A Framework for the Notion of Utility in the Landscape of Crowdfunding

Abstract

Crowdfunding, peer-to-peer lending, and crowdinvesting are part of the philosophy of 'openness' in information systems and constitute valuable opportunities for raising funds for business ideas and any type of project. Research has confirmed that online crowdfunding generates high value for project initiators that look for financial resources. Funders, for their part, benefit from funding compensations which they receive in exchange for their financial support. And, finally, diverse other groups of individuals are directly or indirectly influenced by the project results. As a consequence, research articles often touch aspects of utility regarding the individuals concerned. In fact, the notion of utility is of special importance in the context of crowdfunding because it constitutes the basis for explaining participants' actions and decisions. However, crowdfunding research does not use a consistent concept of 'utility', discusses aspects of utility only superficially, and ignores the various influences on utility generation processes in the landscape of crowdfunding. For this reason, we propose a consistent conceptualization of utility in the area of crowdfunding that regards the different sources of utility. We discuss the influences on funders' decision making and demonstrate that aspects of imperfect openness affect utility generating processes in crowdfunding in many ways.

Keywords: Crowdfunding, Peer-to-Peer Lending, Crowdinvesting, Utility, Openness