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Crowdfunding: a Resource Exchange Perspective

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Crowdfunding: a Resource Exchange Perspective Crowdfunding: A Resource Exchange Perspective Abstract Michael D. Greenberg Online crowdfunding has gained attention among novice 2133 Sheridan Rd. entrepreneurs as an effective platform for funding their Evanston, IL 60208 USA ventures. However, a focus on the financial nature of the [email protected] relationship has obscured the complex interpersonal in- Julie Hui teractions involving the exchange of non-financial re- 2133 Sheridan Rd. sources. Drawing from resource exchange theory in the Evanston, IL 60208 USA marketing literature, we look at the exchange of re- [email protected] sources and the mechanisms that facilitate this exchange in online crowdfunding. We analyzed 81 popular online Elizabeth Gerber crowdfunding platforms to reveal the exchange of various 2133 Sheridan Rd. resources including: money, love, information, status, Evanston, IL 60208 USA goods, and services through mediated, unmediated, and [email protected] hybrid structures. Using resource exchange theory as a lens, we examine crowdfunding as a new type of crowdwork platform and explain how resource exchange theory can help the HCI community understand new, crowdwork platforms. Author Keywords Crowdfunding; crowdsourcing; framework; survey; re- source exchange; online communities; innovation; work practices; online communities ACM Classification Keywords H.5.3 [Group and Organization Interfaces]: Design Copyright is held by the author/owner(s). Introduction CHI’13, April 27 – May 2, 2013, Paris, France. The popular press heralds crowdfunding as a way for ACM 978-1-XXXX-XXXX-X/XX/XX. people, typically with limited access to capital, to raise money for ventures and for a crowd, a distributed net- Crowdfunding work of individuals, to support them They celebrate its Broadly, crowdfunding platforms support the request for potential to spur new ventures that can fuel the economy financial resources in exchange for a reward offered by a [13]. To realize this vision, crowdfunding platforms facil- requester [12, 15]. Specifically, crowdfunding platforms itate the exchange of resources between requestors must allow for 1) many individuals to offer financial sup- (people who create resources) and respondents (people port to realize ONE new venture 2) individuals to raise who give resources) [2, 12, 15]. and receive funds between the ideation and completion of the project, and 3) voluntary financial contributions. We argue that the financial nature of crowdfunding has An example of crowdfunding is the OUYA project, where obscured the critical and overlooked exchange of other just over 65,000 people contributed over $99 each be- resources on crowdfunding platforms. We adopt resource fore the completion of a single new venture to build a exchange theory (RET) [8] from the marketing literature new video game console. All donations are voluntary and to provide a new perspective to human computer interac- occur online. The act of crowdfunding online, although we tion (HCI) researchers and designers who seek to under- define it as the exchange of funds, is based on the ex- stand and support the ways in which people interact with change of resources of many types. We adopt exchange technology. We analyzed 81 crowdfunding platforms to theory to investigate and explain this phenomenon. identify the resources exchanged, the roles that users adopt on crowdfunding platforms, and the mechanisms in Resource Exchange Theory place to broker the exchange of resources for venture Resource exchange theory (RET) is the result of work by formation. Foa and Foa in 1971 as a means for explaining reciprocal social interactions of humans. The core tenet of RET is Figure 1: Resource Exchange Theory diagram of Foa and Foa [8]. This dia- The key contributions of this research are: that people exchange six distinct categories of resources: gram illustrates the proximity of re- • An understanding of resources exchanged and love, status, information, money, goods and services [6– sources on the dimensions of particu- support mechanisms in crowdfunding. 