Team rivalry and lending on crowdfunding platforms: an empirical analysis
- PDF / 835,055 Bytes
- 8 Pages / 595.276 x 793.701 pts Page_size
- 14 Downloads / 171 Views
RESEARCH
Financial Innovation
Open Access
Team rivalry and lending on crowdfunding platforms: an empirical analysis Ling Ge and Xuechen Luo* * Correspondence: [email protected] Department of Information Systems, City University of Hong Kong, Kowloon Tong, Hong Kong
Abstract Background: Prosocial crowdfunding helps the underprivileged obtain non-profit seeking loans from multitudinous lenders. Some platforms introduce team competition to motivate member participation and may thus induce team rivalry. Methods: We investigate how team rivalry affects lending decisions using data from Kiva.org. We argue that a rivalry relationship may engage teams to compete directly against rivals by lending to the same project or prevent them from doing so because they intend not to cooperate. Result: We find that a team is less likely to lend to a project that has received funding from its rival team, suggesting that rival teams tend to avoid cooperation. Conclusions: We discuss the implications of our findings for crowdfunding and competition-based motivation mechanisms in general. Keywords: Crowdfunding, Prosocial lending, Rivalry relationship, Lending decision
Background Crowdfunding brings lenders and borrowers together through internet platforms. It targets financial needs that are not profitable for traditional financial services, such as small businesses, social projects, or the poor. In particular, prosocial and donationbased crowdfunding platforms provide access to capital for poor and low-income populations from multitudinous funders internationally. Prosocial lenders are motivated by ideals and altruism rather than monetary incentives (Burtch et al. 2013). It is thus imperative for platforms to keep lenders motivated to sustain contributions. Platforms often devise reputation-based mechanisms to engage participants to compete for recognition, such as scores, rankings, or badges based on their contribution. Interestingly, some platforms introduce team rivalry to leverage competition. For example, Kiva.org, the largest prosocial crowdfunding platform, allows lenders to build self-organized teams in accordance with their own interests, beliefs, geographic location, religion, and so on. Team rivalry may affect lenders’ lending behavior. The rivalry relationship may enhance teams’ competitive intention and motivate them to contribute to loans (Kilduff et al. 2010). However, rivalry may also lead to reluctance to cooperate (Kogut 1989; Evald and Bager 2008). A team may potentially avoid a project that receives contributions from its rival team, even if the project is contribution worthy. The literature on online platforms contains few examples of this negative impact of rivalry. © The Author(s). 2016 Open Access This article is distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided you give appropriate credit to the original author(s) and the sou
Data Loading...
