Abstract
Competition between formal and informal companies has been increasingly studied. However, there is a lack of studies in the collaboration between formal and informal companies generated using crowdfunding platforms. Based on the signaling theory and using the loans from 2019 of the Kiva crowdfunding platform. The drivers and enablers of the collaboration between formally registered firms (partners micro finances) and informal firms (unregistered firms - borrowers) in the context of the crowdfunding digital platform are studied. The results state a negative relationship between the lender's propensity to make loans and the informal firm's percentage borrowed. However, if the borrower receives a trustworthy partner (micro-finance), the borrower's negative impact decreases. Moreover, the lender's propensity to make loans lesser in projects of the tertiary sector. The study contributes to the entrepreneurship theory to understand the mechanism to legitimization the informal firm through collaboration with formal firms in the digital platforms.
Highlights
The increasing Internet access is transforming the way to do business globally
We hypothesize as follows: H2: “A good characteristic of the partner expressed by a good portfolio yield reduces the negative relation between Logarithm of popularity, as the signaling the level of an urgent need perceived by the lender, on percentage funded of the informal firm.”
That is why we propose the following hypothesis: H3: “The characteristic of the loan the project as the tertiary sector, strengthens the negative relation between Logarithm of popularity, as the signaling the level of an urgent need perceived by the lender, and the percentage funded of the informal firm.”
Summary
The incursion of technology-based companies containing digital platforms disrupts the service industries as media, education, finance, and health. This disruption starts with the less sophisticated customer segments and accelerates rapidly toward the more advanced customer segments (Cennamo, 2019). New companies applying unique business models based on digital platforms are being created. These technology companies connect suppliers and customers directly at a low cost (including low labor costs) and get a high level of satisfaction for suppliers and customers. Businesses based on technology platforms are overgrowing in emerging economies, especially in Latin America, applying total solutions strategies for customers, incorporating new and valuable complementary services, and developing a sharing economy (Monteiro et al, 2018)
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