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Operational Transparency on Crowdfunding Platforms: Effect on Donations for Emergency Response

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  • Jorge Mejia
  • Gloria Urrea
  • Alfonso J. Pedraza‐Martinez

Abstract

Online crowdfunding has emerged as a powerful tool to raise funds for emergency response. Crowdfunding campaigns can use two transparency tools to attract donors: updates and certification. Updates are additional messages that the organizer issues after launching the campaign and are a form of operational transparency when they communicate the campaign’s work to donors. Alternatively, certification is a form of conventional transparency that ensures the campaign truly benefits a charitable purpose. Using an econometric analysis, we investigate the effects of transparency on donations. We study the direction of causality and mechanisms behind work‐related updates by conducting an experiment. Results from the econometric analysis using over 100,000 campaigns benefiting victims of emergencies reveal that both updates and certification have positive effects on donations. Each additional work‐related word in an update (operational transparency) increases donations on average by $65 per month, while certification (conventional transparency) raises funds on average by $22 per month. Results from the experiment confirm the direction of causality; posting work‐related updates in crowdfunding campaigns increases donations. Two mechanisms explain this effect: donors’ enhanced perceptions of effort and perceptions of trust.

Suggested Citation

  • Jorge Mejia & Gloria Urrea & Alfonso J. Pedraza‐Martinez, 2019. "Operational Transparency on Crowdfunding Platforms: Effect on Donations for Emergency Response," Production and Operations Management, Production and Operations Management Society, vol. 28(7), pages 1773-1791, July.
    • Handle: RePEc:bla:popmgt:v:28:y:2019:i:7:p:1773-1791
    DOI: 10.1111/poms.13014
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    Cited by:

    1. Imbriale, Peter & Livingston, Jeffrey A. & Stavrulaki, Euthemia, 2024. "Can Media reports encourage Donors to give cash instead of in-kind? Evidence from an experiment," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 110(C).
    2. Xiahua Wei & Ming Fan & Weijia You & Yong Tan, 2021. "An Empirical Study of the Dynamic and Differential Effects of Prefunding," Production and Operations Management, Production and Operations Management Society, vol. 30(5), pages 1331-1349, May.
    3. Tsan‐Ming Choi & Subodha Kumar & Xiaohang Yue & Hau‐Ling Chan, 2022. "Disruptive Technologies and Operations Management in the Industry 4.0 Era and Beyond," Production and Operations Management, Production and Operations Management Society, vol. 31(1), pages 9-31, January.
    4. Yuan Chen & Hsing Kenneth Cheng & Yang Liu & Jingchuan Pu & Liangfei Qiu & Ning Wang, 2022. "Knowledge‐sharing ties and equivalence in corporate online communities: A novel source to understand voluntary turnover," Production and Operations Management, Production and Operations Management Society, vol. 31(10), pages 3896-3913, October.
    5. Abhishek Behl & Pankaj Dutta & Zongwei Luo & Pratima Sheorey, 2022. "Enabling artificial intelligence on a donation-based crowdfunding platform: a theoretical approach," Annals of Operations Research, Springer, vol. 319(1), pages 761-789, December.
    6. Holguín-Veras, José & Encarnación, Trilce & Van Wassenhove, Luk N. & Pokharel, Shaligram & Cantillo, Víctor & Amaya, Johanna & Wachtendorf, Tricia & Rilling, Juanita, 2022. "Reducing material convergence in disaster environments: The potential of trusted change agents," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 162(C).
    7. Eunae Yoo & Elliot Rabinovich & Bin Gu, 2020. "The Growth of Follower Networks on Social Media Platforms for Humanitarian Operations," Production and Operations Management, Production and Operations Management Society, vol. 29(12), pages 2696-2715, December.
    8. Choi, Tsan-Ming & Ouyang, Xu, 2021. "Initial coin offerings for blockchain based product provenance authentication platforms," International Journal of Production Economics, Elsevier, vol. 233(C).
    9. Yu-Kai Lin & Arun Rai & Yukun Yang, 2022. "Information Control for Creator Brand Management in Subscription-Based Crowdfunding," Information Systems Research, INFORMS, vol. 33(3), pages 846-866, September.
    10. Choi, Tsan-Ming, 2020. "Innovative “Bring-Service-Near-Your-Home” operations under Corona-Virus (COVID-19/SARS-CoV-2) outbreak: Can logistics become the Messiah?," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 140(C).
    11. Cai, Wanxiang & Polzin, Friedemann & Stam, Erik, 2021. "Crowdfunding and social capital: A systematic review using a dynamic perspective," Technological Forecasting and Social Change, Elsevier, vol. 162(C).
    12. Shengsheng Xiao & Yi‐Chun (Chad) Ho & Hai Che, 2021. "Building the Momentum: Information Disclosure and Herding in Online Crowdfunding," Production and Operations Management, Production and Operations Management Society, vol. 30(9), pages 3213-3230, September.
    13. Sunil Mithas & Yanzhen Chen & Yatang Lin & Alysson De Oliveira Silveira, 2022. "On the causality and plausibility of treatment effects in operations management research," Production and Operations Management, Production and Operations Management Society, vol. 31(12), pages 4558-4571, December.
    14. Zhang, Yanming & Huo, Baofeng & Liu, Jing & Dai, Fei & Kang, Mingu, 2023. "Understanding the impact of buyer extra-role behavior on supply-side operational transparency: A serial mediation model," International Journal of Production Economics, Elsevier, vol. 266(C).
    15. Gloria Urrea & Eunae Yoo, 2023. "The role of volunteer experience on performance on online volunteering platforms," Production and Operations Management, Production and Operations Management Society, vol. 32(2), pages 416-433, February.
    16. Zhang, Juan & Huang, Jian, 2020. "Deceptive advertising in a crowdfunding market," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 135(C).
    17. Johannes Jakubik & Stefan Feuerriegel, 2022. "Data‐driven allocation of development aid toward sustainable development goals: Evidence from HIV/AIDS," Production and Operations Management, Production and Operations Management Society, vol. 31(6), pages 2739-2756, June.

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