Skip to main content

How do investors decide? An interdisciplinary review of decision-making in crowdfunding

Abstract

Crowdfunding is on the rise: its volume grew 1000% in only three years and is about to outpace worldwide venture capital spending. A quickly growing body of research is exploring the emerging crowdfunding phenomenon. While the literature offers a detailed and comprehensive picture of decision-making for traditional startup financing or bank loans, it does not provide a holistic understanding of decisions to invest in crowdfunded ventures. Many individual studies investigate isolated factors that influence investor decision-making in crowdfunding campaigns without integrating the findings regarding those influences. A comprehensive view of the relevant decision-making factors is necessary to build future research on and for practitioners to gain a better understanding of how investors choose. We conduct an interdisciplinary literature review to examine which factors influence the investment decisions in crowdfunding. From an analysis of 68 articles, we construct a comprehensive framework of relevant influence factors. Even though prior research covers many factors, others have received scant attention. Especially investors’ cognitive features and the context in which the investment decision is made seem to strongly influence decisions but are scarcely researched. In addition, most reviewed studies focus more on individual factors and campaign success than underlying decision processes. To highlight novel factors of crowdfunding investment decisions, we compare decision-making in traditional investments, such as venture capital and bank loans, to crowdfunding. Our findings offer new avenues for research toward understanding how the shift induced by crowdfunding changes our choices and actions. The analysis should support the endeavor to build better theories and provide a basis for further social and technological development.

This is a preview of subscription content, access via your institution.

Fig. 1
Fig. 2
Fig. 3
Fig. 4
Fig. 5
Fig. 6
Fig. 7

Notes

  1. 1.

    Venture capitalists and business angels both provide capital to young startups in exchange for shares of the venture. They are a major foundation of venture financing taking high risks and, in turn, demanding a larger share of the profit in case of success (Mason and Stark 2004). Business angels are usually wealthy and knowledgeable individuals, often founders themselves that provide money in early seed stages and also bring their experience, contacts, and close involvement to the table (Brettel 2003; Mason and Stark 2004). VCs are often organized more institutionalized, e.g., in funds, invest in larger scale, and usually enter in a later and less risky (growth-)stage, providing more capital but less personal involvement than BAs (Mason and Harrison 2002).

  2. 2.

    Current regulation of equity crowdfunding varies by country and regulation is ongoing in many geographies (Borello et al. 2015; Cumming and Johan 2013; Levin et al. 2013).

  3. 3.

    For simplicity, we refer to founding entrepreneurs, borrowers, fundraisers and everyone else requesting funding in a crowdfunding campaign as “founders” (for similar use see Beaulieu et al. 2015). We title everyone giving money to the founder “investors.”

  4. 4.

    We use the terms “campaign success” to address different dependent variables (DV). Due to the heterogeneity of the analyzed research, different measures are used throughout the literature. The most frequently used DVs are funding success (dummy variable indicating if a campaign reached the desired funding goal), number of investors, total funds raised, investment decision of individual investors (dummy coded), or height of an individual’s contribution. For lending-based campaigns a lower interest rate is also used as indicator for campaign success. All these DVs are also indicators for each funder’s “funding decision”, as referred to in later sections. It is common practice in IS literature reviews to cover a diverse set of dependent variables for a specific topic (Bélanger and Crossler 2011; Smith et al. 2011). See Appendix for an overview of the DVs in the reviewed articles.

  5. 5.

    As some studies cover several types of crowdfunding or different decision-making factors, the figures in the overview tables do not always add up to the 68 analyzed studies.

  6. 6.

    “Other Management & Economics” includes any management discipline besides entrepreneurship and information systems (e.g., organization, marketing, or finance).

References

  1. Agrawal, A., Catalini, C., & Goldfarb, A. (2015). Crowdfunding: Geography, social networks, and the timing of investment decisions. Journal of Economics and Management Strategy, 24(2), 253–274.

    Google Scholar 

  2. Agrawal, A., Catalini, C., & Goldfarb, A. (2016). Are syndicates the killer app of equity Crowdfunding? California Management Review, 58(2), 111–124.

    Google Scholar 

  3. Agrawal, A. K., Catalini, C., & Goldfarb, A. (2011). The geography of crowdfunding. National Bureau of Economic Research, Working Paper No. 16820, retrieved from http://www.nber.org/papers/w16820.

  4. Ahlers, G. K. C., Cumming, D., Günther, C., & Schweizer, D. (2015). Signaling in equity crowdfunding. Entrepreneurship Theory and Practice, 39(4), 955–980.

    Google Scholar 

  5. Akerlof, G. A. (1970). The market for ‘lemons’: quality uncertainty and the market mechanism. The Quarterly Journal of Economics, 84(3), 488–500.

    Google Scholar 

  6. Aksulu, A., & Wade, M. (2010). A comprehensive review and synthesis of open source research. Journal of the Association for Information Systems, 11(11), 576.

