Microloans garnered from crowdfunding provide an important source of financial capital for nascent entrepreneurs. Drawing on cognitive evaluation theory, we assess how linguistic cues known to affect underlying motivation can frame entrepreneurial narratives either as a business opportunity or as an opportunity to help others. We examine how this framing affects fundraising outcomes in the context of prosocial lending and conduct our analysis on a sample of microloans made to over 36,000 entrepreneurs in 51 countries via an online crowdfunding platform. We find that lenders respond positively to narratives highlighting the venture as an opportunity to help others, and less positively when the narrative is framed as a business opportunity.
Get full access to this article
View all access options for this article.
References
1.
AbeleS. & StasserG. (2008). Coordination success and interpersonal perceptions: Matching versus mismatching. Journal of Personality and Social Psychology, 95(3), 576–592.
2.
AllisonT.H., McKennyA.F., & ShortJ.C. (2013). The effect of entrepreneurial rhetoric on microlending investment: An examination of the warm–glow effect. Journal of Business Venturing, 28(6), 690–707.
3.
AllisonT.H., McKennyA.F., & ShortJ.C. (2014). Entrepreneurial rhetoric and business plan funding. In HartR.P. (Ed.), Communication and language analysis in the corporate world (pp. 21–35). Hershey, PA: IGI Global.
4.
AndreoniJ. (1989). Giving with impure altruism: Applications to charity and Ricardian equivalence. Journal of Political Economy, 97(6), 1447–1458.
5.
AndreoniJ. (1990). Impure altruism and donations to public goods: A theory of warm–glow giving. The Economic Journal, 100(401), 464–477.
6.
AnthonyD. (2005). Cooperation in microcredit borrowing groups: Identity, sanctions, and reciprocity in the production of collective goods. American Sociological Review, 70(3), 496–515.
7.
BattilanaJ. & DoradoS. (2010). Building sustainable hybrid organizations: The case of commercial microfinance organizations. Academy of Management Journal, 53(6), 1419–1440.
8.
BaumeisterR.F. & LearyM.R. (1995). The need to belong: Desire for interpersonal attachments as a fundamental human motivation. Psychological Bulletin, 117(3), 497–529.
9.
BrutonG.D. (2010). Letter from the editor. The Academy of Management Perspectives, 24(3), 6–10.
10.
BrutonG.D., AhlstromD., & OblojK. (2008). Entrepreneurship in emerging economies: Where are we today and where should the research go in the future. Entrepreneurship Theory and Practice, 32(1), 1–14.
11.
BuckleyG. (1997). Microfinance in Africa: Is it either the problem or the solution?World Development, 25(7), 1081–1093.
12.
CertoS.T. (2003). Influencing initial public offering investors with prestige: Signaling with board structures. Academy of Management Review, 28(3), 432–446.
13.
ChandlerG.N., BrobergJ.C., & AllisonT.H. (2014). Customer value propositions in declining industries: Differences between industry representative and high–growth firms. Strategic Entrepreneurship Journal, doi: 10.1002/sej.1181.
14.
ChartrandT.L. & BarghJ.L. (1999). The chameleon effect: The perception–behavior link and social interaction. Journal of Personality and Social Psychology, 76, 893–910.
15.
ChatterjiA.K. (2009). Spawned with a silver spoon? Entrepreneurial performance and innovation in the medical device industry. Strategic Management Journal, 30(2), 185–206.
CornelissenJ.P. & ClarkeJ.S. (2010). Imagining and rationalizing opportunities: Inductive reasoning and the creation and justification of new ventures. Academy of Management Review, 35(4), 539–557.
18.
CoxD.R. (1972). Regression models and life tables. Journal of the Royal Statistical Society, 34(2), 187–220.
19.
CoxD.R. & OakesD. (1984). Analysis of survival data (Vol. 21). London: Chapman & Hall.
20.
DeciE.L. (1971). Effects of externally mediated rewards on intrinsic motivation. Journal of Personality and Social Psychology, 18, 105–115.
21.
DeciE.L. (1972). The effects of contingent and noncontingent rewards and controls on intrinsic motivation. Organizational Behavior and Human Performance, 8(2), 217–229.
22.
DeciE.L., EghranH., PatrickB.C., & LeonneD.R. (1994). Facilitating internalization: The self–determination theory perspective. Journal of Personality, 62, 119–142.
23.
