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1 – 10 of over 4000Alexandra Moritz, Joern Block and Eva Lutz
This study’s aim is to investigate the role of investor communication in equity-based crowdfunding. The study explores whether and how investor communication can reduce…
Abstract
Purpose
This study’s aim is to investigate the role of investor communication in equity-based crowdfunding. The study explores whether and how investor communication can reduce information asymmetries between investors and new ventures in equity-based crowdfunding, thereby facilitating the crowd’s investment decisions.
Design/methodology/approach
This paper follows an exploratory qualitative research approach based on semi-structured interviews with 23 market participants in equity-based crowdfunding: 12 investors, 6 new ventures and 5 third parties (mostly platform operators). After analyzing, coding and categorizing the data, this paper developed a theoretical framework and presented it in a set of six propositions.
Findings
The results indicate that the venture’s overall impression – especially perceived sympathy, openness and trustworthiness – is important to reduce perceived information asymmetries of investors in equity-based crowdfunding. To communicate these soft facts, personal communication seems to be replaced by pseudo-personal communication over the Internet (e.g. videos, investor relations channels and social media). In addition, the communications of third parties (e.g. other crowd investors, professional and experienced investors and other external stakeholders) influence the decision-making process of investors in equity-based crowdfunding. Third-party endorsements reduce the perceived information asymmetries and lower the importance of pseudo-personal communications by the venture.
Originality/value
Prior research shows that investor communication reduces information asymmetries between companies and investors. Currently, little is known about the role of investor communication in equity-based crowdfunding. This study focuses on the role of investor communication to reduce the perceived information asymmetries of investors in equity-based crowdfunding.
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Jitender Kumar, Manju Rani, Garima Rani and Vinki Rani
Crowdfunding has emerged as an alternative financing tool and recently gained attention to foster entrepreneurial dynamism and innovation. The current research has identified the…
Abstract
Purpose
Crowdfunding has emerged as an alternative financing tool and recently gained attention to foster entrepreneurial dynamism and innovation. The current research has identified the determinants impacting the behavioral intentions of entrepreneurs to use crowdfunding for financing their small and medium-sized enterprises (SMEs).
Design/methodology/approach
The current article is based on a cross-sectional research design. This research collected the data of 422 owners and managers of SMEs through self-administered questionnaires in the Indian National Capital Region (NCR). The responses were collected from July 17 to October 27, 2022. This article used “partial least squares structural equation modeling” (PLS-SEM) for data analysis.
Findings
This article offered a robust model with a high explanatory value of 66% of behavioral intention and 62.1% variance in crowdfunding use behavior. The finding also highlighted that performance expectancy, social influence, facilitating conditions, trialability and perceived value significantly impact behavioral intention. However, effort expectancy and perceived risk insignificantly influence behavioral intention. Notably, facilitating conditions, trialability and behavioral intention positively impact use behavior.
Practical implications
The results of this study will bridge the gap in empirical research on crowdfunding adoption, shedding light on why entrepreneurs hesitate to adopt crowdfunding for financing. Moreover, these results will offer strategic insights for crowdfunding managers and policymakers, aiding them in making informed decisions.
Originality/value
To the best of the authors' knowledge, this pioneering study built the theoretical framework using three credible technology determinant models. The authors examined crowdfunding-specific contextual factors to improve understanding of the positive effect of technological orientation. This addition assists in strategically arranging entrepreneurs' fundraising conversations more efficiently.
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Andrea Ordanini, Lucia Miceli, Marta Pizzetti and A. Parasuraman
The purpose of this paper is to analyze the emerging crowd‐funding phenomenon, that is a collective effort by consumers who network and pool their money together, usually via the…
Abstract
Purpose
The purpose of this paper is to analyze the emerging crowd‐funding phenomenon, that is a collective effort by consumers who network and pool their money together, usually via the internet, in order to invest in and support efforts initiated by other people or organizations. Successful service businesses that organize crowd‐funding and act as intermediaries are emerging, attesting to the viability of this means of attracting investment.
