Reinvesting in equity crowdfunding: the case of digital workers

Authors

  • Rayan Faisal A. Makki Facultat de Economıa y Empresa, Universitat Autonoma de Barcelona, Barcelona, Spain; College of Business and Tourism, University of Prince Mugrin, Madinah, Saudi Arabia
  • Stefan Van Hemmen Facultat de Economıa y Empresa, Universitat Autonoma de Barcelona, Barcelona, Spain

Keywords:

Equity crowdfunding, Self-determination theory, Reinvesting, Serial investors

Abstract

Purpose

The purpose of this study is to investigate the initial investment's motivations and study the reinvesting motivations. The results revealed differences in reinvestors' motivations of reinvestors in both winning and losing situations. Specifically, financial return and excitement motives were supported for win and loss situations, while recognition was supported for loss and pleasure in win situations.

Design/methodology/approach

The impact of intrinsic and extrinsic motivations on reinvestors was tested using the structural equation model. Furthermore, the framework was analysed with survey data from a total of 355 digital workers from Amazon Mechanical Turk, one of the world's largest crowdsourcing platforms.

Findings

The results indicate that there are differences in the motivations for reinvestors when they are in both winning and losing situations. Financial return and excitement motives were supported for win and loss situation, while recognition was supported in loss and pleasure in win situation.

Research limitations/implications

This study makes it possible to better understand the motivations behind crowdfunding reinvestment among digital workers. To build on this work, more studies should be conducted with different samples to test the generalisability of these results. Moreover, future studies on different samples could determine whether the same motivations would hold for other investors or whether another motivation would have greater impact on these reinvestment decisions.

Originality/value

While previous research on equity crowdfunding has predominantly focused on intrinsic and extrinsic motivations for participating and investing in equity crowdfunding platforms, the motives that specifically affect winning or losing situations for reinvestors have been largely overlooked.

DOI:  https://doi.org/10.1108/JEFAS-07-2021-0116

Downloads

Download data is not yet available.

References

Adams, N., Little, T.D. and Ryan, R.M. (2017), “Self-determination theory”, Development of Self-Determination Through the Life-Course, Vol. 55 No. 1, pp. 47-54.

Aguinis, H., Villamor, I. and Ramani, R.S. (2021), “MTurk Research: review and recommendations”, Journal of Management, Vol. 47 No. 4, pp. 823-837.

Al-Swidi, A., Huque, S.M.R., Hafeez, M.H. and Shariff, M.N.M. (2014), “The role of subjective norms in theory of planned behavior in the context of organic food consumption”, British Food Journal, Vol. 116 No. 10, pp. 1561-1580.

Allison, T.H., Davis, B.C., Short, J.C. and Webb, J.W. (2015), “Crowdfunding in a prosocial microlending environment: examining the role of intrinsic versus extrinsic cues”, Entrepreneurship: Theory and Practice, Vol. 39 No. 1, pp. 53-73.

Antin, J. and Shaw, A. (2012), “Social desirability bias and self-reports of motivation”, Proceedings of the SIGCHI Conference on Human Factors in Computing Systems, pp. 2925-2934.

Aspara, J. and Tikkanen, H. (2011), “Individuals' affect-based motivations to invest in stocks: beyond expected financial returns and risks”, Journal of Behavioral Finance, Vol. 12 No. 2, pp. 78-89.

Bapna, S. (2015), “Complementarity of signals in early stage equity investment decisions: evidence from a randomized field experiment”, Management Science, Vol. 65 No. 2, pp. 933-952.

Beck, R., Müller-Bloch, C. and King, J.L. (2018), “Governance in the blockchain economy: a framework and research agenda”, Journal of the Association for Information Systems, Vol. 19 No. 10, pp. 1020-1034.

Bernardino, S. and Santos, J.F. (2020), “Crowdfunding: an exploratory study on knowledge, benefits and barriers perceived by young potential entrepreneurs”, Journal of Risk and Financial Management, Vol. 13 No. 4, p. 81.

