IDEAS home Printed from https://ideas.repec.org/a/sae/entthe/v39y2015i1p53-73.html
   My bibliography  Save this article

Crowdfunding in a Prosocial Microlending Environment: Examining the Role of Intrinsic versus Extrinsic Cues

Author

Listed:
  • Thomas H. Allison
  • Blakley C. Davis
  • Jeremy C. Short
  • Justin W. Webb

Abstract

Microloans garnered from crowdfunding provide an important source of financial capital for nascent entrepreneurs. Drawing on cognitive evaluation theory, we assess how linguistic cues known to affect underlying motivation can frame entrepreneurial narratives either as a business opportunity or as an opportunity to help others. We examine how this framing affects fundraising outcomes in the context of prosocial lending and conduct our analysis on a sample of microloans made to over 36,000 entrepreneurs in 51 countries via an online crowdfunding platform. We find that lenders respond positively to narratives highlighting the venture as an opportunity to help others, and less positively when the narrative is framed as a business opportunity.

Suggested Citation

  • Thomas H. Allison & Blakley C. Davis & Jeremy C. Short & Justin W. Webb, 2015. "Crowdfunding in a Prosocial Microlending Environment: Examining the Role of Intrinsic versus Extrinsic Cues," Entrepreneurship Theory and Practice, , vol. 39(1), pages 53-73, January.
    • Handle: RePEc:sae:entthe:v:39:y:2015:i:1:p:53-73
    DOI: 10.1111/etap.12108
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1111/etap.12108
    Download Restriction: no
    File URL: https://libkey.io/10.1111/etap.12108?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Zacharakis, Andrew L. & Meyer, G. Dale, 1998. "A lack of insight: do venture capitalists really understand their own decision process?," Journal of Business Venturing, Elsevier, vol. 13(1), pages 57-76, January.
    2. Garry D. Bruton & David Ahlstrom & Krzysztof Obloj, 2008. "Entrepreneurship in Emerging Economies: Where Are We Today and Where Should the Research Go in the Future," Entrepreneurship Theory and Practice, , vol. 32(1), pages 1-14, January.
    3. Joep P. Cornelissen & Jean S. Clarke, 2010. "Imagining and rationalizing opportunities : Inductive reasoning and the creation and justification of new ventures," Post-Print hal-02276730, HAL.
    4. Buckley, Graeme, 1997. "Microfinance in Africa: Is it either the problem or the solution?," World Development, Elsevier, vol. 25(7), pages 1081-1093, July.
    5. Devin G. Pope & Justin R. Sydnor, 2011. "What’s in a Picture?: Evidence of Discrimination from Prosper.com," Journal of Human Resources, University of Wisconsin Press, vol. 46(1), pages 53-92.
    6. Mollick, Ethan, 2014. "The dynamics of crowdfunding: An exploratory study," Journal of Business Venturing, Elsevier, vol. 29(1), pages 1-16.
    7. Michael Lubatkin & John Florin & William S. Schulze, 2003. "A social capital model of high growth ventures," Post-Print hal-02311715, HAL.
    8. Susanna Khavul & Garry D. Bruton & Eric Wood, 2009. "Informal Family Business in Africa," Entrepreneurship Theory and Practice, , vol. 33(6), pages 1219-1238, November.
    9. Shige Makino & Takehiko Isobe & Christine M. Chan, 2004. "Does country matter?," Strategic Management Journal, Wiley Blackwell, vol. 25(10), pages 1027-1043, October.
    10. Khavul, Susanna & Chavez, Helmuth & Bruton, Garry D., 2013. "When institutional change outruns the change agent: The contested terrain of entrepreneurial microfinance for those in poverty," Journal of Business Venturing, Elsevier, vol. 28(1), pages 30-50.
    11. Dean S. Karlan & Jonathan Zinman, 2008. "Credit Elasticities in Less-Developed Economies: Implications for Microfinance," American Economic Review, American Economic Association, vol. 98(3), pages 1040-1068, June.
    12. Michael Lubatkin & John Florin & William S. Schulze, 2003. "A social capital model of high growth ventures," Post-Print hal-02276699, HAL.
    13. Jayanthi Krishnan & Eric Press, 2003. "The North American Industry Classification System and Its Implications for Accounting Research," Contemporary Accounting Research, John Wiley & Sons, vol. 20(4), pages 685-717, December.
    14. Aaron K. Chatterji, 2009. "Spawned with a silver spoon? Entrepreneurial performance and innovation in the medical device industry," Strategic Management Journal, Wiley Blackwell, vol. 30(2), pages 185-206, February.
    15. Andreoni, James, 1989. "Giving with Impure Altruism: Applications to Charity and Ricardian Equivalence," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1447-1458, December.
    16. Andreoni, James, 1990. "Impure Altruism and Donations to Public Goods: A Theory of Warm-Glow Giving?," Economic Journal, Royal Economic Society, vol. 100(401), pages 464-477, June.
    17. Small, Deborah A. & Loewenstein, George & Slovic, Paul, 2007. "Sympathy and callousness: The impact of deliberative thought on donations to identifiable and statistical victims," Organizational Behavior and Human Decision Processes, Elsevier, vol. 102(2), pages 143-153, March.
    18. Allison, Thomas H. & McKenny, Aaron F. & Short, Jeremy C., 2013. "The effect of entrepreneurial rhetoric on microlending investment: An examination of the warm-glow effect," Journal of Business Venturing, Elsevier, vol. 28(6), pages 690-707.
