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In this chapter, we explore to what extent psychological contracts occur between the crowdfunded and the crowdfunders. First argument: fundamentals of finance imply a psychological dimension in financial transactions, which are at the same time contractual. Second arguments: some concrete cases of crowdfunding scandals pertain to contractual violation, which provides evidence for the importance of psychological contracts in crowdfunding projects and processes. This leads to two contributions: (1) a systematic review of the concepts related to psychological contracts theory and the assessment of their transferability to crowdfunding and (2) a list of questions and operational recommendations for every crowdfunding project developer.

This study examines how narratives and legitimacy formation affect crowdfunding capital assembly from distributed, heterogeneous investors.

The study explores a dataset of 80,181 projects from Kickstarter, a rewards-based crowdfunding platform, between 2009 and 2013. We explore the link between project-related variables, legitimacy formation and outcomes.

Entrepreneurs design narratives and create project legitimacy by exploiting crowdfunding platform-specific features. First, lower funding targets and shorter campaign durations confer positive project legitimacy. Second, entrepreneurs exploit reward-levels as narrative tools that encourage funders to engage with the project. Third, visual pitches transmit a broader sociocultural narrative, leveraging emotional rather than financial reasoning. We also note certain gender effects.

Crowdfunding platforms allow entrepreneurs to pitch business ideas to a broad online audience. We show that project legitimacy, including both structural and narrative elements, is linked to crowdfunding outcomes. In particular, legitimacy is co-created through the generation of a persuasive narrative linking the entrepreneur and investor cohort.

Entrepreneurs use crowdfunding platforms to generate a coherent narrative around unfamiliar business models. Generic platform tools may be set and manipulated in online crowdfunding pitches to support project legitimacy. Ultimately, these are less important than establishing an affinity-based narrative that engages and exploits investor participation. Successful crowdfunding pitches co-author the project story with investors.

Crowdfunding has been traditionally understood as simply an online-mediated venture resource assembly tool. A narrative framework highlights the critical role of legitimacy formation in a disintermediated investment system.

We propose a framework based on social network analysis for crowdfunding projects.

Our approach is based on the strength of both weak and strong ties of the social network established by the project proponents. Our approach also considers not only the characteristics of the target population and the close social circle of the proponent but also mainly the community of potential backers strongly and weakly attached to his or her network of friends.

Supported by a literature review on social networks, crowdsourcing and crowdfunding, we have established a framework with five constructs (Extension, Cohesion, Centralization, Clustering, and Power) that can help entrepreneurs to raise funds through crowdfunding platforms.

Structural properties of these social networks such as size, cohesion and centralization may prove useful for applicants and platforms interested in succeeding in their projects and for stimulating the interest of scholars in the growing crowdfunding phenomenon.

The purpose of this chapter is to expose the limitations of the equity-based crowdfunding provisions of the 2012 JOBS Act. These provisions have received much attention because they have the potential to open funding opportunities to countless underfunded entrepreneurs and small businesses. In addition, they can provide everyday investors with new ways to diversify their portfolios. However, the author asserts that the JOBS Act is unlikely to be successful in its current incarnation, because it overly burdens the entrepreneur with reporting and accountability requirements, among other things. The author resolves these issues by articulating a regulatory alternative to the JOBS Act.

This chapter reviews the general requirements for equity-based crowdfunding under the 2012 JOBS Act. It also reviews the various approaches individual states and other countries have taken to promote equity-based crowdfunding.

The existing law and proposed regulations for equity-based crowdfunding under the JOBS Act are overly burdensome and will impair the ability of entrepreneurs and small-businesses to successfully use equity-based crowdfunding throughout the United States. Regulators and other lawmakers need to adopt new rules focused on protecting consumers via spending limits.

Most of the research is based on theory, because the equity-based regulations have not been finalized or implemented at the federal level. However, the United States can learn much from the equity-based crowdfunding efforts of individual states and other countries.

This chapter’s critique is designed to engage lawmakers, regulators, entrepreneurs, and small businesses in a new discussion about equity-based crowdfunding regulations.

Crowdfunding (CF) has been recognized by media narrations as a disruptive approach to funding social entrepreneurship, although there is a lack of evidence in academic literature about factors capable of supporting social entrepreneurs in developing a successful CF campaign. This chapter aims to improve both academic knowledge and CF practice in those areas that can effectively support social entrepreneurs in managing their campaigns. An empirical analysis of 250 CF campaigns launched by Italian social enterprises was conducted. We focused on three main issues in terms of their effect on the overall level of funding achieved: the social enterprise’s network, the choice of CF platform, and CF campaign design. Our results demonstrate that the social enterprise’s presence on Twitter, the choice of a specific reward-based platform, and active management of the CF campaign have a significant impact on the achievement of the funding goal.

This chapter shows how the theory of industrial organization can help us understand some important aspects of crowdfunding that go beyond the finance sphere of the firm. A special attention is devoted to the role and behavior of crowdfunding platforms, which intermediate between entrepreneurs and contributors.

One of the biggest challenges in markets where products have ambiguous values (like fine art, specialty coffee, and wine) is to determine the structure of the market. As products in these markets are unique and values are private, it is difficult to determine its market structure using traditional methods. In this chapter, we present a method to determine the market structure of ambiguously valued products using bidding data from auctions. We create a sociomatrix of artists based on bidders revealed bidding preferences and uncover the market structure with artists as the unit of analysis. We demonstrate our approach using bidding data from an online auction of Modern Indian Art. This approach resulted in the extraction of a two-dimensional art market structure with color and price being the two dimensions. This chapter concludes with a discussion on the implications and limitations of our approach, and directions for future research.

Tourism development is often seen as a tool to empower rural and peripheral communities. Problems can arise if there is an imbalance in the power relationship between local communities and external actors promoting development, including investors and Non Government Organisations (NGOs). This chapter examines the issues of leadership and power related to a hotel project operated by a private company in a small rural town in Timor-Leste. While there was initially substantial support for the project, the private company leading the project failed to adequately engage with community leaders creating feeling of loss of authority. Moreover, the members of the community who were not directly associated with the project felt that there was a gap between promises made to the community and the actual outcomes.

This chapter examines the implications of blockchain ventures for international business. The author highlights the advantages blockchain technologies can create for firms seeking to access international markets for investors, customers, employees, and suppliers. Overall, the international character of initial coin offerings and their business models suggest several advantages over traditional internationalization methods.