UNIVERSITY OF AMSTERDAM
Amsterdam Business School
Bachelor of Economics and Business Specialization: Business Administration
Project Developer’s Social Tie:
Investigating the Moderating Effects of Collectivistic
Culture on Project Developer’s Social Ties and the
Incentives to Crowdfund in Indonesia
A Mixed Method Study of Indonesian Collectivism on the Incentives in Crowdfunding
BSc Thesis by
Syarifah Nadhira Anggitasari 11012331
Supervisor: Willem Dorresteijn Amsterdam, 27th June 2017
Statement of Originality
This document is written by Syarifah Nadhira Anggitasari who declares to take full responsibility for the contents of this document. I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it. The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.
Signature,
Syarifah Nadhira Anggitasari Dated: June 27th, 2017
Table of Contents
STATEMENT OF ORIGINALITY ... 2
ABSTRACT ... 4
INTRODUCTION ... 5
LITERATURE REVIEW ... 8
INDONESIAN INCENTIVES IN CROWDFUNDING ... 8
THE INFLUENCE OF PROJECT DEVELOPER’S SOCIAL TIE ... 9
GOTONG ROYONG AND INDONESIAN COLLECTIVISTIC CULTURE ... 10
METHODOLOGY ... 13 RESEARCH DESIGN ... 13 TARGET POPULATION ... 14 QUANTITATIVE PHASE ... 16 Research Design ... 16 Data Collection ... 16 Measurement ... 17
Quantitative Data Analysis ... 21
QUALITATIVE PHASE ... 22
Research Design ... 22
Data Collection ... 22
Sampling Characteristics ... 23
Interview Protocol Development ... 23
Qualitative Analysis ... 24
RESULTS ... 25
QUANTITATIVE PHASE ... 25
Demographic Information ... 25
Mean, Standard Deviations, and Correlations ... 25
Regression Results ... 27
QUALITATIVE PHASE ... 28
Demographic Information ... 28
Coded Interviews ... 29
SUMMARY OF THE QUANTITATIVE AND QUALITATIVE RESULTS ... 36
DISCUSSION ... 37
THE MAIN EFFECT OF SOCIAL TIE ON THE INCENTIVES TO CROWDFUND ... 38
The Subjective Aspect of Social Tie ... 38
The Backers’ Objective ... 39
THE MAIN EFFECT OF INDONESIAN COLLECTIVISTIC CULTURE ... 39
The Value of Helping Others ... 39
Contribution in Crowdfunding ... 40
THE INTERACTION EFFECT OF SOCIAL TIE AND COLLECTIVISTIC CULTURE ... 41
Crossover Interaction ... 41
Accountable Impact ... 42
LIMITATIONS AND FUTURE SUGGESTIONS ... 43
Quantitative Phase ... 43
Qualitative Phase ... 44
CONTRIBUTIONS AND IMPLICATIONS ... 45
CONCLUSION ... 46
APPENDIX ... 47
VISUAL MODEL OF THE CODED INTERVIEWS ... 47
Abstract
The project developer’s social tie with the backers has been found to impact the success of a crowdfunding project. The purpose of this mixed methods sequential explanatory study was to identify the moderating impact of Indonesian collectivistic culture on the relationship between the crowdfunding project developer’s social tie and the backers’ incentives to crowdfund. This study explored the source of the social tie based on the participants’ perspective on the importance of the relationship between them and the crowdfunding’s project developer based on their Indonesian collectivistic culture and gotong royong culture.
This study used regression to test the hypotheses in the quantitative phase with a sample of 172 Indonesian respondents. In order to explore the statistical results, a follow-up interview was conducted with five participants. In the first, quantitative, phase, two moderating variables were found to be predictors to the dependent variable incentives in crowdfunding. Meanwhile, the main effect of independent variable was not found to impact the backers’ incentives in crowdfunding significantly. The qualitative follow-up semi-structured interview supported the statistical results and further has elaborated the key drivers of the non-significance role of project developer’s social tie on the incentives in crowdfunding.
