THE ROLE OF REWARD-BASED CROWDFUNDING IN FARM FINANCING: WHAT CHARACTERISES SUCCESSFUL CAMPAIGN?
DOI:
https://doi.org/10.5937/ekoPolj2103773LKeywords:
crowdfunding, agri-business, success factors, farm financingAbstract
The purpose of this paper is to provide insight into the role of reward-based crowdfunding in farm financing, with a focus on its likelihood of success. The study uses a sample of 1,566 projects from the Kickstarter platform between 2014 and 2020. We added the level of urbanization and relative importance of agriculture in the countrys economy to the basic elements to assess the importance of the crowdfunding.
We run a logistic regression model to investigate factors that motivate investment decisions. We discovered a statistically significant negative correlation between the self-set campaign goal and project success, as well as a small positive impact of number of backers and a positive impact of the importance of agriculture in the countrys economy on crowdfunding success. In an era of rapid innovation and the rise of social networks, this paper contributes to the current literature on the agri-food industrys reword-based crowdfunding approach.
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References
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29. Liang, X., Hu, X., & Jiang, J. (2020). Research on the Effects of Information Description on Crowdfunding Success within a Sustainable Economy—The Perspective of Information Communication. Sustainability, 12(2), 650.
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32. Macht, S.A., & Weatherston, J. (2014). The Benefits of Online Crowdfunding for Fund-Seeking Business Ventures. Special Issue: Firms Strategy, Organization, and Financial Performance, 23(1-2), 1-14.
33. Martinez-Climent, C., Zorio-Grima, A., & Ribeiro-Soriano, D. (2018). Financial return crowdfunding: literature review and bibliometric analysis. International Entrepreneurship and Management Journal, 14(3), 527-553.
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35. Mitra, T., & Gilbert, E. (2014). The language that gets people to give: Phrases that predict success on Kickstarter. In Proceedings of the 17th ACM conference on Computer supported cooperative work & social computing, Baltimore, pp. 49-61.
36. Mollick, E. (2014). The dynamics of crowdfunding: An exploratory study. Journal of business venturing, 29(1), 1-16.
37. Mollick, E. R., & Kuppuswamy, V. (2014). After the Campaign: Outcomes of Crowdfunding. Research Paper No. 2376997, available at SSRN: https://ssrn.com/abstract=2376997
38. Moritz, A., & Block, J.H. (2016). Crowdfunding: A Literature Review and Research Directions. FGF Studies in Small Business and Entrepreneurship, In: Dennis Brüntje & Oliver Gajda (Eds.). Crowdfunding in Europe, Edition 1, pp. 25-53, Springer.
39. Ni, A. M., Huang, L., & Xiong, F. (2021). A new perspective of innovation-driven agricultural sustainable development: a case of China. In IOP Conference Series: Earth and Environmental Science, Beijing, 667(1), IOP Publishing.
40. Njegomir, V., Tepavac, R., & Ivanišević, N. (2017). Alternative sources of financing entrepreneurial undertakings in agriculture. Economics of Agriculture, 64(1), 295-306.
41. OReilly, T. (2007). What is Web 2.0: Design Patterns and Business Models for the next generation of software". Communication & Strategies, 65, pp. 17-37.
42. Petruzzelli, A. M., Natalicchio, A., Panniello, U., & Roma, P. (2019). Understanding the crowdfunding phenomenon and its implications for sustainability. Technological Forecasting and Social Change, 141, 138-148.
43. Popović S., Janković I., & Ž. Stojanović. (2018). The Importance of Bank Credits for Agricultural Financing in Serbia. Economics of Agriculture, 65(1), 65-80.
44. Pronti, A., Pagliarino, E. (2018). Not just for money. Crowdfunding a new tool of Open Innovation to support the Agro-Food sector. Evidences on the Italian market. Journal of Agricultural & Food Industrial Organization, 17(1), 2-25.
45. Renwick, M., & Mossialos, E. (2017). Crowdfunding our health: Economic risks and benefts. Social Science & Medicine, 191, 4-56.
46. ResearchAndMarkets.(2020). Crowdfunding Market - Growth, Trends, and Forecasts (2020-2025). UK
47. Song, Y., Berger, R., Yosipof, A., & Barnes, B. R. (2019). Mining and investigating the factors influencing crowdfunding success. Technological Forecasting and Social Change, 148, 119723.
48. Stanko, M.A., & Henard, D.H. (2017). Toward a Better Understanding of Crowdfunding, Openness and the Consequences for Innovation. Research Policy 46(4), 1-45.
49. Thies, F., Huber, A., Bock, C., Benlian, A., & Kraus, S. (2018). Following the Crowd—Does Crowdfunding Affect Venture Capitalists Selection of Entrepreneurial Ventures? Small Business Management, 57(4), 1378-1398.
