Reward-based crowdfunding strategies: Aligning the types of rewards for crowdfunding projects with entrepreneurial narratives

Creating types of rewards that align with the motivational inclinations of investors is posited as an essential precondition of successful crowdfunding. However, the relationship among entrepreneurial narratives, the types of rewards, and financing performance is often overlooked. Based on self-determination theory (SDT), we use 256,633 crowdfunding projects from Kickstarter to examine this relationship. Text mining is employed to identify four types of rewards: emotional support, participation opportunity, virtual product, and physical product rewards. The first two have intrinsic incentives, whereas the second two have extrinsic incentives. By econometric models, the results suggest that intrinsically driven rewards are more attractive than extrinsically driven rewards. The participation opportunity reward is the most effective, while the virtual product reward is the least effective. Further, the cognitive load of reward narratives enhances the effect of the reward. Moreover, entrepreneur narcissism enhances the effect of the reward, but the influence is not consistent among the four types of rewards. In addition, the effect of the type of reward depends on a project's characteristics. This study refines the application of SDT regarding online entrepreneurship, deepens understanding of informational mechanisms that motivate investor participation, and offers actionable guidelines for information management regarding the rewards and narrative content.