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IJEBR
23,2
336
Received 15 April 2016
Revised 29 August 2016
Accepted 3 October 2016
International Journal of
Entrepreneurial Behavior &
Research
Vol. 23 No. 2, 2017
pp. 336-353
© Emerald Publishing Limited
1355-2554
DOI 10.1108/IJEBR-04-2016-0117
Why supporters contribute to
reward-based crowdfunding
Norbert Steigenberger
Jönköping International Business School, Jönköping University, Jönköping, Sweden
Abstract
Purpose – The purpose of this paper is to provide empirical evidence on the motivation of supporters to
contribute resources to reward-based crowdfunding campaigns.
Design/methodology/approach – The paper reports results from a survey combining open and closed
questions, addressing supporters of reward-based crowdfunding campaigns in the field of video game
development. Publicly available data from a large crowdfunding website complements the approach.
Findings – Two groups of supporters emerge from the data: one group derives motivation almost exclusively
from a purchasing motive, the other group displays the purchasing motive alongside an altruistic and
involvement motive. There is little indication that social acknowledgement plays a role for supporter motivation.
Supporters rely on the evaluation of previous activities of an entrepreneur to judge trustworthiness.
Originality/value – The manuscript offers empirical insights into the previously scarcely researched
question why supporters contribute to reward-based crowdfunding. These insights inform research on
reward-based crowdfunding and help entrepreneurs considering reward-based crowdfunding as a way to
fund entrepreneurial activities.
Keywords Entrepreneurial finance, Motivation, Reward-based crowdfunding, Mixed-method
Paper type Research paper
Introduction
Fundraising is a critical step for many entrepreneurial activities. In the last couple of years,
reward-based crowdfunding gained momentum as a way to raise funds for product
development projects (Mollick, 2014; Solesvik, 2016). In reward-based crowdfunding,
supporters provide small to moderate amounts of money in exchange for rewards, which
might be material or immaterial and which typically include the project to be developed.
Literature on reward-based crowdfunding begins to accumulate (Kuppuswamy and Bayus,
2015; Leung and Sharkey, 2014; Allison et al., 2015; Colombo et al., 2015; Smith, 2015), yet
there is still a lack of empirical evidence and conceptual understanding regarding why
people commit resources to this form of entrepreneurial finance.
This question is not trivial. Entrepreneurial activities are inherently risky and those
who commit resources carry a substantial part of that risk ( James et al., 2013). At the
time of resource commitment, potential supporters are typically not fully informed of
both the entrepreneur’s competences and the characteristics of the prospective product
(cf. Alvarez, 2007). If a funding campaign is successful, the entrepreneur obtains the
funds from the supporters. When the entrepreneurial activity funded in that way fails,
however, a supporter, just as any other investor, would lose his or her contribution.
Yet, unlike investors in more traditional forms of entrepreneurial finance, supporters of
reward-based crowdfunding activities are unable to appropriate entrepreneurial rents
from successful entrepreneurial activities and lack any legally binding control rights
during product development (Mollick, 2014; Alvarez, 2007).
An example that highlights the problem well is the start-up Oculus VR. Oculus VR’s sole
activity was the development of a virtual-reality headset, called Oculus Rift. The development
process of this headset began around 2011 and was partially funded through a reward-based
crowdfunding campaign in 2012. About 9,500 supporters contributed about 2.4mio US-$ to the
development of the demonstrator version of the headset, in exchange for rewards such as
T-shirts or posters, as well as access to an early demonstrator version of the headset on a
financial commitment of at least US$300. This demonstrator version was released in March 2013
and became the basis for second-round funding and, eventually, a US$2 billion bid for which the Reward-based
startup was sold to Facebook. The supporters of the crowdfunding campaign did not benefit crowdfunding
financially from the US$2 billion deal. If the development would have failed, they would have
lost their financial commitment in full.
It is clear that the motivation to commit financial resources to reward-based
crowdfunding cannot come from a desire to maximize investment returns. Yet what drives
supporters to commit resources to reward-based crowdfunding? Qualitative and conceptual 337
studies suggested in particular the desire to pre-purchase goods that would otherwise not be
available, altruism and social benefits as potential drivers (Agrawal et al., 2014; Wash, 2013;
Gerber and Hui, 2013; Colombo et al., 2015; Boudreau and Jeppesen, 2015). Still, it is not clear
if and to what degree these motives are relevant, if supporters are homogeneous or
heterogeneous with respect to their motives and, finally, if these motives predict actual
behavior in reward-based crowdfunding.
The following study, covering about 400 contributions made in the reward-based video
game development field, contributes empirical evidence that helps close this knowledge gap
(Boudreau and Jeppesen, 2015; Smith, 2015; Boons et al., 2015). The data examines
empirically and discusses conceptually important drivers of supporter motivation and
derives recommendations for entrepreneurs considering fundraising campaigns based on
reward-based crowdfunding. It contributes new evidence to a substantial and currently not
well researched question in the field of crowdfunding.

Supporter motivation in reward-based crowdfunding

Through reward-based crowdfunding, many supporters, collectively forming the “crowd,”
each provide a freely chosen amount of money for a clearly specified activity, often a
product development process (Giudici et al., 2012). The rewards supporters receive are
contingent upon the contributed money. Small sums are typically associated with symbolic
rewards, i.e. an invitation to a specific internet forum, while large sums might involve a
meeting with the project initiator, a chance to contribute ideas to the development process or
recognition as a contributor. From a certain threshold on, supporters typically also receive
the product, upon development completion. This threshold is usually about 25-50 percent
below the envisioned list price of the final product. Payment of the committed sum is due
immediately after the funding stage, while the product to be developed will be delivered at a
later point, where delays are a frequent occurrence (Mollick, 2014).
Firms are nexuses of explicit and implicit contracts and stakeholders contribute such
that subjective gains are in an equilibrium with subjective inputs (Cornell and Shapiro, 1987;
Tirole, 1999). As economic return cannot be the source of subjective gains in reward-based
crowdfunding, other sources of subjective utility must be in place. Previous research and
conceptual considerations suggest three broad groups of payoffs or motives: consumption,
altruism, and social belonging.