Keywords: Crowdfunding, Indonesia, Social Tie, Collectivistic Culture, Gotong Royong
Introduction
From the success story of “Atambua 39º Celcius”, the method of crowdfunding came into light in Indonesia. In the year of 2012, some big headlines for Indonesia’s crowdfunding scene were under the spotlight (Farabi, 2013). One of the greatest projects is the funding for a climate change documentary movie, Atambua 39º Celcius. It was published in Indonesian crowdfunding site Wujudkan.com (Farabi, 2013). The project gathered more than it required, approximately around $32,800, and it successfully brought the movie to the big screen (Santos, 2015). In the past ten years, crowdfunding has evolved into a $16 billion global market and grown more than three times per year (Kirby and Worner, 2014; Statista, 2017). Crowdfunding in Indonesia is still in its starting point, which is in parity with most of Southeast Asia’s crowdfunding platform (Santos, 2015).
Through the Internet utilization, a population of 262.8 million with a total of 132.7 million Internet users could be a prospect for Indonesia’s crowdfunding to thrive (Statista, 2017). Compared to the 5.8 million Singapore populations, Indonesia’s crowdfunding transaction value has only been raised half as much as Singapore’s in 2017 (Statista, 2017). Despite its slow adoption in Indonesia, crowdfunding has been recognized as a chance for the project developers to succeed through providing an alternative method to reach its financial target (Hekman and Brussee, 2013; Mollick, 2014; Santos, 2015). From drawing on small amounts of money from a large number of individuals, the objective is typically seized via the online platform (Hekman and Brussee, 2013; Mollick, 2014). In 2016, the progress of Indonesian crowdfunding is shown from the 18% growth per year (Statista, 2017). Through the sixth objective of Nawa Cita, the Indonesian government is also
beginning to understand and highlight the importance of crowdfunding for Indonesian businesses to be able to thrive and compete in the international market (Santos, 2007; Wapresi, 2017).
As one of the key success factors of crowdfunding, the project developer’s social network is the initial source of capital that mainly come from the pocket of “friends and family” (Agrawal, Catalini, and Goldfarb, 2015). Supported by Stam and Elfring (2008) findings, project developer’s social network provides connections and endorsements of project quality for the future backers that later influences the success of venture financing performance (p. 97). As one of the project developer’s social networks, social tie supports crowdfunding to achieve its target initiatives (Li, 2007; Mollick, 2014). When starting a venture in Indonesia, personal contacts and networks based on trust and intimacies are essentials (Dean, 2000). Indonesians live by the conventional concept of “gotong royong”, which simply means working together as one community. It is where people use their collective power and financial resources to help each other, and this actually makes the Indonesian culture and crowdfunding have mutual cooperation (Freischland, 2015). The concept of gotong royong links to Hofstede’s conception of collectivism in which he defined it as a network of norms, values, and strong ties among individuals based on their deep cultural roots (Hofstede, 2011). Indonesian has a collectivistic culture in which they tend to place their family, friends, and community as a priority into their self-conception and values (Hofstede, 1985; Kharis, 2016). Although up until now, the spirit of gotong royong has yet to discover its scheme into the crowdfunding platform of giving in Indonesia.
Prior researchers have detached the role of social capital in facilitating access to crowdfunding success (Shane and Stuart, 2002; Kirby and Worner, 2014; Mollick, 2014). Additonaly, other researchers have studied the backers motivation in
crowdfunding that eventually leads to the success of crowdfunding in general (Stanko and Henard, 2017). However, few numbers of studies have explored the sources of the backers motivations to crowdfund in the first place. Even though crowdfunding has achieved a notable growth in Indonesia (Santos, 2007; Freischland, 2015; Statista, 2017), there has been none published peer-reviewed work to date exploring the source of incentives to crowdfund in Indonesia. As crowdfunding success come from the backers’ incentives to crowdfund in the project, this study thoroughly explore the source of these incentives. Rather than treating the social tie as an exogenous resource (Shane and Stuart, 2002), this paper adopts social tie as an on-going investment made by project developers and their new ventures. As part of the key success factors of crowdfunding, the concept of social networks and relationship building are both mentioned in the social tie and collectivistic culture. This comes down to the main research question of the paper; to what extent does collectivistic culture moderate the relationship between project developer’s social tie and the backers’ incentives to crowdfund in Indonesia?
