The Crowdfunding Paradox: the Underuse of Crowd in the Individual Investment Decision-Making Factory

Laurence ATTUEL-MENDES, Céline SOULAS, Abdel Malik OLA

Abstract


Crowdfunding has entered the health biotechnology market in France since 2014 offering the opportunity to project owners to find new sources of financing. Innovative firms are characterized, whatever their sector, by uncertainty, which raises the question of the role of the collective embodied by the crowd in individual investment decision-making. An exploratory study was conducted, where the authors covered different investor profiles on generalist and specialist platforms during fundraising campaigns by biotech start-ups. In a netnographic approach, the availability of information (degree and content) that was offered by platforms could be assessed. Interviews were then conducted with investors, which confirmed the observation of a paradoxical underuse of the cognitive lever that can constitute the crowd in the individual investment decision-making factory. On a practical level, recommendations based on an original typology of tools used by the platforms thus offer them the opportunity to better mobilize the information created by this crowd. On a theoretical level, the article completes the literature on decision-making in a context of uncertainty, deepens the role of the crowd beyond its simple financial contribution in crowdfunding and extends the research on crowd typology.


Keywords


Crowdfunding; healthcare biotechnology industry; crowd; investment decision-making; netnography

Full Text:

 Subscribers Only

References


Ahlers G., Cumming D., Guenther C. & Schweizer, G. (2015), “Signaling in Equity Crowdfunding”, Entrepreneurship Theory and Practice, vol. 39, n°4, p. 955-980.

Allard-Poesi F. (2003), “Coder les données” in Y. Giordano (ed), Conduire un projet de recherche, une perspective qualitative, EMS, Caen, p. 245-290

Allison T., Davis B.C., Short J. & Webb J.W. (2015), “Crowdfunding in a Prosocial Microlending Environment: Examining the Role of Intrinsic Versus Extrinsic Cues”, Entrepreneurship Théory and Practice, vol. 39, n°1, p. 53-73.

Alm E., Kokaia,G. (2015), “Attracting Early Stage and Cross Border Venture Capital in the Biotechnology Sector: Showcase Your Value to Investors”, Master Thesis, Lund University, consultable sur http://redit.skane.com/sites/default/files/media/document/attracting_early_stage_and_cross_border_venture_capital_in_the_biotechnology_sector.pdf .

Alvarez S. A., & Barney J. B. (2007), “Discovery and Creation: Alternative Theories of Entrepreneurial Action”, Strategic Entrepreneurship Journal, vol. 1, n°–2, p. 11–26.

Amara M., Ben Cheikh A. & Abdellati T. (2014), “Crowdfunding: Determinants and Motivations of the Contributors to the Crowdfunding Platforms”, Site Social Science Research Network, consultable sur http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2552168 .

Amit, V. & Rapport, N. (2002), The Trouble with Community: Anthropological Reflections on Movement, Identity and Collectivity, Pluto Press.

Attuel-Mendès L., Assadi D. & Raymond S. (2016), “Pourquoi la foule finance-t-elle ? Étude des motivations des contributeurs dans les différents types de financement participatif”, Cahiers du CEREN, n°48, p. 67-94.

Attuel-Mendès L. & Soulas C. (2018), “Le crowdfuding au secours des entreprises dans l'industrie des biotechnologies santé ?”, Revue Française de Gestion, vol. 273, n°4, p. 135-157.

Azar S. & Mackey T. K. (2015), “Crowdfunding: A New Untapped Opportunity for Biotechnology Start-ups?” Journal of Commercial Biotechnology, vol. 21, n°4, consultable sur http://www.commercialbiotechnology.com/index.php/jcb/article/view/717 .

Bapna S. (2019), “Complementarity of Signals in Early-Stage Equity Investment Decisions: Evidence from Randomized Field Experiment”, Management Science, vol. 65, n°2, p. 933-952.

Baeyens K., Vanacker T. & Manigart S. (2006), “Venture Capitalists’ Selection Process: The Case of Biotechnology Proposals”, International Journal of Technology Management, vol. 34, n°1/2, p. 28-46.

Belleflamme P., Lambert T. & Schwienbacher A. (2014), “Crowdfunding: Tapping the Right Crowd”, Journal of Business Venturing, vol. 29, n°5, p. 585-609.

Bernard Y. (2004), “La netnographie : une nouvelle méthode d’enquête qualitative basée sur les communautés virtuelles de consommation”, Décisions Marketing, vol. 36, p. 49-62.

Bikhchandani S., Hirshleifer D. & Welch I. (1992), “A Theory of Fads, Fashion, Custom, and Cultural Change as Informational Cascades”, Journal of Political Economy, vol. 100, n°5, p. 992-1026.

