Author Information : Todd W. Moss (Syracuse University)
Maija Renko-Dolan (University of Illinois at Chicago)
Emily Block (University of Alberta)
Moriah Meyskens (University of San Diego)
Year of Publication : Journal of Business Venturing (2018)
Summary of Findings : How organizations position themselves linguistically influences resource allocation by external audiences such that, even when external audiences expect a given combination of social and economic actions, they strongly prefer singular messaging about either social or economic benefits to a balance of both.
Research Questions : Are prosocial crowdfunding lenders more likely to fund category-spanning ventures that communicate their hybridity, or do they prefer to fund ventures that are more clearly situated within a single social or economic category?
What we know : Prosocial crowdfunding platforms like Kiva are a growing way for microenterprises to receive funding for their ventures, located principally in developing countries. MIcroenterprises are an example of a hybrid organization in which the venture seeks to create both economic and social/environmental value. Prior research has focused on the internal challenges of hybrid organizing, such as conflicting logics and practices that create tensions within the organization. Only recently are scholars paying attention to the external challenges of hybrid organizing, such as how to best acquire resources from external parties. The focus of the present study is the relationship between how microenterprises present themselves online via a prosocial crowdfunding platform and the speed with which those microenterprises receive funding.
Novel Findings : We find that microenterprises which emphasize both social and economic themes in their online venture descriptions are funded more slowly than those which emphasize one over the other. Additionally, an emphasis on social themes results in funding more quickly than an emphasis on economic themes. Our findings thus complement prior research which has focused on how firm actions and practices affect resource acquisition by extending theoretical arguments to show that how firms linguistically present themselves online also plays a role.
Novel Methodology : Hybrid organizations are typically examined through qualitative case studies in which one or a few organizations are studied in-depth to explore the internal mechanisms of hybridity. We complement these studies by taking a quantitative approach in examining the venture descriptions of over 83,000 microenterprises across 15 industries and 60 nations, and the resulting speed with which those ventures were funded online. We use software developed for the psychology field to quantify the linguistic features of these venture descriptions for themes of hybrid language emphasizing economic and social/environmental themes, a first in the literature on hybrid organizations. This technique allows for large-scale studies of organizational hybridity that span industries and nations.
Implications for Practice : Microenterprises seeking funding online via prosocial crowdfunding platforms are funded more quickly when they emphasize their social themes (healthcare, empowerment, being environmentally-friendly, etc.) than when they emphasize economic themes (sales, profits, etc.). The effect of emphasizing social themes is five times larger than emphasizing economic themes. Additionally, emphasizing social themes has a 67% larger effect than balancing social and economic themes. Finally, microenterprises are increasing their emphasis on social themes over time, suggesting that they may be learning how to best present themselves online to more quickly gain the funding they seek.
Implications for Policy: These findings highlight the growing role of crowdfunding into many areas of entrepreneurial life, not just in the USA but also abroad as information technology removes barriers between entrepreneurs and those who wish to provide them capital. To the extent that policy makers improve the ease of crowdfunders to connect with entrepreneurs, we expect the crowdfunding trend to only increase.
Implications for Society: Prosocial crowdfunding allows individuals the world over to provide capital to microenterprises, typically in developing countries. Kiva, the prosocial crowdfunding platform used in this study, has grown rapidly since its inception in 2005 such that they have now enabled over 1.6 million individuals to lend over $1 billion to over 2.6 million microenterprises in 83 countries. That's a pretty significant impact in our view, and so better understanding this phenomenon is an important.
Implications on Research: Future research on entrepreneurial crowdfunding might thus theorize on the differences between actions and words, between what entrepreneurs have accomplished versus what they explain they will accomplish.
Future work could gauge the effect of language representing an orientation towards women in the microenterprise; does a stronger focus on women have any correlation with hybridity? As women are not a homogeneous group, exploring differences among women entrepreneurs in the context of hybrid organizing would be revealing, such as comparing women with husbands and children, with single women, or women who are seasoned entrepreneurs with women who are pursuing entrepreneurship for the first time.
Additionally, more comparative inductive examinations of venture descriptions would be revealing. For example, some of these microenterprises do business internationally by importing clothing, or exporting rugs and jewelry. Future research might consider how crowdfunded organizations competing internationally compare with more localized businesses.
Full Citations : Moss, T.W., Renko, M., Block, E., & Meyskens, M. (forthcoming). Funding the story of hybrid ventures: Crowdfunder lending preferences and linguistic hybridity. Journal of Business Venturing.
Abstract : Prosocial crowdfunding platforms are venues for individual lenders to allocate resources to ventures that specifically pursue economic and social value. In a setting where hybridity is expected, do crowdfunders respond positively to category-spanning ventures, or do they prefer to fund ventures that are more clearly situated within a single category? Drawing on theory rooted in category membership and spanning, our hypotheses test whether prosocial crowdfunding lenders will more quickly allocate resources to hybrid microenterprises that embrace and communicate their hybridity, or to those that focus on a single one of their dual aims. Our study demonstrates that even in such a setting, crowdfunders lend more quickly to microenterprises that position themselves within a single category in which social value is emphasized over economic value. This suggests that how hybrid organizations position themselves in their linguistic narratives has a significant impact on resource allocation by external prosocial audiences.
- Funding the story of hybrid ventures:Crowdfunder lending preferences and linguistic hybridity - November 15, 2017
- The effect of virtuous and entrepreneurial orientations on microfinance lending and repayment: A signaling theory perspective - June 22, 2015
- Cooperation vs. Competition: Alternative Goal Structures for Motivating Groups in a Resource Scarce Environment - June 12, 2015