A principal–agent perspective on consumer co-production: Crowdfunding and the redefinition of consumer power

This article treats crowdfunding, a practice that helps firms fund new projects using online communities of consumers, as a specific case of co-production. Through the lens of principal–agent theory, the article examines the agency relationship in co-production through which a company delegates some parts of the production process to consumers, empowering them. More specifically, a qualitative study uncovers three issues in the agency relationship created by crowdfunding. The issues pertain to the funding source, approval of a project, and community management, and all represent sources of empowerment for consumers. The results thus expand the co-production model to cover earlier stages of the project life cycle (i.e. the funding step). In crowdfunding, consumers collectively determine whether the product will be launched on the market or not, thus suggesting the notion of inverted agency relationship with consumers having some ideas about products to put on the market as principals and companies giving shape to these ideas as agents.