Advertisement

The ‘Wisdom of the Crowd’ as an Antidote to the Credit Crunch: A Preliminary Analysis of Crowdfunding

  • Daniele Previati
  • Giuseppe Galloppo
  • Andrea Salustri
Part of the Palgrave Macmillan Studies in Banking and Financial Institutions book series (SBFI)

Abstract

Crowdfunding is a very recent financial (and social) phenomenon all over the world. When we met at the beginning of our research effort, analysing the different topics and issues arising with reference to crowdfunding, we decided that an interdisciplinary and pluralistic approach was the best path to understanding the phenomenon from a theoretical and methodological point of view. The literature about crowdfunding has very few academic contributions at the international level, and we find more practitioners’ and institutional attention than academicians’ [see Sections 2 and 3]. Putting together banking and finance, economics and statistics’ perspectives and tools is, in our opinion, a good way to develop the research about crowd-funding in a deeper mood.

Keywords

Venture Capital Euro Area Private Equity Innovation Environment Linear Aggregation 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Agrawal, A.K., C. Catalini, and A. Goldfarb (2010) ‘Entrepreneurial finance and the flat-world hypothesis: evidence from crowd-funding entrepreneurs in the arts’, Working Paper.Google Scholar
  2. Agrawal, A., C. Catalini, and A. Goldfarb (2011) ‘The geography of crowdfunding’, NBER Working Paper, No. 16820, February 2011.CrossRefGoogle Scholar
  3. Baeck P., Collins L., and Zhang, B. (2014) ‘Understanding Alternative Finance — The UK Alternative Finance Industry Report 2014’. Edited by Nesta, Unviersity of Cambridge. Cambridge Uk.Google Scholar
  4. Bechter, C., S. Jentzsch, and M. Frey (2011) ‘From wisdom of the crowd to crowd-funding’, Journal of Communication & Computer, 8(11): 951.Google Scholar
  5. Belleflamme, P., T. Lambert, and A. Schwienbacher (2010) ‘Crowdfunding: an industrial organization perspective’, Proceedings of Workshop on ‘Digital Business Models: Understanding Strategies’, Paris, 25–26 June.Google Scholar
  6. Belleflamme, P., T. Lambert, and A. Schwienbacher (2014) ‘Crowdfunding: tapping the right crowd’, Journal of Business Venturing, 29(5): 585–609.CrossRefGoogle Scholar
  7. Berlage, L., and D. Terweduwe (1988) ‘The classification of countries by cluster and by factor analysis’, World Development, 16(12): 1527–45.CrossRefGoogle Scholar
  8. Beugrè, C.D., and N. Das (2013) ‘Limited capital and new venture creation in emerging economies: a model of crowd-capitalism’, SAM Advanced Management Journal, 78(3): 21–27.Google Scholar
  9. Calveri, C., and R. Esposito (2013) ‘Derev Crowdfunding World 2013: report, analisi e trend’, available at http://derev.com.Google Scholar
  10. Castrataro, D. (2011) ‘A social history of crowdfunding’, Social Media Week, Monday, 12 December 2011, http://socialmediaweek.org/blog/2011/12/a-social-history-of-crowdfunding/.
  11. De Buysere, K., O. Gajda, R. Kleverlaan, and D. Marom (with a foreword by Matthias Klaes) (2012) A framework for European crowdfunding, 1st ed., available at http://www.europecrowdfunding.org/files/2013/06/FRAMEWORK_EU_ CROWDFUNDING.pdf.Google Scholar
  12. Deutsche Bank AG DB Research (2013) ‘Crowdfunding: an alternative source of funding with potential’, Banking & Technology Snapshot Research Series, Antje Stobbe Editor.Google Scholar
  13. Ebert, U., and H. Welsch (2004) ‘Meaningful environmental indices: a social choice approach’, Journal of Environmental Economics and Management, 46: 270–83.CrossRefGoogle Scholar