The structures of the paper are as follows; first, the theoretical foundation of the backers’ incentives in crowdfunding, the project developer’s social tie, and the impact of Indonesian collectivistic culture as a basis of our research are reflected. Second, the methodology of both the quantitative and qualitative phases of the research are deliberated. Third, the results of quantitative and qualitative phases of the research are evaluated. Fourth, the results combination of the mixed method is discussed. Fifth, the paper’s limitations are evaluated and further recommendation for crowdfunding’s project developer and future research are discussed. At last, the paper is concluded.
Literature Review
This chapter will elaborate the background of the variables in this study, which leads into the problem statement. First, Indonesian incentives in crowdfunding is explained. Second, the influence and importance of project developer’s social tie will be discussed. Third, Indonesian collectivistic culture and gotong royong will be further elaborated.
Indonesian Incentives in Crowdfunding
The idea of crowdfunding was established in a broader concept of crowdsourcing, which referred to the collection of opinions, feedbacks, and solutions from the crowd (Schwienbacher and Larralde, 2010). Instead of raising money from a small group of sophisticated investors, crowdfunding helps ventures obtain money from large audiences, in which each provides a subtle amount of money (Mollick, 2014). Unlike other kinds of venture financing, projects engaging in “crowdfunding” have a wide variety of targets (Belleflamme et al., 2014). Some crowdfunded projects seek to only raise small amounts of capital, often under $1000, to initiate a particular one-time project (Mollick, 2014). Commonly, the project developer’s social networks are the ones who provide the initial funding (Hekman and Brussee, 2013; Agrawal et al., 2015). In some other cases, crowdfunding appears to be a viable source for venture seed capital, allowing project developers to raise the required initial capital to start their new venture (Schwienbacher and Larralde, 2010; Hekman and Brussee, 2013). In this study, the case of crowdfunding evaluated is not limited to any objective, financial target, or type of crowdfunding in general.
The crowdfunding’s definition of success varied within its context and content (Belleflamme, Lambert and Schwienbacher, 2014). Michael Stanko, an associate professor in North Carolina State’s Poole College of Management, stated, "A lot of people initially see crowdfunding solely as a way to raise money - but, it seemed like a way to learn and create a community that raises awareness of a product” (PO, March 7, 2017). Crowdfunding provides the project developers’ access to financial resources in the early stages; nevertheless, it also enables them to potentially engage with a large number of backers in a novel platform that were previously inaccessible (Stanko, 2017). Given this, the role of backers in crowdfunding could predict the success of crowdfunding both in terms of funding and advertising (Molick and Kuppuswamy, 2014; Stanko, 2017). Backers are central to understand the crowdfunding’s potential to become a success, and thus their willingness to contribute in the crowdfunding project should be further explored. In this paper, the backers’ incentives in crowdfunding as a source of crowdfunding’s success will be further elaborated based on the Indonesian project developer’s social tie and the rooted Indonesian collectivistic culture.
The Influence of Project Developer’s Social Tie
After determining the source of crowdfunding success, factors that affect the backers’ incentives will be further discussed. Social capital, the size of the network and the strength of ties are important factors for the success of crowdfunding initiatives (Hekmen and Brusse, 2013; Agrawal et al., 2015). Social capital is a project developer’s capability for building and maintaining interrelationships with their stakeholders and shareholders (Hsu, 2007; Agrawal et al., 2015). The network establishes ties with pre-existing or future backers that could affect financial projects
to a higher capital valuation (Shane and Stuart, 2002; Mollick, 2014). Large networks are associated with successful fundraising, and strong ties are amongst the early investors (Hsu, 2007; Hekmen and Brusse, 2013; Mollick, 2014).