    Google Scholar 

  7. Allison, T. H., Davis, B. C., Short, J. C., & Webb, J. W. (2015). Crowdfunding in a Prosocial microlending environment: examining the role of intrinsic versus extrinsic cues. Entrepreneurship: Theory and Practice, 39(1), 53–73.

    Google Scholar 

  8. Altman, E. I. (1980). Commercial bank lending: process, credit scoring, and costs of errors in lending. Journal of Financial and Quantitative Analysis, 15(4), 813–832.

    Google Scholar 

  9. Altman, E. I., & Saunders, A. (1997). Credit risk measurement: developments over the last 20 years. Journal of Banking & Finance, 21(11–12), 1721–1742.

    Google Scholar 

  10. Andreoni, J. (1990). Impure altruism and donations to public goods: a theory of warm-glow giving. The Economic Journal, 100(401), 464–477.

    Google Scholar 

  11. Antonenko, P. D., Lee, B. R., & Kleinheksel, A. J. (2014). Trends in the crowdfunding of educational technology startups. TechTrends, 58(6), 36–41.

    Google Scholar 

  12. Arthurs, J. D., & Busenitz, L. W. (2003). The boundaries and limitations of agency theory and stewardship theory in the venture capitalist/entrepreneur relationship*. Entrepreneurship Theory and Practice, 28(2), 145–162.

    Google Scholar 

  13. Bachmann, A., Becker, A., Buerckner, D., Hilker, M., Kock, F., Lehmann, M., et al. (2011). Online peer-to-peer lending -- a literature review. Journal of Internet Banking & Commerce, 16(2), 1–18.

    Google Scholar 

  14. Barasinska, N., & Schäfer, D. (2014). Is crowdfunding different? Evidence on the relation between gender and funding success from a German peer-to-peer lending platform. German Economic Review, 15(4), 436–452.

    Google Scholar 

  15. Beaulieu, P. R. (1996). A note on the role of memory in commercial loan officers’ use of accounting and character information. Accounting, Organizations and Society, 21(6), 515–528.

    Google Scholar 

  16. Beaulieu, T., Sarker, S., & Sarker, S. (2015). A conceptual framework for understanding crowdfunding. Communications of the Association for Information Systems, 37(1), 1–31.

    Google Scholar 

  17. Beier, M., & Wagner, K. (2015). Crowdfunding success: a perspective from social media and E-commerce. In ICIS 2015 Proceedings, Track E-Business and E-Governance, Paper 11, Fort Worth, Texas, USA.

  18. Bélanger, F., & Crossler, R. E. (2011). Privacy in the digital age: a review of information privacy research in information systems. MIS Quarterly, 35(4), 1017–1041.

    Google Scholar 

  19. Belleflamme, P., Lambert, T., & Schwienbacher, A. (2013). Individual crowdfunding practices. Venture Capital, 15(4), 313–333.

    Google Scholar 

  20. Belleflamme, P., Lambert, T., & Schwienbacher, A. (2014). Crowdfunding: tapping the right crowd. Journal of Business Venturing, 29(5), 585–609.

    Google Scholar 

  21. Bellman, S., Lohse, G. L., & Johnson, E. J. (1999). Predictors of online buying behavior. Communications of the ACM, 42(12), 32–38.

    Google Scholar 

  22. Bennett, R. (2009). Impulsive donation decisions during online browsing of charity websites. Journal of Consumer Behaviour, 8(2/3), 116–134.

    Google Scholar 

  23. Boeuf, B., Darveau, J., & Legoux, R. (2014). Financing creativity: crowdfunding as a new approach for theatre projects. International Journal of Arts Management, 16(3), 33–48.

    Google Scholar 

  24. Borello, G., De Crescenzo, V., & Pichler, F. (2015). The funding gap and the role of financial return crowdfunding: some evidence from European platforms. Journal of Internet Banking & Commerce, 20(1), 1–20.

    Google Scholar 

  25. Bretschneider, U., & Leimeister, J. M. (2017). Not just an ego-trip: exploring backers’ motivation for funding in incentive-based crowdfunding. The Journal of Strategic Information Systems. https://doi.org/10.1016/j.jsis.2017.02.002.

    Google Scholar 

  26. Brettel, M. (2003). Business angels in Germany: a research note. Venture Capital, 5(3), 251–268.

    Google Scholar 

  27. Bruce, I. W. (1994). Meeting need: Successful charity marketing. London: Institute of Chartered Secretaries and Administrators.

    Google Scholar 

  28. Bruns, V., Holland, D. V., Shepherd, D. A., & Wiklund, J. (2008). The role of human capital in loan officers’ decision policies. Entrepreneurship Theory and Practice, 32(3), 485–506.