Bogusz, C.I., Laurell, C., Sandström, C. and Sandström, C. (2020), “Tracking the digital evolution of entrepreneurial finance: the interplay between crowdfunding, blockchain technologies, cryptocurrencies, and initial coin offerings”, IEEE Transactions on Engineering Management, Vol. 67 No. 4, pp. 1099-1108.

Borello, G., de Crescenzo, V. and Pichler, F. (2015), “The funding gap and the role of financial return crowdfunding: some evidence from European platforms”, Journal of Internet Banking and Commerce, Vol. 20 No. 1, pp. 1-20.

Bouteska, A. and Regaieg, B. (2018), “Loss aversion, overconfidence of investors and their impact on market performance evidence from the US stock markets”, Journal of Economics, Finance and Administrative Science, Vol. 25 No. 50, pp. 451-478.

Bretschneider, U. and Leimeister, J.M. (2017), “Not just an ego-trip: exploring backers' motivation for funding in incentive-based crowdfunding”, Journal of Strategic Information Systems, Vol. 26 No. 4, pp. 246-260.

Bretschneider, U., Knaub, K. and Wieck, E. (2014), “Motivations for crowdfunding: what drives the crowd to invest in start-ups?”, ECIS 2014 Proceedings - 22nd European Conference on Information Systems, pp. 1-11.

Butticè, V., Colombo, M.G. and Wright, M. (2017), “Serial crowdfunding, social capital, and project success”, Entrepreneurship: Theory and Practice, Vol. 41 No. 2, pp. 183-207.

Cabanac, M. (1971), “Physiological Role of Pleasure: a stimulus can feel pleasant or unpleasant depending upon its usefulness as determined by internal signals”, Science, Vol. 173 No. 4002, pp. 1103-1107.

Cancino, A., Merigo, J.M., Torres, J.P. and Diaz, D. (2018), “A bibliometric analysis of venture capital research”, Journal of Economics, Finannce and Administrative Science, Vol. 23 No. 45, pp. 182-195.

Carbonara, E., Tran, H.T. and Santarelli, E. (2020), “Determinants of novice, portfolio, and serial entrepreneurship: an occupational choice approach”, Small Business Economics, Vol. 55 No. 1, pp. 123-151.

Cholakova, M. and Clarysse, B. (2015), “Does the possibility to make equity investments in crowdfunding projects crowd out reward-based investments?”, Entrepreneurship Theory and Practice, Vol. 39 No. 1, pp. 145-172.

Choy, K. and Schlagwein, D. (2016), “Crowdsourcing for a better world: on the relation between IT affordances and donor motivations in charitable crowdfunding”, Information Technology and People, Vol. 29 No. 1, pp. 221-247.

Collins, L. and Pierrakis, Y. (2012), “The venture crowd: crowdfunding equity investment into business”, Project report, Nesta, London, available at: https://www.nesta.org.uk/report/the-venture-crowd/ (accessed 24 July 2022).

Conway, C. (2013), “Serial entrepreneurs”, International Journal of Entrepreneurship and Innovation, Vol. 14 No. 5, p. 59.

Cumming, D.J., Leboeuf, G. and Schwienbacher, A. (2017), “Crowdfunding cleantech”, Energy Economics, Vol. 65, pp. 292-303.

Cyr, D., Head, M. and Ivanov, A. (2006), “Design aesthetics leading to m-loyalty in mobile commerce”, Information and Management, Vol. 43 No. 8, pp. 950-963.

Daskalakis, N. and Yue, W. (2017), “User's perceptions of motivations and risks in crowdfunding with financial returns”, PSN: Responses to Financial Crises (Development) (Topic), pp. 1-18.

Estrin, S., Gozman, D. and Khavul, S. (2018), “The evolution and adoption of equity crowdfunding: entrepreneur and investor entry into a new market”, Small Business Economics, Vol. 51, pp. 425-439.

Fischer, C., Malycha, C.P. and Schafmann, E. (2019), “The influence of intrinsic motivation and synergistic extrinsic motivators on creativity and innovation”, Frontiers in Psychology, Vol. 10, pp. 1-15.

Gerow, J.E., Ayyagari, R., Thatcher, J.B. and Roth, P.L. (2013), “Can we have fun @ work? The role of intrinsic motivation for utilitarian systems”, European Journal of Information Systems, Vol. 22 No. 3, pp. 360-380.