50. Tomczak, A., & Brem, A. (2013). A conceptualized investment model of crowdfunding. Venture Capital, 15(4), 335-359.
51. Tošović-Stevanović, A., Ćalović, D., Lalić, G., Žuža, M., & Cvijanović, G. (2020). Comparative analysis of the economic potential of the small and family farms in the Republic of Serbia and Romania. Economics of Agriculture, 67(3), 667-681.
52. Vismara, S. (2019). Sustainability in Equity Crowdfunding. Technological Forecasting and Social Change, 141, 98–106.
53. Wang, W., Zhu, K., Wang, H., & Wu, Y. C. J. (2017). The impact of sentiment orientations on successful crowdfunding campaigns through text analytics. IET Software, 11(5), 229-238.
54. Xiong, H., Dalhaus, T., Wang, P., & Huang, J. (2020). Blockchain Technology for Agriculture: Applications and Rationale. Frontiers in Blockchain, 3, article 7.
55. Yu, Z., & Rehman Khan, S.A. (2021). Evolutionary game analysis of green agricultural product supply chain financing system: COVID-19 pandemic. International Journal of Logistics Research and Applications, on line article, 1-21,
56. Zakić, N., Vukotić, S., & Cvijanović, D. (2014). Organisational Models In Agriculture With Special Reference To Small Farmers. Economics of Agriculture,61 (1), 1-13.
57. Živković, A., Pantić, N., & Rosić, M. (2019). Fiscal sustainability of the macroeconomic system of European Union members. Oditor – časopis za menadžment, finansije i pravo, 5(2), 32-41. https://doi.org/10.5937/Oditor1902033Z
58. Zhao, L., Ryu, S. (2020). Reward-Based Crowdfunding Research and Practice. In Shneor, R., Zhao, L., Flaten, B-T. (Eds). Advances in Crowdfunding. Palgrawe Macmillan, pp. 21-44.
2. Beier, M., & Wagner, K. (2015). Crowdfunding Success: A Perspective from Social Media and E-Commerce. In Proceedings of the 26th International Conference on Information System: Exploring the Information Frontier, Fort Woeth, 634-655.
3. Belleflamme, P., Lambert, T., & Schwienbacher, A. (2014). Crowdfunding: tapping the right crowd. Journal of business venturing, 29(5), 585-609.
4. Bernardino, S., & Freitas Santos, J. (2020). Crowdfunding: An Exploratory Study on Knowledge, Benefts and Barriers Perceived by Young Potential Entrepreneurs. Journal of Risk and Financial Management, 13(4), 1-24.
5. Buttice, V., Colombo, M. G., & Wright, M. (2017). Serial crowdfunding, social capital, and project success. Entrepreneurship Theory and Practice, 41(2), 183-207.
6. Butticè, V., Colombo, M. G., Fumagalli, E., & Orsenigo, C. (2019). Green oriented crowdfunding campaigns: Their characteristics and diffusion in different institutional settings. Technological Forecasting and Social Change, 141, 85-97.
7. Calic, G., & Mosakowski, E. (2016). Kicking off social entrepreneurship: How a sustainability orientation influences crowdfunding success. Journal of Management Studies, 53(5), 738-767.
8. Chen, Y., Dai, R., Yao, J., Li, Y. (2019). Donate Time or Money? The Determinants of Donation Intention in Online Crowdfunding. Sustainability, 11, pp. 1-21.
9. Cillo, V., Rialti, R., Bertoldi, B., Ciampi, F. (2018). Knowledge management and open innovation inagri-food crowdfunding. British Food Journal, 121(2), 242 – 258.
10. Colombo, M.G., Franzoni, C., & Rossi- Lamastra, C. (2015). Internal Social Capital and the Attraction of Early Contributions in Crowdfunding. Entrepreneurship Theory and Practice, 39 (1), 75-100.
11. Cumming, D. J., Leboeuf, G., & Schwienbacher, A. (2017). Crowdfunding leantech. Energy Economics, 65, 292-303.
12. Cumming, D., Meoli, M., & Vismara, S. (2019). Investors choices between cash and voting rights: Evidence from dual-class equity crowdfunding. Research Policy, 48(8), 103740.
13. De Larrea, G. L., Altin, M., & Singh, D. (2019). Determinants of success of restaurant crowdfunding. International Journal of Hospitality Management, 78, 150-158.
14. Đurđenić, K. (2017). Crowdfunding–Croatian legal perspective and comparison to other sources of fnancing. Public Sector Economics, 41(2), 259-287.
