Crowdfunding Sustainable Enterprises as a Form of Collective Action

Abstract

Crowdfunding is viewed as a promising source of finance for sustainable enterprises. We apply collective action theory to crowdfunding to better understand its expected potential for financing sustainable enterprises. By carrying out a rule classification analysis, we find three main mechanisms through which crowdfunding seems to facilitate collective action in funding, namely, through (1) use of social networks (2) heterogeneity of contributions and payoffs and (3) aggregation within thresholds. Our findings improve the conceptual understanding of sustainable entrepreneurial finance and provide guidance for sustainable enterprises looking to obtain funds as well as for sustainable crowdfunding platforms as intermediaries.