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Abstract
Micro and social entrepreneurs face multiple challenges, including limited access to funding, knowledge systems, networks, and markets, which limit the growth and development of their ventures. This study seeks to understand how the participation in crowdfunding and its utilization to internationalize can help micro and social enterprises address challenges through social capital. Through a narrative review of literature anchored on the resource-based and knowledge-based theories of the firm and the theory of social capital, this study finds that crowdfunding provides access to funding, knowledge systems, and networks. Moreover, the participation in crowdfunding provides access to large, international markets. However, despite these benefits, there remains challenges to micro and social enterprise participation in crowdfunding as there is low awareness and adoption in developing countries. Furthermore, there is still question on crowdfunding’s viability as an internationalization strategy. The study ends by identifying directions for future research.
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This work is licensed under a Creative Commons Attribution 4.0 International License.
How to Cite
Vergara, K. C., & Vergara, R. A. (2024). Crowdfunding and Social Capital: A Pathway for The Internationalization of MSMEs and Social Enterprises?. International Journal of Multidisciplinary: Applied Business and Education Research, 5(4), 1199-1206. https://doi.org/10.11594/ijmaber.05.04.08
References
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Agrawal, A., Catalini, C., & Goldfarb, A. (2014). Some simple economics of crowdfund-ing. Innovation Policy and the Economy, 14(1), 63-97. https://doi.org/10.1086/674021
Barney, J. B. (1986). Organizational culture: can it be a source of sustained competi-tive advantage?. Academy of Manage-ment Review, 11(3), 656-665. https://doi.org/10.5465/amr.1986.4306261
Barney, J. (1991). Firm resources and sus-tained competitive advantage. Journal of Management, 17(1), 99-120. https://doi.org/10.1177/014920639101700108
Barney, J. B. (2018). Why resource‐based theo-ry's model of profit appropriation must incorporate a stakeholder perspective. Strategic Management Journal, 39(13), 3305-3325. https://doi.org/10.1002/smj.2949
Baumeister, Roy F., and Mark R. Leary. "Writ-ing narrative literature reviews." Review of general psychology 1.3 (1997): 311-320. https://doi.org/10.1037/1089-2680.1.3.311
Belleflamme, P., Lambert, T., & Schwien-bacher, A. (2014). Crowdfunding: Tap-ping the right crowd. Journal of Business Venturing, 29(5), 585-609. https://doi.org/10.1016/j.jbusvent.2013.07.003
Bhave, M. P. (1994). A process model of entre-preneurial venture creation. Journal of Business Venturing, 9(3), 223-242. https://doi.org/10.1016/0883-9026(94)90031-0
Cai, W., Polzin, F., & Stan, E. (2021). Crowd-funding and social capital: A systematic review using a dynamic perspective. Technological Forecasting & Social Change, 162, 120412. https://doi.org/10.1016/j.techfore.2020.120412
Cosh, A., Cumming, D., & Hughes, A. (2009). Outside enterpreneurial capital. The Economic Journal, 119(540), 1494-1533. https://doi.org/10.1111/j.1468-0297.2009.02270.x
Diego, A., Maira, H., & Caiza, C. (2021). The use of crowdfunding and its impact on en-trepreneurship in the city of Ambato-Ecuador. Minerva, 2(6), 13-22. https://doi.org/10.47460/minerva.v2i6.38
Eldridge, D., Nisar, T. M., & Torchia, M. (2021). What impact does equity crowdfunding have on SME innovation and growth? An empirical study. Small Business Econom-ics, 56(1), 105-120. https://doi.org/10.1007/s11187-019-00210-4
Fatoki, O. (2015). The effect of human and so-cial capital on the knowledge of financ-ing alternatives by new small business owners in South Africa. Corporate Own-ership and Control, 13(1), 840-856.
