The effect of moral foundations in prosocial crowdfunding

Abstract

Prosocial crowdfunding is a new business phenomenon which is transforming the microfinance sector, as more microloans are posted online for fundraising. Research suggests that prosocial lenders registered on crowdfunding platforms seek non-financial returns from their investments, such as the creation of value for the social good. This article adds moral ethics to the crowdfunding equation by drawing on Moral Foundations Theory (MFT). It is posited that cues of moral foundations embedded within borrower profile descriptions are likely to inform prosocial lenders about a borrower’s potential for social value creation, thus triggering lending decisions. A Computer-Assisted-Text-Analysis (CATA) of 130,964 funded microloan profile descriptions on a crowdfunding platform suggests that prosocial lenders fund borrowers who cue universal moral foundations (Harm/Care and Fairness/Reciprocity) more quickly than those who cue primarily conservative moral foundations (Ingroup/Loyalty, Authority/Respect and Purity/Sanctity).

Keywords

entrepreneurship microfinance moral foundations theory prosocial crowdfunding prosocial lending

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