8] (see Table 1). Foa and Foa arranged the resource cat- • Preliminary HCI Design implications for crowdfund- larism and concreteness. egories according to two dimensions: concreteness and ing platforms. particularism (Figure 1). They define particularism as "the extent to which the value of a given resource is in- Crowdfunding is a critical new area of study for HCI re- fluenced by the persons involved in the exchange.” [9] searchers and designers as it is a computer-mediated (p. 80).While concreteness is defined as the "form or phenomenon that changes the way people interact with type of the expression characteristic of the various re- each other. In this paper, we use resource exchange the- sources” [9] (p.80). Appropriateness of exchange is ory to examine the landscape of existing crowdfunding based on proximity within this diagram. platforms. We begin to extrapolate our findings to sug- gest how crowdwork platforms at large can foster inter- In this work we are looking at crowdfunding through the actions and exchanges. lens of RET, although we argue that crowdwork platforms in general could benefit from similar analyses. RET has implications for other sub-fields of HCI as well including, “any virtual space where people come together with oth- Resource Description affective computing and interaction design. We see RET ers to converse, exchange information or other re- as a framework to view computer mediated platforms for sources, learn, play, or just be with each other” [11]. Money Any coin or token exchange as it allows us to understand existing dyads of While the focal activity on crowdfunding platforms is of- that has some exchange, envision future dyads of exchange and see ten the exchange of financial resources to realize new standard of ex- potential pitfalls when designing types of exchanges. ventures, in actuality crowdfunding platforms are virtual change value spaces where people come to together with others to Love An expression of In other fields, resource exchange theory has been used communicate, exchange information, and learn. In many affectionate re- to understand the motivations of exchange and to track cases the project page remains a platform for project gard, warmth, or exchange patterns within groups [1,7]. Furthermore, creator to remain in communication with financial back- comfort resource exchange theory describes how similarities be- ers until the completion of the project [10]. This research Information Includes advice, tween types of resources influence the likelihood and seeks to identify the exchange of resources and the opinion or instruc- appropriateness of exchange. For example, an exchange mechanisms of exchange. When viewed through the lens tion or enlighten- of money for goods is a more likely exchange than an of resource exchange theory, we can expand our under- ment but excludes exchange of status for goods, since money and goods standing of what exchanges are possible with the ulti- behaviors that are proximally located in Figure 1. As HCI researchers, mate goal of realizing the vision of creating new ventures could be classed we are constantly designing interactions, which broker to fuel the economy. as love or status the exchange of resources, being information, money or Status An evaluative status. As such, HCI researchers could benefit from this Methods judgment convey- lens. RET proves especially useful for explaining the ex- We conducted a survey of crowdfunding platforms to un- ing high or low change of multiple resources at the same time, which is derstand the exchange of resources and the mechanisms prestige, regard currently an emergent trend on crowdwork platforms. to facilitate this exchange. Specifically, we sought to an- or esteem swer the following questions: Goods Tangible products, In addition to describing the types of resources for ex- objects or materi- change, Foa also described the role of cultural institu- • How are resources being exchanged? als tions in resource exchange. According to Foa, cultural • What are the roles assigned/available to partici- pants? Services Activities on the institutions such as markets and retail operations foster • What resources are being exchanged between body or belong- voluntary exchanges by bringing together combinations different roles? ings of an individ- of individuals with reciprocal motivations for exchanging ual that often resources. For example, a retail operation brings togeth- Data constitute labor. er a seller (possessors of goods) with a buyer (posses- We initiated data collection for crowdfunding platforms by Table 1: Resources for exchange in sors of money) in the correct setting for each role player performing web searches on Google for “crowdfunding”, RET to broker an exchange [9]. “microfinance”, “microloans”, “Kickstarter” and “mi- croventures” in combination with the keyword, “plat- Within the HCI literature, we see a parallel to the litera- form”. Additionally, we searched news media for discus- ture on online communities as they have been defined as sion of existing platforms. All searches took place be- Sub- each platform. We then used pairs of roles to examine Descriptor Representative Examples Descriptor possible interactions involving one-for-one resource ex- 1. Mechanisms Mediated Kickstarter, Sponsume, Kiva change. We used a process of selective coding to flag features of the platforms that facilitated the exchange of Unmediated Independent, “The Cosmonaut” resources, resources exchanged,
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