Fernhaber, S. A., & McDougall-Covin, P. P. (2009). Venture capitalists as catalysts to new venture internationalization: the impact of their knowledge and reputa-tion resources. Entrepreneurship Theory and Practice, 33(1), 277-295. https://doi.org/10.1111/j.1540-6520.2008.00289.x
Grant, R. M. (1996). Toward a knowledge‐based theory of the firm. Strategic Man-agement Journal, 17(S2), 109-122. https://doi.org/10.1002/smj.4250171110
Helliwell, J. F., & Putnam, R. D. (1995). Eco-nomic growth and social capital in Italy. Eastern Economic Journal, 21(3), 295-307. https://www.jstor.org/stable/40325643
Ismaila, B. (2023). The state of crowdfunding in Africa and its potential impact: a liter-ature review. International Journal of Research in Business and Social Science (2147-4478), 12(5), 258-268. https://doi.org/10.20525/ijrbs.v12i5.2550
Kukurba, M., & Waszkiewicz, A. (2018). Crowdfunding as a Form of Funding for Businesses in the Culturally-Changing Global Economy: A Literature Review. Journal of intercultural Management, 10(2), 99-137. https://doi.org/10.2478/joim-2018-0011
Lehner, O. M. (2013). Crowdfunding social ventures: a model and research agenda. Venture Capital, 15(4), 289-311. http://dx.doi.org/10.1080/13691066.2013.782624
Lehner, O. M., Grabmann, E., & Ennsgraber, C. (2015). Entrepreneurial implications of crowdfunding as alternative funding source for innovations. Venture Capital, 17(1-2), 171-189. https://doi.org/10.1080/13691066.2015.1037132
Madrazo-Lemarroy, P., Barajas-Portas, K., & Labastida Tovar, M. E. (2019). Analyzing campaign’s outcome in reward-based crowdfunding: Social capital as a deter-minant factor. Internet Research, 29(5), 1171-1189. https://doi.org/10.1108/INTR-03-2018-0115
Mahdiraji, H.A., Hajiagha, S.H.R., Jafari-Sadeghi, V., Busso, D., & Devalle, A. (2023). Towards financing the entrepre-neurial SMEs: exploring the innovation drivers of successful crowdfunding via a multi-layer decision-making approach. European Journal of Innovation Man-agement. https://doi.org/10.1108/EJIM-12-2021-0618
Maier, E. (2016). Supply and demand on crowdlending platforms: connecting small and medium-sized enterprise bor-rowers and consumer investors. Journal of Retailing and consumer Services, 33, 143-153. https://doi.org/10.1016/j.jretconser.2016.08.004
Maier, L., Baccarella, C. V., Block, J. H., Wagner, T. F., & Voigt, K. I. (2023). The legitimi-zation effect of crowdfunding success: a consumer perspective. Entrepreneurship Theory and Practice, 47(4), 1389-1420. https://doi.org/10.1177/10422587211057025
Mäkelä, M. M., & Maula, M. V. (2005). Cross-border venture capital and new venture internationalization: An isomorphism perspective. Venture Capital, 7(3), 227-257. https://doi.org/10.1080/13691060500258877
Maula, M. V., & Lukkarinen, A. (2022). Atten-tion across borders: Investor attention as a driver of cross‐border equity crowdfunding investments. Strategic Entrepreneurship Journal, 16(4), 699-734. https://doi.org/10.1002/sej.1424
Mollick, E. (2014). The dynamics of crowd-funding: An exploratory study. Journal of business venturing, 29(1), 1-16. https://doi.org/10.1016/j.jbusvent.2013.06.005
Mollick, E. R., & Kuppuswamy, V. (2014). After the campaign: Outcomes of crowdfund-ing. UNC Kenan-Flagler Research Paper, (2376997). Available at SSRN: https://ssrn.com/abstract=2376997 or http://dx.doi.org/10.2139/ssrn.2376997
Nahapiet, J. & Ghoshal, S. (1998). Social capi-tal, intellectual capital, and the organiza-tional advantage. Academic Management Review, 23(2), 242–266. https://doi.org/10.5465/amr.1998.533225
Paoloni, P., Paoloni, N., & Modaffari, G. (2019). Crowdfunding as a new collaborative process in the knowledge economy: A literature review. VINE Journal of Infor-mation and Knowledge Management Systems, 49(2), 241-255. https://doi.org/10.1108/VJIKMS-12-2018-0118
Park, S., & LiPuma, J. A. (2020). New venture internationalization: The role of venture capital types and reputation. Journal of World Business, 55(1), 101025. https://doi.org/10.1016/j.jwb.2019.101025
Pekmezovic, A., & Walker, G. (2016). The global significance of crowdfunding: Solving the SME funding problem and democratizing access to capital. Wm. & Mary Bus. L. Rev., 7, 347. https://scholarship.law.wm.edu/wmblr/vol7/iss2/3
Putnam, R. D. (1993). The prosperous com-munity. The American Prospect, 4(13), 35-42.