Design/methodology/approach
The research employs a “grounded theory” approach, performing an in‐depth qualitative analysis of three cases involving crowd‐funding initiatives: SellaBand in the music business, Trampoline in financial services, and Kapipal in non‐profit services. These cases were selected to represent a diverse set of crowd‐funding operations that vary in terms of risk/return for the investor and the type of payoff associated to the investment.
Findings
The research addresses two research questions: how and why do consumers turn into crowd‐funding participants? and how and why do service providers set up a crowd‐funding initiative? Concerning the first research question, the authors' findings reveal purposes, characteristics, roles and tasks, and investment size of crowd‐funding activity from the consumer's point of view. Regarding the second research question, the authors' analysis reveals purposes, service roles, and network effects of crowd‐funding activity investigated from the point of view of the service organization that set up the initiative.
Practical implications
The findings also have implications for service managers interested in launching and/or managing crowd‐funding initiatives.
Originality/value
The paper addresses an emerging phenomenon and contributes to service theory in terms of extending the consumer's role from co‐production and co‐creation to investment.
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Yaokuang Li, Junjuan Du and Weizhong Fu
The purpose of this paper is to investigate the factors influencing quick cash by crowd in agri-food crowdfunding campaigns; this paper utilizes prospect theory to analyze the…
Abstract
Purpose
The purpose of this paper is to investigate the factors influencing quick cash by crowd in agri-food crowdfunding campaigns; this paper utilizes prospect theory to analyze the value and weighting functions of the crowd's cash.
Design/methodology/approach
Using samples of crowdfunding campaigns launched in the Zhongchou (www.Zhongchou.cn) platform's agriculture and food category, this paper employs a multivariate linear regression model to investigate factors that motivate the crowd to make quick investment decisions.
Findings
The results demonstrate that lowering the investment threshold, improving publicity, and increasing the benefits of a campaign can increase the decision weight assigned to a campaign, thereby motivating the crowd to make quick investment decisions. Improving the product's reputation, enhancing campaign promotion, and diversifying the reward scheme can increase the crowd's expected value of the campaign – another motivation for a quicker cash decision.
Practical implications
This paper can help initiators, platforms and regulators better fulfil their roles in promoting the rapid, healthy development of crowdfunding in the agri-food industry, especially in the context of the Chinese launch of significant initiatives to develop crowdfunding aimed at rural e-commerce and poverty alleviation.
Originality/value
This paper extends the behavioral finance concept of prospect theory to agri-food crowdfunding campaigns and investigates factors that motivate the crowd to make quick investment decisions. Additionally, this paper demonstrates that the backers of crowdfunding are not perfectly rational and can be motivated to invest by increasing mean decision weight and expected value of a campaign.
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The purpose of this paper is to explore the role of trust in the unobservable decision-making process of lead investors and follow-on investors in the specific context of equity…
Abstract
Purpose
The purpose of this paper is to explore the role of trust in the unobservable decision-making process of lead investors and follow-on investors in the specific context of equity crowdfunding (ECF) campaigns.
Design/methodology/approach
This work employs a case study approach. The author conducts a three-year inductive field study of Chinese ECF – AngelCrunch. The author gathered both campaign and platform-level data from the selected case covering a period of seven years from 2011 to 2018. The data set used for this study includes the characteristics of 189 online campaigns, 25 face-to-face interviews with the platform managers, early-stage investors and entrepreneurs, first-hand observations and quarterly reports on online campaigns supplemented with informal interviews with the authors for the reports.
Findings
The findings from this study provide early insights onto the unobservable decision-making process of ECF investors. It demonstrates that lead investors use both selective signalling information and physical interactions with the entrepreneurs to build competence and relational trust on which they rely for making an early pledge. It also shows that follow-on investors differ from lead investors in the process of building trust for decision-making. Furthermore, this work uncovers the role of ECF platforms in facilitating the process of building interpersonal trust for the decision making, with challenges to maintain the notion of platforms in raising a small amount of capital from a large crowd.
Research limitations/implications
This study is constrained by the limited scale of qualitative elements available. The findings of the study have implications for platform managers, investors and policy makers.
