Success of Crowdfunding: A Trustworthiness Perspective

Crowdfunding provides a new platform to entrepreneurs and small businesses to not only raise external funding but also reach out to the market and receive feedback on product prototypes. Based on a trustworthiness perspective, this study proposes that webpage cues of competence trust and benevolence trust on crowdfunding webpages affect crowdfunding success in terms of the amount of funds raised, number of funders, and amount of feedback received. In addition, benevolence trust lessens the negative effect of discriminatory pricing on crowdfunding success. Our hypotheses are verified through 469 rewards-based crowdfunding projects hosted on a major crowdfunding platform in China. Results show that trustworthiness generally increases crowdfunding success and competence trust has a lower impact than benevolence trust on amount of feedback. Unexpectedly, benevolence trust accentuates, rather than mitigates, the negative effect of discriminatory pricing on crowdfunding success. This study contributes to research on crowdfunding success by widening its scope to include both financial and non-financial aspects, providing a parsimonious framework to theorize success factors, and setting a boundary for the effect of discriminatory pricing.