    Google Scholar 

  29. Bruton, G., Khavul, S., Siegel, D., & Wright, M. (2015). New financial alternatives in seeding entrepreneurship: microfinance, crowdfunding, and peer-to-peer innovations. Entrepreneurship Theory and Practice, 39(1), 9–26.

    Google Scholar 

  30. Burtch, G., Ghose, A., & Wattal, S. (2013a). An empirical examination of users’ information hiding in a crowdfunding context. In ICIS 2013 Proceedings, Track 6: Economics and Value of IS, Paper 6, Milan, Italy.

  31. Burtch, G., Ghose, A., & Wattal, S. (2013b). An empirical examination of the antecedents and consequences of contribution patterns in crowd-funded markets. Information Systems Research, 24(3), 499–519.

    Google Scholar 

  32. Burtch, G., Ghose, A., & Wattal, S. (2014a). An empirical examination of peer referrals in online crowdfunding. In ICIS 2014 Proceedings, Track 5: E-Business , Paper 52 Auckland, New Zealand.

  33. Burtch, G., Ghose, A., & Wattal, S. (2014b). An experiment in crowdfunding: assessing the role and impact of transaction-level information controls. In ICIS 2014 Proceedings, Track 6:  Economics and Value of I S, Paper 4, Auckland, New Zealand.

  34. Burtch, G., Ghose, A., & Wattal, S. (2014c). Cultural differences and geography as determinants of online Prosocial lending. MIS Quarterly, 38(3), 773–794.

    Google Scholar 

  35. Burtch, G., Ghose, A., & Wattal, S. (2015). The hidden cost of accommodating Crowdfunder privacy preferences: a randomized field experiment. Management Science, 61(5), 949–962.

    Google Scholar 

  36. Cacioppo, J. T., & Petty, R. E. (1982). The need for cognition. Journal of Personality and Social Psychology, 42(1), 116.

    Google Scholar 

  37. Chan, C. S. R., & Park, H. D. (2015). How images and color in business plans influence venture investment screening decisions. Journal of Business Venturing, 30(5), 732–748.

    Google Scholar 

  38. Chemin, M., & De Laat, J. (2013). Can warm glow alleviate credit market failures? Evidence from online peer-to-peer lenders. Economic Development and Cultural Change, 61(4), 825–858.

    Google Scholar 

  39. Chen, D., & Han, C. (2012). A comparative study of online P2P lending in the USA and China. Journal of Internet Banking & Commerce, 17(2), 1–15.

    Google Scholar 

  40. Cheung, C. M., Chan, G. W., & Limayem, M. (2005). A critical review of online consumer behavior: empirical research. Journal of Electronic Commerce in Organizations, 3(4), 1.

    Google Scholar 

  41. Cheung, C.-K., & Chan, C.-M. (2000). Social-cognitive factors of donating money to charity, with special attention to an international relief organization. Evaluation and Program Planning, 23(2), 241–253.

    Google Scholar 

  42. Childers, T. L., Carr, C. L., Peck, J., & Carson, S. (2002). Hedonic and utilitarian motivations for online retail shopping behavior. Journal of Retailing, 77(4), 511–535.

    Google Scholar 

  43. Cholakova, M., & Clarysse, B. (2015). Does the possibility to make equity Investments in crowdfunding projects crowd out reward-based investments? Entrepreneurship: Theory & Practice, 39(1), 145–172.

    Google Scholar 

  44. Choy, K., & Schlagwein, D. (2016). Crowdsourcing for a better world. Information Technology & People, 29(1), 221–247.

    Google Scholar 

  45. Christensen, C. M. (2013). The innovator’s dilemma: When new technologies cause great firms to fail. Boston: Harvard Business School Press.

    Google Scholar 

  46. Colombo, M. G., Franzoni, C., & Rossi-Lamastra, C. (2015). Internal social capital and the attraction of early contributions in crowdfunding. Entrepreneurship: Theory & Practice, 39(1), 75–100.

    Google Scholar 

  47. Companisto.com (2016). Crowdfunding for Mornin’ Glory. Retrieved from https://www.companisto.com/en/investment/morninglory. Accessed 5 May 2016.

  48. Cordova, A., Dolci, J., & Gianfrate, G. (2015). The determinants of crowdfunding success: evidence from technology projects. Procedia - Social and Behavioral Sciences, 181, 115–124.

    Google Scholar 

  49. Cumming, D., & Johan, S. (2013). Demand-driven securities regulation: evidence from crowdfunding. Venture Capital, 15(4), 361–379.

    Google Scholar 

  50. Danos, P., Holt, D. L., & Imhoff, E. A. (1989). The use of accounting information in bank lending decisions. Accounting, Organizations and Society, 14(3), 235–246.

    Google Scholar 

  51. Darley, W. K., Blankson, C., & Luethge, D. J. (2010). Toward an integrated framework for online consumer behavior and decision making process: A review. Psychology and Marketing, 27(2), 94–116.

