solving the puzzle of crowdfunding in sweden_teigland et al
DESCRIPTION
Presentation at Bocconi Univ in Milan, Italy in Oct 2013 of our research-in-progress on crowdfunding in Sweden. Paper here: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2263965. and Report here: http://blog.fundedbyme.com/robin-teigland/.TRANSCRIPT
Solving the Puzzle of CrowdfundingWhen institutional logics and
affordances collide, (re-)design matters
RESEARCH-IN-PROGRESS
PRESENTED AT BOCCONI UNIVERSITY, MILAN, ITALY
CLAIRE INGRAM, ROBIN TEIGLAND, EMMA VAAST
OCTOBER 2013
Project researchers Claire Ingram
◦ Research Assistant /PhD Student◦ Stockholm School of Economics, Sweden
Robin Teigland◦ Associate Professor◦ Stockholm School of Economics, Sweden
Emmanuelle Vaast◦ Associate Professor◦ McGill University, Canada
Today’s presentation
Crowdfunding and our empirical puzzleTheoretical backgroundMethodologyInitial findingsQ&A
Worldwide 800+ platforms,$2.6bn raised
(Massolution, 2012)
Europe$945m raised
(Massolution, 2012)
Sweden $4m raised
(Sept 2013)
Image: Adapted from growvc.com
CrowdfundingAccumulation of small investments in individual projects by large number of
individuals (the “crowd”) via or with help of Internet and social networks
(De Buysere et al., 2012)
Crowdfunding taking off in Sweden
March 2011-April 2013• $1mln raised• Around 300 projects
funded of over 700 total• Avg $3300 per project• Max raised $86 000
Success Story: Flippin’ Burgers on FundedByMe
Money raised: SEK 36,502 / €4,000
Number of Investors: 186
Date Funded: September 2011
Sector: Food
Flippin’ Burgers - ContinuedTop 5 Best American
Restaurants in Europe
http://travel.cnn.com/best-americana-restaurants-europe-023346
Sweden in top in ICT entrepreneurship and innovation
But here we found an interesting puzzle….
“We haven’t had that many projects, and the projects we’ve had haven’t really held the kind of quality we had hoped for...” - Institutional Actor
“I don’t get the feeling that crowdfunding is the new thing and we can forget everything else.”- IT Entrepreneur
Why are Swedish IT entrepreneurs not using local crowdfunding platforms?
Today’s presentation
Crowdfunding and our empirical puzzleTheoretical backgroundMethodologyInitial findingsQ&A
Institutional theory
Actors embedded in environment defined by cognitive, normative and structural considerationsPressure towards stasisLimited human agency
(Battilana et al. 2009)
Focus on institutional logics, which are part of a broader, accepted belief system about what constitute legitimate expectations and goals within a shared field
(Thornton, 2002)
Role of Institutional Entrepreneur“Social contexts present entrepreneurs with many constraints, yet they also set the conditions that create windows of opportunity.”(Aldrich and Fiol, 1994: 649)
Change agent/ Institutional
entrepreneur
Actors in institutional field being “changed”
Institutional entrepreneur fulfills two conditions (Battilana et al. 2009) 1) Initiate divergent changes in institutions2) Actively participate in implementation of changes
Technology affordances
Affordances Material Social
“Action possibilities and opportunities that emerge from actors engaging with a focal technology” (Faraj and Bijan, 2012: 238)
“As potential interactions between people and technology, rather than as properties of either people or technology” ” (Majchzrak and Markus, 2012: 1)
Integrating theory
Platform affordances
and narratives
Institutional logics
Material Social
Crowdfunding actor, i.e., institutional
entrepreneur, designs platform
Startup funding ecosystem
Research questions Actors [Crowdfunding platforms] behave not only as designers of technological system promoting technical features but also as institutional entrepreneurs who actively try to impact institutional logics to encourage emergence of affordances from system
RQ1: How does the prevalent startup funding institutional logic affect entrepreneurs’ perceptions of the affordances of crowdfunding platforms?
RQ2: What role does this institutional logic play in affecting the narratives of the institutional entrepreneur?
Today’s presentation
Crowdfunding and our empirical puzzleTheoretical backgroundMethodologyInitial findingsQ&A
Qualitative case study: Coding of 22 interviews
Startup ecosystem in Sweden• 16 entrepreneurs • 2 institutional actors• 2 repeat funders• 2 platform creators
Investigating entrepreneur and geographic communities and organizational fields within which entrepreneur is embedded (Marquis and Battilana, 2007).
Enabling analysis of interplay between existing institutional logic and nascent, developing institutional logic (DiMaggio, 1988; Garud, Hardy, and Maguire, 2007; Maguire, Hardy, and Lawrence, 2004).
Today’s presentation
Crowdfunding and our empirical puzzleTheoretical backgroundMethodologyInitial findingsQ&A
Prevalent institutional logic regarding financing
Money is only one of several reasons an entrepreneur goes for funding:
“We were kind of in the mindset of getting like a good investor in; someone who could add something. And that’s still our perspective. The kind of guys who invested in us are really good investors, impressive investors and they add a lot to the company other than money.” - Entrepreneur
First attempt at Institutional Entrepreneurship
Crowdfunding platforms focus on disrupting this funding logic, i.e., as a substitute for existing sources of venture funding, e.g., bank, VC, angel.Physical design of crowdfunding site emphasizes this narrative – amount of money raised in large font with progress bar and percentage, emphasis on giving money and tracking how much has already been received.
Colliding with funding logic
Big $$$
Startupfunding logic
Values
Platform features and narrative
X
Second attempt at Institutional Entrepreneurship
Little change in physical appearance of crowdfunding sitesBUT narrative around crowdfunding changed to be complementary to other forms of startup financing One platform argued crowdfunding could be used for publicity and to test market
Another platform noted that its strategy was to involve large investors in crowdfunding, not just “ordinary people”
Strategy shift: Introduction of and shifted focus from reward-based to crowd equity
Aligning with funding logic
Platform features and narrative
Big $$$
Startupfunding logic
Values
Change of strategy by FundedByMe
Initial success through crowd equity
Discussion
◦ Institutional entrepreneur attempts to use technology affordances and accompanying narrative as tool to change institutional logic
◦But direct “attack” on institutional logic not successful◦Changed to indirect attack through alignment of narrative and strategy with prevailing institutional logic
◦Research in progress - > outcome?
Ongoing research – comments welcome!Next steps – Interviews to be conducted• Primary crowdfunding platforms• Platform technology providers•Other organizational field actors, eg traditional venture funders• Crowd equity entrepreneurs and investors
Continued theoretical development
More information online• Research Paper: http://papers.ssrn.com/sol3/papers.cfm?
abstract_id=2263965• Industry Report: http://blog.fundedbyme.com/robin-teigland/
Today’s presentation
Crowdfunding and our empirical puzzleTheoretical backgroundMethodologyInitial findingsQ&A
Q &A
Image: NewYorker.com
We would like to acknowledge .SE – The Internet Infrastructure
Foundation and VINNOVA for their generous funding
of our research.
Robin [email protected]
www.knowledgenetworking.orgwww.slideshare.net/eteigland
www.nordicworlds.net RobinTeigland
Photo: Lindholm, Metro
Photo: Nordenskiöld
Photo: Lindqvist
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