DeciE.L., KoestnerR., & RyanR.M. (1999). A meta–analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 125(6), 627–668.
24.
DeciE.L. & RyanR.M. (1980). The empirical exploration of intrinsic motivational processes. In BerkowitzL. (Ed.), Advances in experimental social psychology (Vol. 13, pp. 39–80). New York: Academic Press.
25.
DeciE.L. & RyanR.M. (1985). Intrinsic motivation and self–determination in human behavior. New York: Plenum.
26.
DeciE.L. & RyanR.M. (1991). A motivational approach to self: Integration in personality. In DienstbierR. (Ed.), Nebraska symposium on motivation: Perspectives on motivation (Vol. 38, pp. 237–288). Lincoln, NE: University of Nebraska Press.
27.
DeciE.L. & RyanR.M. (2000). The “what” and “why” of goal pursuits: Human needs and the self–determination of behavior. Psychological Inquiry, 11(4), 227–268.
28.
DeciE.L. & RyanR.M. (2002). Handbook of self–determination research. Rochester, NY: University Rochester Press.
29.
DeciE.L. & RyanR.M. (2012). Motivation, personality, and development within embedded social contexts: An overview of self–determination theory. In RyanR.M. (Ed.), The Oxford handbook of human motivation (pp. 85–107). Oxford, U.K.: Oxford University Press.
30.
DeterdingS., SicartM., NackeL., O'HaraK., & DixonD. (2011). Gamification: Using game–design elements in non–gaming contexts. CHI ‘11 Extended Abstracts on Human Factors in Computing Systems, 2425–2428.
31.
DiekmanR. (2007). Microfinancing: An emerging investment opportunity. Frankfurt, Germany: Deutsche Bank.
32.
DoughertyT.W., TurbanD.B., & CallenderJ.C. (1994). Confirming first impressions in the employment interview: A field study of interviewer behavior. Journal of Applied Psychology, 79(5), 659–665.
33.
DuriauV.J., RegerR.K., & PfarrerM.D. (2007). A content analysis of the content analysis literature in organization studies: Research themes, data sources, and methodological refinements. Organizational Research Methods, 10(1), 5–34.
34.
FlorinJ., LubatkinM., & SchulzeW. (2003). A social capital model of high–growth ventures. Academy of Management Journal, 46(3), 374–384.
35.
GaggioliA. & RivaG. (2008). Working the crowd. Science, 321(5895), 1443.
36.
GagneM. & DeciE.L. (2005). Self–determination theory and work motivation. Journal of Organizational Behavior, 26, 331–362.
37.
GalakJ., SmallD., & StephenA.T. (2011). Microfinance decision making: A field study of prosocial lending. Journal of Marketing Research, 48(SPL), S130–S137.
38.
HarackiewiczJ.M., ManderlinkG., & SansoneC. (1984). Rewarding pinball wizardry: Effects of evaluation and cue value on intrinsic motivation. Journal of Personality and Social Psychology, 47, 287–300.
39.
HartR.P. (1984). Verbal style and the presidency. New York: Academic Press.
40.
HartR.P. (2001). Redeveloping DICTION: Theoretical considerations. In WestM.D. (Ed.), Theory, method, and practice in computer content analysis (pp. 43–60). New York: Springer.
41.
HartR.P. (2002). Campaign talk: Why elections are good for us. Princeton, NJ: Princeton University Press.
42.
HartR.P. (2010). Diction 6.0 manual. Austin, TX: Digitext, Inc.
43.
HerzensteinM., SonensheinS., & DholakiaU. (2011). Tell me a good story and I may lend you my money: The role of narratives in peer–to–peer lending decisions. Journal of Marketing Research, 48(SPL), S138–S149.
44.
KarlanD.S. & ZinmanJ. (2008). Credit elasticities in less–developed economies: Implications for microfinance. The American Economic Review, 98(3), 1040–1068.
45.
KhavulS. (2010). Microfinance: Creating opportunities for the poor?The Academy of Management Perspectives, 24(3), 58–72.
46.
KhavulS., BrutonG.D., & WoodE. (2009). Informal family business in Africa. Entrepreneurship Theory and Practice, 33(6), 1219–1238.
47.
KhavulS., ChavezH., & BrutonG.D. (2013). When institutional change outruns the change agent: The contested terrain of entrepreneurial microfinance for those in poverty. Journal of Business Venturing, 28(1), 30–50.
48.