    Google Scholar 

  52. Das, S., Echambadi, R., McCardle, M., & Luckett, M. (2003). The effect of interpersonal trust, need for cognition, and social loneliness on shopping, information seeking and surfing on the web. Marketing Letters, 14(3), 185–202.

    Google Scholar 

  53. De Buysere, K., Gajda, O., Kleverlaan, R., Marom, D., & Klaes, M. (2012). A framework for European crowdfunding. European Crowdfunding Network (ECN), available at www.europecrowdfunding.org/european_crowdfunding_framework (61).

  54. Dickert, S., Sagara, N., & Slovic, P. (2011). Affective motivations to help others: a two-stage model of donation decisions. Journal of Behavioral Decision Making, 24(4), 361–376.

    Google Scholar 

  55. Dixon-Woods, M., Cavers, D., Agarwal, S., Annandale, E., Arthur, A., Harvey, J., et al. (2006). Conducting a critical interpretive synthesis of the literature on access to healthcare by vulnerable groups. BMC Medical Research Methodology, 6(35), 1–13.

    Google Scholar 

  56. Dorfleitner, G., Priberny, C., Schuster, S., Stoiber, J., Weber, M., de Castro, I., et al. (2016). Description-text related soft information in peer-to-peer lending – Evidence from two leading European platforms. Journal of Banking & Finance, 64, 169–187.

    Google Scholar 

  57. Duarte, J., Siegel, S., & Young, L. (2012). Trust and credit: the role of appearance in peer-to-peer lending. Review of Financial Studies, 25(8), 2455–2484.

    Google Scholar 

  58. Dubé, L., & Paré, G. (2003). Rigor in information systems positivist case research: current practices, trends, and recommendations. MIS Quarterly, 27(4), 597–636.

    Google Scholar 

  59. Dushnitsky, G., Guerini, M., Piva, E., & Rossi-Lamastra, C. (2016). Crowdfunding in Europe: determinants of platform creation across countries. California Management Review, 58(2), 44–71.

    Google Scholar 

  60. EIOPA (2015). Financial stability report. EIOPA-FSC-15-088/2015. European insurance and occupational pensions authority. Available at https://eiopa.europa.eu/Publications/Reports/Financial_Stability_Report_December_2015.pdf.

  61. Engel, J. F., Blackwell, R. D., & Miniard, P. W. (1995). Consumer behavior, 8th. New York: Dryder.

    Google Scholar 

  62. Evans, D. S., & Jovanovic, B. (1989). An estimated model of entrepreneurial choice under liquidity constraints. Journal of Political Economy, 97(4), 808–827.

    Google Scholar 

  63. Frydrych, D., Bock, A. J., Kinder, T., & Koeck, B. (2014). Exploring entrepreneurial legitimacy in reward-based crowdfunding. Venture Capital, 16(3), 247–269.

    Google Scholar 

  64. Galak, J., Small, D., & Stephen, A. T. (2011). Microfinance decision making: a field study of prosocial lending. Journal of Marketing Research (JMR), 48, S130–S137.

    Google Scholar 

  65. Galuszka, P., & Bystrov, V. (2014). Crowdfunding: a case study of a new model of financing music production. Journal of Internet Commerce, 13(3/4), 233–252.

    Google Scholar 

  66. Gefen, D. (2002). Customer loyalty in e-commerce. Journal of the Association for Information Systems, 3(1), 2.

    Google Scholar 

  67. Genevsky, A., & Knutson, B. (2015). Neural affective mechanisms predict market-level microlending. Psychological Science (Sage Publications Inc.), 26(9), 1411–1422.

    Google Scholar 

  68. Gerber, E. M., & Hui, J. (2013). Crowdfunding: motivations and deterrents for participation. ACM Transactions on Computer-Human Interaction, 20(6), 34 1–34:32.

    Google Scholar 

  69. 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 (vol. 2, p. 11).

  70. Gigerenzer, G., & Goldstein, D. G. (1996). Reasoning the fast and frugal way: Models of bounded rationality. Psychological Review, 103(4), 650–669.

    Google Scholar 

  71. Glaser, B., & Strauss, A. (1967). The discovery of grounded theory: strategies for qualitative research. London: Weidenfeld and Nicholson.

  72. Gleasure, R. (2015). Resistance to crowdfunding among entrepreneurs: An impression management perspective. The Journal of Strategic Information Systems, 24(4), 219–233.

    Google Scholar 

  73. Gonzalez, L., & Loureiro, Y. K. (2014). When can a photo increase credit? The impact of lender and borrower profiles on online peer-to-peer loans. Journal of Behavioral and Experimental Finance, 2, 44–58.

    Google Scholar 

  74. Greiner, M. E., & Wang, H. (2010). Building consumer-to-consumer trust in E-finance marketplaces: an empirical analysis. International Journal of Electronic Commerce, 15(2), 105–136.

