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1 – 10 of 213
Article
Publication date: 14 December 2017

Joe Cox and Thang Nguyen

The purpose of this paper is to investigate the extent to which rewards-based crowdfunding really does provide financial support for start-ups and small businesses…

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Abstract

Purpose

The purpose of this paper is to investigate the extent to which rewards-based crowdfunding really does provide financial support for start-ups and small businesses relative to other types of activity such as creative and cultural projects.

Design/methodology/approach

The paper reports findings from a series of multiple regression on a unique data set covering around 205,000 rewards-based crowdfunding projects across a number of leading platforms in the USA, the UK and Canada.

Findings

The authors report two main findings. First, rewards-based crowdfunding is highly inequitably distributed and that success is concentrated within a relatively small number of platforms and campaigns. Second, crowdfunding campaigns explicitly related to business perform relatively poorly compared with those in other categories; particularly those in creative areas such as music and dance.

Originality/value

These findings call into question the extent to which rewards-based crowdfunding really is a means by which significant numbers of start-ups can bridge gaps in the provision of finance.

Details

Journal of Small Business and Enterprise Development, vol. 25 no. 1
Type: Research Article
ISSN: 1462-6004

Keywords

Article
Publication date: 17 September 2020

Sunghan Ryu and Ayoung Suh

This study examines how individual contributors' evaluation of the two aspects in reward-based crowdfunding—service and community—influences the formation of platform…

Abstract

Purpose

This study examines how individual contributors' evaluation of the two aspects in reward-based crowdfunding—service and community—influences the formation of platform loyalty. It also seeks to determine the conditions under which the evaluation is positive.

Design/methodology/approach

We collaborated for data collection with two reward-based crowdfunding platforms in South Korea that primarily promote crowdfunding campaigns in the creative domains. We combined the survey data collected from 578 contributors and campaign data from the platforms, empirically examining the formation of platform loyalty and its antecedents.

Findings

The results suggest that service satisfaction with a platform and a sense of belonging to it are positively associated with platform loyalty. We also found that an individual contributor's self-image congruence with the crowdfunding platform is positively associated with service satisfaction and a sense of belonging, while the experience of greater campaign success moderates the relationship in different ways.

Research limitations/implications

This study contributes to the crowdfunding literature by establishing a theoretical background for understanding reward-based crowdfunding platforms, which combine service and community. It also extends the scope of the literature on crowdfunding by examining the role of platform loyalty at the platform level.

Practical implications

The results suggest that service and community are both critical for building a sustainable crowdfunding platform. Platform operators are expected to provide high-quality services and foster a sense of community. Identifying and developing contributors with higher self-image congruence with the platforms is essential.

Originality/value

While previous literature on reward-based crowdfunding has focused on individual contributor- and campaign-level analyses, platform-level knowledge is lacking. This study is among the first to focus on platform loyalty of individual contributors toward reward-based crowdfunding platforms. Moreover, we use both individual-level perception and campaign-level performance variables to examine the formation of platform loyalty.

Details

Internet Research, vol. 31 no. 1
Type: Research Article
ISSN: 1066-2243

Keywords

Article
Publication date: 13 March 2017

Norbert Steigenberger

The purpose of this paper is to provide empirical evidence on the motivation of supporters to contribute resources to reward-based crowdfunding campaigns.

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Abstract

Purpose

The purpose of this paper is to provide empirical evidence on the motivation of supporters to contribute resources to reward-based crowdfunding campaigns.

Design/methodology/approach

The paper reports results from a survey combining open and closed questions, addressing supporters of reward-based crowdfunding campaigns in the field of video game development. Publicly available data from a large crowdfunding website complements the approach.

Findings

Two groups of supporters emerge from the data: one group derives motivation almost exclusively from a purchasing motive, the other group displays the purchasing motive alongside an altruistic and involvement motive. There is little indication that social acknowledgement plays a role for supporter motivation. Supporters rely on the evaluation of previous activities of an entrepreneur to judge trustworthiness.

Originality/value

The manuscript offers empirical insights into the previously scarcely researched question why supporters contribute to reward-based crowdfunding. These insights inform research on reward-based crowdfunding and help entrepreneurs considering reward-based crowdfunding as a way to fund entrepreneurial activities.