KirkR.E. (1996). Practical significance: A concept whose time has come. Educational and Psychological Measurement, 56(5), 746–759.
Kiva.org. (2012). Kiva.org API. Available at http://build.kiva.org, accessed 4 January 2012.
51.
KrishnanJ. & PressE. (2003). The North American industry classification system and its implications for accounting research. Contemporary Accounting Research, 20(4), 685–717.
52.
LeeM.K., CheungC.M., & ChenZ. (2005). Acceptance of Internet–based learning medium: The role of extrinsic and intrinsic motivation. Information & Management, 42(8), 1095–1104.
53.
LoughranT. & McDonaldB. (2011). When is a liability not a liability? Textual analysis, dictionaries, and 10–Ks. The Journal of Finance, 66(1), 35–65.
54.
MacMillanI.C., SiegelR., & NarasimhaP.N. (1986). Criteria used by venture capitalists to evaluate new venture proposals. Journal of Business Venturing, 1, 119–128.
55.
MakinoS., IsobeT., & ChanC.M. (2004). Does country matter?Strategic Management Journal, 25(10), 1027–1043.
56.
MartensM.L., JenningsJ.E., & JenningsD.P. (2007). Do the stories they tell get them the money they need? The role of entrepreneurial narratives in resource acquisition. Academy of Management Journal, 50(5), 1107–1132.
57.
MollickE. (2014). The dynamics of crowdfunding: An exploratory study. Journal of Business Venturing, 29(1), 1–16.
RayJ. & SmithA. (2012). Using photographs to research organizations: Evidence, considerations, and application in a field study. Organizational Research Methods, 15(2), 288–315.
64.
RyanR.M. & DeciE.L. (2000). Self–determination theory and the facilitation of intrinsic motivation, social development, and well–being. American Psychologist, 55(1), 68–78.
65.
RyanR.M., MimsV., & KoestnerR. (1983). Relation of reward contingency and interpersonal context on intrinsic motivation: A review and test using cognitive evaluation theory. Journal of Personal and Social Psychology, 45, 736–750.
66.
ShamirB., ArthurM.B., & HouseR.J. (1994). The rhetoric of charismatic leadership: A theoretical extension, a case study, and implications for research. The Leadership Quarterly, 5(1), 25–42.
67.
ShortJ.C., BrobergJ.C., CogliserC.C., & BrighamK.H. (2010). Construct validation using computer–aided text analysis (CATA). Organizational Research Methods, 13(2), 320–347.
68.
ShortJ.C., MossT.W., & LumpkinG.T. (2009). Research in social entrepreneurship: Past contributions and future opportunities. Strategic Entrepreneurship Journal, 3, 161–194.
69.
ShortJ.C. & PalmerT.B. (2008). The application of DICTION to content analysis research in strategic management. Organizational Research Methods, 11(4), 727–752.
70.
SkinnerB.F. (1953). Science and human behavior. New York: Macmillan.
71.
SmallD.A., LoewensteinG., & SlovicP. (2007). Sympathy and callousness: The impact of deliberative thought on donations to identifiable and statistical victims. Organizational Behavior and Human Decision Processes, 102(2), 143–153.
72.
SpoonerL. (1846). Poverty: Its illegal causes and legal cure: Part first. Boston: B. Marsh.
WalkerH.J., BauerT., ColeM., BernerthJ., FeildH., & ShortJ. (2013). Is this how I will be treated? Reducing uncertainty through recruitment interactions. Academy of Management Journal, 56(6), 1325–1347.
75.
WeickK.E. (1995). Sensemaking in organizations. Thousand Oaks, CA: Sage Publications.
76.
WeinsteinN. & RyanR.M. (2010). When helping helps: Autonomous motivation for prosocial behavior and its influence on well–being for the helper and recipient. Journal of Personality and Social Psychology, 98(2), 222–244.
77.
ZacharakisA.L. & MeyerG.D. (1998). A lack of insight: Do venture capitalists really understand their own decision process?Journal of Business Venturing, 13(1), 57–76.
78.
ZacharyM.A., McKennyA., ShortJ.C., & PayneG.T. (2011). Family business and market orientation construct validation and comparative analysis. Family Business Review, 24(3), 233–251.
79.
ZottC. & HuyQ.N. (2007). How entrepreneurs use symbolic management to acquire resources. Administrative Science Quarterly, 52(1), 70–105.