    Google Scholar 

  75. Haas, P., Blohm, I., & Leimeister, J. M. (2014). An empirical taxonomy of crowdfunding intermediaries. In ICIS 2014 Proceedings, Track 19: Social Media and Digital Collaborations, Paper 13, Auckland, New Zealand.

  76. Hall, J., & Hofer, C. W. (1993). Venture capitalists’ decision criteria in new venture evaluation. Journal of Business Venturing, 8(1), 25.

    Google Scholar 

  77. Hansen, T. (2008). Consumer values, the theory of planned behaviour and online grocery shopping. International Journal of Consumer Studies, 32(2), 128–137.

    Google Scholar 

  78. Harrison, R. (2013). Crowdfunding and the revitalisation of the early stage risk capital market: catalyst or chimera? Venture Capital, 15(4), 283–287.

    Google Scholar 

  79. Hennig-Thurau, T., Gwinner, K. P., Walsh, G., & Gremler, D. D. (2004). Electronic word-of-mouth via consumer-opinion platforms: what motivates consumers to articulate themselves on the internet? Journal of Interactive Marketing, 18(1), 38–52.

    Google Scholar 

  80. Herzenstein, M., Dholakia, U. M., & Andrews, R. L. (2011a). Strategic herding behavior in peer-to-peer loan auctions. Journal of Interactive Marketing, 25(1), 27–36.

    Google Scholar 

  81. Herzenstein, M., Sonenshein, S., & Dholakia, U. M. (2011b). Tell me a good story and I may lend you money: the role of narratives in peer-to-peer lending decisions. Journal of Marketing Research (JMR), 48, S138–S149.

    Google Scholar 

  82. Hibbert, S., & Horne, S. (1996). Giving to charity: questioning the donor decision process. The Journal of Consumer Marketing, 13(2), 4–13.

    Google Scholar 

  83. Hisrich, R. D., & Jankowicz, A. D. (1990). Intuition in venture capital decisions: an exploratory study using a new technique. Journal of Business Venturing, 5(1), 49.

    Google Scholar 

  84. Hobbs, J., Grigore, G., & Molesworth, M. (2016). Success in the management of crowdfunding projects in the creative industries. Internet Research, 26(1), 146–166.

    Google Scholar 

  85. Hong, Y., Hu, Y., & Burtch, G. (2015). How does social media affect contribution to public versus private goods in crowdfunding campaigns? In ICIS 2015 Proceedings, Track Social Media, Paper 22, Fort Worth: Texas, USA.

  86. 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.

    Google Scholar 

  87. Hulme, M. K., & Wright, C. (2006). Internet based social lending: past, present and future. Social Futures Observatory, 11, 1–115.

    Google Scholar 

  88. Iyer, R., Khwaja, A. I., Luttmer, E. F. P., & Shue, K. (2009). Screening in new credit markets: can individual lenders infer borrower creditworthiness in peer-to-peer lending? Harvard University, John F. Kennedy School of Government, Working Paper Series. https://doi.org/10.2139/ssrn.1570115

  89. Iyer, R., Khwaja, A. I., Luttmer, E. F., & Shue, K. (2015). Screening peers softly: Inferring the quality of small borrowers. Management Science, 62(6), 1554–1577. 

    Google Scholar 

  90. Jenq, C., Pan, J., & Theseira, W. (2015). Beauty, weight, and skin color in charitable giving. Journal of Economic Behavior & Organization, 119, 234–253.

    Google Scholar 

  91. Jian, L., & Shin, J. (2015). Motivations behind donors’ contributions to Crowdfunded journalism. Mass Communication & Society, 18(2), 165.

    Google Scholar 

  92. Kahneman, D. (2011). Thinking, fast and slow. London: Macmillan.

    Google Scholar 

  93. Katawetawaraks, C., & Cheng, L. W. (2011). Online shopper behavior: Influences of online shopping decision. Asian Journal of Business Research, 1(2). Retrieved from https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2345198.

  94. Khavul, S. (2010). Microfinance: creating opportunities for the poor? The Academy of Management Perspectives, 24(3), 58–72.

    Google Scholar 

  95. Khavul, S., Chavez, H., & Bruton, G. D. (2013). When institutional change outruns the change agent: the contested terrain of entrepreneurial microfinance for those in poverty. Journal of Business Venturing, 28(1), 30–50.

    Google Scholar 

  96. Kiva.org (2016). Kiva - about us. Retrieved from https://www.kiva.org/about. Accessed 29 April 2016.

  97. Krahnen, J. P., & Weber, M. (2001). Generally accepted rating principles: a primer. Journal of Banking & Finance, 25(1), 3–23.

    Google Scholar 

  98. Lee, E., & Lee, B. (2012). Herding behavior in online P2P lending: an empirical investigation. Electronic Commerce Research and Applications, 11(5), 495–503.