Details

International Journal of Entrepreneurial Behavior & Research, vol. 23 no. 2
Type: Research Article
ISSN: 1355-2554

Keywords

Article
Publication date: 8 February 2016

Haichao Zheng, Jui-Long Hung, Zihao Qi and Bo Xu

– The purpose of this paper is to investigate the role of trust management on the fundraising performance in reward-based crowdfunding.

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Abstract

Purpose

The purpose of this paper is to investigate the role of trust management on the fundraising performance in reward-based crowdfunding.

Design/methodology/approach

A research model was constructed based on elaboration likelihood model (ELM) and literatures with five hypotheses developed. Data were collected from www.demohour.com - the first and one of the largest reward-based crowdfunding platforms in China. In total, 829 reward-based crowdfunding projects were analyzed to test hypotheses. To test the hypotheses, partial least squares was used to analyze data of entrepreneur/sponsor profiles, entrepreneur/sponsor behaviors, and crowdfunding projects.

Findings

Results indicated trust management significantly promoted fundraising performance via central (entrepreneur’s creditworthiness) and peripheral (entrepreneur-sponsor interactions) routes. The peripheral route (entrepreneur-sponsor interaction) showed significantly higher effects than the central route (entrepreneur’s creditworthiness). The finding aligns with authors’ assumptions derived from unique characteristics of reward-based crowdfunding – community and collaboration because personal, dynamic message interactions were more effective than static, historical success records on the trust establishment. In addition to the main effects, the results also showed entrepreneur’s prior success crowdfunding records positively moderated the effect of entrepreneur-sponsor interaction on fundraising performance.

Originality/value

This study is the first paper that reveals the value of trust management in reward-based fundraising, especially the effect of dynamic entrepreneur-sponsor message interactions. Entrepreneur-sponsor interactions not only promoted community benefits in crowdfunding, but also cultivated trust relationships between entrepreneurs and sponsors. Previous studies mainly focussed on the entrepreneur’s popularity level on third-party social media (such as Facebook) toward fundraising performance. This study examines the effect of direct entrepreneur-sponsor interactions on the crowdfunding platform. Additionally, this study found one moderating effect from the central route to the peripheral route. It is a rare case in studies based on ELM. Finally, this study demonstrates how to incorporate a theoretical framework guiding the analysis of structured and unstructured data for in-depth analysis, result interpretation, and corresponding intervention strategy development.

Article
Publication date: 11 September 2017

Zheshi Bao and Taozhen Huang

The purpose of this paper is to discuss some drivers which can promote reward-based crowdfunding campaigns and then compare their effects on two categories of cultural and…

Abstract

Purpose

The purpose of this paper is to discuss some drivers which can promote reward-based crowdfunding campaigns and then compare their effects on two categories of cultural and creative projects.

Design/methodology/approach

The authors first distinguished the roles of “intrinsic qualities” and “external supports” in crowdfunding campaigns. Then based on the theories of reward-based crowdfunding, impression management and social capital, a research model was built to discuss the effects of external supports and a comparative study was conducted by using data collected from Kickstarter.com.

Findings

It indicates that the three dimensions of external supports (reward support, impression support, and relationship support) have positive effects on film and video and publishing projects. Besides, the authors also found that “category of a project” can moderate the relationship between impression support and crowdfunding performance. The effect of impression support on visual works is different from that on printed works.

Research limitations/implications

These findings not only prove that external supports actually play an important role in crowdfunding campaigns, but also reveal that for different categories of cultural and creative crowdfunding projects, the effects of external supports are different. Some other theoretical and practical implications are also provided.

Originality/value

This research reveals some details about the important role of external supports in crowdfunding campaigns and compares their effects on different categories of cultural and creative projects. It can provide useful suggestions for improving reward-based crowdfunding performance.

Details

Online Information Review, vol. 41 no. 5
Type: Research Article
ISSN: 1468-4527

Keywords

Article
Publication date: 7 June 2019

Liang Zhao and Tsvi Vinig

This paper aims to examine different hypotheses concerning the effects of guanxi on the reward-based crowdfunding project fundraising. Specifically, this study provides…

Abstract

Purpose

This paper aims to examine different hypotheses concerning the effects of guanxi on the reward-based crowdfunding project fundraising. Specifically, this study provides new insights into how guanxi and guanxi intensity may affect reward-based crowdfunding success and project performance in the Chinese context.

