Kicking Off Social Entrepreneurship: How A Sustainability Orientation Influences Crowdfunding Success

Abstract

Research generally suggests that, relative to commercial entrepreneurs, social entrepreneurs stand at a disadvantage at acquiring resources through traditional financial institutions. Yet interest in social entrepreneurship appears to be at an all-time high. The current paper advances the argument that an innovative institutional form -crowdfundinghas emerged to address the needs of social entrepreneurs and other entrepreneurs with limited access to traditional sources of capital. To examine this, we study whether and how a sustainability orientation affects entrepreneurs' ability to acquire financial resources through crowdfunding and hypothesize that a venture's sustainability orientation will enhance its fundraising capability. We also suggest that project legitimacy and creativity mediate the relationship between a sustainability orientation and funding success. Our analysis produces two key findings: 1) a sustainability orientation positively affects funding success of crowdfunding projects, and 2) this relationship is partially mediated by project creativity and third party endorsements.

The wisdom of the crowd in funding: information heterogeneity and social networks of crowdfunders

“…These effects are strongest in donation-based crowdfunding. Our findings corroborate recent studies on crowdfunding social and environmental enterprises and projects reporting mixed evidence of funding success to sustainability orientation and goals (Calic and Mosakowski 2016;Hörisch 2015).…”

“…In this regard, crowdfunders, when aggregated across all types, apparently behave differently to professional (VC) investors who rely also on financial due diligence and an alignment of goals between venture and investor (Audretsch et al 2012;Bernstein et al 2016b;Busenitz et al 2005). This study also reveals interesting differences regarding the use of information of distinct types of campaigns, which adds to the understanding of funding dynamics (Belleflamme et al 2014;Calic and Mosakowski 2016;Hornuf and Schwienbacher 2015;Mollick 2014). Forprofit project funders are significantly less interested in information about the projects and its objectives than others, particularly compared to ecological project funders who attach a significantly higher importance to the objective of a project.…”

“…Following earlier work (Calic and Mosakowski 2016;Hörisch 2015), we distinguish between for-profit, social, cultural and ecological projects and coded all projects into these categories as follows: (1) For-profit, (2) Social, (3) Cultural, (4) Ecological. Multiple answers were not coded.…”

Revisiting the Antecedents of Social Entrepreneurial Intentions in Hong Kong

“…With a higher level of social support through connections with diverse individuals, entrepreneurs can obtain valuable resources to enhance firm performance (Stam et al, 2014). For example, social capital can contribute to attaining a high probability of success in crowdfunding (Zheng, Li, Wu, & Xu, 2014), which is an emerging financial source for social enterprises (Calic & Mosakowski, 2016). Accordingly, educators should assist students in developing social networks for public support for alleviating social problems (Mair & Marti, 2006) and in facing work-related stress in entrepreneurial ventures (Batjargal, Hitt, Tsui, Arregle, Webb, & Miller, 2013).…”

The Development of Sustainable Entrepreneurship Research Field

“…Also, [56] claims that translating a sustainability message into a tangible product involves the support of three techniques: preservation, transformation and adding novelty. Other authors [44] [57][58][59][60] refer to the key findings that the triple bottom line of ecological, social and economic goals is integrated sequentially, not simultaneously, that is to say, sustainable entrepreneurs must: (1) be motivated by identities based on both commercial and ecological logics; (2) prioritize commercial and/or ecological goals; and (3) approach stakeholders in a broadly inclusive, exclusive, or co-created manner in order to acquire financial resources through crowdfunding, because sustainable entrepreneurs do not seem to be ready to respond to the challenges or to take any risks by investing in green business, but also that the government and educational institutions do not recognize their own role and the need of supporting the development of green entrepreneurship.…”