Consumption
Supporters might contribute resources according to the expected utility derived from
consumption of the product to be developed or the rewards associated with the resource
commitment (Adner and Zemsky, 2006; Belleflamme et al., 2014; Gerber and Hui, 2013).
Considering that most reward-based crowdfunding campaigns offer the final product at a
discounted price compared to later market prices, this motive is a viable potential
explanation for supporter engagement. Rewards are often of limited material value, but they
may have a subjective value, might allow product customizations that would not be
available otherwise, or might instill a feeling of belonging (Colombo et al., 2015).
The ability to influence features of the product to be developed might increase the
expected utility derived from consumption (Gerber and Hui, 2013; Ordanini et al., 2011).
IJEBR Reward-based crowdfunding often involves two-way communication between supporters
23,2 and product developers (Colombo et al., 2015) and supporters might therefore be able to
influence the development process such that the product to be developed reflects individual
preferences. To motivate supporters to donate collectively more than the funding goal,
project initiators typically promise to add additional content or product features once a
certain overall funding has been reached (e.g. at 200 percent of the original funding goal).
338 These “stretch goals” are also a way to influence the final product. With their resource
commitment, supporters can, thus, contribute to adding additional product features.

Altruism
The second potential motive is altruism. Reward-based crowdfunding has its roots in the
charity field and the altruistic motive might play a role for reward-based crowdfunding as well
(Gerber and Hui, 2013; Ordanini et al., 2011). Doing good is psychologically rewarding,
particularly, if no material benefits are attached (Henderson and Malani, 2009; Andreoni, 1990).
Altruistic resource commitments “buy” what has been called a “warm glow” (Harbaugh, 1998),
a positive affective response emerging from a contribution to a subjectively worthy cause.
Supporters might also be driven by a desire to support a specific person or group, rather
than a cause, either based on sympathy or social relationships (Gerber and Hui, 2013;
Ordanini et al., 2011; Colombo et al., 2015). Alongside this “warm glow,” a supporter also has
the ability to affect a larger goal he or she deems important (impact philanthropy, Duncan,
2004). Reward-based crowdfunding, thus, provides a variety of options to obtain value
based on altruistic motives.

Social belonging
The third group of motives refers to social exchange and belonging. Committing to a
community might turn into a hobby (Shah, 2006) and obtaining information on a project
creates a degree of involvement that cannot be obtained elsewhere and that supporters
might perceive as motivating (Ordanini et al., 2011). It has been recognized in the charity
literature that donors have a desire to communicate their donations in order to obtain social
prestige within a group (Harbaugh, 1998), and a comparable effect has been found in some
crowdsourcing activities (Nambisan and Baron, 2009). This might also drive supporters in
reward-based crowdfunding (Gerber and Hui, 2013).
In the following, an exploration to what degree these potential motives account for actual
motivation in a sample of supporters that contributed to crowdfunded product development
projects in the video game industry is presented.

Empirical study
Background and research setting
The following study explores the importance of the motives developed above. In addition, it
tests how homogeneous supporters are regarding their motives and, if they are
heterogeneous, how groups of supporters differ (cf. Bridoux and Stoelhorst, 2014; Anker
et al., 2010). Finally, it provides evidence regarding if these motives are predictors of
contribution behavior. The study builds on an original sample of contributions in the field of
crowdfunded video game development.
As the study targets crowdfunding of for-profit entrepreneurial activities, it focuses on
an industry where many for-profit firms compete with market-oriented products for funds
and where reward-based crowdfunding is a frequent occurrence. The video game industry
is such a setting. The video game industry has grown quickly in the last decades, with a
worldwide sales volume of about US$21 billion in 2012 in the US market and estimations for
worldwide video game related sales (including hardware) reaching more than US$90 billion
(ESA Entertainment Software Association, 2013). Comparable to the music industry Reward-based
(Clemons and Lang, 2003), the video game industry is traditionally dominated by crowdfunding
large network intermediaries. In the video game industry, these intermediaries are publishers
like EA, Ubisoft or Namco, who provide funding for typically small development studios.
These studios develop new products and support existing ones (Broekhuizen et al., 2013).
In the last couple of years, developers began to look for means to circumvent the
publishers’ gatekeeping role, again a trend comparable to the music industry (Bockstedt 339
et al., 2006; Broekhuizen et al., 2013; Clemons and Lang, 2003). The challenge for video game
developers is to raise the funds for product development, while distribution became less of
an issue with a now-established infrastructure for selling digitalized goods with minimal
marginal costs (Clemons and Lang, 2003). With development cycles of two to five years,
cash flows created only after the release of a product, high quality uncertainty and high
development costs, funding game development projects is not an easy task. Until 2011,
fundraising via reward-based crowdfunding was a niche for small (hobby) developers. Since
2012, however, this funding channel matured and raising funds via reward-based
crowdfunding is now an alternative for for-profit developers in the industry.
In accordance with other empirical work on reward-based crowdfunding (Mollick, 2014;
Zvilichovsky et al., 2013), the following study focus on one crowdfunding platform,
Kickstarter. Crowdfunding platforms provide the technical infrastructure for project
presentations and payment processing. On Kickstarter, projects must comply with certain
rules and regulations, primarily banning specific types of projects and rewards (e.g.
weaponry), otherwise the platform does not get involved with project management or
project controlling, which is, thus, rather typical for present-day crowdfunding platforms.
Kickstarter focuses solely on reward-based crowdfunding.
In order to start a project on Kickstarter, developers specify the amount of money they
aspire to (the funding goal) as well as the rewards they promise upon contributing a specific
sum to the project. Then, they present their project with text, pictures, graphs or videos.
The project is, then, listed for a specific period (typically 30 days) on the Kickstarter website.
During this time, supporters can commit a freely chosen amount of money to the project.
If at the end of the funding period the sum of all commitments reaches or exceeds the
funding goal, Kickstarter bills the pledges from the supporters and transfers these funds to
the person or firm who initiated the project, minus a fee (about 5 percent). If a project does
not reach its funding goal, the project initiator does not receive money but does also not face
any further costs (all-or-nothing approach, cf. Wash and Solomon, 2014). The funding goal is
a lower bound. If the total contribution is higher, project creators also receive the excess
money. Stretch goals motivate supporters to commit money beyond the funding goal.
During and after the funding period, the fundraiser is free to post updates, e.g. providing
additional information, adding new stretch goals or responding to questions, and supporters
can comment on the project. At Kickstarter, initiating a project is free, so entry barriers for
entrepreneurs are low.

