Abstract
In the past decade, online crowdfunding has enabled entrepreneurs to share and finance their projects and ventures using a large crowd of individuals rather than relying on traditional venture capitalists and established angel investors. In order to successfully raise the amount of money needed, entrepreneurs need to adopt various strategies in regard to how they design their projects. Although considerable work has been conducted to comprehend the influence of several of these strategies, little is still known about the consequences of goal setting strategies on funding performance. This thesis examines a particular goal setting strategy, goal stretching or the adoption of stretch goals, which are additional funding goals that are added on top of the primary funding goal in order to raise a higher amount of money, and how this strategy influence crowdfunding performance. To provide a wider comprehension of the consequences of goal stretching, the thesis explores this topic at both the individual and project level by taking advantage of a rich dataset from a leading crowdfunding platform in East Asia and employing causal inference methods such difference-in-differences and regression discontinuity.The first empirical study investigates how goal stretching influences funding performance. The findings show that goal stretching negatively impacts the number of backers received by a project. The root cause behind this effect is found to be an increase in perceived uncertainty among backers due to the adoption of stretch goals. An exploration of the dynamics of this effect over the course of a project showed a positive effect of stretch goals upon stretch goal attainment. Furthermore, uncertainty related factors such as the gap between the primary goal and stretch goal, project category, progress towards the primary goal and backers’ comments, were found to moderate the detrimental impact of stretch goal adoption.
The second empirical work reports the findings of the investigation on the effect of the adoption of stretch goals on backers’ funding decision process. Individual backers’ willingness to support a project was found to be lower after a project has adopted stretch goals compared to before. However, for backers who eventually decide to support, their average contribution amount was found to be higher after a project adopts stretch goals as opposed to before adoption. The time they take to make their backing decision was also found to be higher after stretch goal adoption than before. Individual backers with greater backing experience were found to be less affected in their contribution amount decision but remained nevertheless influenced in regard to their willingness to support and their time taken to make a decision.
The third empirical study goes beyond the individual project adopting stretch goals and examines the consequences the adoption of stretch goals by a project can have on other projects. Successful projects with stretch goals were found to have a positive impact on other projects’ fundraising performance while successful projects without stretch goals had a negative impact on other projects’ fundraising performance. The main reason for such effects is that projects with stretch goals attract a significant number of new backers while those without stretch goals rely more on existing backers.
Overall, the adoption of stretch goals is a strategy that should be used with caution as it can cause a decrease in the number of backers received while also increasing the average contribution amount per backer. Furthermore, it carries important consequences beyond the project that adopt them to other projects. The multifaceted insights offered by the thesis can significantly help entrepreneurs and platform owners in formulating their strategies regarding the adoption of stretch goals while having a clear understanding of the bright and dark side of such a strategy.
| Date of Award | 17 Mar 2025 |
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| Original language | English |
| Awarding Institution |
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| Supervisor | Jenny Pu (Supervisor) & Jin Chen (Supervisor) |