Roma, P., Petruzzelli, A. M., & Perrone, G. (2017). From the crowd to the market: The role of reward-based crowdfunding performance in attracting professional investors. Research Policy, 46(9), 1606-1628. https://doi.org/10.1016/j.respol.2017.07.012
Shahab, Y., Ye, Z., Riaz, Y., & Ntim, C. G. (2019). Individual’s financial investment deci-sion-making in reward-based crowd-funding: Evidence from China. Applied Economics Letters, 26(4), 261-266. https://doi.org/10.1080/13504851.2018.1464643
Sontag-Padilla, L.M., Staplefoote, L., & Gonza-lez Morganti, K. 2012. Financial sustain-ability for nonprofit organizations: A re-view of the literature. Santa Monica, CA: Rand Corporation. Retrieved from http://www.rand.org/pubs/research_reports/RR121.html
Theokary, C., Sarangee, K., & Karniouchina, E. V. (2023). The impact of strategic part-nerships on crowdfunding outcomes: which ties really matter?. Journal of Small
Business Management, 61(2), 481-512. https://doi.org/10.1080/00472778.2020.1796466
Troise, C., Battisti, E., Christofi, M., van Vulpen, N. J., & Tarba, S. (2023). How can SMEs use crowdfunding platforms to interna-tionalize? The role of equity and reward crowdfunding. Management Interna-tional Review. 63(1), 117-159. https://doi.org/10.1007/s11575-022-00493-y
Vergara, R. (2015). Awareness and attitudes towards crowdfunding in the Philip-pines. In 9th Global Business Conference, 4, 3-5.
Vergara, R.A.G. (2019). Crowdfunding and the venture creation process. Philippine Academy of Management E-Journal, 2(1). https://paomassociation.org/paom-e-journal/issues/vol-2-no-1-march-2019/
Vergara, R.A.G. & Vergara, K.C.S. (2023). Why crowdfund? Motivations of Philippine-based project owners and backers. In-ternational Journal of Multidisciplinary: Applied Business and Education Re-search, 4(5), 1650-1658. https://doi.org/10.11594/ijmaber.04.05.26
Agrawal, A., Catalini, C., & Goldfarb, A. (2014). Some simple economics of crowdfund-ing. Innovation Policy and the Economy, 14(1), 63-97. https://doi.org/10.1086/674021
Barney, J. B. (1986). Organizational culture: can it be a source of sustained competi-tive advantage?. Academy of Manage-ment Review, 11(3), 656-665. https://doi.org/10.5465/amr.1986.4306261
Barney, J. (1991). Firm resources and sus-tained competitive advantage. Journal of Management, 17(1), 99-120. https://doi.org/10.1177/014920639101700108
Barney, J. B. (2018). Why resource‐based theo-ry's model of profit appropriation must incorporate a stakeholder perspective. Strategic Management Journal, 39(13), 3305-3325. https://doi.org/10.1002/smj.2949
Baumeister, Roy F., and Mark R. Leary. "Writ-ing narrative literature reviews." Review of general psychology 1.3 (1997): 311-320. https://doi.org/10.1037/1089-2680.1.3.311
Belleflamme, P., Lambert, T., & Schwien-bacher, A. (2014). Crowdfunding: Tap-ping the right crowd. Journal of Business Venturing, 29(5), 585-609. https://doi.org/10.1016/j.jbusvent.2013.07.003
Bhave, M. P. (1994). A process model of entre-preneurial venture creation. Journal of Business Venturing, 9(3), 223-242. https://doi.org/10.1016/0883-9026(94)90031-0
Cai, W., Polzin, F., & Stan, E. (2021). Crowd-funding and social capital: A systematic review using a dynamic perspective. Technological Forecasting & Social Change, 162, 120412. https://doi.org/10.1016/j.techfore.2020.120412
Cosh, A., Cumming, D., & Hughes, A. (2009). Outside enterpreneurial capital. The Economic Journal, 119(540), 1494-1533. https://doi.org/10.1111/j.1468-0297.2009.02270.x
Diego, A., Maira, H., & Caiza, C. (2021). The use of crowdfunding and its impact on en-trepreneurship in the city of Ambato-Ecuador. Minerva, 2(6), 13-22. https://doi.org/10.47460/minerva.v2i6.38
Eldridge, D., Nisar, T. M., & Torchia, M. (2021). What impact does equity crowdfunding have on SME innovation and growth? An empirical study. Small Business Econom-ics, 56(1), 105-120. https://doi.org/10.1007/s11187-019-00210-4
Fatoki, O. (2015). The effect of human and so-cial capital on the knowledge of financ-ing alternatives by new small business owners in South Africa. Corporate Own-ership and Control, 13(1), 840-856.