Gewald, H. and Pilz, D. (2013), “Does money matter? Motivational factors for participation in paid- and non-profit-crowdsourcing communities”, Wirtschaftsinformatik Proceedings 2013, Wirtschaft, Vol. 37, pp. 577-591.

Gleasure, R. and Feller, J. (2016), “Emerging technologies and the democratisation of financial services: a metatriangulation of crowdfunding research”, Information and Organization, Vol. 26 No. 4, pp. 101-115.

Hair, J.F., Risher, J.J., Sarstedt, M. and Ringle, C.M. (2019), “When to use and how to report the results of PLS-SEM”, European Business Review, Vol. 31 No. 1, pp. 2-24.

Hauser, D.J. and Schwarz, N. (2016), “Attentive Turkers: MTurk participants perform better on online attention checks than do subject pool participants”, Behavior Research Methods, Vol. 48 No. 1, pp. 400-407.

Hervé, F., Manthé, E., Sannajust, A. and Schwienbacher, A. (2016), “Investor motivations in investment-based crowdfunding”, Working paper, SSRN Electronic Journal, No. 1, pp. 1-47.

Hoque, A.S.M.M., Awang, Z.B., Muda, H. and Salleh, F. (2018), “Ramification of crowdfunding on Bangladeshi entrepreneur's self-efficacy”, Accounting, Vol. 4, pp. 129-138.

Kaufmann, N., Schulze, T. and Veit, D. (2011), “More than fun and money. Worker motivation in crowdsourcing – a study on mechanical Turk”, Proceedings of the 17th Americas Conference on Information Systems (AMCIS 2011), available at: https://aisel.aisnet.org/amcis2011_submissions/340 (accessed 24 July 2022).

Kelly, P., Hay, M. and Hay, M. (1996), “Serial investors and early stage finance”, The Journal of Entrepreneurial Finance, Vol. 5 No. 2, pp. 159-174.

Lafuente, E., Vaillant, Y., Vendrell-Herrero, F. and Gomes, E. (2019), “Bouncing back from failure: entrepreneurial resilience and the internationalisation of subsequent ventures created by aerial entrepreneurs”, Applied Psychology, Vol. 68 No. 4, pp. 658-694.

Lee, E. (2019), “Equity crowdfunding in Hong Kong: potential, challenges and investor protection”, Journal of Corporate Law Studies, Vol. 19 No. 2, pp. 277-302.

Lee, C.H. and Chiravuri, A. (2019), “Dealing with initial success versus failure in crowdfunding market: serial crowdfunding, changing strategies, and funding performance”, Internet Research, Vol. 29 No. 5, pp. 1190-1212.

Li, Y.Z., He, T.L., Song, Y.R., Yang, Z. and Zhou, R.T. (2018), “Factors impacting donors' intention to donate to charitable crowd-funding projects in China: a UTAUT-based model”, Information Communication and Society, Vol. 21 No. 3, pp. 404-415.

Liang, T.P., Wu, S.P.J. and Huang, C. (2019), “Why funders invest in crowdfunding projects: role of trust from the dual-process perspective”, Information and Management, Vol. 56 No. 1, pp. 70-84.

Lin, H.H., Wang, Y.S. and Chou, C.H. (2012), “Hedonic and utilitarian motivations for physical game systems use behavior”, International Journal of Human-Computer Interaction, Vol. 28 No. 7, pp. 445-455.

Lobāo, J., Pacheco, L. and Pereira, C. (2017), “The use of the recognition heuristic as an investment strategy in European stock markets”, Journal of Economics, Finance and Administrative Science, Vol. 22 No. 43, pp. 207-223.

Lukkarinen, A., Wallenius, J. and Seppälä, T. (2018), “Investor motivations and decision criteria in equity crowdfunding”, SSRN Electronic Journal, Vol. 11, pp. 56-70.

Macht, S. and Chapman, G. (2019), “Getting more than money through online crowdfunding”, Asia-Pacific Journal of Business Administration, Vol. 11 No. 2, pp. 171-186.

