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Crowdfunding in a Prosocial Microlending Environment: Examining the Role of Intrinsic versus Extrinsic Cues

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  • Thomas H. Allison
  • Blakley C. Davis
  • Jeremy C. Short
  • Justin W. Webb

Abstract

Microloans garnered from crowdfunding provide an important source of financial capital for nascent entrepreneurs. Drawing on cognitive evaluation theory, we assess how linguistic cues known to affect underlying motivation can frame entrepreneurial narratives either as a business opportunity or as an opportunity to help others. We examine how this framing affects fundraising outcomes in the context of prosocial lending and conduct our analysis on a sample of microloans made to over 36,000 entrepreneurs in 51 countries via an online crowdfunding platform. We find that lenders respond positively to narratives highlighting the venture as an opportunity to help others, and less positively when the narrative is framed as a business opportunity.

Suggested Citation

  • Thomas H. Allison & Blakley C. Davis & Jeremy C. Short & Justin W. Webb, 2015. "Crowdfunding in a Prosocial Microlending Environment: Examining the Role of Intrinsic versus Extrinsic Cues," Entrepreneurship Theory and Practice, , vol. 39(1), pages 53-73, January.
    • Handle: RePEc:sae:entthe:v:39:y:2015:i:1:p:53-73
    DOI: 10.1111/etap.12108
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