Block J., Hornuf L. & Moritz A. (2018), “Which updates during an equity crowdfunding campaign increase crowd participation?”, Small Business Economics, vol. 50, n°1, p. 3-27.

Bouaiss K. & Maque I. (2016), “Le crowdfunding et les jeunes, Vers une connaissance de la "jeune foule"”, Revue Française de Gestion, vol. 253, p. 33-49.

Bernstein S., Korteweg A. & Laws K. (2017), “Attracting Early-Stage Investors: Evidence from a Randomized Field Experiment”, The Journal of Finance, vol. 72, p.509-538.

Bertheau P. & Garel G. (2015), “Déterminer la valeur de l’innovation en train de se faire, c’est aussi et déjà innover”, Innovations-Revue d’Economie et de Management de l’Innovation, vol. 47, n°2, p. 15-31.

Bretschneider U., Knaub K. & Wieck E. (2014), “Motivations for Crowdfunding: What Drives the Crowd to Invest in Startups?” Twenty Second European Conference on Information Systems, Tel Aviv, Israel.

Bretschneider U. & Leimeister J.M. (2017), “Not Just an Ego-Trip: Exploring Backers’ Motivation for Funding in Incentive-Based Crowdfunding”, The Journal of Strategic Information Systems, vol. 26, n°4, p. 246-260.

Burtch G., Ghose A. & Wattal S. (2013), “An Empirical Examination of the Antecedents and Consequences of Contribution Patterns in Crowd-Funded Markets”, Information Systems Research, vol. 24 n°3, p. 499-519.

Business France (2018), "La France, pays des startups", consultable sur https://www.businessfrance.fr/Media/Default/PROCOM/Kits/Tech%20et%20startups/1_10%20points%20cl%C3%A9s_Tech__Startups_Pays_des_Startups_2018.pdf

Calmé I., Onnée S. & Zoukoua E.-A. (2016a), “La foule, un nouvel acteur dans l'accompagnement à la création d'entreprise”, Revue Française de Gestion, vol. 42, n°258, p. 75-87.

Calmé I., Onnée S. & Zoukoua E.-A. (2016b), “Plateformes de crowdfunding et acteurs de l'écosystème entrepreneurial”, Revue Française de Gestion, vol. 42, n°259, p. 139-154.

Chabaud D. & Messeghem K. (2010), “Stratégie et entrepreneuriat. Les opportunités, ruptures et nouvelles perspectives”, Revue française de gestion, vol. 206, n°7, p. 87-92.

Chang R.C., Cheng J.W. & Khorana A. (2000), “An Examination of Herd Behavior in Equity Markets: An Inernational Perspective”, Journal of Banking and Finance, vol. 24, p. 1651-1679.

Colombo M.G., Franzoni C. & Rossi-Lamastra C. (2015), “Internal Social Capital and the Attraction of Early Contributions in Crowdfunding”, Entrepreneurship, Theory and Practice, vol. 39, n°1, p.75-100.

Corbel P., Charreire-Petit S. & Dubocage E. (2018), “Crowdfunding : les trajectoires du succès… ou de l’échec”, Innovations, vol. 2, n°56, p.239-266.

Courtney C., Dutta S. & Li Y. (2017), “Resolving Information Asymmetry: Signaling, Endorsement, and Crowdfunding Success”, Entrepreneurship, Theory and Practice, vol. 41, n°2, p. 265-290.

Drover W., Wood M.S. & Zacharakis A. (2017), “Attributes of Angel and Crowdfunded Investments as Determinants of VC Screening Decisions”, Entrepreneurship, Theory and Practice, vol. 41, n°3, p. 323-347.

Dubocage E. (2006), “L'évaluation de la “start-up” par le capital-risqueur entre objectivité, jugement et mimétisme”, Vie & sciences de l'entreprise, vol. 4, p. 9-18.

Dushnitsky G., Gurini M, Piva E. & Rossi-Lamastra C (2016), “Crowdfunding in Europe: Determinants of Platform Creation Across Countries”, California Management Review, vol. 58 n°2, p. 44-71.

Eickhoff M. & Muntermann J. (2016), “Stocks Analysts vs. the Crowd: Mutual Prediction and the Drivers of Crowd Wisdom”, Information & Management, vol. 53, p. 835-845.

Estrin S., Gozman D. & Khavul S. (2018), “The Evolution and Adoption of Equity Crowdfunding: Entrepreneur and Investor Entry into a New Market”, Small Business Economics, vol. 51, n°2, p. 425–439.