Methodology
To study supporter motivation, the paper follows the methodological approach of Jeppesen
and Frederiksen (2006) and Autio et al. (2013) and combines survey and archival data.
A questionnaire was administered to reward-based crowdfunding supporters, containing
open and closed questions. Additional data came from the Kickstarter webpage.
In triangulating these data sources, a sound picture of the motivation of supporters in
reward-based crowdfunding emerges.
The survey questionnaire was first administered to a sub-sample of the target population
(n ¼ 49) to evaluate field validity. Kickstarter does not disclose names and contact details of
supporters, therefore, it was necessary to approach the target population in an indirect way.
IJEBR A link to the questionnaire was posted on crowdfunding-related internet forums, followed
23,2 by a reminder one week later. The target forums were selected iteratively: at the outset, a
thorough internet search revealed active forums on reward-based crowdfunding and the
link to the questionnaire was posted in the identified forums. The questionnaire included an
open question asking respondents where they obtain their information on reward-based
crowdfunding projects. During the first days of the response stage, this section of the
340 incoming questionnaires was read and the invitation to participate was posted on
the channels mentioned by these respondents. A full list of internet sites where the
invitation to participate in the study was posted is available from the author upon request.
In order to avoid confounding the sample with events that might unfold over the course of
data collection, such as the release of a particularly successful or unsuccessful crowdfunded
video game, data collection was restricted to two weeks. To minimize hindsight bias (Roese
and Olson, 1996), respondents were asked to report only contributions related to products
that had not been released at the time of questionnaire completion. Each respondent could
report upto three projects he or she had contributed to.
Data collection resulted in a sample of 410 contributions reported by 228 supporters.
In total, 308 questionnaires were completed, but 80 responses were screened out as the
respondents had not previously committed money to reward-based crowdfunding projects
related to currently unpublished video game development projects on Kickstarter.
Limitations related to self-selection bias (Heckman, 1979) are discussed below.

Analytical approach
The analysis combines items from the survey with publicly available data from
www.kickstarter.com. Brought together, these two data sources allow a fine-grained
understanding of supporter motives as well as supporter behavior. The analysis commences
in three steps. First, an overview of the descriptive properties of the sample is presented to
explicate the broad trends regarding supporter motivation that emerge from the data.
Second, a cluster analysis reveals subgroups regarding motivation profiles. Finally,
hierarchical linear modeling tests if motives and cluster membership explain supporter
behavior in terms of contributions to crowdfunded projects on Kickstarter. Data analysis
was done with the software packages SPSS 23 and HLM 7.

Measures
General motivation. Based on the literature review presented above, a list of items that reflect
potential supporter motives was compiled. Social recognition in online communities is
transported via social media (Colombo et al., 2015; Gerber and Hui, 2013). Therefore, social
recognition was measured as the ability to communicate one’s relationship with a focal project
in social media. The other items are straightforward adaptations of the motives discussed in
the previous section to the video game field. All items are displayed in Table I. The order of
appearance of the items was randomized in each questionnaire. As a post hoc test of how
exhaustive the list is, all statements respondents made in the open questions were read to
identify motives previously overlooked. There were none, it seems therefore safe to conclude
that the list of motives is reasonable exhaustive. Respondents were asked to determine the
relevance of each motive for the general motivation to engage in reward-based crowdfunding,
answering on a five-point scale, ranging from “not important” to “highly important.”
After establishing this general motivation profile, respondents were asked to provide
information on up to three specific projects they had previously supported. Based on this
data, the relationship between motivation profile and observable support behavior was
calculated, employing the following dependent, independent and control variables. Most of
these variables are also used in the exploratory data analysis. Table II provides an overview
over the variables in the analyses.
Motive Item
Reward-based
crowdfunding
Unsatisfied demand There are not enough games like the ones I support
Rewards I receive appealing rewards
Influence project I am able to influence the development process and resulting game
Add content I can contribute to the realization of stretch goals (i.e. adding additional
content)
Help others I want to support a particular developer ( person or firm) 341
Support worthy cause I can do some good
Recognition in a community with I can communicate my relationship to this project on social media sites
comparable interests (e.g. Facebook, Google+)
Information about a project Developers provide me with timely and relevant information regarding Table I.
the progress of the development project Motivation items

