The Dark Side of Entrepreneurial Crowdfunding

Steven Andrew Creek

This dissertation takes a three essay approach to examining the dark side of entrepreneurs crowdfunding to finance new ventures. The first essay explores the influence of legitimacy and celebrity on some of the most successful crowdfunding campaigns. I examine the roles of supportive and challenging media frames in the twin domains of pragmatic and moral legitimacy, and their impact on crowdfunding performance. Using a content analysis of 459 news articles written about lucrative Kickstarter campaigns, I find an increase in capital raised through crowdfunding when the pragmatic or moral legitimacy of the campaign is supported in media frames. While celebrity founders attract more money overall, lesser-known founders can reduce this discrepancy when media outlets promote their moral legitimacy. The second essay investigates the impact of funding from family members, friends, and self-backing on crowdfunding outcomes. I employ a mixed methods research design which includes a survey of crowdfunding project founders. My results highlight the importance of offline social capital and reveal that self-backing is a prevalent practice among crowdfunding campaign founders. External social capital and late-stage self-backing are found to be linked to both campaign success and total amounts raised while early-stage self-backing is not. Dark personality traits and their influence within the context of crowdfunding is the focus of my third essay. While prior research has examined the importance of positive psychological traits to entrepreneurship, much less attention has been given to dark personality traits. Drawing on social exchange and life history theories, I propose that the dark triad (comprised of the malevolent traits narcissism, psychopathy, and Machiavellianism) affect funding levels differently contingent upon the type of crowdfunding campaign chosen by the founder. I analyze data involving 328 campaigns from a variety of web platforms to examine these differences, and find that crowdfunding narratives high in narcissism attract less funding in rewards-based campaigns while narratives high in psychopathy raise more money in equity campaigns. Overall, dark personalities were found to be beneficial to entrepreneurs utilizing equity crowdfunding but harmful to individuals using rewards-based platforms.

The Dark Side of Entrepreneurial Crowdfunding

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