Economics professors Dr. Lynn Tang and Dr. Richard Baker co-authored a paper titled, “The Success of Crowdfunding Projects: Technology, Globalization, and Geographic Distance,” which has been accepted for publication in Economics of Innovation and New Technology. Steven Pittaro ’19 served as a student research assistant on this project. Pittaro now works as an operator at Eli Lilly and Company.
“I want to thank my co-authors for their help in the early stage of data collection and paper development, and the research assistants provided by the School of Business,” said Dr. Tang. “I learned a lot about entrepreneurship and new startups on crowdfunding through this research project and the learning helped me to make my teaching more relevant to today’s business world.”
We explore the implications of geographic distance between founders and backers for reward-based crowdfunding. We argue that the development of crowdfunding platforms in the past decade has expanded significantly the network of entrepreneurs by attracting long-distance supporters. Using projects from Kickstarter during a four-week period, we found that geographic distance increased the number of funders for innovative technology-based crowdfunding campaigns, and for projects with early backers from large metropolitan areas. The finding was robust using average distance measures weighted by top backer cities. However, the positive distance effect was marginal for projects founded in smaller cities.