Variable Use Source

General motivation Description, cluster analysis Questionnaire

Motivation deviation score Regression analysis (independent variable) Questionnaire
Cluster membership Regression analysis (independent variable) Cluster
analysis
Commitment to a specific project Description, regression analysis (dependent Kickstarter
variable)
Trust in the development team Description, regression analysis (control variable) Questionnaire
Experience with crowdfunding Description, regression analysis (control variable) Questionnaire
Age Description, regression analysis (control variable) Questionnaire
Gender Description, regression analysis (control variable) Questionnaire
Location Description, regression analysis (control variable) Questionnaire
Income Description, regression analysis (control variable) Questionnaire
Monthly spending on video games Description, regression analysis (control variable) Questionnaire
Update on project page in first three days Regression analysis (control variable) Kickstarter
Spelling errors on project page Regression analysis (control variable) Kickstarter
Funding goal Regression analysis (control variable) Kickstarter
Pledge sufficient to purchase the product Description, regression analysis (control variable) Kickstarter Table II.
Previous backing history Regression analysis (control variable) Kickstarter List of variables
Time effect Regression analysis (control variable) Kickstarter in the analyses

Dependent variable
Commitment to a specific project. The amount of money in US dollar a respondent invested
in each of the three focal projects captures support behavior. This is the dependent variable
for the analysis testing the relationship between motivation and support behavior. It relates
to prior research on crowdfunding, which typically employs the absolute amount of funding
as a dependent variable when calculating a project’s success (Colombo et al., 2015; Mollick,
2014; Calic and Mosakowski, 2016).

Independent variable
Motivation deviation score. The general motivation profile depicts a preference structure.
To evaluate if perceived deviations of a focal project from these preferences predict
contributions to a particular project, respondents were asked to indicate the relevance each
motive had for the decision to support each of the three specific projects. A deviation
score between the motive to invest in a focal project and the general motive to invest in
reward-based crowdfunding was calculated by subtracting the value of the items for which
IJEBR the respondents’ impression of a specific project was below his or her general preference for
23,2 this particular item. For example, if a respondent stated that “doing good” is generally
highly important for him or her (5 on a five-point scale) but was only moderately important
for his or her decision to support the focal project (3 on a five-point scale), the focal project
had a two-point deviation from the respondent’s general preference. As a robustness test,
other measures of deviation were also calculated, as discussed below.
342
Control variables
Trust in the development team. Gerber and Hui (2013) found that lack of trust in the
entrepreneur was the most important reason why supporters did not commit (more) to
reward-based crowdfunding (see also Colombo et al., 2015) and it is therefore possible that
trust dominates the effect of motivation on support behavior. To control for this effect, the
questionnaire captured integrity- and competence-based trust towards the developers of a
focal project, applying a slightly adopted version of the scales suggested by Mayer et al.
(1995), which have also been used elsewhere (e.g. Kim et al., 2004). Both scales are reliable,
with Cronbach’s α of 0.93 (competence-based trust) and 0.90 (integrity-basted trust).
Experience with crowdfunding. It is conceivable that motives and support behavior are
contingent upon the degree of experience a supporter had with crowdfunding (cf. Franke
et al., 2013). Experience was measured as the number of projects a respondent had
supported at the time he or she completed the questionnaire.
Socio-demographics. Previous research implied that socio-demographic conditions might
affect support behavior (Agrawal et al., 2014) and thus might disturb the relationship
between motives and observable behavior. To control for such relationships, age, gender,
location, income, and monthly spending on video games were captured.
Professionalism. Mollick (2014) found that signals of professionalism had an effect on
funding and it seems likely that project professionalism could affect the relationship
between motivation and contributions. Mollick proxied professionalism with three dummy
variables: the presence of a video on the project home site on the crowdfunding platform, the
absence of spelling errors, and the publication of updates within the first three days of the
funding period. Following this approach, a dummy variable was used to indicate if a project
received updates within the first three days of the funding period. Another dummy variable
captures if spelling errors appear in the project presentation. Two coders copied the text of
all project home sites into a word-processing software to identify spelling errors. Occasions
where the coders were unsure were re-checked with an English dictionary. Specific slang
(e.g. “dev” for developer) was excluded from the error list. The video variable did not vary,
as all projects had a video.
Funding goal. The funding goal is the threshold specified by the project initiator that
must be reached for a successful campaign. A large funding goal might be a signal of
professionalism (cf. Mollick, 2014) and supporters might respond differently to projects with
a high and a low funding goal. To test this, the funding goal of a project was also included as
a control variable.
Pledge sufficient to purchase the product. This dummy variable captures if a contribution
reported in the survey was large enough to purchase the product to be developed in the
respective project. The sum required to pre-purchase the product varies between projects.
Information on the purchasing threshold was obtained from the respective Kickstarter pages.
Previous backing history. The number of projects a project initiator supported proxies his
social capital (Colombo et al., 2015) and willingness to reciprocate (Zvilichovsky et al., 2013),
and it is conceivable that supporters perceive projects differently, depending on this
measure. Previous backing history was captured as the number of projects a developer
supported before the start of the funding campaign of the focal project.
 Time effect. Temporal trends were controlled for by a variable capturing how many Reward-based
months before the survey (November 2013) the funding period of a focal project was. crowdfunding
Results
Table III displays descriptive statistics for the demographic variables. Male supporters
(91 percent) from North America (36 percent) and Europe (49 percent) dominate the sample.
96 percent of the respondents are below 45 years of age. The sample comprises supporters 343
with high as well as low income with almost the same frequency.
Table IV displays descriptive results of supporter motives. The relatively low
correlations indicate discriminant validity.
With a mean score of 4.5 on a five-point scale, the most important motive is unsatisfied
demand. Links to social networks are of little relevance to most supporters. The other
motives cover middle grounds, with relatively large standard deviations. These indicate the
existence of subgroups.
A cluster analysis helps identify subgroups with sharper motivation profiles. The variables
to be included are deducted from theory, all have the same range (from 1 to 5, integers only) and
multicollinearity and outliers are not an issue (Table IV), therefore cluster analysis is an
appropriate method (Ketchen and Shook, 1996). A two-step cluster analysis with log-likelihood
distance measures, including all motive items as predictors, revealed a two-cluster solution,
displayed in Table V.
Four of the eight items contribute substantially to the separation between the two clusters.
These four motives are considerably stronger in cluster 1 than in cluster 2. The pre-purchasing
motive is very strong in both subgroups. Both clusters are roughly of the same size, with cluster
1 covering 52 percent and cluster 2 covering 48 percent of the respondents. Considering the
respective values of the motives in the clusters, it seems appropriate to name members in cluster
2 “buyers.” These persons are mainly driven by the purchasing motive. Respondents in cluster 1
also value this motive, yet they are also driven by the ability to contribute to and be informed on
the project. In addition, they appreciate the ability to support a particular developer. This group
is termed “involved” supporters.
The biographical data shows that “buyers” are somewhat older (mean 2.48 vs 2.63,
p o0.10, t-test) and spend more on the gaming hobby (2.28 vs 2.61, p o0.05, t-test).
The differences are not large in absolute terms, though, and differences are insignificant for

