IDEAS home Printed from https://ideas.repec.org/p/arx/papers/1902.02480.html
   My bibliography  Save this paper

Crowdfunding Public Projects: Collaborative Governance for Achieving Citizen Co-funding of Public Goods

Author

Listed:
  • Sounman Hong
  • Jungmin Ryu

Abstract

This study explores the potential of crowdfunding as a tool for achieving citizen co-funding of public projects. Focusing on philanthropic crowdfunding, we examine whether collaborative projects between public and private organizations are more successful in fundraising than projects initiated solely by private organizations. We argue that government involvement in crowdfunding provides some type of accreditation or certification that attests to a project aim to achieve public rather than private goals, thereby mitigating information asymmetry and improving mutual trust between creators (i.e., private sector organizations) and funders (i.e., crowd). To support this argument, we show that crowdfunding projects with government involvement achieved a greater success rate and attracted a greater amount of funding than comparable projects without government involvement. This evidence shows that governments may take advantage of crowdfunding to co-fund public projects with the citizenry for addressing the complex challenges that we face in the twenty-first century.

Suggested Citation

  • Sounman Hong & Jungmin Ryu, 2019. "Crowdfunding Public Projects: Collaborative Governance for Achieving Citizen Co-funding of Public Goods," Papers 1902.02480, arXiv.org.
  • Handle: RePEc:arx:papers:1902.02480
    as