15. Fink, A. (2012). Protecting the Crowd and Raising Capital Through the JOBS Act. Available at SSRN: https://ssrn.com/abstract=2046051
16. Franceschelli, M.V., Santoro, G., & Candelo, E. (2018). Business model innovation for sustainability: a food start-up case study. British Food Journal, 120 (10), 2483-2494.
17. Gerber, E. M., Hui, J. S., & Kuo, P. Y. (2012). Crowdfunding: Why people are motivated to post and fund projects on crowdfunding platforms. In Proceedings of the international workshop on design, influence, and social technologies: techniques, impacts and ethics 2(11), 10.
18. Hommerova, D. (2020). Crowdfunding as a New Model of Nonprofit Funding. In I. Garcia-Rodriguez, E. Romero-Merino (Eds.), Financing Nonprofit Organizations, London: Routledge, chp. 13.
19. Hong, S., & Ryu, J. (2019). Crowdfunding public projects: Collaborative governance for achieving citizen co-funding of public goods. Government Information Quarterly, 36(1), 45-153.
20. Hörisch, J. (2015). Crowdfunding for environmental ventures: an empirical analysis of the influence of environmental orientation on the success of crowdfunding initiatives. Journal of Cleaner Production, 107, 636-645.
21. Hörisch, J. (2018). Think bigorsmall is beautiful? An empirical analysis of characteristics and determinants of success of sustainable crowdfunding projects. International Journal of Entrepreneurial Venturing, 10(1), 111-129.
22. Hörisch, J., & Tenner, I. (2020). How environmental and social orientations influence the funding success of investment-based crowdfunding: The mediating role of the number of funders and the average funding amount. Technological Forecasting and Social Change, 161, 120311.
23. IISD. (2015). Investment Contracts for Agriculture: Maximizing gains and minimizing risks. World Bank.
24. Kovačević, V., Vasiljević, Z., Zakić, V. (2018). Pre-Harvest Financing in Agriculture. Agroekonomika: časopis Instituta za ekonomiku poljoprivrede i sociologiju sela, 47(80), 23-31.
25. Kuti, M. (2014). Crowdfunding. Public Finance Quarterly, 59(3), 355-366.
26. Lehner, O. M. (2013). Crowdfunding Social Ventures: A Model and Research Agenda. Venture Capital, 15(4), 289–311.
27. Li, Y., Du, J. (2020). What drives the rapid achievement of a funding target in crowdfunding? Evidence from China. Agricultural Economics – Czech, 66, 269–277.
28. Li, Y., Du, J., & Fu, W. (2020). Thirty days are enough: what determines the crowds cash time in agri-food crowdfunding?. China Agricultural Economic Review,12(3), 553-575.
29. Liang, X., Hu, X., & Jiang, J. (2020). Research on the Effects of Information Description on Crowdfunding Success within a Sustainable Economy—The Perspective of Information Communication. Sustainability, 12(2), 650.
30. Lin, Y., Lee, W. C., Chang, C. C. H. (2016). Analysis of rewards on reward-based crowdfunding platforms. IEEE/ACM International Conference on Advances in Social Networks Analysis and Mining, Danvers, pp. 501-504.
31. Ljumović, I, & Hanić, A. (2021). Characteristic of crowdfunding campaigns related to the circular economy projects: Evidence from EU countries. Economic Development - Journal of the institute of economics – Skopje, 24(1), pp. 28-40.
32. Macht, S.A., & Weatherston, J. (2014). The Benefits of Online Crowdfunding for Fund-Seeking Business Ventures. Special Issue: Firms Strategy, Organization, and Financial Performance, 23(1-2), 1-14.
33. Martinez-Climent, C., Zorio-Grima, A., & Ribeiro-Soriano, D. (2018). Financial return crowdfunding: literature review and bibliometric analysis. International Entrepreneurship and Management Journal, 14(3), 527-553.
34. Miletić, A., Belokapić, P., & Nešić, B. (2020). Specifics of innovation project portfolio management. Oditor - časopis za menadžment, finansije i pravo, 6(2), 91-107. https://doi.org/10.5937/Oditor2002091M
35. Mitra, T., & Gilbert, E. (2014). The language that gets people to give: Phrases that predict success on Kickstarter. In Proceedings of the 17th ACM conference on Computer supported cooperative work & social computing, Baltimore, pp. 49-61.
36. Mollick, E. (2014). The dynamics of crowdfunding: An exploratory study. Journal of business venturing, 29(1), 1-16.
37. Mollick, E. R., & Kuppuswamy, V. (2014). After the Campaign: Outcomes of Crowdfunding. Research Paper No. 2376997, available at SSRN: https://ssrn.com/abstract=2376997
38. Moritz, A., & Block, J.H. (2016). Crowdfunding: A Literature Review and Research Directions. FGF Studies in Small Business and Entrepreneurship, In: Dennis Brüntje & Oliver Gajda (Eds.). Crowdfunding in Europe, Edition 1, pp. 25-53, Springer.
