Essays on Signaling Theory in Crowdfunding

Ph.D. Candidate: Ankita Kulkarni of Management (Strategy) Department will be defending her dissertation titled, “Essays on Signaling Theory in Crowdfunding” on 05/28/2024.

The time and location of her dissertation defense is 10:30 AM – 12:00 PM, GHall-722

Many thanks to Ankita’s dissertation committee:

• Committee Chair: Jade Lo– Associate Professor – Drexel University
• Committee Member: Dali Ma- Associate Professor – Drexel University
• Committee Member: Jeongsik Lee - Associate Professor - Drexel University
• Committee Member: Srikanth Paruchuri - Professor – Texas A&M University
• Committee Member: Nikolay Merkulov - Chief Data Scientist – United Credit Bureau

Abstract:
Individual qualities, such as productivity, often remain invisible within the market, leading to informational asymmetry between interacting parties. To bridge this gap, signals, such as educational attainment, are utilized as indicators to convey underlying qualities and alleviate informational concerns. Signaling theory, with its intuitive appeal, has garnered popularity across various domains, including economics, finance, industrial organization, and management. While traditional perspectives typically portray signals as non-manipulable, certain scholars in management have proposed that signal interpretation can indeed be influenced. This dissertation aims to reconcile these perspectives by establishing boundary conditions regarding when (context) and how (process) signals can be manipulated. In the first chapter I review and assess both traditional signaling perspectives and signaling studies in management domain. Building upon this foundation, the second chapter delves into an examination of how the simultaneous emission of interdimensional signals of human capital and social cause impacts the success of crowdfunding campaigns. I argue and demonstrate that audience respond favorably to signals of human capital, manifested through work experience and prior entrepreneurial endeavors, as they effectively communicate the competencies of the entrepreneurs. Conversely, signaling a strong commitment to social causes introduces competing demands, thereby diminishing the entrepreneurs’ ability to secure funding. Moreover, the joint emission of these signals complicates the task of balancing them, leading to audience distraction and confusion, ultimately detrimentally affecting the campaign’s success. Moving forward to the third chapter, I propose that the emission of certain signals, such as general human capital (i.e., human capital which is transferable across contexts), alongside category-spanning activities, fails to alleviate the competence ambiguities associated with such activities, thereby proving detrimental to campaign success. Conversely, when entrepreneurs emit specific human capital signals alongside category-spanning activities, they effectively convey their competence to the audience, reducing ambiguity. Furthermore, I theorize and demonstrate that emitting a category-spanning signal alongside heterogeneous human capital suggests that the entrepreneur may possess multiple identities. This, in turn, exacerbates the identity ambiguity often associated with category-spanning activities, thereby negatively impacting the success of crowdfunding campaigns. By situating this study within the crowdfunding context and employing supervised machine learning to analyze data from 81,681 Indiegogo campaigns, I provide empirical support for my theorization. Overall, this dissertation helps propel signaling theory and crowdfunding literature.