Age Frequency (%) Monthly net income Frequency (%) Monthly Frequency
spending on (%)
video games
Under 18 1 (0) Less than US$1,000 56 (25) Less than US$10 53 (23)
18-29 104 (46) US$1,000-1,800 43 (19) US$10-25 69 (30)
30-44 96 (42) US$1,801-2,800 40 (18) US$26-40 36 (16)
45-59 6 (3) US$2,801-4,000 33 (14) US$41-65 24 (11)
older than 59 3 (1) More than US$4,000 35 (15) more than US$65 28 (12)
No answer 18 (8) No answer 21 (9) No answer 18 (8)
Sex Frequency (%) Region Frequency (%)
Male 188 (83) North America 82 (36)
Female 19 (8) Middle/South America 2 (1)
No answer 21 (8) Europe 111 (49)
Middle East and Central Asia 1 (0)
East and Southeast Asia 2 (1) Table III.
Australia 8 (4) Categories and
Other 3 (1) frequencies for
No Answer 19 (8) biographical variables
 23,2

344
IJEBR

Table IV.

motive items
deviations, and

for contribution
Means, standard

bivariate correlations
Variable Mean SD 1 2 3 4 5 6 7 8

1. I receive appealing rewards 3.32 1.18 1

2. I want to support a particular developer (person or firm) 3.89 1.20 0.04 1
3. There are not enough games like the ones I support 4.46 0.81 0.01 −0.04 1
4. Developers provide me with timely and relevant information regarding the progress of the development project 3.71 1.08 0.09 −0.08 0.00 1
5. I am able to influence the development process and the resulting game 2.81 1.26 0.15 0.09 0.04 0.34 1
6. I can communicate my relationship to a project on social media sites 1.56 0.96 −0.3 0.09 −0.03 0.15 0.17 1
7. I can contribute to the realization of stretch goals (i.e. adding additional content) 2.87 1.23 0.21 0.15 0.02 0.15 0.35 0.27 1
8. I can do some good 3.21 1.20 0.07 0.26 0.02 0.19 0.32 0.14 0.31 1
Notes: Categorical variables with five-point scale. Spearman rank-sum correlations. Values greater than or equal to 0.14 are significant at p o0.05)
 Cluster 1 Cluster 2
Reward-based
crowdfunding
I am able to influence the development process and the resulting game (1.00) 3.51 (0.11) 2.03 (0.09)
I can contribute to the realization of stretch goals (i.e. adding additional content) (0.76) 3.44 (0.11) 2.22 (0.10)
Developers provide me with timely and relevant information regarding the progress
of the development project (0.65) 4.21 (0.08) 3.17 (0.10)
I can do some good (0.58) 3.68 (0.10) 2.69 (0.11)
I can communicate my relationship to a project on social media sites (0.24) 1.84 (0.11) 1.24 (0.05) 345
I receive appealing awards (0.13) 3.50 (0.10) 3.11 (0.12)
I want to support a particular developer (person or firm) (0.11) 4.07 (0.11) 3.70 (0.12)
There are not enough games like the ones I support (0.05) 4.38 (0.08) 4.55 (0.07)
n 117 107 Table V.
Note: Group means, in parentheses, predictor importance (first column) and standard errors (second and Two-step Cluster
third column) analysis

all other biographical variables as well as for crowdfunding experience. Not surprisingly,
“involved” supporters commit substantially more to a single project than “buyers” (mean
US$122.15 vs US$72.89, p o0.01; median US$40 vs US$25). This relates to the desire
of “involved” supporters to have an impact on a project, while “buyers” are more interested
in getting the product and therefore commit only the amount required to obtain it,
which is often in the range of US$20-30. Almost all (98.4 percent) commitments made by
“buyers” are large enough to pre-purchase the focal product (96 percent of all commitments
are in the full sample).
The next analytical step is to test if motivation predicts resource commitment
behavior. A series of hierarchical linear regression models (contributions nested within
persons) has been calculated, predicting the sum a respondent commits to a project
(Heck et al., 2010; Aguinis, Gottfredson and Culpepper, 2013). Following Aguinis,
Gottfredson and Joo (2013), a conservative outlier deletion strategy regarding the
dependent variable was applied to minimize measurement error, and observations
where the dependent variable was more than three SD above the sample mean were
dropped. This affected four observations with commitments of more than US$1,749.58,
reducing sample size from 410 to 406. Some respondents did not provide information on
biographical data, this reduces the sample size to 361. Accounting for the skewed
distribution, the dependent variable was logarithmized. Table VI reports descriptive
statistics and correlations.
Table VII displays the hierarchical linear regression models. Model 1 is the baseline
model, which contains all control variables, but not the two independent variables. Model 2
includes the deviation from preferences measure and tests if deviations from preferences
affect the sum a respondent contributed to a focal project. Model 3 is the omnibus model.
It adds a dummy capturing cluster membership.
The results show that the deviation from a supporter’s preference structure predicts the
sum a focal supporter invests in a project. Model fit increases from Model 1 to Model 2 and
again to Model 3, indicating that both deviation from preferences and cluster membership
add substantial explanatory power. “Involved” supporters invest substantially more than
“buyers,” controlling for the other variables in the model. Neither general spending on video
games nor income affect the dependent variable. High-funding goals have a significantly
positive effect on resource contributions.
In contrast to previous research (Mollick, 2014), the models show that spelling errors
have no effect on resource contributions, while updates within the first three days of a
project have a negative effect. Trust does not affect how much a supporter is willing to
commit to a project.
 23,2

