Crowdfunding as 'Donations': Theory & Evidence

Kevin J. Boudreau, Lars Bo Jeppesen, Toke Reichstein, Francesco Rullani

    Publikation: Working paperForskning

    Resumé

    For a wide class of crowdfunding approaches, we argue that the reward structure (for funders) is closer to that of charitable donations to public goods than it is to traditional entrepreneurial finance. Many features of the design of crowdfunding platforms can therefore be understood as attempts to deal with attendant “free-rider” problems in motivating contributions. Reviewing institutional features of today’s crowdfunding, we clarify that there are often limits in the extent to which tangible rewards can be used to motivate contributions. Drawing on analogies with charitable donations, we theorize that intangible sources of motivation — (i) direct psychological rewards, (ii) reciprocity and (iii) social interactions — can play a role in entrepreneurial crowdfunding. In our detailed empirical analysis of a representative project we find abundant evidence consistent with this characterization and we proceed to discuss implications for platform design and entrepreneurial funding and unique and defining characteristics of crowdfunding.
    For a wide class of crowdfunding approaches, we argue that the reward structure (for funders) is closer to that of charitable donations to public goods than it is to traditional entrepreneurial finance. Many features of the design of crowdfunding platforms can therefore be understood as attempts to deal with attendant “free-rider” problems in motivating contributions. Reviewing institutional features of today’s crowdfunding, we clarify that there are often limits in the extent to which tangible rewards can be used to motivate contributions. Drawing on analogies with charitable donations, we theorize that intangible sources of motivation — (i) direct psychological rewards, (ii) reciprocity and (iii) social interactions — can play a role in entrepreneurial crowdfunding. In our detailed empirical analysis of a representative project we find abundant evidence consistent with this characterization and we proceed to discuss implications for platform design and entrepreneurial funding and unique and defining characteristics of crowdfunding.
    SprogEngelsk
    Udgivelses stedBoston
    UdgiverHarvard Business School
    Antal sider37
    StatusUdgivet - 2015
    NavnHarvard Business School Working Paper
    Nummer16-038

    Emneord

    • Crowdfunding platforms
    • Entrepreneurial finance
    • Free-riding
    • Voluntary contributions to public goods

    Citer dette

    Boudreau, K. J., Jeppesen, L. B., Reichstein, T., & Rullani, F. (2015). Crowdfunding as 'Donations': Theory & Evidence. Boston: Harvard Business School. Harvard Business School Working Paper, Nr. 16-038
    Boudreau, Kevin J. ; Jeppesen, Lars Bo ; Reichstein, Toke ; Rullani, Francesco. / Crowdfunding as 'Donations' : Theory & Evidence. Boston : Harvard Business School, 2015. (Harvard Business School Working Paper; Nr. 16-038).
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    abstract = "For a wide class of crowdfunding approaches, we argue that the reward structure (for funders) is closer to that of charitable donations to public goods than it is to traditional entrepreneurial finance. Many features of the design of crowdfunding platforms can therefore be understood as attempts to deal with attendant “free-rider” problems in motivating contributions. Reviewing institutional features of today’s crowdfunding, we clarify that there are often limits in the extent to which tangible rewards can be used to motivate contributions. Drawing on analogies with charitable donations, we theorize that intangible sources of motivation — (i) direct psychological rewards, (ii) reciprocity and (iii) social interactions — can play a role in entrepreneurial crowdfunding. In our detailed empirical analysis of a representative project we find abundant evidence consistent with this characterization and we proceed to discuss implications for platform design and entrepreneurial funding and unique and defining characteristics of crowdfunding.",
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    Boudreau, KJ, Jeppesen, LB, Reichstein, T & Rullani, F 2015 'Crowdfunding as 'Donations': Theory & Evidence' Harvard Business School, Boston.

    Crowdfunding as 'Donations' : Theory & Evidence. / Boudreau, Kevin J.; Jeppesen, Lars Bo; Reichstein, Toke; Rullani, Francesco.

    Boston : Harvard Business School, 2015.

    Publikation: Working paperForskning

    TY - UNPB

    T1 - Crowdfunding as 'Donations'

    T2 - Theory & Evidence

    AU - Boudreau,Kevin J.

    AU - Jeppesen,Lars Bo

    AU - Reichstein,Toke

    AU - Rullani,Francesco

    PY - 2015

    Y1 - 2015

    N2 - For a wide class of crowdfunding approaches, we argue that the reward structure (for funders) is closer to that of charitable donations to public goods than it is to traditional entrepreneurial finance. Many features of the design of crowdfunding platforms can therefore be understood as attempts to deal with attendant “free-rider” problems in motivating contributions. Reviewing institutional features of today’s crowdfunding, we clarify that there are often limits in the extent to which tangible rewards can be used to motivate contributions. Drawing on analogies with charitable donations, we theorize that intangible sources of motivation — (i) direct psychological rewards, (ii) reciprocity and (iii) social interactions — can play a role in entrepreneurial crowdfunding. In our detailed empirical analysis of a representative project we find abundant evidence consistent with this characterization and we proceed to discuss implications for platform design and entrepreneurial funding and unique and defining characteristics of crowdfunding.

    AB - For a wide class of crowdfunding approaches, we argue that the reward structure (for funders) is closer to that of charitable donations to public goods than it is to traditional entrepreneurial finance. Many features of the design of crowdfunding platforms can therefore be understood as attempts to deal with attendant “free-rider” problems in motivating contributions. Reviewing institutional features of today’s crowdfunding, we clarify that there are often limits in the extent to which tangible rewards can be used to motivate contributions. Drawing on analogies with charitable donations, we theorize that intangible sources of motivation — (i) direct psychological rewards, (ii) reciprocity and (iii) social interactions — can play a role in entrepreneurial crowdfunding. In our detailed empirical analysis of a representative project we find abundant evidence consistent with this characterization and we proceed to discuss implications for platform design and entrepreneurial funding and unique and defining characteristics of crowdfunding.

    KW - Crowdfunding platforms

    KW - Entrepreneurial finance

    KW - Free-riding

    KW - Voluntary contributions to public goods

    KW - Crowdfunding platforms

    KW - Entrepreneurial finance

    KW - Free-riding

    KW - Voluntary contributions to public goods

    M3 - Working paper

    BT - Crowdfunding as 'Donations'

    PB - Harvard Business School

    CY - Boston

    ER -

    Boudreau KJ, Jeppesen LB, Reichstein T, Rullani F. Crowdfunding as 'Donations': Theory & Evidence. Boston: Harvard Business School. 2015.