    Download full text from publisher

    File URL: http://arxiv.org/pdf/1902.02480
    File Function: Latest version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ajay Agrawal & Christian Catalini & Avi Goldfarb, 2014. "Some Simple Economics of Crowdfunding," Innovation Policy and the Economy, University of Chicago Press, vol. 14(1), pages 63-97.
    2. Myers, Stewart C. & Majluf, Nicholas S., 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Journal of Financial Economics, Elsevier, vol. 13(2), pages 187-221, June.
    3. Stewart C. Myers & Nicholas S. Majluf, 1984. "Corporate Financing and Investment Decisions When Firms Have InformationThat Investors Do Not Have," NBER Working Papers 1396, National Bureau of Economic Research, Inc.
    4. Gordon Burtch & Anindya Ghose & Sunil Wattal, 2013. "An Empirical Examination of the Antecedents and Consequences of Contribution Patterns in Crowd-Funded Markets," Information Systems Research, INFORMS, vol. 24(3), pages 499-519, September.
    5. Ethan Mollick & Ramana Nanda, 2016. "Wisdom or Madness? Comparing Crowds with Expert Evaluation in Funding the Arts," Management Science, INFORMS, vol. 62(6), pages 1533-1553, June.
    6. Rajagopal, 2014. "Organizations and Innovation," Palgrave Macmillan Books, in: Architecting Enterprise, chapter 3, pages 58-86, Palgrave Macmillan.
    7. Sounman Hong & Taek Kyu Kim, 2018. "Public–private partnership meets corporate social responsibility—the case of H-JUMP school," Public Money & Management, Taylor & Francis Journals, vol. 38(4), pages 297-304, June.
    8. Demircioglu, Mehmet Akif & Audretsch, David B., 2017. "Conditions for innovation in public sector organizations," Research Policy, Elsevier, vol. 46(9), pages 1681-1691.
    9. Arundel, Anthony & Casali, Luca & Hollanders, Hugo, 2015. "How European public sector agencies innovate: The use of bottom-up, policy-dependent and knowledge-scanning innovation methods," Research Policy, Elsevier, vol. 44(7), pages 1271-1282.
    10. Whitney Afonso, 2016. "The Equity of Local Sales Tax Distributions in Urban, Suburban, Rural, and Tourism Rich Counties in North Carolina," Public Finance Review, , vol. 44(6), pages 691-721, November.
    11. Juho Hamari & Mimmi Sjöklint & Antti Ukkonen, 2016. "The sharing economy: Why people participate in collaborative consumption," Journal of the Association for Information Science & Technology, Association for Information Science & Technology, vol. 67(9), pages 2047-2059, September.
    12. Roland Strausz, 2017. "A Theory of Crowdfunding: A Mechanism Design Approach with Demand Uncertainty and Moral Hazard," American Economic Review, American Economic Association, vol. 107(6), pages 1430-1476, June.
    13. Chang Heon Lee & J. Leon Zhao & Ghazwan Hassna, 2016. "Government-incentivized crowdfunding for one-belt, one-road enterprises: design and research issues," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 2(1), pages 1-14, December.
    14. Markus M. Bugge & Carter W. Bloch, 2016. "Between bricolage and breakthroughs—framing the many faces of public sector innovation," Public Money & Management, Taylor & Francis Journals, vol. 36(4), pages 281-288, May.
    15. Sandmo, Agnar, 1976. "Optimal taxation : An introduction to the literature," Journal of Public Economics, Elsevier, vol. 6(1-2), pages 37-54.
    16. Strausz, Roland, 2017. "A Theory of Crowdfunding," Rationality and Competition Discussion Paper Series 2, CRC TRR 190 Rationality and Competition.
    17. Collm & Schedler, 2014. "Strategies for Introducing Organizational Innovation to Public Service Organizations," Public Management Review, Taylor & Francis Journals, vol. 16(1), pages 140-161, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Xiaobei Liang & Xiaojuan Hu & Jiang Jiang, 2020. "Research on the Effects of Information Description on Crowdfunding Success within a Sustainable Economy—The Perspective of Information Communication," Sustainability, MDPI, vol. 12(2), pages 1-36, January.
    2. Chiara Carolina Donelli & Isabella Mozzoni & Francesco Badia & Simone Fanelli, 2022. "Financing Sustainability in the Arts Sector: The Case of the Art Bonus Public Crowdfunding Campaign in Italy," Sustainability, MDPI, vol. 14(3), pages 1-20, January.
    3. Valente, Marieta & Fernandes, Maria Eduarda & Pinto, Lígia Maria Costa, 2024. "Crowdfunding or crowdsourcing time: Exploring the willingness of private citizens to help prevent forest fires," Forest Policy and Economics, Elsevier, vol. 163(C).
    4. Ari, Ibrahim & Koc, Muammer, 2021. "Philanthropic-crowdfunding-partnership: A proof-of-concept study for sustainable financing in low-carbon energy transitions," Energy, Elsevier, vol. 222(C).
    5. Gao, Yongqiang & Cai, Yaohan, 2024. "In help-seekers' shoes: First-person pronouns entitled charitable fundraising campaigns and individual donating behavior in China," Journal of Retailing and Consumer Services, Elsevier, vol. 79(C).
    6. Li, Liangqiang & Yang, Liang & Zhao, Meng & Liao, Miyan & Cao, Yunzhong, 2022. "Exploring the success determinants of crowdfunding for cultural and creative projects: An empirical study based on signal theory," Technology in Society, Elsevier, vol. 70(C).

