Abstract

As seen in other online contexts (e.g., Benlian & Hess 2011), investors’ trust plays a fundamental role in crowdfunding (Agrawal et al. 2014) due to two risks associated with crowdfunding investments: First, crowdfunded startups can fail to deliver promised rewards and/or go bankrupt (Hornuf & Schwienbacher 2014). Second, crowdfunding is prone to fraud where “entrepreneurs” misuse contributed money (e.g., Mollick 2014; Griffin 2012). Presumably, crowdfunding investors who supported ventures that failed or fraudulent campaigns will lower their trusting beliefs towards the entrepreneur they supported (Gerber & Hui 2013) but also any other entrepreneur pursuing crowdfunding (McKnight et al. 1998). In contrast, having invested in successful venture projects (leading to high returns) likely reinforces trust in crowdfunding entrepreneurs and thus induces higher future investments. However, investor reactions to own crowdfunding experiences remain unresearched. Therefore, this study aims to add insights about the consequences of investors’ experiences on their future trusting beliefs and investment behavior in crowdfunding.

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