Fallery B. & Rodhain F. (2007), “Quatre approaches pour l’analyse de données textuelles : lexicale, linguistique, cognitive, thématique”, 16ème Conférence Internationale de Management Stratégique, Montréal, 27 p.

Fasshauer I. (2016), “Contrôler pour la foule ?”, Revue Française de Gestion, vol. 42, n°259, p. 51-68.

Financement Participatif France (2015), “Baromètre du crowdfunding en France en 2014, réalisé par CompinnoV”, consultable sur http://financeparticipative.org/barometres-crowdfunding/barometre-du-crowdfunding-2015/.

Financement Participatif France (2019), “Baromètre du crowdfunding en France 2018, réalisé en collaboration avec KPMG”, consultable sur consultable sur http://financeparticipative.org/barometre-crowdfunding-france-2018/.

Gephart R. (2004), “Qualitative Research and the Academy of Management Journal”, Academy of Management Journal, vol. 47, n°4, p. 454-462.

Goethner M., Luettig S. & Regner T. (2018), “Crowdinvesting in Entrepreneurial Projects: Disentangling Patterns of Investor Behaviour”, Jena Economic Research Papers, n° 018.

Harrison R., Dibben M. R., & Mason C. M. (1997), “The Role of Trust in the Informal Investor’s Investment Decision: An Exploratory analysis”, Entrepreneurship Theory and Practice, vol. 21, n°4, p. 63-81.

Hervé F., Manthé E. Sannajust A. & Schwienbacher A. (2019), “Determinants of Individual Investment Decisions in Investment-Based Crowdfunding”, Journal of Business Finance & Accounting, p. 1-22.

Herzenstein M., Dholakia U.M. & Andrews R.L. (2011), “Strategic Herding Behavior in Peer-to-Peer Loan Auctions”, Journal of Interactive Marketing, vol. 25, n°1, p. 27-36.

Hisrich R. D. & Jankowicz A. D. (1990), “Intuition in Venture Capital Decisions: An Exploratory Study Using a New Technique”, Journal of Business Venturing, vol. 5, n°1, p. 49-62.

Hoppe H. H. (2007), “The Limits of Numerical Probability: Frank H. Knight and Ludwig von Mises and The Frequency Interpretation”, The Quarterly Journal of Austrian Economics, vol. 10, n°1, p. 1-20.

Hornuf L. & Schwienbacher A. (2018), “Market Mechanisms and Funding Dynamics in Equity Crowdfunding”, Journal of Corporate Finance, vol. 50, n°C, p. 556-574.

Huang L. (2017), “The Role of Investor Gut Feel in Managing Complexity and Extreme Risk”, Academy of Management Journal, vol. 61, n°5, p. 1821-1847.

Huang L. & Pearce J. L. (2015), “Managing the Unknowable: The Effectiveness of Early-stage Investor Gut Feel in Entrepreneurial Investment Decisions”, Administrative Science Quaterly, vol. 60, n°4, p. 634-670.

INSEE (2018), "Les entreprises en France, édition 2018", coll. INSEE références, paru le 8/11/2018, consultable sur https://www.insee.fr/fr/statistiques/3639594

Josefy M., Dean T.J., Albert L.S. & Fitza M.A. (2017), “The Role of Community in Crowdfunding Success: Evidence on Cultural Attributes in Funding Campaigns to “Save the Local Theater” ”, Entrepreneurship, Theory and Practice, vol. 41, n°2, p. 161-182.

Jung S., Koch G. & Rauch M. G. (2011), “Decoding VCs Decision Making Behavior in Biotechnology: The Relative Importance of Established Decision Criteria and the Role of Start-Ups’ Knowledge Networks”, consultable sur SSRN: https://ssrn.com/abstract=1926626 or http://dx.doi.org/10.2139/ssrn.1926626

Kelly P., & Hay M (2003), “Business angel contracts: the influence of context”, Venture Capital, vol. 5, n°4, p. 287-312.

Kerr W. R., Nanda R. & Rhodes-Kropf M. (2014), “Entrepreneurship as Experimentation”, Journal of Economics Perspectives, vol. 28, n°3, p. 25-48.

Khanna N. & Mathews R.D. (2011), “Can Herding improve Investment Decision?”, The RAND Journal of Economics, vol. 42, n°1, p. 150-174.

Kim K. & Viswanathan S. (2019), “The Experts in the Crowd: The Role of Experienced Investors in a Crowdfunding Market”, MIS Quaterly, vol. 43, n°2, p. 347-372.

Kirsch D., Goldfarb B. & Gera A. (2009), “Form or Substance: The Role of Business Plans in Venture Capital Decision Making”, Strategic Management Journal, vol. 30, n°5, p. 487-515.