    19. Joep P. Cornelissen & Jean S. Clarke, 2010. "Imagining and rationalizing opportunities : Inductive reasoning and the creation and justification of new ventures," Post-Print hal-02312342, HAL.
    20. Tim Loughran & Bill Mcdonald, 2011. "When Is a Liability Not a Liability? Textual Analysis, Dictionaries, and 10‐Ks," Journal of Finance, American Finance Association, vol. 66(1), pages 35-65, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Benson, David F. & Brau, James C. & Cicon, James & Ferris, Stephen P., 2015. "Strategically camouflaged corporate governance in IPOs: Entrepreneurial masking and impression management," Journal of Business Venturing, Elsevier, vol. 30(6), pages 839-864.
    2. Anglin, Aaron H. & Short, Jeremy C. & Drover, Will & Stevenson, Regan M. & McKenny, Aaron F. & Allison, Thomas H., 2018. "The power of positivity? The influence of positive psychological capital language on crowdfunding performance," Journal of Business Venturing, Elsevier, vol. 33(4), pages 470-492.
    3. Allison, Thomas H. & McKenny, Aaron F. & Short, Jeremy C., 2013. "The effect of entrepreneurial rhetoric on microlending investment: An examination of the warm-glow effect," Journal of Business Venturing, Elsevier, vol. 28(6), pages 690-707.
    4. Hadar Gafni & Marek Hudon & Anaïs Périlleux, 2021. "Business or Basic Needs? The Impact of Loan Purpose on Social Crowdfunding Platforms," Journal of Business Ethics, Springer, vol. 173(4), pages 777-793, November.
    5. Ling Ge & Xuechen Luo, 2024. "Channel structure and funder incentive in prosocial crowdfunding," Information Technology and Management, Springer, vol. 25(4), pages 335-344, December.
    6. Xiang Yuan & Luyao Wang & Xicheng Yin & Hongwei Wang, 2021. "How text sentiment moderates the impact of motivational cues on crowdfunding campaigns," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 7(1), pages 1-26, December.
    7. Shepherd, Dean A. & Sattari, Rose & Patzelt, Holger, 2022. "A social model of opportunity development: Building and engaging communities of inquiry," Journal of Business Venturing, Elsevier, vol. 37(1).
    8. Johnson, Michael A. & Stevenson, Regan M. & Letwin, Chaim R., 2018. "A woman's place is in the… startup! Crowdfunder judgments, implicit bias, and the stereotype content model," Journal of Business Venturing, Elsevier, vol. 33(6), pages 813-831.
    9. Andreas Hoegen & Dennis M. Steininger & Daniel Veit, 2018. "How do investors decide? An interdisciplinary review of decision-making in crowdfunding," Electronic Markets, Springer;IIM University of St. Gallen, vol. 28(3), pages 339-365, August.
    10. Penz, R. Frederic & Hörisch, Jacob & Tenner, Isabell, 2022. "Investors in environmental ventures want good money—and a clean conscience: How framing, interest rates, and the environmental impact of crowdlending projects influence funding decisions," Technological Forecasting and Social Change, Elsevier, vol. 182(C).
    11. Fang, Xing, 2022. "Why we hide good deeds? The selfless and anonymous donation behavior in crowdfunding," Technology in Society, Elsevier, vol. 71(C).
    12. Criaco, Giuseppe & van Oosterhout, J. (Hans) & Nordqvist, Mattias, 2021. "Is blood always thicker than water? Family firm parents, kinship ties, and the survival of spawns," Journal of Business Venturing, Elsevier, vol. 36(6).
    13. Zunino, Diego & van Praag, Mirjam C. & Dushnitsky, Gary, 2017. "Badge of Honor or Scarlet Letter? Unpacking Investors' Judgment of Entrepreneurs' Past Failure," IZA Discussion Papers 11017, Institute of Labor Economics (IZA).
    14. Gregor Dorfleitner & Lars Hornuf & Martina Weber, 2018. "Dynamics of investor communication in equity crowdfunding," Electronic Markets, Springer;IIM University of St. Gallen, vol. 28(4), pages 523-540, November.
    15. Maria Figueroa-Armijos & John P. Berns, 2022. "Vulnerable Populations and Individual Social Responsibility in Prosocial Crowdfunding: Does the Framing Matter for Female and Rural Entrepreneurs?," Journal of Business Ethics, Springer, vol. 177(2), pages 377-394, May.
    16. Gregor Dorfleitner & Lars Hornuf & Martina Weber, 2017. "Dynamics of Investor Communication in Equity Crowdfunding," Research Papers in Economics 2017-04, University of Trier, Department of Economics.
    17. Johan, Sofia & Zhang, Yelin, 2020. "Quality revealing versus overstating in equity crowdfunding," Journal of Corporate Finance, Elsevier, vol. 65(C).
    18. Praag, Mirjam van & Zunino, Diego & Dushnitsky, Gary, 2017. "Badge of Honor or Scarlet Letter? Unpacking Investors’ Judgment of Entrepreneurs’ Past Failure," CEPR Discussion Papers 12329, C.E.P.R. Discussion Papers.
    19. Yuliya Snihur & Llewellyn D. W. Thomas & Raghu Garud & Nelson Phillips, 2022. "Entrepreneurial Framing: A Literature Review and Future Research Directions," Entrepreneurship Theory and Practice, , vol. 46(3), pages 578-606, May.
    20. Liu, He & Li, Xuerong & Wang, Shouyang, 2021. "A bibliometric analysis of 30 years of platform research: Developing the research agenda for platforms, the associated technologies and social impacts," Technological Forecasting and Social Change, Elsevier, vol. 169(C).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:entthe:v:39:y:2015:i:1:p:53-73. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.