346
IJEBR

Table VI.

deviations, and
Means, standard

bivariate correlations
Variable Mean SD 1 2 3 4 5 6 7 8 9 10

(a) Level 1 (decision) variables

1. Funding goal (Thousand US$) 519.40 488.59 1
2. Contribution sum (US$) 147.94 533.88 0.52 1
3. Month between end of funding and start of survey 5.72 5.13 0.40 0.37 1
4. No. of projects supported by the developer 16.37 31.22 −0.25 −0.25 −0.11 1
5. Spelling Errors (0 ¼ no spelling errors) 0.61 0.49 0.22 0.04 −0.18 −0.05 1
6. Updates within the first three days (0 ¼ no updates) 0.88 0.32 −0.07 0.02 −0.21 0.30 0.15 1
7. Deviation from preferences 3.02 2.88 −0.28 −0.41 −0.26 0.10 −0.05 0.04 1
8. Pledge sufficient to buy product (0 ¼ not sufficient) 0.96 0.20 0.08 0.31 0.02 −0.09 −0.02 0.04 −0.04 1
9. Integrity-based trust (5-point scale) 4.10 0.81 0.20 0.33 0.19 −0.12 −0.01 −0.06 −0.32 0.02 1
10. Competence-based trust (5-point scale) 4.31 0.79 0.34 0.37 0.28 −0.18 0.02 −0.06 −0.35 0.04 0.66 1
(b) Level 2 (supporter) variables
1. No. of previous contributions 8.21 19.25 1
2. Cluster membership (1 ¼ “involved”, 2 ¼ “buyer”) 1.48 0.50 0.04 1
3. Age (categorical) 2.55 0.63 0.18 0.15 1
4. Income (categorical) 2.75 1.44 0.06 0.15 0.32 1
5. Spending on video games (categorical) 2.55 1.34 0.30 0.08 −0.05 0.08 1
6. Gender (1 ¼ male, 2 ¼ female) 1.09 0.29 −0.13 0.04 −0.03 −0.10 −0.15 1
Notes: (a) n ¼ 361 (level 1). In parentheses: units of measurement. Spearman rank-sum correlations. Values greater than or equal to 0.10 are significant at p o0.05;
(b) n ¼ 201. In parentheses: units of measurement. Spearman rank-sum correlations. Values greater than or equal to 0.14 are significant at p o 0.05
 Model 1 Model 2 Model 3
Reward-based
Variable Coeff. SE Coeff. SE Coeff. SE crowdfunding
Spending on video games less than US$10 0.12 0.19 0.17 0.20 0.14 0.19
Spending on video games US$10-25 0.13 0.18 0.18 0.19 0.18 0.18
Spending on video games US$26-40 −0.06 0.20 −0.04 0.20 −0.04 0.19
Spending on video games US$41-65 −0.09 0.21 −0.08 0.22 −0.07 0.21
Income less than US$1,000 −0.22 0.18 −0.27 0.18 −0.33* 0.18 347
Income US$1,000-1,800 0.11 0.18 0.10 0.19 0.13 0.18
Income US$1,801-2,800 −0.23 0.19 −0.33* 0.19 −0.30 0.18
Income US$1,801-4,000 −0.01 0.20 0.05 0.20 −0.01 0.19
No. of previous contributions −0.003 0.002 −0.002 0.003 −0.001 0.003
No. projects supported by game developer −0.004** 0.002 −0.003** 0.001 −0.004** 0.001
Funding goal 0.0008*** 0.0001 0.0007*** .0001 0.0007*** 0.0001
Month between end of funding and start
of survey 0.05*** 0.01 0.04*** 0.01 0.04*** 0.01
Spelling errors −0.11 0.10 −0.07 0.10 −0.06 0.10
Updates within the first three days −0.43*** 0.16 −0.41*** 0.15 −0.37** 0.15
Pledge not sufficient to purchase product −1.30*** 0.25 −1.28*** 0.23 −1.42*** 0.23
Integrity-based trust 0.21** 0.08 0.13 0.08 0.09 0.08
Competence-based trust 0.05 0.09 −0.03 0.08 −0.03 0.08
Deviation from preferences −0.11*** 0.02 −0.13*** 0.02
Table VII.
Cluster “involved” 0.46*** 0.11
Results of hierarchical
Akaike information criterion 1034.7 1006.0 993.1 linear regression,
n (N) 361 (201) 361 (201) 361 (201) predicting ln
Notes: *p o0.1; **p o0.05; ***p o0.01 (contribution sum)

