The effect of storytelling style in crowdfunding video
pitches on the ability to obtain financial resources
Lisanne van Vucht 10331379 22-6-2018
Master Thesis Business Administration
Entrepreneurship and Management in the Creative Industries University of Amsterdam
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Statement of originality
This document is written by Lisanne van Vucht, who declares to take full responsibility for the contents of this document.
I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it. The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.
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Table of contents
Abstract 5
1. Introduction 6
2. Theory and hypothesis development
2.1 The importance of legitimacy and storytelling as legitimation mechanism 2.2 Performance style 2.3 Linguistic style 2.4 Body language 2.5 Conceptual model 10 10 12 14 16 18 3. Methods 3.1 Research setting 3.2 Data collection 3.3 Dependent variable 3.4 Independent variable 3.5 Moderator variables 3.6 Control variables 19 19 19 20 20 21 22 4. Results 4.1 Descriptive statistics 4.1.1 Performance style 4.1.2 Linguistic style 4.1.3 Body language 4.2 Hypothesis testing 4.2.1 Logistic regression 4.2.2 Moderation analysis 25 25 25 26 27 31 31 32 5. Discussion 5.1 Theoretical implications 5.2 Managerial implications 35 36 37
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5.3 Limitations and future research 38
6. Conclusion 40
7. References 41
Table of figures and tables Figure 1. Conceptual model
Figure 2. Interaction plot of linguistic style on performance style for the ability to obtain financial resources
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Table 1. Factor leadings after rotation Table 2. Correlation matrix
Table 3. Logistic regression 1 Table 4. Logistic regression 2
Table 5. Moderation analysis of linguistic style and body language
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Abstract
This study uses legitimacy and storytelling theory in order to examine the effectivity of the entrepreneurs’ storytelling style in crowdfunding video pitches to obtain financial resources for new ventures. Three elements of storytelling style are discussed to have an influence on the success of a crowdfunding campaign: performance style, linguistic style and body language. It is hypothesized that a mimetic performance style has a positive effect on the ability to convince investors instead of a diegetic performance style. Furthermore, this study examines whether a linguistic style (a proxy of psychological proximity) and an expressive body language positively moderates the relation between the performance style and the ability to obtain financial resources. As sample, 111 video pitches from the Dutch creative
crowdfunding platform Voordekunst are coded in order to examine the effects of these three storytelling style elements. Results show that a mimetic performance style is positively related to crowdfunding success but no significant positive moderation effect is found for both
linguistic style and expressive body language. However, I found a significant strong positive direct effect for both linguistic style and body language on the ability to obtain financial resources.
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1. Introduction
Entrepreneurs and scholars still try to understand the process of discovering, creating and exploiting new goods. One largely discussed and researched topic is about opportunities to obtain financial resources for new ventures (Lounsbury & Glynn 2001; Venkataraman, 1997). This study starts from this entrepreneurial problem and uses crowdfunding (in the creative industries) as empirical setting (Lounsbury & Glynn 2001; Venkataraman, 1997).
The concept of crowdfunding is a relatively novel way to finance a new project and has been discussed intensively since 2010 (Moritz and Block, 2015). The idea of
crowdfunding is based on two other concepts: micro-finance and crowdsourcing (Mollick, 2014). Crowdfunding is seen as a type of financing method that allows entrepreneurs to raise their funds using the internet and the ‘crowd’ – a large number of capital providers – without relinquishing control over the project (Belleflamme et al., 2014 and Moritz and Block, 2015). Since 2010, the number of crowdfunding platforms has grown and is still increasing (Voldere and Zego, 2017). There are more than 600 different crowdfunding platforms in Europe, for example the local Dutch platform Voordekunst which is the case in this study (Voldere and Zego, 2017).
Previous crowdfunding studies are mostly focused on finding the most efficient way to reach the financial target of new venture campaigns. According to Courtney et al. (2017), a video pitch is one of the most important tools to promote your campaign successfully. A video pitch is an entrepreneurs’ signalling strategy to explain and communicate the new project to the target audience. A successful video pitch should “create positive perception or reputation, and establish reliable production, delivery and accountability systems” (Pollack et al., 2012, p. 916).For this reason, I take a closer look at success factors for a crowdfunding video pitch in this study.
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Previous studies about video pitches demonstrate that the communication content for funding purposes plays an important role in attracting potential investors for crowdfunding campaigns and obtain financial resources (Parhankangas and Renko, 2017; Agrawal et al., 2011; Ahlers et al., 2015; Mollick, 2014). Communication content can be explained as ‘what’ one communicates in a crowdfunding campaign to the investors, such as the main story that is presented (Parhankangas and Renko, 2017). Today many entrepreneurs are struggling with the question of ‘how’ to deliver a successful fund-raising pitch because little is known about ‘how’ one should communicate the content of a crowdfunding video pitch most effectively to the potential investors (Parhankangas and Renko, 2017). Therefore, in this study, I examine the difficulty in communicating the entrepreneurs’ new ventures in the most convincing way to investors in the empirical setting of crowdfunding.
One specific topic dominated the discussion in previous literature about convincing investors: creating legitimacy to investors. Based on Fisher et al. (2017) investors need to perceive a new venture as legitimate before eventually deciding to financially support it. To create legitimacy Fisher et al. (2017) describe different legitimation mechanisms used by entrepreneurs to convince investors. One of these mechanisms is the use of storytelling that can confer legitimacy to new ventures (Fisher et al., 2017; Aldrick & Fiol, 1994). It is widely recognized in previous research that storytelling can have a lot of selling power (Gilliam & Flaherty, 2015). However, stories can be told by the entrepreneur in many different ways and it could be useful for entrepreneurs to know more about ‘how’ to communicate a story and to know more about the impact of their storytelling style on crowdfunding success (Gilliam & Flaherty, 2015). This brings me to the following research question:
Does the storytelling style of an entrepreneur, in a crowdfunding video pitch presentation, influence the ability to obtain financial resources?
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In this research I discuss three different elements of storytelling style which may influence the entrepreneurs’ legitimacy and eventually the ability to obtain financial resources for the new venture: performance style, linguistic style and body language. These three
storytelling style elements are discussed largely in previous studies, however none of them brings all different elements together in one theoretical entrepreneurial framework. It could give new insights to scholars and entrepreneurs to examine the effects of these three
storytelling style elements together.
The first storytelling style element is about the entrepreneurs’ performance style in a crowdfunding video pitch. The idea is based on the historical views of Aristoteles and Plato about diegetic and mimetic performance styles in theatre performances. Moreover, this theory is studied frequently by film and literature studies but less attention is paid to this particular topic in entrepreneurial research and practice (Halliwell, 1986).