Originality/value
Building on entrepreneurial finance and trust theory, this work demonstrates how lead investors build competence and relational trust on which they rely to make an early pledge in the context of ECF. The perception of a lead investor and the commitment together with the selective and formative information by the entrepreneur/s are key in follow-on investors’ decision making. This study uncovers that crowdfunding enables additional and valuable information to be assessed by crowd investors to manage extreme risk and uncertainty occurred in early-stage investments. This work also demonstrates that virtual world has its limitations to build interpersonal trust for managing extreme risk.
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Valentina Ndou, Paola Scorrano, Gioconda Mele and Pasquale Stefanizzi
The wide development of digital platforms permitted the birth of new financing modalities, namely, crowdfunding, where the crowd of individuals and investors can supply the…
Abstract
Purpose
The wide development of digital platforms permitted the birth of new financing modalities, namely, crowdfunding, where the crowd of individuals and investors can supply the necessary financial resources for venture creation and growth. While the extant literature has focused on analyzing the dynamics and features of crowdfunding campaigns, few studies have focused on understanding how crowd investors decide which ventures to invest in and which factors influence their decision-making process. Due to this gap, the purpose of this paper is to analyze the factors influencing the choice to invest in an equity crowdfunding campaign, by defining a set of indicators useful to evaluate the risk of the campaign.
Design/methodology/approach
An empirical research study of Italian equity crowdfunding campaigns has been conducted to identify quantitative indicators useful for evaluating the risk in a crowdfunding campaign.
Findings
Findings demonstrate that the risk indicators proposed to represent important gauges that investors can usefully consider ex ante to assess the degree of riskiness of the investment in the equity crowdfunding campaign.
Research limitations/implications
The limitations of the study regarding the size of the sample that is small due to the necessity to extract enough information in pre and post-equity campaigns. Also, the lack of historical data is another limitation.
Originality/value
The originality of the studies relies on the proposal of quantitative indicators for the evaluation of the risk in equity crowdfunding campaigns for “crowd” investors to reduce information asymmetries.
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Andrei Yakovlev and Denis Ivanov
The purpose of this paper is to investigate the links between investment activity and personal contacts for small- and medium-sized firms with public officials at the subnational…
Abstract
Purpose
The purpose of this paper is to investigate the links between investment activity and personal contacts for small- and medium-sized firms with public officials at the subnational level in Russia.
Design/methodology/approach
A list-experiment design, using a survey of 21,000 Russian firms in 2017, was used to evaluate the importance of personal connections with officials for conducting business.
Findings
A total of 27% of firms without investment and 37% with investment considered personal connections with officials an important factor for doing business. The importance of such contacts was lower in regions with a better investment climate. However, a higher proportion of firms were likely to invest in the regions where higher importance was placed on political connections. Therefore, in Russia in the mid-2010s, investment from politically connected firms did not crowd out investment from other firms.
Research limitations/implications
Although the available data did not allow causality to be defined, the research shows that political connections are important for investors in emerging markets and that the importance of political connections diminishes with improvement in the business climate.
Originality/value
This paper provides a quantitative estimate of the relationship between political connections and firm investment in Russia, an example of large emerging economy. This relationship is moderated by institutional quality at the subnational level. The results provide empirical support for the theory of limited access orders elaborated by North et al. (2009), and stress the importance of rents and their productive utilization for the development of emerging economies.
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Francesco James Mazzocchini and Caterina Lucarelli
This paper aims to provide a multidisciplinary framework that allows an integrated understanding of reasons of success or failure in equity crowdfunding (ECF), a Fintech digital…
Abstract
Purpose
This paper aims to provide a multidisciplinary framework that allows an integrated understanding of reasons of success or failure in equity crowdfunding (ECF), a Fintech digital innovation of the traditional entrepreneurial finance, defining a future research agenda.
Design/methodology/approach
A systematic literature review (SLR) has been conducted on 127 documents extracted from two multidisciplinary repositories (Elsevier’s Scopus and Clarivate Analytics Web of Science) for the period between 2015 and early 2022. After a systematized series of inclusion and exclusion criteria, in line with the objectives and conceptual boundaries, a final list of 32 peer-reviewed articles written in English was analyzed by the authors through a meta-synthesis and thematic analysis to identify the key themes and dominant concepts.
