Culture, international stakeholders, and crowdfunding

Abstract

Research Summary

International crowdfunding platforms present a unique opportunity for foreign entrepreneurs to attract stakeholders, typically from either the entrepreneur's home-country or the platform's host-country. We argue that success in mobilizing these stakeholders is culturally dependent. Specifically, cultural distance from the platform's host country can impede the mobilizing of home-country stakeholders. Conversely, while attracting host-country stakeholders may appear advantageous, these benefits are uncertain and limited for culturally-proximal entrepreneurs. This is because their offerings are seen as less distinct compared to host-country local offerings while introducing additional information asymmetries. Given these dynamics, we theorize that culturally-distant entrepreneurs have better fundraising prospects when attracting host-country backers, while culturally-proximal entrepreneurs are more successful when mobilizing home-country backers. Our analysis of 55,266 foreign projects on Kickstarter supports these arguments.

Managerial Summary

This study examines how cultural differences affect the success of entrepreneurs using non-local crowdfunding platforms. We find that entrepreneurs from countries that are culturally distant from the platform's host-country are more successful when they focus on attracting backers from the platform's host-country. In contrast, entrepreneurs from culturally similar countries do better when they mobilize supporters from their home country. For practitioners, this means that understanding cultural distance is key to successful crowdfunding. Entrepreneurs should tailor their outreach strategy based on their cultural distance from the platform's host country. Those from culturally-distant regions should prioritize backers from the platform's country, while those from culturally similar regions should focus on home-country supporters to maximize their fundraising success.