Fu, J. Y., Wen-Ching Sophia Chou, Chwo-Ming Joseph Yu, and Huang, K. F. 2022. The More, the Merrier? The Bystander Effect on Crowdfunding Platforms. NTU Management Review, 32 (2): 123-154. https://doi.org/10.6226/NTUMR.202208_32(2).0004
Jyun-Ying Fu, Department of Business Administration, National Chengchi University
Wen-Ching Sophia Chou, Department of Business Administration, National Chengchi University
Chwo-Ming Joseph Yu, Department of Business Administration, National Chengchi University
Kuo-Feng Huang, Department of Business Administration, National Chengchi University
Abstract
From a network externalities perspective, prior studies suggest that social networks can improve fundraising performance on crowdfunding platforms. However, according to the bystander effect in the social psychological literature, the number of project supporters may be negatively associated with fundraising performance. By analyzing 5,773 daily observations from 191 crowdfunding projects on the flyingV platform, we show that the bystander effect harms the daily pledge amount. To mitigate such a negative impact, crowdfunding project creators may signal project legitimacy and use a longer project-funding period to escalate the conversion from bystanders to backers, which in turn enhances the fundraising performance.
Keywords
bystander effectsocial psychologylegitimacycrowdfunding