The Effects of Novelty, Density and Metaknowledge on Digital Market Entry

Past theories of innovation, have described the process of developing an innovation as search in a solution or design space. We build upon this view, suggesting that potential microinvestors decide which new products to support based on attributes pertinent to their position in the design space. This paper focuses on two of these attributes, namely space novelty and space density. We examine 77,769 product ideas that sought funding over the course of more than 4 years in the most popular crowdfunding platform to date. Using prior theories of market entry, we attempt to understand the distinct effects of space novelty and space density. Finally, we identify the moderating role of metaknowledge and discuss the theoretical and practical implications.