As Lin (2007) stated, there is strong and weak social tie. The strength of an interpersonal tie is a linear combination of the amount of time, the emotional intensity, and the mutual confiding which characterize each tie (Granovetter, 1973; Lin, 2007). Social tie is one of the key success factors that can be accessed or mobilised; for instance the relationships between individuals that can dynamically increase or decrease the success of a new venture (Coleman, 1988; Lin, 2008). Supported by Shane and Stuart (2002), project developer’s social ties with backers possess a higher probability of receiving venture funding in the early stages (Hsu, 2007). Beyond their financial contribution, the role of backers in crowdfunding could also affect the success of the crowdfunding advertisement (Hekmen and Brusse, 2013). Meaning, if the Indonesian project developer’s social tie with the backers is culturally strong, suppose it could increase the Indonesian backers incentives to do a crowdfunding. As the concept of social tie has been considered to support the incentives in crowdfunding, I then hypothesis;
Hypothesis 1 [H1]: Project developer’s social tie positively impacts the backers’ incentives in crowdfunding
Gotong Royong and Indonesian Collectivistic Culture
After defining what social tie could do to crowdfunding success, one of the sources is explained by the moderator variable collectivistic culture. Culture has been defined as
a collective mind-setting that differentiates the members of one group from the others (Hofstede, 2011). Individualism-collectivism is one of the dimensions in Hofstede five cultural dimensions; it is the degree to which a person is integrated into groups (Hofstede, 1985). On this paper, I would narrow down to collectivism, precisely the degree of low to high collectivistic culture in Indonesia. The greater the concern for others, the more collectivistic a society member is (Hofstede, 1985). In Hofstede studies (1985), Indonesia is rated towards the collectivist end of the individualist dimension with a country index of 14 (pp. 355). In comparison, Australia had reached the highest individualistic national culture with a country index of 90 (Hofstede, 1985). If the idea of crowdfunding is to help each other achieve their projects initiatives through a small contribution of money (Mollick, 2014), does not it correlate with the Indonesian value of gotong royong based on their high social obligation to the community? Thus I come to the second hypothesis;
Hypothesis 2 [H2]: Collectivistic culture positively impacts the backers’ incentives in crowdfunding
According to Mollick (2014), a strong tie could positively impact the success of crowdfunding initiatives. Krackhardt, Nohria, and Eccles (2003) stated, "People resist change and are uncomfortable with uncertainty. Strong ties constitute a base of trust that can reduce resistance and provide comfort in the face of uncertainty.” (pp. 84). A collectivism-oriented nation has a greater social obligation and trust with each other, make more pro-social choices and are more for affirmative action (Sorensen, Nicholas, and Oyserman, 2009). Recalling to a shared value in Indonesia, gotong royong could be the base of a strong social tie within Indonesian community. In the
end, it could increase the Indonesian backers’ incentives to contribute in crowdfunding project. Thus I come to the final hypothesis;
Hypothesis 3 [H3]: Collectivistic culture moderates the relationship between project developer’s social tie and the backers’ incentives in crowdfunding
Methodology
Research Design
To complete the research objective, a mixed methods approach was used. The procedure included collecting, analyzing, and integrating both quantitative and qualitative data at sequential stage of the research process within a single study (Creswell, 2005). The main reasons for combining both types of data was that neither quantitative nor qualitative methods were sufficient to capture the details of situations, such as the complex issue of the moderating effect of collectivistic culture on the project developer’s social tie in the backers’ incentives to crowdfund. Especially, the research on this matter has never been conducted before. When used in combination, quantitative and qualitative methods complemented each other and provided a more complete picture of the research problem (Green, Caracelli, and Graham, 1989).