    Google Scholar 

  99. Levin, R. B., Nowakowski, J., & O’brien, A. A. (2013). The JOBS act--implications for raising capital and for financial intermediaries. Journal of Taxation & Regulation of Financial Institutions, 26(5), 21–29.

    Google Scholar 

  100. Ley, A., & Weaven, S. (2011). Exploring agency dynamics of crowdfunding in start-up capital financing. Academy of Entrepreneurship Journal, 17(1), 85–110.

    Google Scholar 

  101. Lin, M., Prabhala, N. R., & Viswanathan, S. (2013). Judging borrowers by the company they keep: friendship networks and information asymmetry in online peer-to-peer lending. Management Science, 59(1), 17–35.

    Google Scholar 

  102. Lin, M., & Viswanathan, S. (2015). Home bias in online investments: an empirical study of an online crowdfunding market. Management Science, 62(5), 1393–1414. 

    Google Scholar 

  103. Liu, D., Brass, D. J., Lu, Y., & Chen, D. (2015). Friendships in online peer-to-peer lending: pipes, prisms, and relational herding. MIS Quarterly, 39(3), 729–742.

    Google Scholar 

  104. Loureiro, Y. K., & Gonzalez, L. (2015). Competition against common sense. The International Journal of Bank Marketing, 33(5), 605–623.

    Google Scholar 

  105. Luo, B., & Lin, Z. (2013). A decision tree model for herd behavior and empirical evidence from the online P2P lending market. Information Systems & e-Business Management, 11(1), 141–160.

    Google Scholar 

  106. MacMillan, I., Siegel, R., & Narasimha, P. N. S. (1985). Criteria used by venture capitalists to evaluate new venture proposals. Journal of Business Venturing, 1(1), 119.

    Google Scholar 

  107. Malhotra, D. K. K., & Malhotra, R. (2003). Evaluating consumer loans using neural networks. Omega, 31(2), 83–96. 

    Google Scholar 

  108. Mason, C. M., & Harrison, R. T. (2002). Is it worth it? The rates of return from informal venture capital investments. Journal of Business Venturing, 17(3), 211–236.

    Google Scholar 

  109. Mason, C., & Stark, M. (2004). What do Investors look for in a business plan?: A comparison of the investment criteria of bankers, venture capitalists and business angels. International Small Business Journal, 22(3), 227–248.

    Google Scholar 

  110. Massolution (2015). The crowdfunding industry report, 2015CF, available at http://reports.crowdsourcing.org/index.php?route=product/product&product_id=54.

  111. Maxwell, A. L., Jeffrey, S. A., & Lévesque, M. (2011). Business angel early stage decision making. Journal of Business Venturing, 26(2), 212–225.

    Google Scholar 

  112. Meer, J. (2014). Effects of the price of charitable giving: Evidence from an online crowdfunding platform. Journal of Economic Behavior & Organization, 103, 113–124.

    Google Scholar 

  113. Mendes-Da-Silva, W., Rossoni, L., Conte, B. S., Gattaz, C. C., & Francisco, E. R. (2016). The impacts of fundraising periods and geographic distance on financing music production via crowdfunding in Brazil. Journal of Cultural Economics, 40(1), 75–99.

    Google Scholar 

  114. Michels, J. (2012). Do unverifiable disclosures matter? Evidence from peer-to-peer lending. Accounting Review, 87(4), 1385–1413.

    Google Scholar 

  115. Miles, M. B., & Huberman, A. M. (1984). Drawing valid meaning from qualitative data: toward a shared craft. Educational Researcher, 13(5), 20.

    Google Scholar 

  116. Mill, J. S. (1844). On the definition of political economy, and on the method of investigation proper to it. Essays on some unsettled questions of political economy. London: Longmans, Green, Reader, and Dyer.

  117. Mollick, E. (2014). The dynamics of crowdfunding: An exploratory study. Journal of Business Venturing, 29(1), 1–16.

    Google Scholar 

  118. Mollick, E. R., & Nanda, R. (2015). Wisdom or madness? Comparing crowds with expert evaluation in funding the arts. Management Science, 62(6), 1533–1553.

    Google Scholar 

  119. Mollick, E., & Robb, A. (2016). Democratizing innovation and capital access: the role of crowdfunding. California Management Review, 58(2), 72–87.

    Google Scholar 

  120. Moritz, A., & Block, J. H. (2016). Crowdfunding: a literature review and research directions. In D. Brüntje, O. Gajda (Eds.), Crowdfunding in Europe. FGF studies in small business and entrepreneurship. Cham: Springer.

  121. Moritz, A., Block, J., & Lutz, E. (2015). Investor communication in equity-based crowdfunding: A qualitative-empirical study. Qualitative Research in Financial Markets, 7(3), 309–342.

    Google Scholar 

  122. Moss, T. W., Neubaum, D. O., & Meyskens, M. (2015). The effect of virtuous and entrepreneurial orientations on microfinance lending and repayment: a signaling theory perspective. Entrepreneurship: Theory & Practice, 39(1), 27–52.