Secondly, linguistic style in video pitches may have an impact on the success of a crowdfunding campaign. Parhankangas and Renko (2017) show that linguistic style, in terms of psychological proximity, matters in the category of non-commercial entrepreneurs.
Psychological proximity plays a crucial role in emerging and social fields since investors do not exactly know what to expect from new ventures (Parhankangas and Renko, 2017). In this study, I look at the moderator effects of linguistic style on the relation between the
entrepreneurs’ performance style and the ability to obtain financial resources.
Thirdly, I examine the moderator effect of body language in crowdfunding campaigns. Body language may help entrepreneurs to present their story confidently and trustworthy. Janevski and Zafirovska (2015) describe body language as an important tool to create credibility and legitimacy to investors. Furthermore, Chen et al. (2009) substantiate the important role of a passionate and expressive body language in a pitch. In this study, I look at
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the moderator effect of an expressive body language on the relation between performance style and the ability to convince investors.
This study continues as follows: first of all, I discuss theories about the concept of legitimacy and different legitimation mechanisms and I explain the importance of storytelling as legitimation mechanism. Secondly, I tell more about the three different storytelling style elements entrepreneurs can use in order to convince investors. I explain what I intend for those elements and offer the hypotheses for the empirical setting of this study: crowdfunding video pitches. Thirdly, I explain the research design methods for the case of Voordekunst in which I coded 111 different creative crowdfunding video pitches. Fourthly, I present the results and discuss the research. Finally, a short conclusion is drawn.
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2. Theory and hypotheses development
2.1 The importance of legitimacy and storytelling as legitimation mechanism
New ventures need to signal legitimacy as an important property to obtain initial financial resources for their growth (Zimmerman and Zeitz, 2002). Legitimacy in general is defined as “a generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs, and definitions” (Suchman, 1995 p. 574). If legitimacy is lacking – when potential investors do not fully understand the motivation and idea behind the new venture – entrepreneurs are mostly unable to attract the necessary financial resources from investors (Fisher et al., 2017; Martens et al., 2007; Aldrich & Fiol, 1994). Entrepreneurs have to find ways to promote their new developments to the investors. According to Aldrich & Fiol (1994) entrepreneurs have to promote new ventures by developing trust, knowledge, perceptions of reliability and a
legitimate reputation by consistent stories and behaviours.
Fisher et al. (2017) define a variety of things that entrepreneurs might do to manage legitimacy. They describe four broad categories of legitimation mechanisms based on their meta-analysis of 70 articles on new venture legitimation published between 1986 and 2015: ‘identity mechanisms’, ‘associative mechanisms’, ‘organizational mechanisms’ and the leftover ‘other mechanisms’ category. However, most of all studies (32 out of the 70) are focused on the identity mechanisms which can be described as the entrepreneur’s strategic use of identity claims such as images, symbols and language to manage a new venture’s
legitimacy (Fisher et al., 2017).
In particular, the use of storytelling is one of the identity mechanisms that can confer legitimacy to a new venture. Stories have the unique ability to help persons structure their experience and can form the currency of communications to a wide public (Aldrick & Fiol, 1994). Logical arguments will make abstracted truth claims, however stories aim for
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verisimilitude and believability (Bruner, 1986). Stories are meant for the recognition that something could happen (McGregor & Holmes, 1999).
A successful entrepreneur “draws from their stories to make his/her more perfect, more encompassing, more capable of attracting a wider following and gaining greater allegiance” (Krieger, 1981, p.75). Especially when outsiders have no external source of validation for new products, entrepreneurs have to draw on alternative forms of
communication, such as storytelling (Aldrick & Fiol, 1994). Like Adrick and Friol (1994) argued: “A rational argument is based on inferential moves and deliberation; narration (storytelling) works by suggestion and identification” (p. 652).
The power of storytelling as legitimation mechanism is widely recognized across other different disciplines such as sociology, psychology, management and marketing (Gilliam & Flaherty, 2015). For example, Gilliam and Flaherty (2015) argue that storytelling allows investors to easily make a decision about funding, especially in an industry like the creative one, which presents ambiguity, vagueness, uncertainty and a general lack of information (Gilliam & Flaherty, 2015; Robinson & Hawpe, 1986). Moreover, Lounsbury and Glynn (2001) establish a link between entrepreneurial stories and wealth creation. They conclude that entrepreneurial stories can facilitate new venture identity related to legitimacy, which is necessary for the ability to obtain financial resources from the investors (Lounsbury & Glynn, 2001).
However, entrepreneurs can tell and share their story about their new venture in numerous ways (Gilliam & Flaherty, 2015). In particular, I discuss three elements of storytelling style ‘how’ entrepreneurs could communicate their story: performance style, linguistic style and body language. Based on previous literature, I expect those elements of storytelling style to have an influence on the ability to obtain financial resources in the empirical setting of this study: crowdfunding video pitches.
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2.2 Performance style
The first element of storytelling style – performance style – relates to the way a story is performed by the entrepreneur. Following the theatrical and historical performance style theory of Plato and Aristotle, there are two different modes in which a story can be performed and one mixed mode where both are used (Halliwell, 1986; Berger, 1994). Originally, Plato differentiates between the two Greek performance concepts: diegetic and mimetic. Diegetic is occurring when a narrator tells a story to the audience while a mimetic performance style is occurring when a story is acted out by actors (Raven & Elahic, 2015). Moreover, Aristoteles argues that a mimetic performance style provides more information by showing instead of only telling the story (Halliwell, 1986).
Recently, diegetic and mimetic performance styles are studied in different fields. For example, in literature and film studies, Yacavone (2012) and Raven and Elahic (2015) describe the diegetic mode as the way in which the storyteller communicates. In this mode, the storyteller is situated in the reality and is not part of the story. In addition, they describe the mimetic mode as a dramatic mode in which the storyteller is part of a theatrical
performance.
Furthermore, Raven and Elahic (2015) discuss the importance of specific narrative styles. They discuss the effect of a mimetic and diegetic performance style on the way audiences experience and ascribe meaning to a story when the product (film or theatre
performance) is finished. However, in previous literature, none focuses purely on the effect of the performance style of stories in a more entrepreneurial/ business setting where
entrepreneurs have to convince investors to invest in their new ventures. In this study I focus on the way entrepreneurs could use different performance styles to create legitimacy, which helps to convince investors and eventually obtain the necessary financial resources for a new project.