This study used a sequential explanatory mixed methods design, consisting of two distinct phases (Green et al., 1989; Creswell, 2005). The study started with collecting and analyzing the quantitative and numeric data. Second, the qualitative and text data was collected and analyzed in sequence. The quantitative data provided a general picture of the research problem and helped to identify the significance of the predictive variables that affected the incentives of Indonesian people to crowdfund, whilst the qualitative data helped to further elaborate the quantitative data through the participants’ in-depth insights on the variables examined in the study. The quantitative and qualitative phases were connected when developing the qualitative interview questions that based on the quantitative results (Green et al., 1989;
Creswell, 2005). Lastly, the results of the quantitative and qualitative phases were integrated during the discussion of the outcomes of the entire study (Creswell, 2005). Figure 2 will show the overall phases of this study.
Target Population
The target population in this study was Indonesian people with a diverse background in terms of education, occupation, and age. There were no limitation of population criterion and the study has gathered 172 Indonesian who were willing to finish the web-based survey. The anonymity of the respondents in the first quantitative phase was protected by not assigning the raw data to other parties other than the researcher herself. In the second phase, the participants selected for the interview were as signed fictitious names, thus keeping the responses confidential. The background of the five interviewee were selected based on as diverse as background as possible. Two of participants were students and three of them were employees. The participants’ histories in crowdfunding were also checked for the purpose of reviewing their awareness and history in crowdfunding. The background check would help the researcher to elaborate the participants’ views on the matter of the studies further.
Quantitative Phase Research Design
The surveys were chosen as the quantitative research strategy considering the strengths of its capability of obtaining information from a large sample of the population (MacIntyre, 1999). The study used the convenience sampling technique because the high number of Indonesian population was nearly impossible to gather. By using the convenience sampling, the subjects of the research were chosen based on the direct access to the researcher that could produce a fast and reliable response (Coyne, 1997). Coyne (1997) deliberated that samples from convenience sampling technique could support the study to meet purposive sample selection criteria that were relevant to the study. As this study wanted a diverse background of respondents, controlling the questionnaires distribution would help the study to achieve its intention. Through a web-based survey, a cross-sectional research design was used in this study to evaluate Indonesian population (McMillan, 2000). In this case, the researcher was able to gain data and contact the participants from Indonesia virtually.
Data Collection
The pilot of the survey was first distributed to 15 Indonesian from different occupation, gender, and age. The pilot test was done to see the clarity of the questionnaires' structure and content. The pilot test found an average of 5 minutes for each participant to finish the survey. Moreover, some unclear introductions and typos were corrected based on the participants' feedback. The final survey was distributed to 250 Indonesian through the researcher’s personal links. The description, purpose, and link to the survey were included in the questionnaire distribution. The distribution was sent online through emails, Line, Whatsapp, and other forms of social media. In order
to gain more data, the researcher also asked the participants to help distribute the surveys to their links. A reminder was sent to the participants after two days following the survey distribution. From 250 potential participants, 172 responded, which constituted a response rate of 68.8%. In order to guarantee the participants' confidentiality, the participants filled the online survey anonymously and the researcher did not pass the raw data to other parties. The collection of quantitative data was acquired in a 12-day period.
Measurement
The core survey items formed four 7-point Likert scale type related to three variables affecting the incentives in crowdfunding such as; “social tie”, “gotong royong”, and “collectivistic culture”. The survey items were developed based on the analysis of the related literature.
Incentives in Crowdfunding (9 items,!! = .762). The measurement for the dependent variable of Incentives in crowdfunding was based on Belleflamme et al. (2014). The participants rated their judgment on the factors that could support their decision to crowdfund. This measurement aimed to explore the source of the participants’ motivations to crowdfund. The scales range from not important at all (1) to extremely important (7). The items were:
1. The crowdfunding potential to become a success. 2. Visual design of the project's ads.
3. Videos/ photos showing examples of the project. 4. In-depth information about the project.
6. Regular updates on progress from the project developers. 7. A large number of people contributing to the project. 8. The idea of the project itself.
9. Rewards for yourself.
A high score represented a high importance of each factor to the participant when deciding to do a crowdfunding. The internal consistency scale of this measurement scale was high and the mean of seven items was used to operationalize the dependent variable (α = .762).