    Google Scholar 

  123. Noblit, G., & Hare, R. (1988). Meta-ethnography. Thousand Oaks: SAGE Publications.

    Google Scholar 

  124. Norton, E. (1995). Venture capital as an alternative means to allocate capital: an agency-theoretic view. Entrepreneurship: Theory and Practice, 20(2), 19–30.

    Google Scholar 

  125. Okoli, C., & Schabram, K. (2010). A guide to conducting a systematic literature review of Information Systems Research. Sprouts: Working Papers on Information Systems, 10(26), http://sprouts.aisnet.org/10-26

  126. Olson, J. C. (1976). Price as an informational cue: Effects on product evaluations. College of Business Administration, Pennsylvania State University: University Park.

  127. Ordanini, A., Miceli, L., Pizzetti, M., & Parasuraman, A. (2011). Crowd-funding: transforming customers into investors through innovative service platforms. Journal of Service Management 22(4), R. P. Fisk (Ed.), (pp. 443–470).

  128. Ortiz de Guinea, A., & Paré, G. (2017). What literature review type should I conduct? In R. Galliers & M. Sten (Eds.), The Routledge companion to management information systems. Oxford: Routledge, Taylor & Francis Group.

    Google Scholar 

  129. Paré, G., Tate, M., Johnstone, D., & Kitsiou, S. (2016). Contextualizing the twin concepts of Systematicity and transparency in information systems literature reviews. European Journal of Information Systems, 25(6), 493–508.

    Google Scholar 

  130. Patton, M. Q. (1980). Qualitative evaluation methods. Beverly Hills: Sage.

    Google Scholar 

  131. Piccoli, G., & Ives, B. (2005). It-dependent strategic initiatives and sustained competitive advantage: a review and synthesis of the literature. MIS Quarterly, 29(4), 747–776.

    Google Scholar 

  132. Pitschner, S., & Pitschner-Finn, S. (2014). Non-profit differentials in crowd-based financing: evidence from 50,000 campaigns. Economics Letters, 123(3), 391–394.

    Google Scholar 

  133. Pope, D. G., & Sydnor, J. R. (2011). What’s in a picture? Journal of Human Resources, 46(1), 53–92.

    Google Scholar 

  134. Preston, J. (2014). How Marillion pioneered crowdfunding in music. In Virgin.com Retrieved from https://www.virgin.com/music/how-marillion-pioneered-crowdfunding-in-music. Accessed 5 May 2016.

  135. Prystav, F. (2016). Personal information in peer-to-peer loan applications: Is less more? Journal of Behavioral and Experimental Finance, 9, 6–19.

    Google Scholar 

  136. Ryu, S., & Kim, Y.-G. (2016). A typology of crowdfunding sponsors: birds of a feather flock together? Electronic Commerce Research and Applications, 16, 43–54.

    Google Scholar 

  137. Sahlman, W. A. (1990). The structure and governance of venture-capital organizations. Journal of Financial Economics, 27(2), 473–521.

    Google Scholar 

  138. Saxton, G. D., & Wang, L. (2014). The social network effect: the determinants of giving through social media. Nonprofit and Voluntary Sector Quarterly, 43(5), 850.

    Google Scholar 

  139. Schwarz, A., Mehta, M., Johnson, N., & Chin, W. W. (2007). Understanding frameworks and reviews: a commentary to assist us in moving our field forward by analyzing our past. SIGMIS Database, 38(3), 29–50.

    Google Scholar 

  140. Smith, H. J., Dinev, T., & Xu, H. (2011). Information privacy research: an interdisciplinary review. MIS Quarterly, 35(4), 989–1016.

    Google Scholar 

  141. Smith, P. F. (1964). Measuring risk on consumer Instalment credit. Management Science, 11(2), 327–340.

    Google Scholar 

  142. Sonenshein, S., Herzenstein, M., & Dholakia, U. M. (2011). How accounts shape lending decisions through fostering perceived trustworthiness. Organizational Behavior and Human Decision Processes, 115(1), 69–84.

    Google Scholar 

  143. Steinberg, D. (2012). The Kickstarter Handbook: Real-Life Success Stories of Artists, Inventors, and Entrepreneurs, Original edition. Philadelphia: Quirk Books.

    Google Scholar 

  144. Strauss, A. L., & Corbin, J. M. (1998). Basics of qualitative research: Techniques and procedures for developing grounded theory. Thousand Oaks: Sage Publications.

    Google Scholar 

  145. Strong, D. M., & Volkoff, O. (2010). Understanding organization - Enterprise system fit: a path to theorizing the information technology artifact. MIS Quarterly, 34(4), 731–756.

    Google Scholar 

  146. Sullivan, M. (2006). Crowdfunding. In fundavlog.com . Retrieved from http://web.archive.org/web/20070224191008/http://fundavlog.com/community/index.php?op=ViewArticle&articleId=9&blogId=1. Accessed 28 Apr 2016.