Fernhaber, S. A., & McDougall-Covin, P. P. (2009). Venture capitalists as catalysts to new venture internationalization: the impact of their knowledge and reputa-tion resources. Entrepreneurship Theory and Practice, 33(1), 277-295. https://doi.org/10.1111/j.1540-6520.2008.00289.x
Grant, R. M. (1996). Toward a knowledge‐based theory of the firm. Strategic Man-agement Journal, 17(S2), 109-122. https://doi.org/10.1002/smj.4250171110
Helliwell, J. F., & Putnam, R. D. (1995). Eco-nomic growth and social capital in Italy. Eastern Economic Journal, 21(3), 295-307. https://www.jstor.org/stable/40325643
Ismaila, B. (2023). The state of crowdfunding in Africa and its potential impact: a liter-ature review. International Journal of Research in Business and Social Science (2147-4478), 12(5), 258-268. https://doi.org/10.20525/ijrbs.v12i5.2550
Kukurba, M., & Waszkiewicz, A. (2018). Crowdfunding as a Form of Funding for Businesses in the Culturally-Changing Global Economy: A Literature Review. Journal of intercultural Management, 10(2), 99-137. https://doi.org/10.2478/joim-2018-0011
Lehner, O. M. (2013). Crowdfunding social ventures: a model and research agenda. Venture Capital, 15(4), 289-311. http://dx.doi.org/10.1080/13691066.2013.782624
Lehner, O. M., Grabmann, E., & Ennsgraber, C. (2015). Entrepreneurial implications of crowdfunding as alternative funding source for innovations. Venture Capital, 17(1-2), 171-189. https://doi.org/10.1080/13691066.2015.1037132
Madrazo-Lemarroy, P., Barajas-Portas, K., & Labastida Tovar, M. E. (2019). Analyzing campaign’s outcome in reward-based crowdfunding: Social capital as a deter-minant factor. Internet Research, 29(5), 1171-1189. https://doi.org/10.1108/INTR-03-2018-0115
Mahdiraji, H.A., Hajiagha, S.H.R., Jafari-Sadeghi, V., Busso, D., & Devalle, A. (2023). Towards financing the entrepre-neurial SMEs: exploring the innovation drivers of successful crowdfunding via a multi-layer decision-making approach. European Journal of Innovation Man-agement. https://doi.org/10.1108/EJIM-12-2021-0618
Maier, E. (2016). Supply and demand on crowdlending platforms: connecting small and medium-sized enterprise bor-rowers and consumer investors. Journal of Retailing and consumer Services, 33, 143-153. https://doi.org/10.1016/j.jretconser.2016.08.004
Maier, L., Baccarella, C. V., Block, J. H., Wagner, T. F., & Voigt, K. I. (2023). The legitimi-zation effect of crowdfunding success: a consumer perspective. Entrepreneurship Theory and Practice, 47(4), 1389-1420. https://doi.org/10.1177/10422587211057025
Mäkelä, M. M., & Maula, M. V. (2005). Cross-border venture capital and new venture internationalization: An isomorphism perspective. Venture Capital, 7(3), 227-257. https://doi.org/10.1080/13691060500258877
Maula, M. V., & Lukkarinen, A. (2022). Atten-tion across borders: Investor attention as a driver of cross‐border equity crowdfunding investments. Strategic Entrepreneurship Journal, 16(4), 699-734. https://doi.org/10.1002/sej.1424
Mollick, E. (2014). The dynamics of crowd-funding: An exploratory study. Journal of business venturing, 29(1), 1-16. https://doi.org/10.1016/j.jbusvent.2013.06.005