Klein N. J. & Foss P. G. (2012), Organizing Entrepreneurial Judgment, A New Approach to the Firm, Cambridge University Press, Cambridge.

Knight F. H. (1921), Risk Uncertainty and Profit, Houghton Mifflin Company, Boston.

Kozinets R. V. (2002), “The Field behind the Screen : Using Netnography for Marketing Research in Online Communities”, Journal of Marketing Research, vol. 39, p. 61-72.

KPMG-France Biotech (2017), “15ème édition du Panorama France Health Tech”, consultable sur http://www.france-biotech.fr/wp-content/uploads/2017/12/Panorama-2017-web-1.pdf.

Krief N. & Zardet V. (2013), “Analyse de données qualitatives et recherché-intervention”, Recherches en Sciences de Gestion, vol. 2, n°95, p. 211-237.

Le Bon G. (2009), Psychologie des foules, Le Monde Flammarion, Paris, (édition originale 1895).

Lebraty J.F. & Lobre-Lebraty K. (2010), "Créer de la valeur par le crowdsourcing: la dyade Innovation-Authenticié", Systèmes d'Information et Management, vol. 15 n°3, p. 9-40.

Lee T. (1998), Using Qualitative Methods in Organizational Research, Sage, Thousand Oaks.

Lee E. & Lee B. (2012), “Herding Behavior in Online P2P Lending: An Empirical Investigation”, Electronic Commerce Research and Applications, vol. 11, n°5, p. 495-503.

Lin Y., Boh W. F. & Goh K. H. (2014), “How Different are Crowdfunders? Examining Archetypes of Crowdfunders and Their Choice of Projects”, consultable sur SSRN : http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2397571.

Lipshitz R. & Strauss O. (1997), “Coping with Uncertainty: A Naturalistic Decision-Making Analysis”, Organizational Behavior and Human Decision Processes, vol. 69, n°2, p. 149-163.

Mangematin V. (2003), “PME de biotechnologie : plusieurs business modèles en concurrence” in P. Mustar and H. Penan (eds), Encyclopédie de l'innovation, Economica, Paris, p. 539-552.

Max S. & Gandit M. (2011), “Vers un modèle intégratif du concept de "preuve sociale"” in J. Baillé (eds), Preuve, Presses Universitaires de Grenoble, Grenoble, p. 199-214.

Maxwell A. L. & Lévesque M. (2014), “Trustworthiness: A Critical Ingredient for Entrepreneurs Seeking Investors”, Entrepreneurship: Theory & Practice, vol. 38, n°5, p. 1057-1080.

McMullen J. S. & Sheperd D. A. (2006), “Entrepreneurial Action and the Role of Uncertainty in the Theory of the Entrepreneur”, The Academy of Management Review, vol. 31, n°1, p. 132-152.

Milliken F. J. (1987), “Three Types of Perceived Uncertainty about the Environment: State, Effect, and Response Uncertainty”, The Academy of Management Review, vol. 12, n°1, p. 133-143.

Mintzberg H. (1976), “Planning on the Left Side and Managing on the Right”, Harvard Business Review, vol. 54, n°4, p. 49-58.

Mollick E. (2014), “The Dynamics of Crowdfunding: An Exploratory Study”, Journal of Business Venturing, vol. 29, p. 1-16.

Moritz A., Block J., Lutz, E. (2015), “Investor Communication in Equity-Based Crowdfunding: A Qualitative-Empirical Study”, Qualitative Research in Financial Markets, vol.7, n°3, p. 309-342.

Navis C. & Glynn M. A. (2011), “Legitimate Distinctiveness and the Entrepreneurial Identity: Influence on Investor Judgments of New Venture Plausibility”, The Academy of Management Review, vol. 36, n°3, p. 479-499.

Ola A.M., Deffains-Crapsky C. & Dumoulin R., (2019), “Vers une nouvelle approche de l’investissement en amorçage : un raisonnement à travers la théorie de l’alignement structurel”, Finance Contrôle Stratégie, consultable en ligne sur https://journals.openedition.org/fcs/3091

Onnée S. & Renault S. (2014), “Crowdfunding : vers une compréhension du rôle joué par la foule”, Revue Management & Avenir, vol. 74, p. 117-133.

Poetz M.K & Schreier M. (2012), “The Value of Crowdsourcing: Can Users Really Compete with Professionals in Generating New Product Ideas?”, Journal of Product Innovation Management, vol. 29, p. 245-156.

