Does Crowdfunding Really Foster Innovation? Evidence from the Board Game Industry

Abstract

Crowdfunding offers inventors and entrepreneurs alternative access to resources with which they can develop and realize their ideas. Besides helping to secure capital, crowdfunding also connects creators with engaged early supporters who provide public feedback. But does this process foster truly innovative outcomes? Does the proliferation of crowdfunding in an industry make it more innovative overall? Prior studies investigating the link between crowdfunding and innovation do not compare traditional and crowdfunded products and so while claims that crowdfunding supports innovation are theoretically sound, they lack empirical backing. We address this gap using a unique dataset of board games, an industry with significant crowdfunding activity in recent years. Each game is described by how it combines fundamental mechanisms such as dice-rolling, negotiation, and resource-management, from which we develop quantitative measures of innovation in game design. Using these measures to compare games, we find that crowdfunded games tend to be more distinctive from previous games than their traditionally published counterparts. They are also significantly more likely to implement novel combinations of mechanisms. Crowdfunded games are not just transient experiments: subsequent games imitate their novel ideas. These results hold in regression models controlling for game and designer-level confounders. Our findings demonstrate that the innovative potential of crowdfunding goes beyond individual products to entire industries, as new ideas spill over to traditionally funded products.