Signalling in Donation Crowdfunding: The Role of Mixed Product and Ideological Bundling

Abstract

Crowdfunding projects depend on signalling to demonstrate authenticity. However, literature on signalling has focused on investment and reward crowdfunding with lesser emphasis on donation crowdfunding. This study adopts the signalling theory and bundling concepts to explore the impact of two validation mechanisms on donation crowdfunding outcomes. Drawing from the literature on bunding and signalling, we investigate the impact of a mixed product bundling strategy (community pot mechanism) and ideological bundling strategy (third-party signalling) on donation project success. Based on data from Mchanga.com, our findings indicate that the mixed product bundling strategy positively influences project amount of funds raised and backer support. However, we also find preliminary evidence indicating ideological bundling can have undesirable and contrasting effects on project outcomes. Implications and future work are also discussed.