Abstract
Technology-driven change has generated new, even revolutionary business models, characterized by high levels of user participation. In the finance field, business models based on crowdfunding have seen significant growth and entered use as an alternative means of extending access and gaining financing for various types of projects. Nonetheless, current crowdfunding practices have been subject to criticism for issues such as information asymmetry, lack of trust and transaction costs, spurring discussion of how to develop and improve these practices. One way of speaking to the criticism has been a suggestion that platforms could be owned by the ones who use them. While the associated way of thinking, referred to as platform co-operativism, has seen some inroads in practice, its novel and practical nature means that a clear knowledge gap remains with regard to its potential for dealing with challenges of platform economy. Consequently, the aim of this study is to examine the relevance and potential of the co-operative company form for crowdfunding arrangements. Our conceptual study utilizes existing research on co-operatives and considers features of crowdfunding from three different perspectives: asymmetry of information and of trust, interaction frequency and homogeneity of interests. As a result, we provide three taxonomies for outlining future research on co-operative platforms.
Highlights
In the past few years, technology-driven change has provided new tools for revolutionary business models
Some topics associated with the platforms have received attention, among them the various business models, the regulatory environment and the asymmetric information problems faced by crowdfunding intermediaries (e.g., Belleflamme, Omrani, & Peitz, 2015; Chen, Ghosh, & Lambert, 2014; Courtney, Dutta, & Li, 2016; Doshi, 2014; Rey-Martí et al, 2019; Wash & Solomon, 2014). These studies provide a vital basis for our research design, since we explore the co-operative ownership’s potential to deal with challenges of platform economy
That using the co-operative company form could anchor trust within a given crowdfunding platform, and those platforms whose approach demands additional mechanisms to reduce asymmetry of information would benefit the most from this form of organization
Summary
In the past few years, technology-driven change has provided new tools for revolutionary business models. We begin our discussion with an adequate literature review by introducing crowdfunding phenomenon and earlier research on the topic as well as defining the fundamental principles of user-ownership and cooperative company form. This grounding is followed by discussion of three non-monetary relationship-based taxonomies within and between the two sets of parties involved, whom we refer to as the applicants (for people who request funds) and funders (for those providing resources), on account of these terms’ independence of platform type. Our conclusions summarize the results, identify areas for future research and delineate policy implications
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