  147. Thaler, R. (1980). Toward a positive theory of consumer choice. Journal of Economic Behavior & Organization, 1(1), 39–60.

    Google Scholar 

  148. Thaler, R. H. (2000). From Homo Economicus to Homo Sapiens. The Journal of Economic Perspectives, 14(1), 133–141.

    Google Scholar 

  149. Thaler, R. H., & Sunstein, C. R. (2008). Nudge: Improving decisions about health, wealth and happiness. New Haven: Yale University Press.

    Google Scholar 

  150. Thies, F., Wessel, M., & Benlian, A. (2014). Understanding the dynamic interplay of social buzz and contribution behavior within and between online platforms – Evidence from crowdfunding. In ICIS 2014 Proceedings, Track 19: Social Media and Digital Collaborations, Paper 7, Auckland, New Zealand.

  151. Tsiotsou, R. (2006). The role of perceived product quality and overall satisfaction on purchase intentions. International Journal of Consumer Studies, 30(2), 207–217.

    Google Scholar 

  152. Tversky, A., & Kahneman, D. (1974). Judgment under uncertainty: heuristics and biases. Science, 185(4157), 1124–1131.

    Google Scholar 

  153. Vulkan, N., Åstebro, T., & Sierra, M. F. (2016). Equity crowdfunding: a new phenomena. Journal of Business Venturing Insights, 5, 37–49.

    Google Scholar 

  154. Weber, O., Scholz, R. W., & Michalik, G. (2010). Incorporating sustainability criteria into credit risk management. Business Strategy and the Environment, 19(1), 39–50. 

  155. Webster, J., & Watson, R. T. (2002). Analyzing the Past to Prepare for the Future: Writing a Literature Review. MIS Quarterly, 26(2), xiii–xxiii.

    Google Scholar 

  156. West, D. (2000). Neural network credit scoring models. Computers & Operations Research, 27(11), 1131–1152.

    Google Scholar 

  157. Whitty, M. T., & Joinson, A. (2008). Truth, lies and trust on the internet. Abingdon: Routledge.

    Google Scholar 

  158. Wolfswinkel, J. F., Furtmueller, E., & Wilderom, C. P. (2013). Using grounded theory as a method for rigorously reviewing literature. European Journal of Information Systems, 22(1), 45–55.

    Google Scholar 

  159. Xiao, X., Califf, C. B., Sarker, S., & Sarker, S. (2013). ICT innovation in emerging economies: a review of the existing literature and a framework for future research. Journal of Information Technology, 28(4), 264–278.

    Google Scholar 

  160. Xu, B., Zheng, H., Xu, Y., & Wang, T. (2016). Configurational paths to sponsor satisfaction in crowdfunding. Journal of Business Research, 69(2), 915–927.

    Google Scholar 

  161. Yum, H., Lee, B., & Chae, M. (2012). From the wisdom of crowds to my own judgment in microfinance through online peer-to-peer lending platforms. Electronic Commerce Research and Applications, 11(5), 469–483.

    Google Scholar 

  162. Zacharakis, A. L., & Meyer, G. D. (1998). A lack of insight: do venture capitalists really understand their own decision process? Journal of Business Venturing, 13(1), 57.

    Google Scholar 

  163. Zhang, J., & Liu, P. (2012). Rational herding in microloan markets. Management Science, 58(5), 892–912.

    Google Scholar 

  164. Zheng, H., Hung, J.-L., Qi, Z., & Xu, B. (2016). The role of trust management in reward-based crowdfunding. Online Information Review, 40(1), 97–118.

    Google Scholar 

  165. Zheng, H., Li, D., Wu, J., & Xu, Y. (2014). The role of multidimensional social capital in crowdfunding: a comparative study in China and US. Information Management, 51(4), 488–496.

    Google Scholar 

  166. Zvilichovsky, D., Inbar, Y., & Barzilay, O. (2013). Playing both sides of the market: success and reciprocity on crowdfunding platforms. In ICIS 2013 Proceedings, Track 6: Economics and the Value of IS, Paper 13, Milan, Italy.

Download references

Author information

Affiliations

Authors

Corresponding author

Correspondence to Andreas Hoegen.

Additional information

Responsible Editors: Roman Beck and Rainer Alt

Appendix

Appendix

Rights and permissions

Reprints and Permissions

About this article

Verify currency and authenticity via CrossMark

Cite this article

Hoegen, A., Steininger, D.M. & Veit, D. How do investors decide? An interdisciplinary review of decision-making in crowdfunding. Electron Markets 28, 339–365 (2018). https://doi.org/10.1007/s12525-017-0269-y

Download citation

Keywords

  • Crowdfunding
  • Investment
  • Decision-making
  • Literature review

JEL Classification

  • M15