Design/methodology/approach

The research data including 989 crowdfunding projects were collected from zhongchou.com which is the largest reward-based crowdfunding platform in a one-year period (2014.1-2014.12). The hypotheses are tested by using robust OLS regressions and robust logistic regressions. Robustness check was also conducted to test the validation of the results.

Findings

This paper found that project developers’ guanxi-establishing behavior conducted before launching their own projects such as being fans of other projects and supporting other projects are positively related to project success. In addition, the intensity of guanxi-establishing behavior positively influences project performance in a significant way. Besides, the establishment and maintenance of project developers’ guanxi with funders during the fundraising process are also positively associated with project success and fundraising performance.

Originality/value

Based on the theory of trust, this paper offers an interesting and novel perspective to investigate reward-based crowdfunding success in the Chinese context by taking guanxi and guanxi intensity into consideration.

Details

Chinese Management Studies, vol. 14 no. 2
Type: Research Article
ISSN: 1750-614X

Keywords

Article
Publication date: 18 March 2019

Jordan Robert Gamble

The purpose of this paper is to explore the implementation of equity crowdfunding (ECF) within the record industry in terms of challenges and opportunities, in addition to…

Abstract

Purpose

The purpose of this paper is to explore the implementation of equity crowdfunding (ECF) within the record industry in terms of challenges and opportunities, in addition to the marketing and financial implications for independent music artists and major record labels.

Design/methodology/approach

This study adopted a qualitative methodology consisting of two-stage interview-based research methods. A total of 44 semi-structured in-depth interviews were conducted with the CEOs of ECF platforms in the record industry, other related record industry informants, independent artist managers and senior executives from major record labels.

Findings

The loyalty aspect of ECF may have significant marketing potential in terms of inconspicuously using the equity platform as a “prosumer” identification mechanism. As this early career stage of artists is delicate in terms of establishing trust and patronage from their fans, these early marketing and ECF ventures should be implemented directly from the artist without external third-party involvement.

Research limitations/implications

The implications of this paper’s findings and theoretical model are not limited to the two studied stakeholder groups of the record industry. The insights in relation to the obstinate lack of understanding and clarity (particularly for independent artists) which surround ECF are likely to influence short-term strategic approaches by other players throughout the wider music industry.

Practical implications

The insights regarding negative approaches towards ECF by the labels may influence future “coopetition strategies” for independent labels, as they seek to navigate the changing industry dynamics.

Originality/value

This paper is the first study to empirically explore the predominantly under-researched area of ECF implementation in the record industry in terms of marketing and financial consequences for artists and labels.

Details

European Journal of Marketing, vol. 53 no. 3
Type: Research Article
ISSN: 0309-0566

Keywords

Article
Publication date: 18 July 2019

Mingchun Chen, Zhiying Liu and Chaoliang Ma

Crowdfunding, especially reward-based crowdfunding, has quickly evolved into a commonly used vehicle for innovating entrepreneurs to develop their products. Many…

Abstract

Purpose

Crowdfunding, especially reward-based crowdfunding, has quickly evolved into a commonly used vehicle for innovating entrepreneurs to develop their products. Many crowdfunding platforms allow creators maximum flexibility in terms of the prices and rewards offered in a project to gain sufficient capital. However, creators need to understand how to design project rewards and how to select a pricing strategy, in addition to whether the creator should spend resources on designing multiple rewards of varying quality. The purpose of this paper is to address these issues by answering whether and why there are significant differences in the application of early-bird and versioning pricing strategies in crowdfunding.

Design/methodology/approach

This paper develops a two-stage dynamic game model with incomplete information, proposes a corollary calculated by analyzing a perfect Bayesian equilibrium, and then tests Corollary 1 by empirical analysis.

Findings

Contrary to the findings of other studies, the results show that an early-bird pricing strategy is likely better than a versioning pricing strategy for earning greater revenue in a crowdfunding context, on average. This finding means that creators do not have to spend as much in designing rewards of various qualities; rather, they should only provide multiple price options for high-quality rewards. However, if the heterogeneity of target backers’ valuations and the quality difference between two types of products are adequately high, a versioning pricing strategy may be a good choice for creators.