Project Developer’s Social Tie (6 items,!! = .821). The independent variable of project developer’s social tie measurement was based on Li (2007). Li (2007) defined social tie as the strength of interpersonal relationship between in this case, the project developer and the backers. The participants were given an example of a crowdfunding project in a hypothetical situation of knowing the project developer. This aim of this example was used to virtually alter the participant’s perception of the importance of a relationship in the case of a crowdfunding platform. Then, the participants were asked to rate the following statement with the scale ranged from strongly disagree (1) to strongly agree (7). The items were:
1. I am more confident to crowdfund in my friend's project more than someone I don't know.
2. I trust a project developed by a friend more than someone I don't know. 3. I give a higher priority to crowdfund my friend's project more than
someone I don't know.
friend's project
5. The potential of success of the project is less important as long as I can help my friend's project
6. The relationship between the project developer and me is important.
A high score represented a strong social tie between the participant and their friend, presumably, as the crowdfunding’s project developer. The strong social tie means the relationship between the participants, as the backers, and the project developer is valuable. Meaning, the relationship could impact the backers’ decision in contributing to their friend’s crowdfunding project. The internal consistency scale was high and the mean of seven items was used to operationalize the independent variable (α = .821).
Indonesian Collectivistic Culture (13 items,!! = .803). As the source of the moderator variable, gotong royong, was measured separately from the collectivist variable and based on the article from Pasya (2011). Pasya (2011) defined gotong royong as a communal work with the whole community intended for the goal of the community or for simply helping their surrounding. This measurement was aimed to see the recognition of gotong royong in Indonesia. The participants were asked to rate the following statement of gotong royong with the scale ranged from strongly disagree (1) to strongly agree (7). The items were:
1. The principle of 'gotong royong' has become my way of living. 2. Harmony among community should always be maintained.
3. Maintaining a relationship with my surrounding is very important to me. 4. I am conscious of the needs of others.
5. Volunteering to help someone is very rewarding. 6. I enjoy sharing what I have for those in needs.
7. My happiness depends on the happiness of those around me.
A high score represented a high-perceived value of gotong royong in the participants' life. The internal consistency scale was high (α = .781).
Lastly, the variable of collectivism was measured based on Hofstede (2011). Hofstede (2011) defined collectivism as a preference of a collective action rather than individual action or identity. The participants were asked to rate their perception of themselves as a member of a community. The scale ranged from strongly disagree (1) to strongly agree (7). The items were:
1. My surrounding defines who I am.
2. To me, pleasure is spending time with others.
3. I make an effort to avoid disagreements with my group members. 4. Before making a decision, I always consult with others.
5. How I behave depends on whom I am with, where I am, or both. 6. I would rather do something with a group than do one alone.
A high score represented a high collectivism of the participant. The internal consistency scale was satisfactory (α = .701). After combining the variables of gotong royong and collectivism, the internal consistency scale became higher and the mean of thirteen items was used to operationalize the moderator variable, which identified as Indonesian collectivistic culture (α = .803).
Quantitative Data Analysis
This study used a moderation model that was intended to examine the effect of collectivistic culture on the relationship between the social tie and the incentives to crowdfund. The model is divided into two; the main and interaction effects on the dependent variable. Before the first step, the results of the variable of gotong royong and collectivism are combined as one moderator variable, named as Indonesian collectivistic culture.
In the first step, the main effect of independent variable social tie on dependent variable incentives in crowdfunding was tested. The study predicted a positive effect of independent variable project developer’s social tie on the dependent variable the backers’ incentives to crowdfund. Meaning the stronger the social tie between the backers and the project developer, the higher the incentives of the backers in pledging into the crowdfunding project.
The second step was conducted to test the main effect of the moderator variable collectivistic culture on the dependent variable incentives in crowdfunding. The study predicted a positive effect of moderator variable Indonesian collectivistic culture on the dependent variable the backers’ incentives to crowdfund. As for collectivistic culture was estimated to enhance stronger incentives in helping others, it was predicted that collectivistic culture positively impacts the incentives in crowdfunding.
