Abstract
An increasing body of entrepreneurship research highlights the prevalence of effectuation as an effective strategy in uncertain environments, yet little is known about how investors react to entrepreneurs’ effectucation strategies. In this study, we examine how stretch goals, an effectuation strategy where entrepreneurs adaptively adopt new goals on top of the initial and predetermined goal, affect investors’ decisions. On the one hand, stretch goals may mitigate perceived uncertainty by demonstrating an entrepreneur’s continuous commitment and sharp sense-making of the changing opportunities and whereas, on the other hand, it may raise questions about the entrepreneur’s ability to reach the target, thus increasing uncertainty. An analysis of data from one of the largest crowdfunding platforms in Southeast Asia shows that stretch goal adoption has an instantaneous negative effect on fundraising performance. However, as the fundraising unfolds, entrepreneurs can mitigate, and even reverse the negative effect. Moreover, further exploration demonstrates mechanisms that can worsen or alleviate the initial negative effect. Our study highlights the countervailing effects of stretch goals and has important implications for entrepreneurs that use stretch goals as a strategy to optimize the chances of success in resource acquisition.
Recommended Citation
Sindihebura, Tanguy Tresor; Pu, Xiaodie; Kuo, Ting-Kuei; and CHEN, Jin, "More Goals, More Money? An Investigation of Stretch Goals on a Crowdfunding Platform" (2023). AIS EIF Program Working Papers. 6.
https://aisel.aisnet.org/aiseifprogram/6
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