Martínez-Climent, C., Zorio-Grima, A. and Ribeiro-Soriano, D. (2018), “Financial return crowdfunding: literature review and bibliometric analysis”, International Entrepreneurship and Management Journal, Vol. 14 No. 3, pp. 527-553.

Maslow, A.H. (1987), Motivation and Personality, Harper and Row Publishers, New York.

Medina-Molina, C., Rey-Moreno, M., Felício, J.A. and Romano Paguillo, I. (2019), “Participation in crowdfunding among users of collaborative platforms: the role of innovativeness and social capital”, Review of Managerial Science, Vol. 13 No. 3, pp. 529-543.

Meric, J., Brabet, J. and Maque, I. (2016), International Perspectives on Crowdfunding: Positive, Normative and Critical Theory, Emerald Group Publishing.

Miller, K.A., Deci, E.L. and Ryan, R.M. (1988), “Intrinsic motivation and self-determination in human behavior”, Contemporary Sociology, Vol. 17 No. 2, p. 253.

Mitchell, R., Schuster, L. and Jin, H.S. (2020), “Gamification and the impact of extrinsic motivation on needs satisfaction: making work fun?”, Journal of Business Research, Vol. 106, pp. 323-330.

Mochkabadi, K. and Volkmann, C.K. (2018), “Equity crowdfunding: a systematic review of the literature”, Small Business Economics, Vol. 54 Nos 1/5, pp. 75-118.

Moritz, A., Block, J. and Lutz, E. (2015), “Investor communication in equity-based crowdfunding: a qualitative-empirical study”, Qualitative Research in Financial Markets, Vol. 7 No. 3, pp. 309-342.

Moysidou, K. and Spaeth, S. (2016), “Cognition, emotion and perceived values in crowdfunding decision making”, 14th International Open and User Innovation, available at: https://www.chalmers.se/sv/institutioner/tme/nyheter/Documents/Spaeth_ValuesCrowdfunding.pdf (accessed 24 July 2022).

Pierrakis, Y. (2019), “Peer to peer lending to businesses: investors' characteristics, investment criteria and motivation”, International Journal of Entrepreneurship and Innovation, Vol. 20 No. 4, pp. 239-251.

Reeve, J. (1989), “The interest-enjoyment distinction in intrinsic motivation”, Motivation and Emotion, Vol. 13 No. 2, pp. 83-103.

Reyhanloo, T., Baumgärtner, S., Haeni, M., Quatrini, S., Saner, P. and Von Lindern, E. (2018), “Private-sector investor's intention and motivation to invest in land degradation neutrality”, PLoS ONE, Vol. 13 No. 12, pp. 1-19.

Roseman, I.J. and Evdokas, A. (2004), “Appraisals cause experienced emotions: experimental evidence”, Cognition and Emotion, Vol. 18 No. 1, pp. 1-28.

Ryu, H.S. (2018), “What makes users willing or hesitant to use Fintech? The moderating effect of user type”, Industrial Management and Data Systems, Vol. 118 No. 3, pp. 541-569.

Schwienbacher, A. and Larralde, B. (2012), “Crowdfunding of small entrepreneurial ventures”, Cumming, D. (Ed.), The Oxford Handbook of Entrepreneurial Finance, Oxford University Press, Oxford, Chapter 13.

Sherman, A. and Axelrad, H. (2020), “A qualitative study on money, well-being and serial crowdfunding”, Baltic Journal of Management, Vol. 16 No. 1, pp. 97-112.

Signori, A. and Vismara, S. (2018), “Does success bring success? The post-offering lives of equity-crowdfunded firms”, Journal of Corporate Finance, Vol. 50, pp. 575-591.

Skirnevskiy, V., Bendig, D. and Brettel, M. (2017), “The influence of internal social capital on serial creators' success in crowdfunding”, Entrepreneurship: Theory and Practice, Vol. 41 No. 2, pp. 209-236.

Smallbone, D., Deakins, D., Battisti, M. and Kitching, J. (2012), “Small business responses to a major economic downturn: empirical perspectives from New Zealand and the United Kingdom”, International Small Business Journal, Vol. 30 No. 7, pp. 754-777.

