Making the World a Better Place: How Crowdfunding Increases Consumer Demand for Social-Good Products

Abstract

Crowdfunding has emerged as an alternative means of financing new ventures wherein a large number of individuals collectively back a project. This research specifically examines reward-based crowdfunding, in which those who take part in the crowdfunding process receive the new product for which funding is sought in return for their financial support. This work illustrates that consumers make fundamentally different decisions when considering whether to contribute their money to crowdfund versus purchase a product. Six studies demonstrate that compared with a traditional purchase, crowdfunding more strongly activates an interdependent mindset and, as a result, increases consumer demand for social-good products (i.e., products with positive social and/or environmental impact). The research further highlights that an active involvement in the crowdfunding process is necessary to increase demand for social-good products: when a previously crowdfunded product is already to market, the effect is eliminated. Finally, it is demonstrated that crowdfunding participants exhibit an increased demand for social-good products only when collective efficacy (i.e., one’s belief in the collective’s ability to bring about change) is high.