Financing Decisions and the Role of CSR in Donation-Based Crowdfunding - Evidence from Pakistan and Indonesia

Donation-based crowdfunding and corporate social responsibility (CSR) activities have potential symbiotic ramifications to raise funds, but campaigners are confronted with challenges and competition to accomplish their charitable target. For instance, CSR activities could warrant the possibility of using crowdfunding to raise money. On the other hand, a company\u27s CSR objectives can be achieved by using crowdfunding to micro-fund various social initiatives. Current research investigates the relationship between fundraisers in donation-based crowdfunding activities, which become potential CSR activities. Exclusively, the study analyzes the correlation among the value raised at the end of fundraising activity, the amounts targeted by the fundraiser, and CSR-Type activities on the project\u27s success in donation-based crowdfunding. Based on this, a research taxonomy has been established for a comparative analysis between Pakistan and Indonesia. Secondary data is collected from donation-based platforms and analyzed through Ordinary Least Square (OLS) regression and the models are validated using a robustness check. The outcomes show that a higher value raised (V) correlates more positively with project success in Pakistan (164) as compared with Indonesia (122). The Target fund (T) has a significant and negative association with the project\u27s success in the Pakistani market, however, the significant and negative effect on the project’s success in the Indonesian market. Lastly, CSR-related activities such as education, environment, community, and health have a positive relationship with project success in Pakistan, except for the product which has a negative, however significant relationship. In contrast, for Indonesia, CSR-type activities such as education, environment, community, product, and health have a positive and significant relationship with the project\u27s success. This study contributes to the donation-based crowdfunding literature to develop a vivid understanding of different CSR activities and their impact on the project\u27s success. The current study is one of the first to examine the significance of CSR activities and will enrich the body of knowledge regarding crowdfunding in diverse economies

The Effect and Impact of Signals on Investing Decisions in Reward-Based Crowdfunding: A Comparative Study of China and the United Kingdom

When traditional financial institutions faced difficulties in the task of assisting micro, small and medium-sized enterprises (MSMEs) with capital allocations, crowdfunding can upsurge as an innovative and vibrant vehicle that can support and assist the activity of such MSME’s, by financing their activity and instrumenting the process of risk-sharing. Simultaneously with its enormous growth and popularity, crowdfunding is faced by several key challenges, one of biggest such challenges referring to the problem of information asymmetry that can exist between fundraisers and potential backers. Based on the signaling theory, a research taxonomy has been developed for a comparative analysis between China and the UK. This has been accomplished by retrieving secondary data from the following crowdfunding platforms: Dreamore (Chinese platform) and Crowdfunder (UK platform). The objective of the study is to investigate both the effect and the impact that signals (goal setting, project comments and updates) have upon mitigating the problem of information asymmetry, in order to make the project successful. We have thus deployed an Ordinary Least Square (OLS) regression and validated the models through a robustness check. The findings reveal that signals actively mitigate the problem of information asymmetry in both countries, but this varies in the sense that higher goal setting has a more positive/impactful relationship with project success in the UK than it does in China. Project comments are more positively associated with project success in China as compared to the UK, whereas project updates are more negatively related to project success in China as compared to the UK. These findings demonstrate the importance that signals have upon successful crowdfunding activities/campaigns, highlighting the theoretical and practical influence and relevance for potential fundraisers in the two aforementioned economies

The effect and impact of signals on investing decisions in reward-based crowdfunding: A comparative study of China and the United Kingdom

When traditional financial institutions faced difficulties in the task of assisting micro, small and medium-sized enterprises (MSMEs) with capital allocations, crowdfunding can upsurge as an innovative and vibrant vehicle that can support and assist the activity of such MSME's, by financing their activity and instrumenting the process of risk-sharing. Simultaneously with its enormous growth and popularity, crowdfunding is faced by several key challenges, one of biggest such challenges referring to the problem of information asymmetry that can exist between fundraisers and potential backers. Based on the signaling theory, a research taxonomy has been developed for a comparative analysis between China and the UK. This has been accomplished by retrieving secondary data from the following crowdfunding platforms: Dreamore (Chinese platform) and Crowdfunder (UK platform). The objective of the study is to investigate both the effect and the impact that signals (goal setting, project comments and updates) have upon mitigating the problem of information asymmetry, in order to make the project successful. We have thus deployed an Ordinary Least Square (OLS) regression and validated the models through a robustness check. The findings reveal that signals actively mitigate the problem of information asymmetry in both countries, but this varies in the sense that higher goal setting has a more positive/impactful relationship with project success in the UK than it does in China. Project comments are more positively associated with project success in China as compared to the UK, whereas project updates are more negatively related to project success in China as compared to the UK. These findings demonstrate the importance that signals have upon successful crowdfunding activities/campaigns, highlighting the theoretical and practical influence and relevance for potential fundraisers in the two aforementioned economies

Does the Role of Media and Founder’s Past Success Mitigate the Problem of Information Asymmetry? Evidence from a UK Crowdfunding Platform

Crowdfunding is an innovative concept for a new start-ups seeking financial support for their distinctive and novel projects. Despite their popularity, crowdfunding platforms face several key challenges amongst which is information asymmetry between entrepreneurs and influential backers, where credible information must be disclosed by the founders (entrepreneurs) to the potential “backers„ in order to assess the potentiality of the project. In order to fill this gap, we developed and tested a model that examines the signaling interaction between the founder and a potential backer through media and the founders’ past success. This model also examines how these two signals (i.e., media and past success) interact so as to mitigate the problem of information asymmetry and to make the project successful. A total of 14,887 projects were extracted from a reward-based platform named Crowdfunder. The data was analyzed by performing Tobit and logistic regression and the model was validated by using the robustness technique. The results strongly mitigate the problem of information asymmetry which improves the rate of success in projects floated on the Crowdfunder platform. We believe that our study will significantly contribute to this nascent yet developing research area by probing for information mechanisms to succeed in crowdfunding