  14. European Central Bank (2013) Survey on the access to finance of small and medium-sized enterprises in the Euro area (Frankfurt am Main: ECB).Google Scholar
  15. ECN (European Crowdfunding Network) (2013). EC exploring the added value of potential regulatory action. Available at http://www.eurocrowd.org/2013/10/exploring-the-added-value-of-potential-eu-action/.Google Scholar
  16. European Commission (2013) ‘Consultation Document: Crowdfunding in the EU — Exploring the added value of potential EU action’, available at http://ec.europa.eu.Google Scholar
  17. European Commission (2009) ‘Design as a driver of user-centred innovation’, Commission Stall Working Document, available at http://ec.europa.eu.Google Scholar
  18. European Commission (2015). Understanding crowdfunding and its regulations, Joint Research Centre.Google Scholar
  19. Forman, E.H. (1983) ‘The analytical hierarchy process as a decision support system’, Proceedings of the IEEE Computer Society.Google Scholar
  20. Freudenberg, M. (2003) ‘Composite indicators of country performance: a critical assessment’, OECD Sci. Tech. Industry Working Papers, No. 2003/16, OECD Publishing.CrossRefGoogle Scholar
  21. Gerber, E.M., J.S. Hui, and Kuo Pei-Yi (2012) ‘Crowdfunding: whypeople are motivated to post and fund projects on crowdfunding platforms’, Northwestern University, Creative Action Lab.Google Scholar
  22. Giudici, G., R. Nava, C. Rossi Lamastra, and C. Verecondo (2012) ‘Crowdfunding: the new frontier for financing entrepreneurship?’, available at SSRN: http://ssrn.com/abstract=2157429 or http://dx.doi.org/10.2139/ssrn.2157429.Google Scholar
  23. Golub, B., and M.O. Jackson (2010) ‘Naïve learning in social networks: convergence, influence, and the wisdom of crowds’, American Economic Journal, Microeconomics, 2(1): 112–49.Google Scholar
  24. Green, P.E., and V. Srinivasan (1978) ‘Conjoint analysis in consumer research: issues and outlook’, Journal of Consumer Research, 5: 103–23.CrossRefGoogle Scholar
  25. Groh, A.P., H. Liechtenstein, and K. Lieser (2008) ‘The attractiveness of Central Eastern European countries for venture capital and private equity investors’, IESE Business School Working Paper, No. D/677.Google Scholar
  26. Hair, J.F., R.E. Anderson, R.L. Tatham, and W.C. Black (1998) Multivariate Data Analysis, Filth ed. (Englewood Clills, NJ: Prentice Hall).Google Scholar
  27. Harms, M. ‘What drives motivation to participate financially in a crowdfunding community?’, 13 July 2007, available at SSRN: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2269242.Google Scholar
  28. Harrison, R. (2013) ‘Crowdfunding and the revitalisation of the early stage risk capital market: catalyst or chimera?’, Venture Capital, 15(4): 283–87.CrossRefGoogle Scholar
  29. Hemer, J., U. Schneider, F. Dornbusch, and S. Frey (2011) Crowdfunding und Andere Formen Informetter Microfinanzierung in der Projekt- und Innovations Finanzierung (Stuttgart: Fraunhofer Verlag).Google Scholar
  30. Howe, J. (2008) Crowdsourcing: Why the Power of the Crowd Is Driving the Future of Business (New York: Random House).Google Scholar
  31. Jacobs, R., P. Smith, and M. Goddard (2004) ‘Measuring performance: an examination of composite performance indicators’, Centre for Health Economics, Technical Paper Series, No. 29.Google Scholar
  32. Kaulmann, D., A. Kraay, and P. Zoido-Lobatón (1999) ‘Aggregating governance indicators’, World Bank Policy Research Working Papers, No. 2195.Google Scholar
  33. Kaufmann, D., A. Kraay, P. Zoido-Lobatón (2003) ‘Governance matters III: governance indicators for 1996–2002’, World Bank Policy Research Working Papers, No. 3106.CrossRefGoogle Scholar