    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. Sylvain Dejean, 2020. "The role of distance and social networks in the geography of crowdfunding: evidence from France," Regional Studies, Taylor & Francis Journals, vol. 54(3), pages 329-339, March.
    2. Gilles Chemla & Katrin Tinn, 2020. "Learning Through Crowdfunding," Management Science, INFORMS, vol. 66(5), pages 1783-1801, May.
    3. Bi, Gongbing & Geng, Botao & Liu, Lindong, 2019. "On the fixed and flexible funding mechanisms in reward-based crowdfunding," European Journal of Operational Research, Elsevier, vol. 279(1), pages 168-183.
    4. Massimo G. Colombo & Kourosh Shafi, 2021. "Receiving external equity following successfully crowdfunded technological projects: an informational mechanism," Small Business Economics, Springer, vol. 56(4), pages 1507-1529, April.
    5. Saul Estrin & Susanna Khavul & Mike Wright, 2022. "Soft and hard information in equity crowdfunding: network effects in the digitalization of entrepreneurial finance," Small Business Economics, Springer, vol. 58(4), pages 1761-1781, April.
    6. Friedemann Polzin & Helen Toxopeus & Erik Stam, 2018. "The wisdom of the crowd in funding: information heterogeneity and social networks of crowdfunders," Small Business Economics, Springer, vol. 50(2), pages 251-273, February.
    7. Fabrice Hervé & Armin Schwienbacher, 2018. "Crowdfunding And Innovation," Journal of Economic Surveys, Wiley Blackwell, vol. 32(5), pages 1514-1530, December.
    8. Mehmet Akif Demircioglu & David B. Audretsch, 2019. "Public sector innovation: the effect of universities," The Journal of Technology Transfer, Springer, vol. 44(2), pages 596-614, April.
    9. Xu, Yang & Zhou, Qiang & Wang, Xu, 2023. "Joint price and quality optimization strategy in crowdfunding campaign," International Journal of Production Economics, Elsevier, vol. 263(C).
    10. Nguyen, Thang & Cox, Joe & Rich, Judy, 2019. "Invest or regret? An empirical investigation into funding dynamics during the final days of equity crowdfunding campaigns," Journal of Corporate Finance, Elsevier, vol. 58(C), pages 784-803.
    11. Daniel Blaseg & Douglas Cumming & Michael Koetter, 2021. "Equity Crowdfunding: High-Quality or Low-Quality Entrepreneurs?," Entrepreneurship Theory and Practice, , vol. 45(3), pages 505-530, May.
    12. Regner, Tobias & Crosetto, Paolo, 2021. "The long-term effects of self pledging in reward crowdfunding," Technological Forecasting and Social Change, Elsevier, vol. 165(C).
    13. Viotto da Cruz, Jordana, 2018. "Beyond financing: crowdfunding as an informational mechanism," Journal of Business Venturing, Elsevier, vol. 33(3), pages 371-393.
    14. Gary Dushnitsky & Evila Piva & Cristina Rossi‐Lamastra, 2022. "Investigating the mix of strategic choices and performance of transaction platforms: Evidence from the crowdfunding setting," Strategic Management Journal, Wiley Blackwell, vol. 43(3), pages 563-598, March.
    15. Roma, Paolo & Vasi, Maria & Kolympiris, Christos, 2021. "On the signaling effect of reward-based crowdfunding: (When) do later stage venture capitalists rely more on the crowd than their peers?," Research Policy, Elsevier, vol. 50(6).
    16. Hsieh, Hui-Ching & Vu, Thi Huyen Chi, 2021. "The impact of economic policy uncertainty on crowdfunding success," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 75(C).
    17. Boudreau, Kevin J. & Jeppesen, Lars Bo & Reichstein, Toke & Rullani, Francesco, 2021. "Crowdfunding as Donations to Entrepreneurial Firms," Research Policy, Elsevier, vol. 50(7).
    18. Praveen Kumar & Nisan Langberg & David Zvilichovsky, 2020. "Crowdfunding, Financing Constraints, and Real Effects," Management Science, INFORMS, vol. 66(8), pages 3561-3580, August.
    19. Tuo Gladys & Yi Feng & Sarpong Solomon & Wang Wenxin, 2020. "The Second Round Resource Acquisition of Entrepreneurial Crowdfunded Ventures: The Relevance of Campaign and Project Implementation Performance Outcomes," Entrepreneurship Research Journal, De Gruyter, vol. 10(3), pages 1-21, July.
    20. Besancenot, Damien & Vranceanu, Radu, 2018. "Crowdfunding with overenthusiastic investors : a global game model," ESSEC Working Papers WP1802, ESSEC Research Center, ESSEC Business School.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:arx:papers:1902.02480. 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: arXiv administrators (email available below). General contact details of provider: http://arxiv.org/ .

    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.