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Showing part of the project – a mimetic performance style – may improve
trustworthiness and legitimacy since more information could be given about the new venture to the investors (Moritz et al. 2015). New venture entrepreneurs lack a source of external validation from which to argue, so they have to look for alternative forms of communication to build trust and legitimacy. A mimetic performance style may help to create identity which can foster legitimacy and the chance to convince investors (Aldrich & Fiol, 1994). When an entrepreneur uses a more mimetic performance style, the entrepreneur can, for example, show their practical way of working and previous projects which could signal the entrepreneur as more reliable to investors (Denning & Dew, 2012). In this manner, a mimetic performance style may facilitate the crafting of a new venture identity that serves as a touchstone for legitimacy (Lounsbury & Glynn 2001). Entrepreneurs could show why the new venture adds value and is worthy of investment (Wry et al., 2011). On the contrary, using a diegetic performance style may have a weaker ability to involve investors because entrepreneur could only convince the investor verbally. Especially in uncertain environments like the creative industries the entrepreneurs’ performance style could play an important role since external validity is missing (Denning and Dew, 2012; Fisher et al., 2017; Hirsch 2002). In conclusion, by using a mimetic performance style, entrepreneurs may facilitate comprehensibility and plausibility by offering a more coherent and vivid account of future possibilities and steps that will be taken to lead to the desired outcome (Garud et al., 2014). Therefore, I hypothesize that:
H1:
In a crowdfunding video pitch presentation, the use of a mimetic performance style has a greater ability to obtain financial resources than the use of a diegetic performance style.
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2.3 Linguistic style
The second element of storytelling style – linguistic style – which I discuss relates to the style of verbal communication of the entrepreneur. Linguistic style is defined as “the use of style words” (Parhankangas & Renko, 2017, p. 218). Words used in stories and talks include both content words and style words. Content words are adjectives, nouns and verbs that primary function as a means to convey the intended message, while style words
determine 'how' the message is conveyed – the linguistic style. Linguistic words include traditional language components, emotion words, words describing cognitive processes, relativity-related words and sensory related words (Parhankangas & Renko, 2017).
Parhankangas and Renko (2017) focus on the role of linguistic style in crowdfunding campaigns for different crowdfunding categories. They describe how language behaviours may have an influence on the development of expectations of the investors based on the language expectancy theory which describes how a language is structured, how words are chosen and how language can influence decisions (Parhankangas & Renko, 2017).
They test their hypotheses in a sample of 656 campaigns on the Kickstarter platform and they conclude that all researched linguistic styles – concreteness, preciseness, interactivity and psychological proximity – have an influence on the ability to obtain financial resources in social emerging fields, because the audience in that field does not exactly know what it should expect of the project (Parhankangas & Renko, 2017).
Since the creative industries are based on newly emerging and not on forehand well-defined ventures, the entrepreneurs need to come up with additional ways to convince investors because external sources and validity are missing. According to Parhankangas and Renko (2017), one of the important communicative tools to attract potential investors in uncertain environments could be through psychological proximity. High psychological proximity may offer investors the possibility to get more personal information about the
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entrepreneurs’ motivation and project. Parhankangas and Renko (2017, p. 221) describe psychological proximity as “the extent to which an individual distances or removes himself or herself from the present circumstances or the topic being discussed”. In this study, I focus on this idea of psychological proximity and combine it with different performance styles in the empirical setting of crowdfunding in the creative industries. Psychological proximity may be an important tool to communicate legitimacy to the investors which is important to receive financial resources. It seems likely that investors are more attracted to pitches where the entrepreneur shares personal experiences and uses language high in psychological proximity (Parhankangas & Renko, 2017).
Besides that, according to Lee et al. (2018) psychological proximity increases the willingness to engage in supportive behaviours. Lee et al. (2018) explores the role of
psychological proximity related to social media campaigns. Results show that psychological proximity affects how people construe information and their subsequent behaviours.
Proximity was found to have a positive effect on the people’s intentions to participate in campaigns since they experienced a feeling of closeness and engagement (Lee et al., 2018).
As mentioned above, previous literature in psychology and consumer behaviour argue the important role of psychological proximity on the way consumers behave. However, instead of a single directly positive role for psychological proximity, it may also collaborate with other storytelling style elements. Psychological proximity may have a positive moderator effect on the relation between the performance style and financial resources, since a story about a project uses high psychological proximity – which is told in the first-person perspective and using lots of emotional words – may interest investors to invest in a new venture (Parhankangas & Renko, 2017). By using a personal story, entrepreneurs could increase the connection with their potential investors and decrease the chance investors
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perceive the entrepreneur as a deception (Newman et al, 2003; Parhankangas & Renko, 2017). Therefore, I hypothesize that:
H2:
In a crowdfunding video pitch presentation, the use of a language high in psychological proximity positively moderates the effect that a (mimetic and/or diegetic) performance style
plays on the ability to obtain financial resources.
2.4 Body language
The entrepreneurs’ communication of the content in video pitches of crowdfunding campaigns includes besides verbal communication also nonverbal communication. Nonverbal communication can be described as “the way people sit, walk, stand and express themselves through certain gestures” and it can take different forms (Janevski & Zafirovska, 2015,
p.139). Janevski and Zafirovska (2015) describe different forms of nonverbal communication: movements of body, hands and palms, attitude (body posture), facial expression, physical characteristics, touch, artefacts, space, voice (paralanguage) and environment. The combination of those different forms can oppose or support the verbal message of the entrepreneur (Janevski & Zafirovska, 2015). Entrepreneurs who understand nonverbal communication and uses body language in line with their verbal communication, can have a lot of advantages in convincing investors. Body language can help entrepreneurs to present themselves as full of confidence, reliable and honest which may be related to legitimacy (Janevski & Zafirovska, 2015).
Furthermore, Janevski and Zafirovska (2015) argue nonverbal communication is very important in business fields because with the right communication tools entrepreneurs can create credibility and promote legitimacy which may result in financial and human resources
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(Janevski & Zafirovska, 2015). However, verbal and nonverbal communication can be at odds with each other. Means (2012) conclude that when nonverbal and verbal communication are in conflict, the audience will choose to trust the nonverbal communication instead of the verbal communication. Based on this, entrepreneurs should be aware of their nonverbal communication in order to avoid making a wrong impression.
Furthermore, Chen et al., (2009) show body language is one of the most important factors in presenting passion. They conclude that by using a more passionate pitch, it attracts a bigger audience which increases the chance of completing the financial goal. Passion is a strong indicator for the motivation of the entrepreneur and the commitment for building a venture. Chen et al. (2009) show that energetic body movements, a rich body language, lots of facial expression and the use of a lot of gestures promote a passionate presentation, which is related to a better crowdfunding performance. A more passionate pitch may increase the confidence investors have in the new project (Chen et al., 2009).
