Peter Younkin

What Problems Does Crowdfunding Solve

The expansion of crowdfunding raises two related questions: what type of platform suits each project and how should existing platforms expand? The answer lies in analyzing the field of crowdfunding as a solution to four specific problems: gatekeeping, coordination, inexperience, and patronage. Using an inductive analysis of the largest U.S. sites, this article identifies the range of problems crowdfunding addresses and their performance to date. Crowdfunding succeeds in raising money within and across networks, but efforts to use crowdfunding to educate or to generate recurring revenue are less successful.

The Colorblind Crowd? Founder Race and Performance in Crowdfunding

The dearth of minority entrepreneurs has received increasing media attention but few academic analyses. In particular, the funding process creates challenges for either audit or correspondence methods, making it difficult to assess the role, or type, of discrimination influencing resource providers. We use a novel approach that combines analyses of 7,617 crowdfunding projects with an experimental design to identify whether African American men are discriminated against and whether this reflects statistical, taste-based, or unconscious bias on the part of prospective supporters. We find that African American men are significantly less likely than similar white founders to receive funding and that prospective supporters rate identical projects as lower in quality when they believe the founder is an African American male. We conclude that the reduction in perceived quality does not reflect conscious assumptions of differences in founder ability or disamenity but rather an unconscious assumption that black founders are lower quality. In two additional experiments, we identify three means of reducing this bias: through additional evidence of quality via third-party endorsements i.e., awards, evidence of prior support, through evidence that African American founders have succeeded previously, and by removing indicators of the founders race. The online appendix is available at https://doi.org/10.1287/mnsc.2017.2774 . This paper was accepted by Toby Stuart, entrepreneurship and innovation.

Complicating Abandonment: How a Multi-Stage Theory of Abandonment Clarifies the Evolution of an Adopted Practice:

This article presents a process-model for the abandonment of a practice. This complements earlier research on adoption and abandonment by allowing for fluctuations in the level of commitment across time and by demonstrating the persistent role for both institutional pressure and performance-based concerns on the maintenance of a practice. It also provides a novel means for identifying differences in the method of abandonment through the introduction of a concept of decommitment. Further, it helps resolve the question of how firms respond when faced with conflicting internal and external evidence of the success of an adopted practice. Using the divestiture of unrelated business segments by 100 U.S. firms between 1970–96, I estimate post-adoption commitment to a practice and the likelihood of a given firm decommitting. I find that treating abandonment as a process clarifies the evolving role of institutional and performance-based concerns and helps identify when a given firm is more subject to either source of pressure. The implications of this approach and these findings for current research on resistance to adoption and de-institutionalization are explored in the conclusion.

The Paradox of Breadth: The Tension between Experience and Legitimacy in the Transition to Entrepreneurship*:

In a study of artists who launched independent record labels in the music industry from 1990 to 2013, we focus on explaining the paradox generated when prospective entrepreneurs accumulate broad functional experience, which signals to resource providers mastery of different skills and access to various information and resources but may also undermine the legitimacy of their entrepreneurial claims because they are not seen as specialists. To resolve this paradox, we theorize that the potential legitimacy discount of categorical membership can be avoided when individuals are classified according to multiple categories simultaneously. We find that the transition to entrepreneurship is most likely to occur when an artist’s functional experience is broad but market experience is narrow: he or she has mastered a variety of skills but solicited few audiences. We also find that the paradox of breadth is attenuated—the potential penalty of functional breadth and the corresponding need to develop narrow market experience are reduced—when the entrepreneur has alternate methods of signaling legitimacy, including high status and more-typical prior work experience. Moreover, some audiences are more disposed than others to allow an entrepreneur to pursue greater novelty. Our findings suggest that mastering a variety of skills is not universally beneficial for aspiring entrepreneurs. In some circumstances, such mastery is best coupled with a narrow market focus.

Blaming the Customer: The Effect of Cast Racial Diversity on the Performance of Hollywood Films

Is employment discrimination driven by consumer bias rather than employer bias? One explanation for the persistence of employment discrimination, despite considerable legal and social pressure, is that unbiased employers are penalized by biased customers. An equitable employer is therefore a less profitable one, and apparent employer bias is more accurately described as reflected consumer antipathy. The empirical challenge of relating consumer behavior to employee composition has limited prior tests of this hypothesis and focused attention largely on employer behavior. We provide a rare direct test of the claim that consumers change their spending patterns in relation to employee composition by evaluating the commercial and artistic performance of all films released theatrically within the United States between 2011-2015 as a function of the racial diversity of their cast. We find that employing black actors for less prominent roles has no effect on either outcome. However, we find that films employing multiple black actors in leading roles achieve significantly higher domestic box-office revenues (149% higher) than films with no black actors. Moreover, this higher commercial performance domestically does not occur at the expense of artistic success or international box-office appeal. Specifically, we find no evidence of a penalty with respect to Academy Award nominations or international film revenues for films with more black actors. These results indicate that the persistent underemployment of minorities in Hollywood is not the product of consumer discrimination.Is employment discrimination driven by consumer bias rather than employer bias? One explanation for the persistence of employment discrimination, despite considerable legal and social pressure, is that unbiased employers are penalized by biased customers. An equitable employer is therefore a less profitable one, and apparent employer bias is more accurately described as reflected consumer antipathy. The empirical challenge of relating consumer behavior to employee composition has limited prior tests of this hypothesis and focused attention largely on employer behavior or structural factors. We provide a rare direct test of the claim that consumers respond to employee composition by evaluating the commercial and artistic performance of films released theatrically within the United States between 2011-2015 as a function of the racial diversity of their cast. We find that films are not penalized for the diversity of their casts; instead employing multiple black actors in the principal cast achieves significantly higher domestic box-office revenues than films with no black actors. Moreover, we find that international audiences do not exhibit evidence of bias against diverse casts, and that the net returns to diversity remain positive when worldwide box-office revenues are considered. We confirm the robustness of these results in a survey and experimental setting that controls for film-level differences, and through an analysis of a novel dataset capturing the social media activity (on Twitter) for each film by users of different races. Our findings advance an alternative interpretation of the consumer bias thesis, where consumers prefer employers reflect their world or values, rather than their traits.