Crowdfunding in a Prosocial Microlending Environment: Examining the Role of Intrinsic versus Extrinsic Cues

Abstract

Microloans garnered from crowdfunding provide an important source of financial capital for nascent entrepreneurs. Drawing on cognitive evaluation theory, we assess how linguistic cues known to affect underlying motivation can frame entrepreneurial narratives either as a business opportunity or as an opportunity to help others. We examine how this framing affects fundraising outcomes in the context of prosocial lending and conduct our analysis on a sample of microloans made to over 36,000 entrepreneurs in 51 countries via an online crowdfunding platform. We find that lenders respond positively to narratives highlighting the venture as an opportunity to help others, and less positively when the narrative is framed as a business opportunity.

The open innovation research landscape: established perspectives and emerging themes across different levels of analysis

“…Mollick 2014). The availability of projects' descriptions on crowdfunding platforms and the new methodologies for content analysis make crowdfunding a source of data for studying the effects of soft aspects on the success of OI initiatives, such as cues to ethical values (Allison et al 2015;De Fazio, Franzoni, and Rossi-Lamastra 2015). Moreover, crowdfunding can be a good setting to study failure in the context of OI, based on the data on unsuccessful projects.…”

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

“…We use 'importance of security of getting a promised return' (securityreturn) as a proxy for instrumental motivation. Consistent with cognitive evaluation theory, the intrinsic motivation of lenders to provide capital is undermined when entrepreneurs focus on future extrinsic rewards associated with lending (Allison et al 2015). We also control for the influence of others investing in the project (herding effect) (Bikhchandani et al 1992;Vismara 2016b) by including the variable 'knowing the financial contributions made by others' (knowingfincontriboth) in our analysis.…”

The Role of Mobile Technology in Tourism: Patents, Articles, News, and Mobile Tour App Reviews

“…It should be highlighted that easy is positively correlated with praise, and amaze, awesome and fun is positively correlated with satisfaction. Mixing the scores of the variables deduced by DICTION and other quantitative indices (e.g., evaluation keyword) to conduct statistical analysis has already been attempted in other studies, and this research ensured that the analysis is in line with that of these studies [178][179][180].…”