Analyzing campaign’s outcome in reward-based crowdfunding

Abstract

Purpose The purpose of this paper is to probe how reward-based crowdfunding campaigns accomplish their goal by adopting the theoretical constructs of social capital dimensions: structural, cognitive and relational. Design/methodology/approach The approach used is a design model for concluded campaigns in a Mexican crowdfunding platform, which determines social capital from operating social networks (Facebook and Twitter). By using this model, the associations between the dimensions are revealed, verifying how social capital flourishes during the campaign and how it alters the campaign’s outcome. Findings The findings demonstrate how social interaction through a wide social network (structural dimension), shared vision and values among entrepreneurs and their potential funders (cognitive dimension), and the development of trustworthiness within the campaign (relational dimension) boost the probability of achieving the crowdfunding goal. Research limitations/implications The results inform researchers on how social capital is forged from social networks during a crowdfunding campaign. However, the method must be validated with other crowdfunding models and other social network platforms commonly used by campaign creators. Practical implications Contributions from this paper include tools (design model and evaluation method) associating theory with the crowdfunding mechanism, complementing previous work. Crowdfunding providers, as well as campaign creators, have now an approach to appraise social capital and obtain the desired goal. Originality/value In addition to providing much-needed research on the current state of crowdfunding, this paper analyzes the link between practice and theory, which can be valuable in confining the mechanism to an accurate theory and ensuring the theory’s longevity.

Analyzing the impact of social capital on US based Kickstarter projects outcome

“…In this regard, we find two empirical papers on shared values and crowdfunding. [35,39] As per Zhao et al [57] if both the entrepreneur and the Backers shared comparable values, there is a high level of commitment and trust between backers and entrepreneurs in reward-based crowdfunding. In the same year, Josefy et al [29] established that these shared values within a group of collectives are linked to trust, aligned behaviors, cooperation, judgement, individual and collective beliefs, amongst other things.…”

“…Empirical results verify that the degree to which a campaign goal is consistent with community culture positively affects project performance. In this regard, we find two empirical papers on shared values and crowdfunding [ 54 , 55 ].…”

Intellectual capital, knowledge sharing and equity crowdfunding

“…Therefore, through technological innovations from Web 2.0, represented by RSS (Really Simple Syndication) feeds and microblogging sites (e.g. Facebook, Google+, Twitter) which allowed Internet users to produce and share online content, young firms are able to finance their activities using the crowd (Madrazo-Lemarroy et al , 2019). This new approach to raising money via the Internet is called crowdfunding, which allows individual founders of for-profit, social or cultural projects to request funding from multiple people (Mollick, 2014; Belleflamme et al , 2014).…”

“…To attract this kind of investor, entrepreneurs must find a credible signal for the intrinsic quality of their business, and, as previously introduced, human capital is one of the first aspects which investors consider before funding a firm. At the same time, the ability to obtain capital can be influenced by the reciprocal behaviour within the network, resulting from sentiments of trust, norms and expectations (Nahapiet and Ghosal, 1998; Madrazo-Lemarroy et al , 2019).…”

Online service or virtual community? Building platform loyalty in reward-based crowdfunding

“…tangible products), strict supervision for fraud does not need to be applied to the development of reward-based crowdfunding. These relatively loose criteria have led reward-based crowdfunding to become the most acceptable of the four crowdfunding models (Madrazo-Lemarroy et al , 2019; Mollick, 2014; Zheng et al , 2018).…”