Mollick, E. R., & Kuppuswamy, V. (2014). After the campaign: Outcomes of crowdfund-ing. UNC Kenan-Flagler Research Paper, (2376997). Available at SSRN: https://ssrn.com/abstract=2376997 or http://dx.doi.org/10.2139/ssrn.2376997
Nahapiet, J. & Ghoshal, S. (1998). Social capi-tal, intellectual capital, and the organiza-tional advantage. Academic Management Review, 23(2), 242–266. https://doi.org/10.5465/amr.1998.533225
Paoloni, P., Paoloni, N., & Modaffari, G. (2019). Crowdfunding as a new collaborative process in the knowledge economy: A literature review. VINE Journal of Infor-mation and Knowledge Management Systems, 49(2), 241-255. https://doi.org/10.1108/VJIKMS-12-2018-0118
Park, S., & LiPuma, J. A. (2020). New venture internationalization: The role of venture capital types and reputation. Journal of World Business, 55(1), 101025. https://doi.org/10.1016/j.jwb.2019.101025
Pekmezovic, A., & Walker, G. (2016). The global significance of crowdfunding: Solving the SME funding problem and democratizing access to capital. Wm. & Mary Bus. L. Rev., 7, 347. https://scholarship.law.wm.edu/wmblr/vol7/iss2/3
Putnam, R. D. (1993). The prosperous com-munity. The American Prospect, 4(13), 35-42.
Roma, P., Petruzzelli, A. M., & Perrone, G. (2017). From the crowd to the market: The role of reward-based crowdfunding performance in attracting professional investors. Research Policy, 46(9), 1606-1628. https://doi.org/10.1016/j.respol.2017.07.012
Shahab, Y., Ye, Z., Riaz, Y., & Ntim, C. G. (2019). Individual’s financial investment deci-sion-making in reward-based crowd-funding: Evidence from China. Applied Economics Letters, 26(4), 261-266. https://doi.org/10.1080/13504851.2018.1464643
Sontag-Padilla, L.M., Staplefoote, L., & Gonza-lez Morganti, K. 2012. Financial sustain-ability for nonprofit organizations: A re-view of the literature. Santa Monica, CA: Rand Corporation. Retrieved from http://www.rand.org/pubs/research_reports/RR121.html
Theokary, C., Sarangee, K., & Karniouchina, E. V. (2023). The impact of strategic part-nerships on crowdfunding outcomes: which ties really matter?. Journal of Small
Business Management, 61(2), 481-512. https://doi.org/10.1080/00472778.2020.1796466
Troise, C., Battisti, E., Christofi, M., van Vulpen, N. J., & Tarba, S. (2023). How can SMEs use crowdfunding platforms to interna-tionalize? The role of equity and reward crowdfunding. Management Interna-tional Review. 63(1), 117-159. https://doi.org/10.1007/s11575-022-00493-y
Vergara, R. (2015). Awareness and attitudes towards crowdfunding in the Philip-pines. In 9th Global Business Conference, 4, 3-5.
Vergara, R.A.G. (2019). Crowdfunding and the venture creation process. Philippine Academy of Management E-Journal, 2(1). https://paomassociation.org/paom-e-journal/issues/vol-2-no-1-march-2019/
Vergara, R.A.G. & Vergara, K.C.S. (2023). Why crowdfund? Motivations of Philippine-based project owners and backers. In-ternational Journal of Multidisciplinary: Applied Business and Education Re-search, 4(5), 1650-1658. https://doi.org/10.11594/ijmaber.04.05.26