Entrepreneurs have to perform a reliable and confident story in their pitch and an expressive body language may help to create legitimacy. An extravert body language may strengthen the performance of the entrepreneurs’ story (Chen et al., 2009). Moreover, Hao and Hood (2018) argue that an expressive meaning related body language has a larger effect on people than just modest sound related body language which is small automatic body movements. A more expressive body language can explain the story and passion better because it may strengthen the meaning of the story (Hao and Hood, 2018). Based on above studies I expect entrepreneurs have to tell and perform their story in an enthusiastic way to persuade the investors to invest in their crowdfunding projects. Therefore, I hypothesize that:
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H3:
In a crowdfunding video pitch presentation, the use of an expressive body language positively moderates the effect that a (mimetic and/or diegetic) performance style plays on the ability to
obtain financial resources.
2.5 Conceptual model
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3. Methods
3.1 Research settingThe empirical setting of this study is about crowdfunding projects in the creative industries. The research sample consists of crowdfunding pitches from previously failed and successfully funded crowdfunding campaigns from the Dutch crowdfunding website
‘www.voordekunst.nl’. Voordekunst is an online platform founded in 2010, where
entrepreneurs can start crowdfunding campaigns. Voordekunst uses both a ‘reward-based’ and a ‘purely donation-based’ crowdfunding model. As a investor, you can choose between those two donation models. In case of the reward-based model, the value of the rewards depends on the amount of money the investor donates. However, in case of the purely donation model the investor gets nothing in return. Besides that, Voordekunst uses the ‘all-or-nothing’ financial principle where the entrepreneur only gets the funded money when the total target amount has been raised (Voldere & Zego, 2017). But there is an exception: if an entrepreneur reaches the financial target between 80% and 100% the project is still successfully funded. Only if the entrepreneur has reached lower than 80% of the financial target, all the money will be refunded. The final sample of this research, after deleting missing cases, consists of 111 crowdfunding projects.
3.2 Data collection
The available dataset offers demographical data of crowdfunding campaigns from three disciplines: design, books and visual arts. My final sample is based on three criteria. Firstly, the crowdfunding project in the final sample should be recent, following Manning and Bejarano (2016) and secondly, the project should come from a single project entrepreneur, similar to the research of Davis et al. (2017). The reason for choosing only solo entrepreneurs in my sample is because I study the effect of storytelling style related to legitimacy of an
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individual entrepreneur to crowdfunding performance. Therefore, the final sample is only based on book publishing and visual arts industries, because entrepreneurs mostly operate on their own in these industries (Naranjo, 2017). Finally, only campaigns with video pitches containing verbal and nonverbal communication were included in my sample, because the focus of this study is about storytelling theories based on the entrepreneurs’ verbal and nonverbal communication in crowdfunding video pitches.
3.3 Dependent variable
Financial resources - refer to the successful financial funding of a crowdfunding campaign. Following Parhankangas and Renko (2017) the variable is measured as a binary variable indicating whether the crowdfunding campaign is funded successfully or not. The threshold from which a crowdfunding campaign is funded or not is based on the measurement of the platform Voordekunst. Voordekunst considers all projects which are funded 80% or more as a successful project. ‘0’ means unsuccessful - a funding less than 80% of the original financial target. ‘1’ means a successful crowdfunding campaign – funding more than 80% of the original financial goal.
3.4 Independent variable
Performance style – is analysed using a newly developed measure, since performance style as a storytelling style element is only discussed in different qualitative studies and not studied jet in a quantitative research setting. I measure to what extent the entrepreneur uses a diegetic and/or mimetic performance style. When the storyteller – the entrepreneur – uses a diegetic performance style, the entrepreneur is just telling the story – a mode of presentation. The entrepreneur tells in a realistic way about the new venture. A mimetic performance style is used when the entrepreneur shows part of the project. The entrepreneur is creating a
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theatrical world where he or she shows the creative idea – story – instead of talking about it (Yacavone. 2012; Raven & Elahic, 2015).
Since a performance style could be just diegetic, mimetic or both, I measure the total performance style of the crowdfunding pitch using a 5-point scale which includes all: ‘1’ means the entrepreneurs uses only a diegetic performance style, ‘2’ means the entrepreneur uses a mixed mode performance style with a larger focus on a diegetic performance style, ‘3’ means the entrepreneurs uses a mixed mode performance style which is equally divided, ‘4’ means the entrepreneur uses a mixed mode performance style with a larger focus on a mimetic performance style, ‘5’ means the entrepreneur uses only a mimetic performance style. This performance style scale is comprised of a total of 5 performance style items: the entrepreneur presents the story totally strait to the camera, the entrepreneur shows the current project, the entrepreneur shows past projects, the entrepreneur shows the creative process and the degree of theatrality presented in the crowdfunding pitch.
3.5 Moderator variables
Linguistic style – is measured through a psychological proximity 5-point Likert scale based on Parhankangas and Renko (2017). They measured linguistic style by using two software packages which analysed transcribed video pitches. However, in this study I measure the linguistic style ‘psychological proximity’ on a human-performed way instead of a
computerized program. Low psychological proximity is occurring when the entrepreneur avoids talking about their personal challenges and uses less emotion words. High
psychological proximity is happening when an entrepreneur uses first-person pronouns and a lot of emotion words. The total psychological proximity is measured through a 5-point Likert scale where ‘1’ means low psychological proximity and ‘5’ means a high psychological proximity. This psychological proximity scale is comprised of a total of 5 linguistic style
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items: the entrepreneur uses first-person pronouns, the entrepreneur uses emotional words, the entrepreneur tells a personal story related to the crowdfunding project, the entrepreneur tells about his/her personal challenge(s) and the entrepreneur tells from a business perspective.
Body language – is measured on a 5-point Likert scale where ‘1’ means the
entrepreneur uses a modest body language and ‘5’ means the entrepreneurs uses an expressive related body language. The measurement of body language is based both on Chen et al., (2009) and on Hao and Hood (2018). An expressive body language is measured in terms of passion – energetic body movements, rich body language, facial expression and the use of a lot of gestures – and in terms of an expressive meaning related body language. Eventually the total body language scale is comprised of a total of 6 body language items: the entrepreneur uses energetic body movements, the entrepreneur uses a rich body language, the entrepreneur uses a lot of gestures, the entrepreneur shows facial expression, the body language of the entrepreneur is meaning related and the body language of the entrepreneur is sound related.
3.6 Control variables:
Following previous studies on crowdfunding success, I controlled for several factors found to be associated with crowdfunding performance: gender, ethnicity, social network size, length of the pitch, text in English/ English subtitles, prior experience in crowdfunding, prior education in the field, amount of actors in the video pitch and discipline.
Gender – is measured as a dummy variable. ‘0’ means the entrepreneur is a woman and ‘1’ means the entrepreneur is a man.
Ethnicity – is measured as a dummy variable and follows the measurement of Davis et al. (2017). ‘1’ means the entrepreneur is Caucasian and ‘0’ means the entrepreneur is not Caucasian.
