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The More, the Merrier? The Bystander Effect on Crowdfunding Platforms

directly.
Another unique feature of the flyingV platform is that it allows project creators to
reach the actual crowd. In particular, when someone hits the Facebook “share” button on
the project page, his/her Facebook friends will also receive information about the current

project. After his/her Facebook friends share this crowdfunding project information on his/
her Facebook message wall, based on the algorithm of the Facebook platform (Pariser,
2012), more people will receive information about the focal crowdfunding project. Other

crowdfunding platforms, such as Kickstarter, primarily rely on the social network of
the project creator alone. In this regard, flyingV helps project creators reach a broader
audience. Thus, using data from the flyingV platform allows us to examine the social
network and the associated bystander effect in a more nuanced manner.

5. Theoretical Contribution

Our research contributes to the existing crowdfunding research by providing new

insights into the funding dynamics on a crowdfunding platform (Kim, Kannan, Trusov,
and Ordanini, 2020). While prior studies have examined how the founders’ social networks
influence funding success (e.g., Kuppuswamy and Bayus, 2018), our study cautions
that some types of social networks may cause the potential adverse bystander effect.
Specifically, when the bystander notices that other bystanders also receive the funding

request in the notification letter, this will negatively influence a person’s likelihood of
providing funding. This is primarily because the bystander might believe that someone
else will provide help. Moreover, the presence of bystanders also indicates a higher risk
of project failure, which discourages investors from investing. Based on the above two

arguments, we expect that the bystander ratio leads to a reduced pledge amount. Our
findings provide direct empirical evidence about the bystander effect on the crowdfunding
platform.
Our research is related to an emerging literature that investigates the bystander

effect in the crowdfunding context (Kim et al., 2020). Borrowing insights from the social
psychological literature (Darley and Latané, 1968; Fischer et al., 2011), recent scholars
have examined the bystander effect in the crowdfunding setting (Chan et al., 2020;
Kuppuswamy and Bayus, 2017). We add to this line of literature by providing empirical

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