Robustness test
To study the robustness of these results, the models were calculated with alternative
deviation from preferences measures. First, the sum of all deviations from the preference
structure was used, i.e. positive deviations received the same value as negative deviations.
Second, a deviation measure where positive and negative deviations were allowed to cancel
each other out was employed. Both models fit the data less well than the models presented
above, indicating that the relationship between general expectation and the perception of a
focal project is not symmetrical. Negative deviations affect the willingness to pay
negatively, while positive deviations have no or only a minor effect.
Considering that the link to the questionnaire was posted in internet forums related to
crowdfunding, it is possible that heavily involved supporters are particularly likely to
frequent these forums and are, therefore, oversampled (Autio et al., 2013; Heckman, 1979).
To assess this form of self-selection bias, the average commitment of respondents to a focal
project was compared to the average commitment of all supporters to this project (data
obtained from Kickstarter). A mean deviation of US$49 and a deviation of the median of −US$7
indicate that most of the contributions are well in line with the average contributions of the
respective focal projects. In addition, about 50 percent of the respondents had little
crowdfunding experience, i.e., they supported three or fewer projects (including the ones
reported in the survey), and 80 percent supported eight or fewer projects. It seems therefore
reasonable to conclude that heavily engaged supporters are not systematically oversampled.
Other limitations of the study approach are discussed towards the end of the paper.

Discussion
The purpose of this study is to explore the motivation of supporters to contribute financial
resources to product development projects funded via reward-based crowdfunding, addressing
the question why supporters contribute to this form of entrepreneurial finance despite their
IJEBR inability to acquire economic rents while still carrying the entrepreneurial risk. The study
23,2 revealed a hybrid motivation structure, with a dominant demand motive. Supporters base their
contributions strongly on a logic of consumption, where the intent to acquire the product
outranks the demand for other rewards. Table VIII provides quotes from the survey that
substantiate this observation. The important role of the demand motive is also visible in the
distribution of the individual contributions, where the vast majority of the contributions are in
348 a range of US$20-US$50, and almost all contributions are such that they include a pre-purchase
of the product to be developed. In the sub-group of “buyers,” this picture is even more
pronounced – with a median commitment of US$25, members of this group tend to pay just as
much as needed to pre-purchase the product in development. The subgroup of “involved”
supporters commits, with a median of US$40, somewhat more money per pledge, the money
paid above the purchasing limit can be understood as an additional willingness to pay based on
the stronger altruistic and informational motives.
Altruistic motives are of some importance for all supporters in the sample, and of
considerable importance for the “involved” supporters, who also value the ability to
influence the development process. The importance of the different altruistic motives differs.

Quote Referring to topic

“I’m mainly interested in seeing games get made that I’m interested to buy – and Demand motive
these types of games aren’t very common”
“Getting a game that I might be interested anyways for pretty cheap is definitely Demand motive
a factor”
“[My motive is] the genre of the video game. I like niche games and there are Demand motive
little video games made of that genre”
“[I am] putting money where my mouth is. I stopped purchasing games from Altruistic motive
developers and publishers I dislike. And support those I want to see more off.
Internet rage will not sway game development economics. Money streams will”
“[My motive is] a desire to support and promote an alternative funding Altruistic motive
mechanism to the unworkable and corrosive publisher funding system”
“I view crowdfunding (of video games, board games, and films in particular) as a Altruistic motive
sort of poor man’s patronage of the arts. I am more interested in giving someone
my small share of a nudge toward their goal than anything else”
“I like the content updates for the Kickstarter as much as receiving the game” Information and
involvement motive
“[I am motivated by] lots of feedback on the development process” Information and
involvement motive
“I am a software developer myself, so receiving fresh information on the internal Information and
process of developing of a videogame is quite a lot of fun, even before the game involvement motive
is available”
“Viability of the project, clear budgeting (no ridiculous stretch goals or Expectations
unachievable targets)”
“Detailed plan of action (development/business/money)” Expectations
“Developers having a history in the field. A clear concept video or proof of Expectations
concept. The amount they are asking for is reasonable for what they are doing.
Not asking for too little. Enough to make the game”
“[I require] some sort of indication that the company will be able to finish the game – Importance of reputation
For instance, past games finished by the company actually not being terrible”
“The developer team needs some experience. No-names get no money. Importance of reputation
Good example: Star Citizen by Chris Roberts (big name)”
“The developers MUST have a good track record in the games industry. I will Importance of reputation
not pledge to start-ups, novices, or people I don’t feel will be able to deliver on
Table VIII. their promises”
Selected quotes Note: Spelling corrected
Of the two motives derived from impact philanthropy (Duncan, 2004), the general chance to Reward-based
exert a positive impact on a greater goal is less relevant than the ability to support a specific crowdfunding
developer. In the case of video gaming, network intermediaries are considered to hamper
creativity in the industry and the circumvention of publishers is the “good cause” the motive
“doing good” refers to (Broekhuizen et al., 2013; cf. Harbaugh, 1998). Yet, crowdfunding
supporters focus strongly on the developer and commit money specifically to this person or
firm, to allow him or her to develop just the product he or she imagines. This indicates the 349
important role reputation within the community seems to play. Reputation, the group-
specific assessment of an organization’s or person’s capability to create value based on
its/his/her characteristics and qualities (Mishina et al., 2012, p. 460), also helps supporters to
control risk, a mechanism that favors in particular well-known developers (cf. Table VIII).
The motivational structure of supporters in reward-based crowdfunding is thus strongly
driven by this combination of demand-based value creation (Adner and Zemsky, 2006) and
impact philanthropy (Duncan, 2004). The observation that supporters vary regarding how
much weight they put on the altruistic motive is well in line with recent insights in stakeholder
theory (Bridoux and Stoelhorst, 2014). Still, even for “involved” supporters, altruism is clearly
less important than unsatisfied demand. The observation that demand is the main driver for
most supporters implies that reward-based crowdfunding shares many characteristics with
pre-selling in traditional product markets, where unsatisfied demand determines willingness to
pay (Grahovac and Miller, 2009). Therefore, it seems appropriate to emphasize the pre-selling
aspect when developing a conceptual understanding of reward-based crowdfunding as a
phenomenon. This might, to some degree, de-mystify the phenomenon. A traditional
understandings of supply and demand might fit the phenomenon relatively well.
Relatedly, the for-profit character of the development projects seems to have no bearing
on supporters’ decisions to support projects based on altruistic considerations, which is at
odds with the importance of distributional justice in stakeholder theory (Bosse et al., 2009)
and, in particular, the charity literature, where for-profit characteristics tend to crowd out
willingness to give for charity (Andreoni, 1990; Benabou and Tirole, 2006). This is not the
case in reward-based crowdfunding, underlining the impression that altruistic motives are
less important than the demand motive.
The “involved” supporters also value the ability to influence the development process. This
might relate to an increase in the consumption value of the final product by obtaining a better
fit to one’s own preferences (Gerber and Hui, 2013; Ordanini et al., 2011), yet the responses to the
open questions (Table VIII) suggest that the general pleasure this sub-group derives from being
intimately involved in the development process is more important. We also see that many
supporters enjoy the privileged information flow that comes with supporting a project, while
communicating the relationship to a project on social media sites is of little relevance. This
observation from the quantitative data is backed by the qualitative insights, where not a single
answer to an open question referred to social recognition or the desire to visually express social
belonging. This finding is surprising as it is at odds with previous studies from the
crowdsourcing (Nambisan and Baron, 2009) and the charity (Saxton and Zhuang, 2013) field,
who indicated that social recognition is a main driver of contributor behavior. Reward-based
crowdfunding seems to follow different logics, indicating that the reward structures for
supporters differ in different forms of crowd-based activities.
The results revealed that the match between a supporter’s general expectations and his
or her perception of a specific project predicts the sum he or she contributes to a project in a
significant way. It is, therefore, safe to conclude that supporter motivation is an important
driver of behavior in reward-based crowdfunding and setting a project up in such a way
that it meets the motivational structure of potential supporters will have a strong impact on
success or failure of crowdfunding campaigns. This is a relevant consideration for both
research and entrepreneurial practice.
IJEBR The study also advances the understanding of other predictors of supporter behavior.
23,2 In line with Mollick (2014), many respondents indicate that they expect signals of
professionalism, they seem to be quite aware of the risks associated with the
product development process, in terms of potential delays or even non-deliveries of products
(see Table VIII). Contrasting Mollick (2014), however, we did not find that spelling errors, videos
or early updates seem to suffice. Instead, respondents reported that indications of solid project
350 management and realistic goal-setting would be signals of professionalism. This might imply
that the crowdfunding field reached a stage of maturity, where a technically solid presentation
alone is no longer sufficient. All projects in the sample had a video, almost all received early
updates. The spelling error measure was somewhat more discriminating (39 percent of the
projects had spelling errors), yet did not predict supporter behavior. Future research might
consider these developments in the field when measuring project professionalism. On a
more general level it is currently not clear which signals sent in a project pitch actually influence
supporter behavior in crowdfunding. Research on specific types of signals begins to accumulate
(Allison et al., 2015; Ahlers et al., 2015; Moss et al., 2015), but more needs to be done to fully
understand how supporter perceive and respond to project pitches.