Polzin F., Toxopeus H. & Stam E. (2018), “The Wisdom of the Crowd in Funding: Information Heterogeneity and Social Networks of Crowdfunders”, Small Business Economy, vol. 50, p. 251-273.

Rainie L., & Wellman B. (2012), Networked: The New Social Operating System, MIT Press, Cambridge, MA.

Renault S. (2018), “Financement participatif : les leçons d’une success-story. Le cas de l’hyper-financement de la bande dessinée “Comme convenu””, Gérer & Comprendre, n°131, p. 20-35.

Renault S. (2017), “Crowdsourcing : la foule en question(s)”, Gérer & Comprendre, n°129, p. 45-57.

Renault S. (2014a), “Comment orchestrer la participation de la foule à une activité de crowdsourcing ? La taxonomie des 4C”, Systèmes d'Information et Management, vol. 19, n°1, p. 77-105.

Renault S. (2014b), “Crowdsourcing compétitif : ressorts en enjeux”, Recherches en Sciences de Gestion, p. 59-80.

Russ C. (2007), “Online Crowds – Extraordinary Mass Behavior on the Internet”, Proceedings of I-MEDIA ’07 and I-SEMANTICS ’07, Graz, Austria, September 5-7, 2007.

Sasaki S. (2019), “Majority Size ad Conformity Behavior in Charitable Giving: Field Evidence from a Donation-Based Crowdfunding Platform in Japan”, Journal of Economic Psychology, vol. 70, p. 36-51.

Sayarh N. (2013), “La netnographie : mise en application d’une méthode d’investigation des communautés virtuelles représentant un intérêt pour l’étude des sujets sensibles”, Recherches Qualitatives, vol. 32, n°2, p. 227-251.

Scarbrough H., Swan J., Amaeshi K., & Briggs T. (2013), “Exploring the Role of Trust in the Deal-Making Process for Early-Stage Technology Ventures”, Entrepreneurship: Theory & Practice, vol. 37, n°5, p. 1203-1228.

Seale C. (1999), “Quality in Quantitative Research”, Qualitative Inquiry, vol. 5, n°4, p. 465-478.

Smith D. J., Mason C. M., & Harrison R. T. (2010), “Angel Investment Decision Making as a Learning Process”, Working Paper 10-05, University of Strathclyde.

Soulé B. (2007), “Observation participante ou participation observante ? Usages et justifications de la notion de participation observante en sciences sociales”, Recherches Qualitatives, vol. 27, n°1, p. 127-140.

Stevenson R.M., Ciuchta M.P., Letwin C., Dinger J.M, & Vancouver J.B. (2019), “Out of Control or Right on the Money ? Funder Self-Efficacy and Crowd Bias in Equity Crowdfunding”, Journal of Business Venturing, vol. 34, p. 348-367.

Stigliani I. & Ravasi D. (2012), “Organizing Thoughts and Connecting Brains: Material Practices and the Transition From Individual to Group-Level Prospective Sensemaking”, The Academy of Management Journal, vol. 55, p. 1232-1259.

Stroebe W., Diehl M. & Abakoumkin G. (1992), “The Illusion of Group Effectivity”, Personality and Social Psychology Bulletin, vol. 18, n°5, p. 643-650.

Surowiecki J. (2008), La sagesse des foules, Jean-Claude Lattès, Paris.

Thiétart R.A. (2007), Méthodes de recherche en management, Dunod, Paris.

Vismara S. (2018), “Information Cascades among Investors in Equity Crowdfunding”, Entrepreneurship Theory and Practice, vol. 42 n°3, p. 467-497.

Wallnöfer M. & Hacklin F. (2013), “The Business Model in Entrepreneurial Marketing: A Communication Perspective on Business Angels' Opportunity Interpretation”, Industrial Marketing Management, vol. 42, n°5, p. 755-764.

Weber R.P. (1990), Basic Content Analysis, Sage, Newbury Park.

Welch I. (1992), “Sequential Sales, Learning, and Cascades”, Journal of Finance, vol. 47, p. 695-732.

Wick J-N. & Ihl C. (2018), “Herding and the Role of Experts in Equity Crowdfunding Markets”, Academy of Management Proceedings, vol. 28, n°1.

Wu A. (2016), “Organizational Decision-Making and Information: Angel Investments by Venture Capital Partners”, Academy of Management Best Paper Proceedings (2016), p. 189-194.

Zhang J. & Liu P. (2012), “Rational Herding in Microloan Markets”, Management Science, vol. 58, n°5, p. 892-912.




DOI: http://dx.doi.org/10.9876/sim.v25i1.1006

Copyright (c) 2020 Systèmes d'Information et Management (French Journal of Management Information Systems)