Practical implications

This paper provides a reference for creators regarding the selection of pricing strategies and the design of reward quality when launching crowdfunding projects.

Originality/value

This paper explains an interesting and practical issue in the design of reward quality and the selection of a pricing strategy after fully considering the role of the crowdfunding all-or-nothing mechanism and special backer behavior.

Details

Asia Pacific Journal of Marketing and Logistics, vol. 32 no. 3
Type: Research Article
ISSN: 1355-5855

Keywords

Article
Publication date: 8 May 2018

Mohamed Asmy Bin Mohd Thas Thaker and Anwar Allah Pitchay

This paper aims to attempt to offer a viable alternative model of source of financing to develop waqf land, which is known as crowdfunding-waqf model (CWM).

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Abstract

Purpose

This paper aims to attempt to offer a viable alternative model of source of financing to develop waqf land, which is known as crowdfunding-waqf model (CWM).

Design/methodology/approach

The extant literature on the financing constraints faced by waqf institution in developing waqf land, and crowdfunding have been reviewed critically and used in the attempt of proposing an alternative model.

Findings

The paper has developed CWM as a source of financing for waqf institution in Malaysia. This model is expected to provide waqf institution in Malaysia to meet their liquidity constraint in developing waqf land. It also involves an involvement of crowdfunding platform.

Research limitations/implications

The paper is based on conceptual explorations of literature in the area of waqf and crowdfunding. This is a conceptual paper, so it did not use any empirical analysis.

Practical implications

The findings of this paper will provide waqf institution with an alternative source of financing to develop waqf land. The present study also has implications for government and policymakers. By involving crowdfunding, it helps the government to reduce its expenses for the development of waqf land in Malaysia.

Originality/value

This paper offers an additional literature on waqf and crowdfunding especially from the Malaysian context. The paper proposes a viable alternative model for waqf institution as a source of financing by using crowdfunding, to develop waqf land. This model incorporates donation-based crowdfunding model and reward-based crowdfunding model. This model is different with the existing way of raising Cash waqf, which is conducted also via online basis by financial institutions and state government agencies. Later, the collected Cash waqf fund is transformed into illiquid assets such as building of hospitals, educational institutions and purchasing machinery and assets. However, the nature of proposed model in this study is to assist waqf institution to develop waqf land. Crowdfunding model is used to raise fund to develop waqf land in Malaysia. The fund collected via crowdfunding model is based on donation and reward based, not based on the nature of Cash waqf.

Details

Journal of Islamic Accounting and Business Research, vol. 9 no. 3
Type: Research Article
ISSN: 1759-0817

Keywords

Article
Publication date: 18 September 2019

Gongbing Bi, Qinghua Xiang, Botao Geng and Qiong Xia

The purpose of this paper is to investigate the influence of the crowdfunding platforms on reward-based crowdfunding projects. This study offers guidance for the creator…

Abstract

Purpose

The purpose of this paper is to investigate the influence of the crowdfunding platforms on reward-based crowdfunding projects. This study offers guidance for the creator on how to choose among platforms and how to make optimal product and pricing decisions.

Design/methodology/approach

Usually, crowdfunding platforms are able to help creators to lower unit costs and charge platform fees in return. In this paper, the reduction of the unit cost and the platform fee are selected for determining the competitive strength (CS) of a platform. Then, the CS affecting the creators and the backers of the projects is analyzed.

Findings

In the basic model, when the product quality level is exogenous, the optimal price increases in the product quality level and decreases in the difficulty level of the project, while the corresponding expected profit is a unimodal function of the product quality level and the difficulty level. In the endogenous case, the optimal price is exactly twice the unit cost. With the influence of platforms, platforms with higher CS tend to help the creator to lower the prices and to achieve higher profitability. Moreover, platforms with higher CS usually help the creator to offer higher quality products and to charge higher prices.

Research limitations/implications

The opportunity cost is zero in this paper. In reality, backers arrive at the project in different order. Usually, earlier backers bare more opportunity cost and risk.

Originality/value

To the best of authors’ knowledge, this paper is the first one to offer suggestions for creators on how to choose among crowdfunding platforms. The study provides theoretical guidance on product and pricing decisions on an analytical side.

Details

Journal of Modelling in Management, vol. 14 no. 3
Type: Research Article
ISSN: 1746-5664

Keywords

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