The third step was conducted to test the interaction effect of the independent variable social tie and the moderator variable collectivistic culture on the dependent variable incentives in crowdfunding. The study predicted the moderator variable Indonesian
collectivistic culture to impact the relationship of independent variable project developer’s social tie and the dependent variable the backers’ incentives to crowdfund. Meaning, that being a high collectivist could strengthen or weaken the social tie between the backers and the project developer. Thus, this could affect the incentives of the backers in pledging into a crowdfunding project.
Qualitative Phase Research Design
The study employed a qualitative method by using abductive approach, which included both deductive and inductive approach (Dubois and Gadde, 2002). As part of the deductive approach, the study looked at the available literature and established theories that confirmed with the research (Dubois and Gadde, 2002). Inductive approach was used through developing new theories and patterns along with conducting the semi-structured interviews in this study (Dubois and Gadde, 2002). Peirce (1955) described abductive approach as a reasoning process from effects to causes, thus yielding explanations. As this study wanted to explore the reasoning of the hypotheses further, an abductive approach would help to provide broader insights on this matter.
Data Collection
The data was collected from multiple sources to provide the richness and the depth of the interview itself. First, in-depth semi structured face-to-face interviews with one participant and second, in-depth semi structured telephone interviews with the other four participants. The interviewees were chosen based on their prior contribution in the quantitative phase of this study. The researcher contacted the five participants for
the third time after the first and reminder of the online surveys. Before the interview took hand, the appointment, general information, and purpose of the study were given to the participants. This would ensure the participants to be fully agreed, aware, and ready to do the interview. Each interview was audio taped and transcribed verbatim (Creswell, 2005).
Sampling Characteristics
The sampling included five Indonesian who were currently living in the Netherlands and Indonesia. The interviewees that participated in this study were coming from different occupation, age, and gender. Moreover, their history contribution in crowdfunding was also reviewed. The diverse background of the participants would help this study explained the key drivers of how certain variables were significantly correlated and one of them was not. Lastly, the names of the participants were modified for the purpose of confidentiality.
Interview Protocol Development
The semi-structured interviews in this study were used to provide in-depth discussions that could help this study to elaborate the results from the quantitative data (Green et al., 1989). Thus, the content of the interview protocol was grounded based on the first phase of the study. With this method, this study wanted to explore the statistical results of the predictor variable that contradicting with the hypothesis. In this case, the non-significance impact of the independent variable project developer’s social ties on the dependent variable the backers’ incentives to crowdfund. The questions were open-ended questions starting from the general term of gotong royong and narrowed down to their willingness to contribute in crowdfunding. The interviews were also
supported by leading questions that could explore the participants’ answers. The interview lasted an average of 20 minutes based on the pilot interview protocol that was tested on one participant, purposefully selected from those who had completed the survey in the first phase of the study. The pilot study has exposed some unclear interview questions that could lead bias into the discussion and some leading questions were found to be inadequate. As a result, the order of the protocol questions was revised slightly and additional probing questions were developed.
Qualitative Analysis
The recorded interviews were coded using different types of coding such as open, axial, and selective coding. After the data was coded completely, the study focused on classifying the themes based on all variables in the study. In the end the study involved the theoretical foundation as the basis and comparison of the data analysis.
Results
Quantitative Phase Demographic Information
The sample for this study was collected with a total of 172 respondents consisting of 55.2% female (N = 95), 43.6% female (N = 75), and 1.2% percent chose not to identify (N = 2). The age majority of the participants were ranged between 20 to 29 years old (N = 116, 67.4%). Most of the participants’ highest level of education was Bachelor’s degree (N = 75, 43.6%). The majority of the participants were students (55.2%) and mainly studying in the major of accounting (37.8%). Whilst, 67 participants were employees and self-employed (38.9%) and the majority of the respondents was employed in the financial services sector (29.7%). More than half of the participants have contributed to crowdfunding (N = 113, 65.7%) and the most attractive industry for them was the charitable sector (N = 111, 64.5%).
