Community-Based Resource Mobilization: How Entrepreneurs Acquire Resources from Distributed Non-Professionals via Crowdfunding

Abstract

We examine how entrepreneurs acquire financial resources for their early-stage ventures from distributed non-professionals via crowdfunding. Through an inductive analysis of entrepreneurs’ successful and unsuccessful non-equity crowdfunding campaigns, we derive a holistic framework of community-based resource mobilization. Our framework consists of three distinct processes entrepreneurs use to attain financial capital from non-professional resource providers over time: community building to establish psychological bonds with individuals possessing domain-relevant knowledge, community engaging to foster social identification with existing resource providers, and community spanning to leverage proofpoints with intermediaries who can help orchestrate resource mobilization with broader audiences. Entrepreneurs’ enactment and temporal sequencing of these three processes distinguish successful versus unsuccessful resource mobilization efforts in a crowdfunding setting. Community building is used by successful entrepreneurs primarily prior to a campaign’s launch, community engaging is used throughout a campaign, and community spanning is most effectively used after achieving a campaign’s initially-stated funding goal. This study empirically illustrates and theoretically conceptualizes the dynamics of resource mobilization in a crowdfunding setting.

Crowdfunding cultural and commercial entrepreneurs: an empirical study on motivation in distinct backer communities

“…Second, our study adds to the recent conversation on crowdfunding communities. Some studies have emphasized that the community of backers has a central role in crowdfunding (Belleflamme et al 2014;Josefy et al 2017;Murray et al 2020), yet the conversation of backer communities has only started. For instance, Belleflamme et al (2014) suggest that communities differ from reward to equity crowdfunding.…”

“…Second, we build on and extend the few studies that investigate the role of communities in reward crowdfunding (Belleflamme et al 2014;Josefy et al 2017;Murray et al 2020). Josefy et al (2017) suggest that crowdfunding communities consist of backers who share similar interests and values.…”

What is the Eisenhardt Method, really?

“…They then uncovered distinct collaboration processes that were likely to lead to one or the other outcome. Murray et al (2020) study how ventures mobilize crowdfunding resources by choosing similar ventures with highly and much less successful fundraising outcomes. Zuzul and Tripsas (2020) pick four firms in the nascent air taxi industry—two firms that made adaptive adjustments and two that did not.…”

We Cannot Direct the Wind, but We Can Adjust the Sails: Prosocial Ventures’ Responses to Potential Resource Threats

“…However, many resource mobilization studies have implicitly assumed that ventures operate under rather stable resource conditions, neglecting venture environments that are highly uncertain (Packard et al 2017) and subject to abrupt changes and shocks (Weick and Sutcliffe 2006, Rerup 2009, Garud et al 2011. Such events potentially undermine the legitimacy of new ventures' activities (Murray et al 2020). When venture legitimacy declines, resource holders tend to withdraw their support from ventures (Pearson and Clair 1998), which ultimately threatens ventures' functioning (Murray et al 2020).…”

“…Such events potentially undermine the legitimacy of new ventures' activities (Murray et al 2020). When venture legitimacy declines, resource holders tend to withdraw their support from ventures (Pearson and Clair 1998), which ultimately threatens ventures' functioning (Murray et al 2020). To avoid (or minimize) the negative effects of external shocks, ventures need to appraise potential threats from these shocks to themselves (Marcus and Nichols 1999) and/or to their competitors (Chi et al 2015(Chi et al , 2020, understand the meaning and consequences of these threats for their operations (Weick et al 2005), and adapt (Lengnick-Hall and Beck 2005) with an active response (Christianson et al 2009) that keeps resource holders engaged and the venture functioning.…”