Open Innovation After Initial Coin Offerings - An Empirical Investigation of Crowd Participation and Third-Party Support

This study investigates the relationship between third-party support of young ventures and crowd engagement in open source development projects grounded in signaling theory. It is centered on the empirical analysis of a multi-source secondary dataset of 697 firms which conducted an initial coin offering (ICO) and published their source code online. We find that internal third-party support by technology advisors is positively associated with crowd engagement for open source development projects. Contrary to our initial hypothesis, we find internal support by business advisors and prestigious external support to be negatively related to crowd participation. The study enhances our understanding of antecedents of software co-creation and contributes to IS literature on third-party endorsement in open innovation and ICOs

What the History of Linux Says About the Future of Cryptocurrencies

Since Bitcoin’s meteoric rise, hundreds of cryptocurrencies that people now publicly trade have emerged. As such, the question naturally arises: how have cryptocurrencies evolved over time? Drawing on the theory of polycentric information commons and cryptocurrencies’ historical similarities with another popular information commons (namely, Linux), we make predictions regarding what cryptocurrencies may look like in the future. Specifically, we focus on four important historical similarities: 1) support from online hacker communities, 2) pursuit of freedom, 3) criticism about features and use, and 4) proliferation of forks. We then predict that: 1) cryptocurrencies will become more pragmatic rather than ideological, 2) cryptocurrencies will become more diverse in terms of not only the underlying technology but also the intended audience, and 3) the core technology behind cryptocurrencies, called blockchain, will be successfully used beyond cryptocurrencies

Goal Size Signaling in Entrepreneurial Finance: Evidence for Costless and Simultaneous Signaling in Initial Coin Offerings

Initial Coin Offerings (ICOs), a novel form of entrepreneurial finance, are characterized by extreme information asymmetry. To reduce this asymmetry and attract potential investors, entrepreneurs send signals about unobservable characteristics of their ventures to investors. This paper examines the signaling effects of entrepreneurs’ fundraising goals in ICOs. Using a hand-collected dataset of more than 400 ICOs, we show that the relationship between the size of fundraising goals and actual funding obtained follows curvilinear shapes. We also find that these curvilinear shapes are contingent on the presence of simultaneously sent, costless signals. Our findings enhance understanding how fundraising goals affect fundraising success and provide evidence that in ICOs costless signals are interpreted by investors in conjunction with each other

Cutting Out the Noise”Costly vs. Costless Signals in Initial Coin Offerings

Since 2013, over 850 ventures have conducted initial coin offerings (ICO), which enable startups to raise capital through direct, global sales of cryptographic tokens to (non-expert) investors. As the ICO market is decentralized and lacks regulation, inv

The effect of lockup and persuasion on online investment decisions: an experimental study in ICOs

Many firms use social media (SM) to solicit online investments. In this study, we examine the interaction between SM attributes and online-investment attributes to determine how this interaction shapes users’ investment decisions. Specifically, we investigate initial coin offerings (ICOs) as an application domain of distributed ledger technology for peer-to-peer investment. We use signaling theory to develop a context-specific explanation for how the interplay of persuasion signals found in SM and technology-enforced lockups shapes individuals’ ICO investment decisions. To evaluate this interplay, we conducted a 2 × 2 factorial experiment with 473 participants. The results show that when an investment does not require a technology-enforced lockup, persuasion signals encourage investments in ICOs; however, when an investment requires a technology-enforced lockup, persuasion signals do not affect investments in ICOs. Furthermore, our analyses suggest that combining a technology-enforced lockup and persuasion signals reduces the ICO’s plausibility. This is the first study to investigate how the willingness to invest in ICOs is influenced by the relationship between technology-enforced lockups and persuasion signals. The findings have practical implications for individuals attempting to make sound decisions on ICO investments, policymakers regulating online investments, and firms seeking to attract investors