Raising funds through crowdfunding for a capital-constrained servicing manufacturer

Servitization (service-oriented manufacturing) is an emerging business model under which a manufacturer offers services derived from physical goods. A servicing manufacturer is more likely to be capital-constrained, as its revenue is monetized over a long period of time. Therefore, we explore how a capital-constrained servicing manufacturer raises funds through crowdfunding. We construct a game-theoretical model to capture the optimal decisions (quality and price) of a servicing manufacturer facing two types of customers. In our paper, the endogenous quality level is derived by tailoring the service to consumers’ needs. According to the posted quality level, customers determine their optimal usage of the service, which impacts the target of crowdfunding. We find that when both types of customers share the same product in crowdfunding, a higher proportion of high-end customers will lead to a lower quality level determined by the manufacturer. In addition, the servicing manufacturer also optimizes price decisions to induce high-type customers to make a contribution to the success of crowdfunding. These results underscore the influence of the crowdfunding mechanism on the servicing manufacturer’s decisions. However, offering a product line lets no one sacrifice interests for the success of crowdfunding. Both the manufacturer and customers obtain the highest benefits because servitization enables the manufacturer to provide customers with customized services. We argue that servitization improves the performance of crowdfunding by allowing the manufacturer to optimize operational decisions.