Home⇛International Journal of Multidisciplinary: Applied Business and Education Research⇛vol. 5 no. 4 (2024)

Crowdfunding and Social Capital: A Pathway for The Internationalization of MSMEs and Social Enterprises?

Kimberly Christie S. Vergara | Raymond Allan G. Vergara

 

Abstract:

Micro and social entrepreneurs face multiple challenges, including limited access to funding, knowledge systems, networks, and markets, which limit the growth and development of their ventures. This study seeks to understand how the participation in crowdfunding and its utilization to internationalize can help micro and social enterprises address challenges through social capital. Through a narrative review of literature anchored on the resource-based and knowledge-based theories of the firm and the theory of social capital, this study finds that crowdfunding provides access to funding, knowledge systems, and networks. Moreover, the participation in crowdfunding provides access to large, international markets. However, despite these benefits, there remains challenges to micro and social enterprise participation in crowdfunding as there is low awareness and adoption in developing countries. Furthermore, there is still question on crowdfunding’s viability as an internationalization strategy. The study ends by identifying directions for future research.



References:

  1. Agrawal, A. K., Catalini, C., & Goldfarb, A. (2011). The geography of crowdfunding (No. w16820). National Bureau of Eco-nomic Research. https://doi.org/10.1086/674021 Agrawal, A., Catalini, C., & Goldfarb, A. (2014). Some simple economics of crowdfund-ing.
  2. Innovation Policy and the Economy, 14(1), 63-97. https://doi.org/10.1086/674021
    Barney, J. B. (1986). Organizational culture: can it be a source of sustained competi-tive advantage?. Academy of Manage-ment Review, 11(3), 656-665. https://doi.org/10.5465/amr.1986.4306261
  3. Barney, J. (1991). Firm resources and sus-tained competitive advantage. Journal of Management, 17(1), 99-120. https://doi.org/10.1177/014920639101700108
  4. Barney, J. B. (2018). Why resource‐based theo-ry's model of profit appropriation must incorporate a stakeholder perspective. Strategic Management Journal, 39(13), 3305-3325. https://doi.org/10.1002/smj.2949
  5. Baumeister, Roy F., and Mark R. Leary. "Writ-ing narrative literature reviews." Review of general psychology 1.3 (1997): 311-320. https://doi.org/10.1037/1089-2680.1.3.311
  6. Belleflamme, P., Lambert, T., & Schwien-bacher, A. (2014). Crowdfunding: Tap-ping the right crowd. Journal of Business Venturing, 29(5), 585-609. https://doi.org/10.1016/j.jbusvent.2013.07.003
  7. Bhave, M. P. (1994). A process model of entre-preneurial venture creation. Journal of Business Venturing, 9(3), 223-242. https://doi.org/10.1016/0883-9026(94)90031-0
  8. Cai, W., Polzin, F., & Stan, E. (2021). Crowd-funding and social capital: A systematic review using a dynamic perspective. Technological Forecasting & Social Change, 162, 120412. https://doi.org/10.1016/j.techfore.2020.120412
  9. Cosh, A., Cumming, D., & Hughes, A. (2009). Outside enterpreneurial capital. The Economic Journal, 119(540), 1494-1533. https://doi.org/10.1111/j.1468-0297.2009.02270.x
  10. Diego, A., Maira, H., & Caiza, C. (2021). The use of crowdfunding and its impact on en-trepreneurship in the city of Ambato-Ecuador. Minerva, 2(6), 13-22. https://doi.org/10.47460/minerva.v2i6.38
  11. Eldridge, D., Nisar, T. M., & Torchia, M. (2021). What impact does equity crowdfunding have on SME innovation and growth? An empirical study. Small Business Econom-ics, 56(1), 105-120. https://doi.org/10.1007/s11187-019-00210-4
  12. Fatoki, O. (2015). The effect of human and so-cial capital on the knowledge of financ-ing alternatives by new small business owners in South Africa. Corporate Own-ership and Control, 13(1), 840-856.
  13. Fernhaber, S. A., & McDougall-Covin, P. P. (2009). Venture capitalists as catalysts to new venture internationalization: the impact of their knowledge and reputa-tion resources. Entrepreneurship Theory and Practice, 33(1), 277-295. https://doi.org/10.1111/j.1540-6520.2008.00289.x
  14. Grant, R. M. (1996). Toward a knowledge‐based theory of the firm. Strategic Man-agement Journal, 17(S2), 109-122. https://doi.org/10.1002/smj.4250171110
  15. Helliwell, J. F., & Putnam, R. D. (1995). Eco-nomic growth and social capital in Italy. Eastern Economic Journal, 21(3), 295-307. https://www.jstor.org/stable/40325643
  16. Ismaila, B. (2023). The state of crowdfunding in Africa and its potential impact: a liter-ature review. International Journal of Research in Business and Social Science (2147-4478), 12(5), 258-268. https://doi.org/10.20525/ijrbs.v12i5.2550
  17. Kukurba, M., & Waszkiewicz, A. (2018). Crowdfunding as a Form of Funding for Businesses in the Culturally-Changing Global Economy: A Literature Review. Journal of intercultural Management, 10(2), 99-137. https://doi.org/10.2478/joim-2018-0011
  18. Lehner, O. M. (2013). Crowdfunding social ventures: a model and research agenda. Venture Capital, 15(4), 289-311. http://dx.doi.org/10.1080/13691066.2013.782624
