What Do Backers Trust When They Do Not Know Initiators? Crowdfunding Experimentation in India

Abstract

Purpose - The establishment and sustainability of the transaction depends on the willingness of the actors to meet their commitments. They are usually loyal when they trust. Trust emerges when one party believes that the other party achieves prior commitments without taking advantage of his/her exchange partner, even of the opportunity manifests. This paper aims to explore how crowdfunding platforms can build trust to simultaneously attract project initiators and contributors and facilitate transactions between them. The focus is put on the third-party sources of trust building: cultural, politico-legal and independent certifying institutions. Design/methodology/approach - To answer to the research purpose we adopt the method of experimentation with four fictitious, but highly plausible platforms: One platform represents the control reference. Three more platforms are designed according to the three types of thirdparty trust builders (as independent variables): network of acquaintance (group pressure), label of certification designated by the nongovernmental professional organization, and the politico-legal authority. Findings - The ANOVA analyses reveal unexpected results. While there are significant differences on behaviors of time spent and pages visited across the experimentation websites, the behavior of donation does not present any significant difference at the time of experimentation among the control website and the three other declinations, which are supported by different third-party builder of trust. The differences in donation behaviors are not however statistically significant. Thus, it can be stated that the different types of third-party trust builders do not alter the magnitude of donation behaviors. They, however, do alter the stickiness behaviors. Originality/value - Results and insights gained from this research extend the theoretical literature on trust in general and trust building in emerging P2P markets in particular. The findings also provide actionable policies for practitioners in particular in the two-sided markets where platforms need to build trust between different parties. Our results might yield to actionable policies to build trust beyond the sector of crowdfunding, which was our field of research. Consequently, marketers and business responsible managers can proactively contribute to build trust, in order to ease and speed up transactions and exchanges.

Keywords:

View PDF