39. Ni, A. M., Huang, L., & Xiong, F. (2021). A new perspective of innovation-driven agricultural sustainable development: a case of China. In IOP Conference Series: Earth and Environmental Science, Beijing, 667(1), IOP Publishing.
40. Njegomir, V., Tepavac, R., & Ivanišević, N. (2017). Alternative sources of financing entrepreneurial undertakings in agriculture. Economics of Agriculture, 64(1), 295-306.
41. OReilly, T. (2007). What is Web 2.0: Design Patterns and Business Models for the next generation of software". Communication & Strategies, 65, pp. 17-37.
42. Petruzzelli, A. M., Natalicchio, A., Panniello, U., & Roma, P. (2019). Understanding the crowdfunding phenomenon and its implications for sustainability. Technological Forecasting and Social Change, 141, 138-148.
43. Popović S., Janković I., & Ž. Stojanović. (2018). The Importance of Bank Credits for Agricultural Financing in Serbia. Economics of Agriculture, 65(1), 65-80.
44. Pronti, A., Pagliarino, E. (2018). Not just for money. Crowdfunding a new tool of Open Innovation to support the Agro-Food sector. Evidences on the Italian market. Journal of Agricultural & Food Industrial Organization, 17(1), 2-25.
45. Renwick, M., & Mossialos, E. (2017). Crowdfunding our health: Economic risks and benefts. Social Science & Medicine, 191, 4-56.
46. ResearchAndMarkets.(2020). Crowdfunding Market - Growth, Trends, and Forecasts (2020-2025). UK
47. Song, Y., Berger, R., Yosipof, A., & Barnes, B. R. (2019). Mining and investigating the factors influencing crowdfunding success. Technological Forecasting and Social Change, 148, 119723.
48. Stanko, M.A., & Henard, D.H. (2017). Toward a Better Understanding of Crowdfunding, Openness and the Consequences for Innovation. Research Policy 46(4), 1-45.
49. Thies, F., Huber, A., Bock, C., Benlian, A., & Kraus, S. (2018). Following the Crowd—Does Crowdfunding Affect Venture Capitalists Selection of Entrepreneurial Ventures? Small Business Management, 57(4), 1378-1398.
50. Tomczak, A., & Brem, A. (2013). A conceptualized investment model of crowdfunding. Venture Capital, 15(4), 335-359.
51. Tošović-Stevanović, A., Ćalović, D., Lalić, G., Žuža, M., & Cvijanović, G. (2020). Comparative analysis of the economic potential of the small and family farms in the Republic of Serbia and Romania. Economics of Agriculture, 67(3), 667-681.
52. Vismara, S. (2019). Sustainability in Equity Crowdfunding. Technological Forecasting and Social Change, 141, 98–106.
53. Wang, W., Zhu, K., Wang, H., & Wu, Y. C. J. (2017). The impact of sentiment orientations on successful crowdfunding campaigns through text analytics. IET Software, 11(5), 229-238.
54. Xiong, H., Dalhaus, T., Wang, P., & Huang, J. (2020). Blockchain Technology for Agriculture: Applications and Rationale. Frontiers in Blockchain, 3, article 7.
55. Yu, Z., & Rehman Khan, S.A. (2021). Evolutionary game analysis of green agricultural product supply chain financing system: COVID-19 pandemic. International Journal of Logistics Research and Applications, on line article, 1-21,
56. Zakić, N., Vukotić, S., & Cvijanović, D. (2014). Organisational Models In Agriculture With Special Reference To Small Farmers. Economics of Agriculture,61 (1), 1-13.
57. Živković, A., Pantić, N., & Rosić, M. (2019). Fiscal sustainability of the macroeconomic system of European Union members. Oditor – časopis za menadžment, finansije i pravo, 5(2), 32-41. https://doi.org/10.5937/Oditor1902033Z
58. Zhao, L., Ryu, S. (2020). Reward-Based Crowdfunding Research and Practice. In Shneor, R., Zhao, L., Flaten, B-T. (Eds). Advances in Crowdfunding. Palgrawe Macmillan, pp. 21-44.
Published
2021-09-25
How to Cite
Ljumović, I. L., Hanić, A., & Kovačević, V. (2021). THE ROLE OF REWARD-BASED CROWDFUNDING IN FARM FINANCING: WHAT CHARACTERISES SUCCESSFUL CAMPAIGN?. Economics of Agriculture, 68(3), 773–788. https://doi.org/10.5937/ekoPolj2103773L
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