Effectiveness of Crowdfunding in Financing Sustainable Enterprises

Abstract

AbstractEntrepreneurial sustainability is the much-needed solution to the current world problems of social inequality and environmental concerns. More and more enterprises are needed to undertake activities with the purpose of benefitting society as a whole and not making profits. Sustainable enterprises with social and environmental orientations often face difficulty in arranging funds from traditional sources of financing. Crowdfunding can help in collecting funds for projects with social and environmental orientation. Crowdfunding is a way of collecting money from different individuals who are willing to support a specific cause. Crowdfunding in India is a decade old industry, with the first platform being launched in 2009. Since then, various individuals and enterprises have used crowdfunding either for their personal or social good. This study’s primary objective is to understand the effectiveness of crowdfunding in financing ventures with sustainable orientation. For the purpose of this study, enterprises with social and environmental orientations are considered sustainable enterprises. The study is exploratory in nature. A sample of 458 campaigns belonging to different categories from an Indian crowdfunding platform were selected. The study aims to find out whether the campaigns having a social or environmental orientation are able to attract more supporters and thus are able to achieve their target level of funds. In other words, the study is meant to explore the effect of different categories on the outcome of the crowdfunding campaigns. The findings of the study suggested that the environmental orientation of a campaign cannot significantly predict the outcome of the campaign whereas social orientation has a negative effect on the campaign.KeywordsCrowdfundingEnvironmentSustainableSocial