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NTU Management Review Vol. 32 No. 2 Aug. 2022

evidence that the bystander effect reduces the daily pledge amount on crowdfunding plat-
forms. Furthermore, in line with information asymmetries arguments, we find that project
legitimacy and funding durations convert more bystanders into backers. Our results thus
provide more nuanced insights into how the bystander effect, project legitimacy, and fund-

ing duration all together shape project fundraising performance.

6. Managerial Implications and Limitations

Our research has several policy implications. First, entrepreneurs can gain further
insights from our research, especially that not all supporters contribute funds to campaigns.
Notably, some of those supporters are only bystanders who do not pledge and may cause
the bystander effect, which negatively influences fundraising performance. In this respect,

project creators may consider more effective communication strategies that would help
convert bystanders into backers. Our findings suggest that project legitimacy in the form
of firm incumbency and funding duration mitigate the negative bystander effect.
Second, our research also highlights the importance of setting funding durations,

as this will affect the projects’ amount of capital received. Specifically, a long funding
period will weaken the bystander effect, primarily because these supporters have more
time to evaluate and gather information about campaigns. By setting an appropriate period
of funding duration, creators have a higher likelihood of converting bystanders into real

backers.
Third, our findings also provide some implications for crowdfunding platform man-
agers. While making the crowdfunding platform more transparent to users is of primary
importance (Cumming, Vanacker, and Zahra, 2021; Donovan, 2021), our findings suggest

that how investors interpret such information influences investors’ decisions to fund. Spe-
cifically, additional details about the bystander ratio provided by the flyingV platform lead
2
to a reduced daily pledge amount, which was counterintuitive. Thus, platform managers
should caution that some project-related information they display on the webpage might

lead to unintended consequences.

2 flyingV now no longer provides information about the number of supporters (and bystanders) on the
project webpage.

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