Limitations
This study faces some limitations. First, sampling is based on self-selection. Although self-
selection bias is not a strong concern regarding supporter involvement, over-sampling might
have happened regarding other dimensions, e.g. geography or gender. Another limitation is
that, in addressing only active crowdfunding supporters, the study cannot explain why a
person does not engage in reward-based crowdfunding. Although the study has this limitation
in common with most other crowdfunding-related publications, it is still a problem future
research should try to overcome. Laboratory studies simulating crowdfunding decisions under
controlled conditions would be a good way to do that. In addition, it seems necessary to develop
a deeper understanding of the intra-project dynamics of crowdfunding campaigns. Do project
initiators respond to feedback they perceive during their campaign and, if so, how? Over all,
research on crowdfunding as a phenomenon has just begun to uncover the forces that govern
this particular niche in entrepreneurial finance.

Conclusion
The insights obtained in this study imply that the entrepreneurs will need to focus on a
market niche and also address the altruistic and information motives to some degree in
order to be successful, where finding the appropriate market niche is of much higher
importance. In addition, the entrepreneurs might benefit from sending signals of
professionalism. These signals might be based on reputation earned by previous success
and/or be grounded in convincing project management plans. By contrast, considerations
regarding links to social media and the specifics of the rewards can take a backseat when
planning the campaign. Putting strong emphasis on the market niche the product is
supposed to fill should clearly be the dominant concern.
Applying an explorative approach with quantitative and qualitative elements, this paper
extended and strengthened previous work on the motivation of supporters in reward-based
crowdfunding (Ordanini et al., 2011; Gerber and Hui, 2013). Unsatisfied demand emerged as
the core motive for supporters to commit resources to reward-based crowdfunding.
This implies that reward-based crowdfunding has the potential to create beneficial welfare
effects. The crowdfunding campaigns improve resource allocation in niche markets by
reducing information asymmetries between buyer and seller in a stage where sunk costs are
typically low (cf. Adner and Kapoor, 2010; Keller, 2004). The decision to support a project
indicates that there is an unsatisfied demand. Crowdfunding thus contributes to the
development of relevant products (Daley and Green, 2012; Autio et al., 2013). Considering
that fundraising is critical for the success of entrepreneurial activities (Lam, 2010; Carrier Reward-based
et al., 2004), it seems likely that reward-based crowdfunding will occupy a niche in crowdfunding
entrepreneurial finance for years to come.

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Corresponding author
Norbert Steigenberger can be contacted at: norbert.steigenberger@ju.se

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