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Social network size – is an important control variable since the size of an
entrepreneur’s network may influence the opportunity to reach investors (Mollick, 2013). The measurement for social network size is based on Naranjo (2017) and measured through three variables: Facebook friends, linked-in connections and Facebook page likes. However, not all entrepreneurs used all those social media. To solve this problem I created a new variable ‘social network total’ which is the average of all (Naranjo, 2017).
Length of the pitch – may influence investors since in a very short pitch the
entrepreneur can offer limited information, however in a long pitch entrepreneurs may offer more information to the investors but it is more difficult for the audience to maintain
attention. The length of the pitch is measured in different categories: ‘1’ means the pitch has a length between 0-1 minute, ‘2’ means the pitch has a length between 1-2 minutes, ‘3’ means the pitch has a length between 2-3 minutes and ‘4’ means the pitch is longer than 3 minutes. Eventually, I divided this total categorical length scale into four variables measured by a binary variable where ‘0’ means no and ‘1’ means yes.
Text in English/ English subtitles – is an important control variable since a bigger audience could be reached when an entrepreneur offers their pitch in English or with English subtitles. Also, non-Dutch speaking people can reached and become potential investors. A dummy variable is created where ‘0’ means no English text and ‘1’ means the entrepreneur offers the pitch in English or with English subtitles.
Relevant prior experience– is a control variable which is based on the measurements of Naranjo (2017). Relevant prior experience of the entrepreneur is measured through a dummy variable: ‘0’ means no relevant prior experience and ‘1’ means relevant prior experience. However, this variable has to fulfil two criteria: prior experience has to be positive and in a relevant industry to be coded as relevant prior experience (Naranjo, 2017) .
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Prior education in the field – is based on the measurements of Naranjo (2017) which measure the relevant prior education of the entrepreneur. The prior education is coded as relevant when the genre of the crowdfunding campaign is aligned with the prior education experience (Naranjo, 2017). Eventually it is measured as a binary variable where ‘0’ means no relevant prior education in the field and ‘1’ means relevant prior education in the field.
Number of actors in the video pitch – is an important control variable since the other actors besides the entrepreneur can influence the legitimacy of the entrepreneur. It is possible that other people are playing a (review) role in the video pitch. This control variable is measured through a binary variable where ‘0’ means only the entrepreneur is visible and ‘1’ means other actors are presented in the video pitch.
Discipline – is controlled by a dummy variable to see if there is a difference between books and visual arts. ‘0’ means a book and ‘1’ means a visual arts project.
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4. Results
4.1 Descriptive statistics
In my research I code 111 different creative cases on storytelling style measurement scales for: performance style, linguistic style and body language. Of those 111 crowdfunding projects, 66 are books and 46 projects are visual arts projects. All storytelling style scales are measured purely based on the visible video pitch of the entrepreneur on the website of www.voordekunst.nl. I code all the videos together with one other coder which I instruct the definitions of the different measuring scales. For all variables I use a 5-point Likert scale where 1 means absolute disagree and 5 means absolute agree.
4.1.1 Performance style
The performance style scale has a high reliability, with a Cronbach’s alpha of 0.864. The corrected item-total correlation indicates that all the items have a good correlation (> 0.3) with the total score. None of the items would substantially affect reliability if they were deleted.
I conduct a factor analysis with varimax rotation on the performance style scale. The Kaiser-Meyer-Olkin measure verifies the sampling adequacy for the analysis, KMO = 0.818. Barlett’s test of sphericity indicates that correlations between items were sufficiently large for PAF. Besides that, I run an initial analysis to obtain eigenvalues for each component in the data. One component has eigenvalues over Kaiser’s criterion of 1 and explains 65,76% of the variance. Furthermore, in agreement with Kaiser’s criterion, examination of the scree plot reveals a levelling off after the first factor.
Based on above tests I concluded that the performance style scale has a high reliability and validity. I created a total performance scale based on those 5 performance style items and in this total scale the mean was 2.96 on a scale from 1.00 to 4.60, with a standard deviation of
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0.97. This means the crowdfunding video pitches score overall above average on the performance style scale.
4.1.2 Linguistic style
The linguistic style scale measured through psychological proximity has a lower reliability, with a Cronbach’s alpha of 0.675. Based on the corrected item-total correlation, four out of five items have a good correlation (> 0.3) with the total score of the scale. When linguistic style item 5 is deleted the Cronbach’s alpha will be 0.702, however the difference between the current Cronbach’s alpha (0.675) and the new one (when item 5 is deleted) is too small to substantially affect the reliability when deleted.
To check the validity, I conduct a factor analysis with varimax rotation on the
linguistic style scale. The Kaiser-Meyer-Olkin measure verifies the sampling adequacy for the analysis, KMO = 0.656. Barlett’s test of sphericity indicated that correlations between items are sufficiently large. Besides that, I run an initial analysis to obtain eigenvalues for each component in the data. Two components have eigenvalues over Kaiser’s criterion of 1 and explain together 66,24% of the variance. However, examination of the scree plot does not show a clear levelling off after the first or second factor. Moreover, based on the component matrix, the factor value of linguistic style item five is 0.40 and is not higher than |.45|. This means the validity of body language will be higher in case of deleting this item. So, I decide to delete the fifth item of linguistic style (the entrepreneur tells from a business perspective) to increase both the reliability and validity of the total linguistic style. Without the fifth item, a new factor analysis with varimax rotation is conducted. The new Kaiser-Meyer-Olkin measure is increased to a KMO of 0.692. Just one component has eigenvalues over Kaiser’s criterion of 1 and explains 52,93% of the variance. In agreement with Kaiser’s criterion, examination of the scree plot reveals a clear levelling off after the first factor.
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Based on above reliability test and the second validity test without the fifth item of linguistic style, I create a valid and reliable total linguistic style scale. In this total scale the mean is 3.81 on scale from 2.25 to 4.75, with a standard deviation of 0.58. This means the crowdfunding video pitches score overall more than average on the linguistic style scale.
4.1.3 Body language
The body language style scale has high reliability, with a Cronbach’s alpha of 0.904. The corrected item-total correlation indicates all the items have a good correlation (> 0.3) with the total score of the scale and none of the items would substantially affect reliability if they were deleted. Only a small increase of reliability to 0.918 is possible when I delete body language style item 6 (sound related focus). However, the difference in reliability between the scale with or without item six is very small, so based on these results I have decide not to delete this item.
