Crowd-funding: Transforming customers into investors through innovative service platforms

Andrea Ordanini, Lucia Miceli, Marta Pizzetti, Ananthanarayanan Parasuraman

Research output: Contribution to journalArticle

370 Citations (Scopus)

Abstract

Purpose: The purpose of this paper is to analyze the emerging crowd-funding phenomenon, that is a collective effort by consumers who network and pool their money together, usually via the internet, in order to invest in and support efforts initiated by other people or organizations. Successful service businesses that organize crowd-funding and act as intermediaries are emerging, attesting to the viability of this means of attracting investment. Design/methodology/approach: The research employs a "grounded theory" approach, performing an in-depth qualitative analysis of three cases involving crowd-funding initiatives: SellaBand in the music business, Trampoline in financial services, and Kapipal in non-profit services. These cases were selected to represent a diverse set of crowd-funding operations that vary in terms of risk/return for the investor and the type of payoff associated to the investment. Findings: The research addresses two research questions: how and why do consumers turn into crowd-funding participants? and how and why do service providers set up a crowd-funding initiative? Concerning the first research question, the authors' findings reveal purposes, characteristics, roles and tasks, and investment size of crowd-funding activity from the consumer's point of view. Regarding the second research question, the authors' analysis reveals purposes, service roles, and network effects of crowd-funding activity investigated from the point of view of the service organization that set up the initiative. Practical implications: The findings also have implications for service managers interested in launching and/or managing crowd-funding initiatives. Originality/value: The paper addresses an emerging phenomenon and contributes to service theory in terms of extending the consumer's role from co-production and co-creation to investment.

Original languageEnglish (US)
Pages (from-to)443-470
Number of pages28
JournalJournal of Service Management
Volume22
Issue number4
DOIs
StatePublished - Aug 2011

Fingerprint

business service
financial services
music
qualitative analysis
services
Investors
Funding
viability
methodology
analysis
effect
Music
Service provider
World Wide Web
Co-production
Network effects
Risk-return
Qualitative analysis
Design methodology
Co-creation

Keywords

  • Crowd-funding
  • Customer-investors
  • Customers
  • Investments
  • Service innovation

ASJC Scopus subject areas

  • Strategy and Management
  • Business, Management and Accounting (miscellaneous)
  • Tourism, Leisure and Hospitality Management

Cite this

Crowd-funding : Transforming customers into investors through innovative service platforms. / Ordanini, Andrea; Miceli, Lucia; Pizzetti, Marta; Parasuraman, Ananthanarayanan.

In: Journal of Service Management, Vol. 22, No. 4, 08.2011, p. 443-470.

Research output: Contribution to journalArticle

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