Smith, N.A., Sabat, I.E., Martinez, L.R., Weaver, K. and Xu, S. (2015), “A convenient solution: using MTurk to sample from hard-to-reach populations”, Industrial and Organizational Psychology, Vol. 8 No. 2, pp. 220-228.

Soediono, B. (2006), “Psychology of human motivation”, Journal of Chemical Information and Modeling, Vol. 53, p. 160.

Stritch, J. (2017), “Coversheet”, Public, International Journal, Management, pp. 0-35, October 2016.

Teschner, F. and Gimpel, H. (2018), “Crowd labor markets as platform for group decision and negotiation research: a comparison to laboratory experiments”, Group Decision and Negotiation, Vol. 27 No. 2, pp. 197-214.

Törhönen, M., Sjöblom, M., Hassan, L. and Hamari, J. (2019), “Fame and fortune, or just fun? A study on why people create content on video platforms”, Internet Research, Vol. 30 No. 1, pp. 165-190.

Troise, C. and Tani, M. (2020), “Exploring entrepreneurial characteristics, motivations and behaviours in equity crowdfunding: some evidence from Italy”, Management Decision, Vol. 59 No. 5, pp. 995-1024.

Vaillant, Y. and Lafuente, E. (2019), “Entrepreneurial experience and the innovativeness of serial entrepreneurs”, Management Decision, Vol. 57 No. 11, pp. 2869-2889.

Vismara, S. (2019), “Sustainability in equity crowdfunding”, Technological Forecasting and Social Change, Vol. 141, pp. 98-106.

Walthoff-Borm, X., Schwienbacher, A. and Vanacker, T. (2018), “Equity crowdfunding: first resort or last resort?”, Journal of Business Venturing, Vol. 33 No. 4, pp. 513-533.

Wasiuzzaman, S., Chong, L.L. and Ong, H.B. (2021a), “Influence of perceived risks on the decision to invest in equity crowdfunding: a study of Malaysian investors”, Journal of Entrepreneurship in Emerging Economies, Vol. 14 No. 2, pp. 1-23.

Wasiuzzaman, S., Lee, C.L., Boon, O.H. and Chelvam, H.P. (2021b), “Examination of the motivations for equity-based crowdfunding in an emerging market”, Journal of Theoretical and Applied Electronic Commerce Research, Vol. 16 No. 2, pp. 63-79.

Wen, J., Hu, Y. and Kim, H.J. (2018), “Impact of individual cultural values on hotel guests' positive emotions and positive eWOM intention: extending the cognitive appraisal framework”, International Journal of Contemporary Hospitality Management, Vol. 30 No. 3, pp. 1769-1787.

Wu, J. and Lu, X. (2013), “Effects of extrinsic and intrinsic motivators on using utilitarian, hedonic, and dual-purposed information systems: a meta-analysis”, Journal of the Association for Information Systems, Vol. 14 No. 3, pp. 153-191.

Yang, L. and Hahn, J. (2015), “Learning from prior experience: an empirical study of serial entrepreneurs in IT-enabled crowdfunding”, International Conference on Information Systems: Exploring the Information Frontier, ICIS, available at: https://core.ac.uk/reader/301367364 (accessed 24 July 2022).

Zhang, W., Xu, Y. and Zheng, H. (2019), “The antecedents and consequences of crowdfunding investors' citizenship behaviors: an empirical study of motivations and stickiness”, Online Information Review, Vol. 43 No. 4, pp. 584-599.

Zhao, Y., Qin, Y., Zhao, X. and Shi, L. (2018), “Relationship between entrepreneurial motivation and crowdfunding success based on qualitative analysis-based on kickstarter website data”, Wireless Personal Communications, Vol. 102 No. 2, pp. 1723-1734.

Downloads

Published

2022-12-13

How to Cite

Makki, R. F. A., & Van Hemmen, S. (2022). Reinvesting in equity crowdfunding: the case of digital workers. Journal of Economics, Finance and Administrative Science, 27(54), 394–411. Retrieved from https://revistas.esan.edu.pe/index.php/jefas/article/view/643