To check the validity of the body language scale I conduct a factor analysis with varimax rotation on the body language scale. The Kaiser-Meyer-Olkin measure verifies the sampling adequacy for the analysis, KMO = 0.830. Barlett’s test of sphericity indicates that correlations between items are sufficiently large for PAF. An initial analysis is run to obtain eigenvalues for each component in the data. One component has eigenvalues over Kaiser’s criterion of 1 and explains 67,83% of the variance. In agreement with Kaiser’s criterion, examination of the scree plot reveals a levelling off after the first factor. However, based on the component matrix, the factor value of item six is 0.23 and is not higher than |.45| so this means the validity of body language will higher when deleting this item. Without the sixth item a new factor analysis with varimax rotation is conducted. The new Kaiser-Meyer-Olkin measure has a KMO of 0.824 and just one component has eigenvalues over Kaiser’s criterion
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of 1 and explains 75,69% of the variance. In agreement with Kaiser’s criterion, examination of the scree plot reveals a clear levelling off after the first factor.
Based on the above tests, I conclude that the body language scale has a high reliability and validity after deleting item 6. A valid total body language scale is created without item 6. In this total body language scale the mean is 2.88 on scale from 1.00 to 5.00, with a standard deviation of 1.12. This means that crowdfunding video pitches score overall less than average on the body language scale.
Overall, I conduct a principal axis factoring analysis to measure the validity of all scales comparing to each other. The Kaiser-Meyer-Olkin measure verifies the sampling adequacy for the analysis, KMO= 0.816, with a significant Barlett’s test of sphericity. I run an initial analysis to obtain eigenvalues for each component in the data. Three components have eigenvalues over Kaiser’s criterion of 1 and in combination explain 66,85% of the variance. In agreement with Kaiser’s criterion, examination of the scree plot reveals a levelling off after the third factor. Thus three factors are retained and rotated with a Oblimin with Kaiser
normalization rotation. Table 1 shows the factor leadings after rotation, where factor loadings over 0.40 appear in bold. Besides that, Table 2 shows the correlation matrix for all dependent, independent, moderator and control variables including their mean and standard deviation.
29 Table 1. Factor leadings after rotation.
Item Rotated factor
Performance Linguistic Body
Using first-person pronouns -0,052 0,552 0,163
Using emotional words -0,001 0,832 -0,235
Telling personal story 0,115 0,798 -0,005
Talking about personal challenge 0,014 0,624 0,256 Presenting straight to the camera (R) 0,887 0,009 -0,065 Showing part of the current project 0,820 -0,092 0,090 Showing part of the past project(s) 0,704 -0,052 -0,017
Showing creative process 0,851 0,044 0,072
Theatrality 0,739 0,133 -0,010
Energetic body movements 0,022 -0,059 0,923
Rich body language 0,098 0,015 0,868
Use of a lot of gestures -0,061 0,066 0,729
Use of a lot of facial expression 0,015 -0,079 0,894
Meaning related focus 0,087 0,134 0,824
Eigenvalues 2.166 1.772 5.421
30 Table 2. Correlation Matrix.
Mean Std. Dev 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 1. Fin. resources 0,76 0,431 - 2. Performance style 2,9604 0,97078 ,385** - (.86) 3. Linguistic style 3,8108 0,58214 ,512** ,259** - (.70) 4. Body language 2,8811 1,11986 ,482** ,392** ,324** - (.92) 5. Gender 0,43 0,498 -0,141 -,269** -,233* -0,122 - 6. Ethnicity 0,92 0,274 ,216* 0,070 0,060 0,093 -0,007 - 7. Social network 2,3451 0,67117 0,060 0,138 ,188* ,194* -0,076 -0,023 - 8. Length <1 0,08 0,274 0,015 -,247** -0,159 -0,146 0,074 -0,033 -0,126 - 9. Length 1-2 0,66 0,477 0,166 0,124 0,108 0,046 0,055 0,064 ,206* -,412** - 10. Length 2-3 0,22 0,414 -0,161 0,022 -0,017 -0,007 -,193* -0,085 -0,081 -0,156 -,728** - 11. Length >3 0,05 0,208 -0,079 0,000 -0,004 0,101 0,161 0,065 -0,143 -0,065 -,301** -0,114 - 12. English 0,15 0,362 0,066 ,344** ,193* 0,113 -,220* -0,057 0,040 -0,126 0,043 0,080 -0,092 - 13. Prior experience 0,5135 0,50208 -0,132 0,068 -0,186 -0,020 0,086 0,041 0,043 -0,041 -0,018 0,073 -0,049 -0,037 - 14. Prior education 0,4414 0,49881 0,123 ,329** -0,085 ,264** -0,117 ,198* 0,106 -0,131 0,183 -0,158 0,069 0,126 ,285** - 15. Number of actors 0,14 0,883 0,045 0,079 -0,168 -0,131 0,084 -,289** 0,012 ,289** -0,163 -0,036 0,063 -0,070 -0,086 -0,043 - 16. Discipline 0,41 0,493 -0,088 ,330** -0,079 ,200* -0,091 -0,024 0,159 -0,178 0,016 0,101 -0,002 ,260** ,400** ,448** -0,073 -
**. Correlation is significant at the 0.01 level (2-tailed). *. Correlation is significant at the 0.05 level (2-tailed).
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4.2 Hypothesis testing 4.2.1 Logistic regression
I conduct a hierarchical logistic regression to test hypothesis 1. I include performance style as independent variable and financial resources as dependent variable. The control variables that I include are: gender, ethnicity, social network, length of the pitch, English text, prior experience, prior education, amount of actors and discipline. Results for the logistic regression are displayed in table 3.
Table 3. Logistic regression 1.
Model 1 Model 2
Variable B S.E. Wald df Sig. Exp(B) B S.E. Wald df Sig. Exp(B)
Gender -0,720 0,524 1,888 1 0,169 0,487 -0,432 0,614 0,495 1 0,482 0,649
Ethnicity 1,713 0,827 4,288 1 0,038** 5,544 1,480 0,841 3,097 1 0,078* 4,394
Average of social network 0,117 0,372 0,099 1 0,754 1,124 0,036 0,433 0,007 1 0,934 1,036
Length < 1 0,809 1,280 0,399 1 0,527 2,246 1,919 1,457 1,735 1 0,188 6,812
Length 1-2 1,198 1,041 1,325 1 0,250 3,313 1,353 1,153 1,376 1 0,241 3,869
Length 2-3 0,303 1,133 0,071 1 0,789 1,354 0,284 1,277 0,049 1 0,824 1,328
Text English 0,612 0,821 0,555 1 0,456 1,843 -0,511 0,902 0,321 1 0,571 0,600
Relevant prior experience -0,568 0,563 1,020 1 0,313 0,566 -0,620 0,621 0,999 1 0,318 0,538
Relevant prior education 0,688 0,611 1,268 1 0,260 1,989 0,267 0,699 0,146 1 0,702 1,306
Number of actors 0,357 0,417 0,733 1 0,392 1,429 0,001 0,404 0,000 1 0,999 1,001 Discipline -0,616 0,613 1,012 1 0,315 0,540 -1,244 0,735 2,865 1 0,091* 0,288 Performance style Constant -1,023 1,511 0,459 1 0,498 0,359 1,399 -4,056 0,386 1,959 13,130 4,284 1 1 0,000**** 0,038** 4,051 0,017 Negelkerke’s R2 .207 .395
Note: statistical significance: *p < .10, **p < .05. ***p < .01, ****p < .001.
