Context
Crowdfunding has become a widespread practice to finance innovative projects. For crowdfunding campaigns to be successful, the public must be convinced of the project’s validity and merits. Since crowdfunding is by definition associated with the concept of collectivity and interdependence between participants, it makes sense that crowdfunding platforms be used to finance more and more prosocial projects (ie projects with a positive social and/or environmental impact). Today, many crowdfunding campaigns are reward-based, which means consumers receive the product in return for their financial support. A reward-based crowdfunding transaction therefore seems awfully similar to a regular purchase. An article by Simpson, Schreier, Bitterl and White published in 2021 in the Journal of Marketing Research explains why seemingly similar transactions (regular purchase and reward-based crowdfunding) may result in different consumer choices.
Research questions
The authors’ assumption is that crowdfunding’s collective dimension may induce mechanisms that modify consumer behavior, particularly when arbitrating between prosocial and self-benefit goods. Therefore, they chose to test the relevance of several concepts that relate to collectiveness and interconnectedness in the context of crowdfunding such as:
– the activation of an independent vs interdependent self-construal (put differently, the fact that the self is perceived as unique and separate from others or the sense that one’s self is connected with others),
– collective efficacy, ie the belief in the collective’s ability to bring about change.
Consequently, the authors address the following research questions:
– Does the demand in social or self-benefit goods vary across transaction contexts (namely standard purchase or reward-based crowdfunding)?
– Does crowdfunding allow the activation of an interdependent construal?
– Does collective efficacy affect consumer behavior in crowdfunding contexts?
Method
To answer these research questions, the authors conducted 4 series of experiments.
The first series was composed of two studies. The first study was conducted on 160 participants who were asked for their willingness to pay for a pen made from reclaimed materials (social product), either in a crowdfunding or a purchase context. The second study 403 participants asked for their willingness to pay for a pen either made from reclaimed materials (social good) or presented as qualitative and high-performance pen (self-benefit good) either in crowdfunding or a purchase context.
The second series was also composed of two studies, using sunglasses as the focal product. The first study involved 244 participants who were asked to choose between a social good and its self-benefit counterpart in the context of crowdfunding vs a regular purchase. It aimed at understanding how consumers arbitrate between a social good or its self-benefit counterpart. The second study, conducted on 600 participants, included measures of the self-construal.
In the third study, 1149 participants were randomly assigned one out of 3 transaction conditions (crowdfunding, purchase, purchase of a product with a crowdfunding history) and asked to choose between a social product and its self-benefit alternative.
Finally, study 4 (conducted on 963 participants) was designed to assess the impact of collective efficacy on the product choice (social or self-benefit) in the purchase and crowdfunding contexts.
Results
– When the transaction involves a self-benefit good, there is no significant difference in the consumer’s willingness to pay whether the transaction is made in the context of a regular purchase or crowdfunding. However, when the transaction concerns a social good, demand and willingness to pay are higher in the crowdfunding context than in the standard purchase situation.
– The type of transaction influences the type of product chosen by the consumer. When asked to choose between a social good and its self-benefit counterpart, the share of consumers choosing the social-good is twice as high in a crowdfunding context than in a regular purchase context.
– The increased demand in social goods in a crowdfunding context compared with a purchase context follows from the fact that crowdfunding activates an interdependent self-construal while the regular purchase situation activate an independent self-construal. Put differently, in a crowdfunding context, consumers feel more connected and interdependent with others, which leads them to choose social goods and increases their willingness to pay for the social good. Conversely, in a standard purchase condition, consumers do not feel the same concern for others and are centered on their own interests, which is why they prefer the self-benefit good.
– When a previously crowdfunded product is available for purchase, it does not benefit from the prosocial effect triggered by a crowdfunding process in progress. In other words, consumer demand for prosocial goods is attenuated in the case of previously crowdfunded products, because the transaction no longer relates to crowdfunding and resembles a standard purchase. This stems from the fact that the activation of an interdependent self-construal can be limited in time.
– Within a crowdfunding transaction, demand for prosocial goods is higher if participants believe in the chances of achieving this collective goal (high collective efficacy). In other words, crowdfunding’s positive impact on the demand of social goods is lost when participants lose faith in the project’s chances of succeeding. The demand for self-benefit products is not affected by collective efficacy.
– The studies rule out the impact of perceived risk, role of others and entrepreneurial need in the effects described above.
Why is this article relevant for researchers?
These findings enrich the literature on crowdfunding and prosocial choice by revealing the determining role of involvement and collective efficacy in these areas. It also bridges the transaction and the self-construal literatures by showing that different types of transactions activate either an independent or an interdependent self-construal.
Future research could check the external validity of these results across transaction types, and particularly transactions that evoke a sense of collectivity, such as pay-it-forward, pay-what-you-want and donation contexts. In the same vein, the present article opted for a social/self-benefit segmentation of products, but other product characteristics (such as innovation, as the authors point out) could also benefit from the activation of an interdependent self-construal. Moreover, since the activation of an interdependent self-construal by crowdfunding does not seem to hold on the long run, research could investigate which factors may prolong the effect. Finally, the activation of an interdependent self-construal was investigated overall, but it may be facilitated by certain consumer characteristics such as culture or predispositions for social behavior. The agency-communion theory could provide interesting insight to explore this avenue.
Why is this article relevant for professionals?
This article is relevant for professionals wishing to engage in reward-based crowdfunding strategies. It shows that emphasizing the prosocial dimension of the project can increase chances of success. For instance, Livin Farms advertised its prosocial intent right away on its crowdfunding campaign page using such words as “healthy”, “sustainable” or “food revolution”. Moreover, consumers seem to be more willing to pay when cues signal a high collective efficacy. Therefore, dividing the campaign into stages so that the objective always seems reachable could be an incentive for consumers to be more generous. For instance, the video game Star Citizen was developed stretching goals over time and showing backers what was achieved each step of the way.
However, the findings also show that, when the crowdfunding campaign is over, marketers will need to find other arguments to fuel the product’s success, since the effects of the interdependent self-construal driven by crowdfunding do not hold on the long run. For instance, Orison batteries were originally launched on Kickstarter and continue to thrive thanks to the promise of lower energy costs and back-up power before appealing to the green energy argument.