Resonance, Consonance, Dissonance: Explaining Divergent Responses to Entrepreneurial Setbacks

Abstract

Gaining and maintaining the support of audiences, such as investors, analysts, or critics, is a fundamental challenge for entrepreneurial actors, who often encounter setbacks as their endeavors come to fruition. However, initially supportive audiences can react in surprisingly different ways to the same setback, leaving open the question of how and why such divergence occurs. To examine this puzzle, I conducted a process study of “backers”—a resource-providing audience—who followed the first highly successful crowdfunding campaign, from its launch in 2012 to its delivery in 2015. Although backers offered overwhelming support at first, they developed different stances as events unfolded, and diverged more drastically after an important setback. Analyzing the change trajectories of backers, I advance a model that explains how and why supportive audiences responded differently to setbacks, based on the early expectations they set (experiencing resonance), how close they felt to changing realities (cultivating consonance), and in reaction to the expectation–reality gaps that others perceived (resolving dissonance). Complementing prior insights, which emphasize collective or individual differences, the model theorizes how relational differences develop as audiences engage with entrepreneurial actors.