A logistic regression is conducted to predict the chance that a crowdfunding project would be funded successfully for 111 projects using the variable performance style in a crowdfunding video pitch. The second model is significant with a Chrisquare of 34.090, p < .001 with df = 12.
The Wald criterion in Model 2 of table 4 indicates that performance style in a crowdfunding video pitch makes a significant contribution to funding (β = 4,05, p = .000). The performance style coefficient indicates that when displayed performance style is raised by one unit the odds ratio is 4.05 times as large and therefore the crowdfunding project is 4.05
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times more likely to be successfully funded. Therefore, hypothesis 1, stating that using a mimetic (instead of diegetic) performance style has a positive effect on the ability to obtain financial resources, is supported.
Furthermore, I conducted another logistic regression to predict the chance that a crowdfunding project would be funded successfully by adding the other two variables linguistic style and body language in the regression. Eventually hypotheses 2 and 3 expect a moderator effect for those two variables. However, firstly, I check if there is a direct effect between those two variables and financial resources. Based on results of the second logistic regression linguistic style (β = 44,71, p = .001) and body language (β = 4,87, p = .004) both have a significant positive direct effect on the ability to fund a crowdfunding project. All details are shown in table 4.
Table 4. Logistic regression 2.
Model 1 Model 2
Variable B S.E. Wald df Sig. Exp(B) B S.E. Wald df Sig. Exp(B)
Gender -0,720 0,524 1,888 1 0,169 0,487 0,489 0,951 0,264 1 0,608 1,630
Ethnicity 1,713 0,827 4,288 1 0,038** 5,544 2,536 1,156 4,816 1 0,028** 12,627
Average of social network 0,117 0,372 0,099 1 0,754 1,124 -0,524 0,588 0,795 1 0,373 0,592
Length <1 0,809 1,280 0,399 1 0,527 2,246 6,229 2,424 6,606 1 0,010** 507.27
Length 1-2 1,198 1,041 1,325 1 0,250 3,313 4,331 1,881 5,300 1 0,021** 76,025
Length 2-3 0,303 1,133 0,071 1 0,789 1,354 3,094 1,920 2,596 1 0,107 22,072
Text English 0,612 0,821 0,555 1 0,456 1,843 -1,501 1,210 1,539 1 0,215 0,223
Relevant prior experience -0,568 0,563 1,020 1 0,313 0,566 -0,531 0,880 0,364 1 0,546 0,588
Relevant prior education 0,688 0,611 1,268 1 0,260 1,989 0,820 1,059 0,599 1 0,439 2,270
Number of actors 0,357 0,417 0,733 1 0,392 1,429 0,866 1,196 0,525 1 0,469 2,378 Discipline -0,616 0,613 1,012 1 0,315 0,540 -0,954 1,052 0,822 1 0,365 0,385 Performance style 0,821 0,531 2,389 1 0,122 2,273 Linguistic style 3,800 1,194 10,133 1 0,001*** 44,707 Body language Constant -1,023 1,511 0,459 1 0,498 0,359 1,584 -23,601 0,543 6,521 8,503 13,100 1 1 0,004*** 0,000**** 4,874 0,000 Nagelkerke's R2 .207 .737 Note: statistical significance: *p < .10, **p < .05. ***p < .01, ****p < .001.
4.2.2 Moderation analysis
In order to test hypotheses 2 and 3 I perform a moderation analysis using PROCESS by A.F. Hayes (Hayes, 2013). PROCESS Model 2 allows the inclusion of two moderation effects at the same time. The included control variables are again: gender, ethnicity, social network, length of the pitch, English text, prior experience, prior education, amount of actors
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and discipline. I include financial resources as dependent variable, performance style as independent variable and linguistic style and body language as moderator variables. Results for this moderation analysis are shown in table 5.
Table 5. Moderation analysis of linguistic style and body language. Coefficient SE p Performance style (X) 1,5922 0,9205 0,0837 Linguistic style (M) 3,5213 1,2719 0,0056 Interaction (XM) -3,2933 1,2757 0,0098 Body language (W) 1,8715 0,6560 0,0043 Interaction (XW) Nagelkerke's R2 1,3532 0,7978 0,7999 0,0907
The output of the moderation analysis (table 5) shows that linguistic style has a significant moderation effect on the relation between performance style and the ability to obtain financial resources (Coeff = -3.293, p = 0,0098). However, based on the correlation coefficient, the effect of linguistic style on the relation between performance style and financial resources is not positive but negative. In my second hypothesis, I expected that in a crowdfunding video pitch presentation, the use of a language high in psychological proximity positively moderates the effect that a (mimetic and diegetic) performance style plays on the ability to obtain financial resources. So, hypothesis 2 is not supported since it offers an opposite significant moderation effect. However, table 5 shows that linguistic style as a direct effect is positive and significant (Coeff = 3,5213, p = 0,0056). Based on this output and the output of the second logistic regression (table 4) I conclude that psychological proximity (linguistic style) has only a strong direct effect on the ability to obtain financial resources but not a positive moderation effect related to performance style.
After probing the interaction, shown in figure 2, can be seen that the slope linking performance style and financial resources is strongly more inclined for the crowdfunding pitches with low psychological proximity when performance style becomes more mimetic.
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Compared to the slope with a medium psychological proximity, the effect is less positive and even slightly negative for high psychological proximity when performance style becomes more mimetic. This confirms the negative moderation effect of linguistic style since the total effect on the financial resources becomes lower in case of high psychological proximity instead of low psychological proximity for a more mimetic performance style.
Figure 2. Interaction plot of linguistic style on performance style for the ability to obtain financial resources.
= high psychological proximity = medium psychological proximity = low psychological proximity
For hypothesis 3, which is expected a positive moderation effect of body language on the relation between performance style and financial resources, no significant positive moderation effect is found since the p-value is too high (Coeff = 1,353, p = 0.09). Thus the third hypothesis is not supported. However, despite the fact that body language is not
significant (p < 0.05) and the hypothesis is not supported, I want to emphasize that a p-value of 0.09 is still very low and almost lowly significant. So their might be a lowly significant positive moderation effect for body language.
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5. Discussion
This study examines to what extent storytelling style has an effect on the ability of the entrepreneur to convince investors to provide financial resources for their new ventures. I test three elements of storytelling style – performance style, linguistic style and body language – which may have an influence on the ability to obtain financial resources.
