Mind Your Language Entrepreneur! Analysing Crowdfunding Success Through the Lens of Effectuation Theory

Abstract

Crowdfunding has become an important source of funds for entrepreneurs. In this paper, we add a novel dimension to the literature examining how narrative styles affect the performance of such funding campaigns, by employing the lens of effectuation theory. Using data from a popular non-equity crowdfunding platform from 2009 to 2019 and examining the narratives of the campaigns through the lens of effectuation, we provide empirical evidence that entrepreneurial tendencies exhibited in crowdfunding campaigns’ narratives can affect the chances of success of such campaigns. More specifically, we show that narratives with higher effectual orientation exhibit higher chances of success in raising funds and this impact is more pronounced in commercial campaigns. We also show that campaigns having narratives with higher causal orientation tend to be more successful in raising the required funds, though the evidence is mixed.