  19. Lehner, O. M., Grabmann, E., & Ennsgraber, C. (2015). Entrepreneurial implications of crowdfunding as alternative funding source for innovations. Venture Capital, 17(1-2), 171-189. https://doi.org/10.1080/13691066.2015.1037132
  20. Madrazo-Lemarroy, P., Barajas-Portas, K., & Labastida Tovar, M. E. (2019). Analyzing campaign’s outcome in reward-based crowdfunding: Social capital as a deter-minant factor. Internet Research, 29(5), 1171-1189. https://doi.org/10.1108/INTR-03-2018-0115
  21. Mahdiraji, H.A., Hajiagha, S.H.R., Jafari-Sadeghi, V., Busso, D., & Devalle, A. (2023). Towards financing the entrepre-neurial SMEs: exploring the innovation drivers of successful crowdfunding via a multi-layer decision-making approach. European Journal of Innovation Man-agement. https://doi.org/10.1108/EJIM-12-2021-0618
  22. Maier, E. (2016). Supply and demand on crowdlending platforms: connecting small and medium-sized enterprise bor-rowers and consumer investors. Journal of Retailing and consumer Services, 33, 143-153. https://doi.org/10.1016/j.jretconser.2016.08.004
  23. Maier, L., Baccarella, C. V., Block, J. H., Wagner, T. F., & Voigt, K. I. (2023). The legitimi-zation effect of crowdfunding success: a consumer perspective. Entrepreneurship Theory and Practice, 47(4), 1389-1420. https://doi.org/10.1177/10422587211057025
  24. Mäkelä, M. M., & Maula, M. V. (2005). Cross-border venture capital and new venture internationalization: An isomorphism perspective. Venture Capital, 7(3), 227-257. https://doi.org/10.1080/13691060500258877
  25. Maula, M. V., & Lukkarinen, A. (2022). Atten-tion across borders: Investor attention as a driver of cross‐border equity crowdfunding investments. Strategic Entrepreneurship Journal, 16(4), 699-734. https://doi.org/10.1002/sej.1424
  26. Mollick, E. (2014). The dynamics of crowd-funding: An exploratory study. Journal of business venturing, 29(1), 1-16. https://doi.org/10.1016/j.jbusvent.2013.06.005
  27. Mollick, E. R., & Kuppuswamy, V. (2014). After the campaign: Outcomes of crowdfund-ing. UNC Kenan-Flagler Research Paper, (2376997). Available at SSRN: https://ssrn.com/abstract=2376997 or http://dx.doi.org/10.2139/ssrn.2376997
  28. Nahapiet, J. & Ghoshal, S. (1998). Social capi-tal, intellectual capital, and the organiza-tional advantage. Academic Management Review, 23(2), 242–266. https://doi.org/10.5465/amr.1998.533225
  29. Paoloni, P., Paoloni, N., & Modaffari, G. (2019). Crowdfunding as a new collaborative process in the knowledge economy: A literature review. VINE Journal of Infor-mation and Knowledge Management Systems, 49(2), 241-255. https://doi.org/10.1108/VJIKMS-12-2018-0118
  30. Park, S., & LiPuma, J. A. (2020). New venture internationalization: The role of venture capital types and reputation. Journal of World Business, 55(1), 101025. https://doi.org/10.1016/j.jwb.2019.101025
  31. Pekmezovic, A., & Walker, G. (2016). The global significance of crowdfunding: Solving the SME funding problem and democratizing access to capital. Wm. & Mary Bus. L. Rev., 7, 347. https://scholarship.law.wm.edu/wmblr/vol7/iss2/3
  32. Putnam, R. D. (1993). The prosperous com-munity. The American Prospect, 4(13), 35-42.
  33. Roma, P., Petruzzelli, A. M., & Perrone, G. (2017). From the crowd to the market: The role of reward-based crowdfunding performance in attracting professional investors. Research Policy, 46(9), 1606-1628. https://doi.org/10.1016/j.respol.2017.07.012
  34. Shahab, Y., Ye, Z., Riaz, Y., & Ntim, C. G. (2019). Individual’s financial investment deci-sion-making in reward-based crowd-funding: Evidence from China. Applied Economics Letters, 26(4), 261-266. https://doi.org/10.1080/13504851.2018.1464643
  35. Sontag-Padilla, L.M., Staplefoote, L., & Gonza-lez Morganti, K. 2012. Financial sustain-ability for nonprofit organizations: A re-view of the literature. Santa Monica, CA: Rand Corporation. Retrieved from http://www.rand.org/pubs/research_reports/RR121.html
  36. Theokary, C., Sarangee, K., & Karniouchina, E. V. (2023). The impact of strategic part-nerships on crowdfunding outcomes: which ties really matter?. Journal of Small
    Business Management, 61(2), 481-512. https://doi.org/10.1080/00472778.2020.1796466
  37. Troise, C., Battisti, E., Christofi, M., van Vulpen, N. J., & Tarba, S. (2023). How can SMEs use crowdfunding platforms to interna-tionalize? The role of equity and reward crowdfunding. Management Interna-tional Review. 63(1), 117-159. https://doi.org/10.1007/s11575-022-00493-y
  38. Vergara, R. (2015). Awareness and attitudes towards crowdfunding in the Philip-pines. In 9th Global Business Conference, 4, 3-5.
  39. Vergara, R.A.G. (2019). Crowdfunding and the venture creation process. Philippine Academy of Management E-Journal, 2(1). https://paomassociation.org/paom-e-journal/issues/vol-2-no-1-march-2019/.
  40. Vergara, R.A.G. & Vergara, K.C.S. (2023). Why crowdfund? Motivations of Philippine-based project owners and backers. In-ternational Journal of Multidisciplinary: Applied Business and Education Re-search, 4(5), 1650-1658. https://doi.org/10.11594/ijmaber.04.05.26

Tools


Copyright © 2024  KITE Digital Educational Solutions |  Exclusively distributed by CE-Logic