Firstly, a direct positive effect of performance style on the ability to obtain financial resources is found. Results show that using a more mimetic performance style in a
crowdfunding video pitch, the chance investors are convinced to invest increases.
Secondly, results show that linguistic style – in terms of psychological proximity - has a significant negative moderation effect. This effect is in the opposite direction of what I expected. However, results show that psychological proximity still has a strong positive direct effect on the ability to obtain financial resources. This effect is so strong that eventually, psychological proximity only has a strong positive effect on its own and does not moderate with performance style anymore. In conclusion, no significant positive moderation effect is found for linguistic style since the effect of the combined variables is less than the sum of the individual effects of the variables.
Thirdly, no strong significant positive moderation effect is found for body language. However, the value for significance is still low so it could be argued that body language may have a slightly low significant positive moderation effect on financial resources. Besides that, based on the logistic regression and moderation analysis, results show a strongly significant positive direct relation for body language on the ability to obtain financial resources. In conclusion, expressive body language does not have a strongly significant moderation effect but still has a positive direct effect on financial resources.
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5.1 Theoretical implications
Many entrepreneurs are struggling with the question of ‘how’ to deliver a successful fund-raising pitch. Previous entrepreneurial research largely discussed the importance of creating legitimacy to investors, for example by the use of storytelling. However, little is known about ‘how’ one should communicate the content of a crowdfunding video pitch – the storytelling style – most effectively to create legitimacy to the investors (Fisher et al., 2017; Parhankangas and Renko, 2017). This research about the effect of storytelling style
contributes to previous literature since I relate legitimacy and storytelling theory with communication theories. Previous literature explores the importance of the concepts
legitimacy or storytelling, however this study adds to that by examining ‘how’ entrepreneurs have to communicate their story to investors to create legitimacy. Specifically, this research explores three different elements of storytelling style ‘how’ entrepreneurs could communicate the content of a new venture in a crowdfunding video pitch most effectively. Overall, results show support for all researched elements of storytelling style – performance style, linguistic style and body language – positively affects crowdfunding success.
Furthermore, to the best of my knowledge, this study is the first one that focuses on three different elements of storytelling style. I combined previous theories and studies about performance style and (non-)verbal communication in one theoretical entrepreneurial
framework. This contributes to previous research since it gives a clear overview about ‘how’ entrepreneurs should communicate new ventures. All three elements where already largely researched on their own in the fields of humanities and social sciences, however this research brings new insights on those topics related to entrepreneurship and management. According to the findings, the storytelling style of the entrepreneur in a crowdfunding video pitch is
important in predicting if the entrepreneur will obtain enough financial resources from investors to consider his venture successfully crowdfunded. Only direct effects of all
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storytelling style elements are found which increments previous research because not just one but all elements are important to use for a successful crowdfunding campaign.
5.2 Managerial implications
Entrepreneurs should be aware of their storytelling style used in crowdfunding video pitches since this influences the chance of a successful completion of the campaign. Results suggest that three elements of storytelling style are positively related to the obtained financial resources.
Firstly, entrepreneurs which use a more mimetic performance style in their crowdfunding video pitch, become more legitimate in the eyes of investors. When
entrepreneurs show their product, their creative process and their previous projects, this may create legitimacy and increase the chance of a successful crowdfunding campaign.
Secondly, results suggest that for linguistic style – psychological proximity – and body language no significant positive moderation effect is found. However, both have a strong significant positive direct effect on the obtained financial resources. Psychological proximity positively affects the ability to obtain financial resources, especially when entrepreneurs uses first person pronouns and tell their personal story and goal. In addition, entrepreneurs have to use a passionate and expressive body language to increase the chance of successfully
convincing investors. Eventually all three elements of storytelling style – performance style, linguistic style and body language – are important to reach the goal of a successful
crowdfunding campaign.
Lastly, results show that some control variables positively affected the crowdfunding performance. Both ethnicity and the length of the pitch positively affected the ability to obtain financial resources. Results indicate that when an entrepreneur is Caucasian it could increase the chance to convince investors. In addition, short video pitches are preferable over
long-38
winded pitches which tend to provide too much information, which lead to loss of viewer attention.
5.3 Limitations and future research
First of all, the current study only examines video pitches and does not include the written text of the entrepreneur on the crowdfunding website since based on Courtney et al. (2017) a crowdfunding video pitch has the largest influence on the investors. However, future research could perform a broader analysis of all information given by the entrepreneur besides the video pitch.
Secondly, the used data of this research has some limitations. Firstly, the sample consists only of pitches from www.voordekunst.nl which means that all entrepreneurs are Dutch and creative entrepreneurs. Also the final sample is focused purely on book publication and visual art projects. Future research could also include entrepreneurs outside the of
Netherlands in broader fields. Secondly, the sample size of 111 crowdfunding projects could be improved for future research. Thirdly, the reliability could be increased by using more coders to get a more objective view. Fourthly, the body language variable is quite complicated to measure since sometimes the body of the entrepreneur is not totally visible. This could influence the accuracy of the measurement for body language. Lastly, the control variable social network size is based on the average of three social media connections. However, no distinction is made between the different impact and importance of those different media connections. For example, Facebook is less business focused than LinkedIn.
Lastly, the analysis of the crowdfunding video pitches is based purely on the visible legitimacy elements in the pitch. However, legitimacy may not be the only factor which influences whether a crowdfunding campaign becomes successful or not. Many other factors may be important for success, such as the state of the economy, the content of the project
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itself, the demand for the project and competitive pressures (Aldrick & Fiol, 1994). This study focuses on the examination of the storytelling style of the entrepreneur however future
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6. Conclusion
The aim of this study is to explore whether the entrepreneurs’ storytelling style, presented in a crowdfunding video pitch, influence the chances of convincing investors and to obtain financial resources for new ventures. Three different elements of storytelling style are examined: performance style, linguistic style and body language. Based on previous research, it is hypothesized that a mimetic performance style has a positive effect on the obtained financial resources as opposed to a diegetic performance style. Additionally, linguistic style and body language is hypothesized to have a positive moderation effect on the relationship between performance style and the ability to obtain financial resources. However, based on results from the Dutch creative crowdfunding platform Voordekunst, just one out of three hypotheses is supported. Only a direct significant positive effect for performance style on the financial resources is found. None of the moderation hypotheses are totally supported. However, results show that linguistic style and body language both have a strong direct positive effect on financial resources. In conclusion, this research indicates that more importance should be given to ways in which an entrepreneurs’ storytelling style in (crowdfunding) pitches influences the ability to convince investors for new ventures. This study may help broaden the perspective of both entrepreneurs and scholars about the
effectivity of three elements of storytelling style: performance style, linguistic style and body language.
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