Crowdfunding Entrepreneurial or Humanitarian Needs? The Influence of Signals and Biases on Decisions

Abstract

Crowdfunding platforms have become a valid alternative for raising funds for both entrepreneurial and humanitarian projects. The aim of our study is to investigate the factors influencing the likelihood of funding success across these two project types. Building on the charitable giving and entrepreneurial finance literature streams, we employ the lenses of signaling theory and behavioral decision making to hypothesize how the impact of certain factors varies contingent on the nature of the project, from a humanitarian plea to an entrepreneurial venture. We conduct our investigation on Kiva and find that gender bias and risk signals exhibit a stronger impact on the likelihood of funding success for entrepreneurial projects, whereas humanitarian projects are more affected by home bias. By reconciling prior inconsistencies in crowdfunding research and bringing forward new ideas, we aim to support the vigorous growth of an emergent phenomenon that is of growing social and economic importance.