Findings
Results show that the body of literature is recent and fast growing. The proposed integrative framework of existing research indicates that the outcome of an ECF campaign is related to signals conveyed by entrepreneurs in the form of hard information (firm characteristics, financial information, business characteristics and project description) and soft information (intellectual capital, human capital, social capital and social media network), catalyzed by digital media that facilitate also personal interactions between entrepreneurs and investors. Similarly, external factors (investors and campaign characteristics, with the fundamental role of ECF platform managers in building trust between entrepreneurs and investors) allow for the alleviation of information asymmetries. The present study sheds light on which signal mechanisms are decisive in improving the outcome, taking into consideration various disciplines which follow different but complementary perspectives.
Practical implications
Entrepreneurs should adapt to the transition toward the digital era, exploiting alternative financial instruments and learning effective signaling strategies, within a large variety of skills requested. Platform managers can obtain more focused information on selected entrepreneurial projects more efficiently.
Originality/value
Although it is fast-growing, the field of research is very recent, still fragmented and limited to the perspective/discipline followed. This SLR is, to the best of the authors’ knowledge, the first multidisciplinary and integrative analysis of reasons that motivates success, or failure, of an equity-based crowdfunding campaign. The digital nature of ECF encourages future research to move toward more pioneering and unconventional theories and research methods. Hence, the authors add to the existing literature by proposing future patterns of research based on an integration of highly technological skills and behavioral/psychological approaches.
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Sumit Agarwal and Yeow Hwee Chua
This paper reviews recent advances in the empirical literature of FinTech and household finance.
Abstract
Purpose
This paper reviews recent advances in the empirical literature of FinTech and household finance.
Design/methodology/approach
We survey the effects of FinTech on three different aspects of household finance: payments, lending and portfolio decisions. Specifically, we examine the impact of digital payments, mobile money, FinTech lending, marketplace lending, robo-advising and crowd-funding.
Findings
Studies suggest that FinTech has positively benefited households by increasing consumption and borrowing. This allows them to smoothen their consumption across time. Furthermore, there is an improvement in their portfolio diversification. Nonetheless, there is also evidence that certain households overconsume and borrow beyond their means.
Originality/value
Despite the importance of this topic, there has been a lack of empirical evidence until recently. In this paper, we take stock of the empirical evidence in the literature through the lens of household finance
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Volker Frehe, Jens Mehmann and Frank Teuteberg
The purpose of this paper is to evaluate the nature and characteristics of crowd logistics business models. Using this evaluation, a new concept for a sustainable implementation…
Abstract
Purpose
The purpose of this paper is to evaluate the nature and characteristics of crowd logistics business models. Using this evaluation, a new concept for a sustainable implementation of crowd logistics services is proposed.
Design/methodology/approach
The Design Science process was followed to develop the proposed crowd logistics business model concept. The data are derived from expert interviews and a document-based data analysis of 13 companies.
Findings
Four relevant steps that companies should follow to implement sustainable crowd logistics services are identified. Open research questions are also identified and guide five research tasks, which may lead to a greater understanding of this emerging field.
Research limitations/implications
The present research is based on data from companies operating in Germany. The holistic approach gives a broad overview but lacks detailed descriptions.
Practical implications
Managers can use the four steps and the crowd logistics business model concept to plan future activities (e.g. new service provision). These steps increase the understanding, awareness and knowledge of opportunities and risks of specific crowd logistics services.
Social implications
This paper provides initial insights into social changes in terms of drivers for the use of crowd logistics services. However, further research is needed to capture the social implications in detail.
Originality/value
Crowd logistics is an emerging concept, and this paper is one of the first dealing with this topic generally and the first providing an analysis of crowd logistics business models. The developed concept includes implications for practice in the forms of common, and best practices, and science in the form of open research questions and tasks. Overall, the present research provides new insights into this emerging topic.
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