  34. Larralde, B., and A. Schwienbacher (2012) ‘Crowdfunding of small entrepreneurial ventures’, The Oxford Handbook of Entrepreneurial Finance, edited by D. Cumming. Vol. 369 (New York: Oxford University Press).Google Scholar
  35. Lawton, K., and D. Marom (2010) The Crowdfunding Revolution: Social Networking Meets Venture Financing (New York: McGraw Hill).Google Scholar
  36. Lawton, K., and D. Marom (2013) The Crowdfunding Revolution: How to Raise Venture Capital using Social Media (New York: McGraw Hill).Google Scholar
  37. Le Bon, G. (2009) Psychology of Crowds (Sparkling Books edition, Sparkling Books), (Southampton, UK).Google Scholar
  38. Ley, A., and S. Weaven (2011) ‘Exploring agency dynamics of crowdfunding in start-up capital financing’, Academy of Entrepreneurship Journal, 17(1): 85–110.Google Scholar
  39. Lehner, O.M. (2013) ‘Crowdfunding social ventures: a model and research agenda’, Venture Capital, 15(4): 289–311.CrossRefGoogle Scholar
  40. Lieser, K., and A.P. Groh (2010) ‘The attractiveness of 66 countries for institutional real estate investments: a composite index approach’, IESE Research Papers, No. D/868.Google Scholar
  41. Massolution (2013) ‘Crowdfunding Industry Report’, Crowdsourcing, LLC Editor.Google Scholar
  42. McDaniel, C., and R. Gates (1998) Contemporary Marketing Research (Cincinnati, OH: South-Western College Publishing).Google Scholar
  43. Mollick, E.R. (2014) ‘The Dynamics of Crowdfunding: An Exploratory Study’, Journal of Business Venturing, 29(1): 1–16.CrossRefGoogle Scholar
  44. Nardo, M., M. Saisana, A. Saltelli, S. Tarantola, A. Hoffman, and E. Giovannini (2005a) Handbook on Constructing Composite Indicators: Methodology and User Guide (Paris: OECD).CrossRefGoogle Scholar
  45. Nardo, M., M. Saisana, A. Saltelli, and S. Tarantola (2005b) ‘Tools for composite indicators building’, Joint Research Centre Working Paper, EUR 21682 EN, European Commission.Google Scholar
  46. Nunnaly, J. (1978) Psychometric Theory (New York McGraw Hill).Google Scholar
  47. Ordanini, A., L. Miceli, M. Pizzetti, A. Parasuraman (2011) ‘Crowd-funding: transforming customers into investors through innovative service platforms’, Journal of Services Marketing, 22(4): 443–70.Google Scholar
  48. Ray, R. (2006) ‘Prediction markets and the financial “wisdom of crowds”’, The Journal of Behavioral Finance, 7(1): 2–4.CrossRefGoogle Scholar
  49. Rubinton, B.J. (2011) ‘Crowdfunding: disintermediated investment banking’, available at SSRN: http://ssrn.com/abstract=1807204 or http://dx.doi.org/10.2139/ssrn.1807204.Google Scholar
  50. Saaty, R.W. (1987) ‘The analytical hierarchy process: what it is and how it is used’, Mathematical Modeling, 9: 161–76.CrossRefGoogle Scholar
  51. Shiller, R. J. (2013). Capitalism and financial innovation. Financial Analysts Journal, 69(1).Google Scholar
  52. Stemler, A.R. (2013) ‘The JOBS Act and crowdfunding: harnessing the power-and money-of the masses’, Business Horizons, 56(3): 271–75.CrossRefGoogle Scholar
  53. Surowiecki, J. (2004) The Wisdom of Crowds (New York: Doubleday).Google Scholar
  54. Wei-Skillern, J., J.E. Austin, H., Leonard and H. Stevenson. (2007). Entrepreneurship in the Social Sector, (Los Angeles, CA, Sage Publications).Google Scholar
  55. Yuma, H., B. Lee, and M. Chae (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: 469–83.CrossRefGoogle Scholar

Copyright information

© Daniele Previati, Giuseppe Galloppo and Andrea Salustri 2015

Authors and Affiliations

  • Daniele Previati
  • Giuseppe Galloppo
  • Andrea Salustri

There are no affiliations available

Personalised recommendations