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Role of Social Capital in Crowd Funding Campaigns: Exploring Factors That Fuel Success in Crowd Funding Campaigns

Manikandan, Babu V
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Abstract

Crowdfunding provides a convenient method with which to collect funding from an immense base of investors without geographic boundaries and intermediaries. In recent years, it has become entrenched as a surrogate funding source to traditional external finance for entrepreneurs. This paper offers an exploration of factors that propel crowdfunding ventures from a dataset of 182,216 projects and over $2 billion in funding from the two most common crowdfunding platforms based on rewards, namely, Kickstarter and Indiegogo. While previous studies have identified certain elements that lead to success in crowdfunding campaigns, this study delves into the pivotal success factors influencing funding success based on social capital theory. This study asserts that the strength of the promoter’s social network ties increases funder commitment to a crowdfunding campaign and funder trust, both of which lead to a successful campaign. We further predict funder’s perceived risk to be a critical factor in a campaign’s success. We explore prior studies in the literature with a common framework into various financing options and evaluate the crowdfunding paradox from funders, promoters, and online platform dimensions. This study also examines the potential significance of social capital, promoter commitment, and funder risk to crowdfunding campaign success, representing an addition to the literature. This empirical investigation is a quantitative study of crowdfunding campaign characteristics associated with influencing funders to make decisions to invest that uses the social capital theory as a conceptual framework. This model adds practical findings concerning crowdfunding campaigns. It also presents a reliable model for businesses to determine further how to tap into potential elements that can augment the success of crowdfunding campaigns in raising funds.

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Date
2020-03-19
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Keywords
Crowdfunding, equity crowdfunding, non-equity crowdfunding, FINTECH, social capital theory, alternative finance
Citation
Manikandan, Babu V. "Role of Social Capital in Crowd Funding Campaigns: Exploring Factors That Fuel Success in Crowd Funding Campaigns." 2020. Dissertation, Georgia State University https://doi.org/10.57709/17323706
Embargo Lift Date
2020-04-09
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