Mean, Standard Deviations, and Correlations
Table 1 presented the means, standard deviations, and correlations coefficients between the main variables. The relationship between all variables was explored using Pearson product-moment correlation coefficient. First of all, the reliability of each variable was checked to ensure there was no violation on the study’s measurement internal validity.
Table 1. Mean, Standard Deviations, and Correlations of Study Variables (Cronbach’s Alphas on diagonal)
Mean SD 1 2 3
1 Incentives in Crowdfunding 5.804 .660 (.762) 2 Project Developer’s Social Tie 11.990 1.068 .077 (.821) 3 Collectivistic Culture 6.856 .667 .000*** .000*** (.803) Note. N = 172, *p<.5 **p<.01 ***p<.001
Henson (2001) stated reliability should be at least .73 to be sufficient (p. 183). Based on Table 1, the reliability of dependent variable incentives in Ccowdfunding (α = .762) and independent variable social tie (α = .821) is satisfactory. As well, the reliability of the moderator variable collectivistic culture, (α = .803) is also satisfactory. It means that all measurements for dependent variable incentives in crowdfunding, independent variable social Tie, and moderator variable collectivistic culture are all reliable. Hypothesis 1 predicted project developer’s social tie to impact backers’ incentives in crowdfunding positively. However, our results showed that the project developer’s social tie, r (172) = .077, ns, were not correlated with the incentives in crowdfunding. This suggested that the relationship between the project developer and the backers in crowdfunding do not make the backers to pledge in their project any higher nor lower. However, table 1 showed that collectivism and incentives in crowdfunding, r (172) = 0.000, p<.01), is positively correlated. This supported the second hypothesis, which predicted that collectivistic culture positively impacts the incentives in crowdfunding. Meaning that the higher the collectivism of an Indonesian, the higher her/ his incentive in pledging in to a crowdfunding project.
Regression Results
Table 2 showed different regression results. In all three tables, Model 1 of the regression was the independent and moderator variables, social tie and collectivistic culture. Lastly, in the Model 2 in Table 2 showed the addition of interaction variable of project developer’s social tie and collectivistic culture on the top of the variables entered in the Model 1.
Table 2. Regression results of the main (Model 1) and interaction effects (Model 2) of Social
Tie and Collectivistic Culture on Incentives in Crowdfunding.
Note. N = 172 *p<.05. **p<.01. ***p<.001
Table 2 presented the results of the moderated regression for incentives in crowdfunding. With an 8-percent explained variance in the first model, the main effect of social tie did not significantly affect the incentives in crowdfunding (β = .044, ns, R2 = .079). However, the main effect of collectivism did significantly positive affect the incentives in crowdfunding (β = .262, p<.001, R2 = .079). Furthermore, the second model (R2 = .079) explained more variance than the first
Model 1 Model 2
Dependent Variable Incentives in Crowdfunding Incentives in Crowdfunding Coefficient SE Beta Coefficient SE Beta
Constant 5.804*** .049 5.774*** .050 Social Tie .028 .049 .044 .041 .048 .066 Collectivism .259** .078 .262** .269** .077 .271** Social Tie * Collectivism .176* .051 .176* R2 .079 .109
model (R2 = .109). Likewise the second model has confirmed the third Hypothesis, in which there is a significant effect of collectivistic culture on the relationship between the project developer’s social tie and the incentives in crowdfunding (β = .176, p < .05, R2 = .109). This is interesting because the main effect of social tie was not significant whilst the interaction effect of collectivistic and social tie was significant. This effect is called a crossover interaction, in which the interaction is significant but the main effect is not (Baron and Kenny, 1986). This means that the project developer’s social tie is not associated with any differences in the incentives in crowdfunding. However, if the backers have a strong social tie with the project developer and the value of collectivism is highly perceived in the Indonesian backers, then the incentives to crowdfund will be higher.
Qualitative Phase
Demographic Information
The participants for the qualitative study were interviewed with a total of five interviewees consisting of two students and three employees. The age majority of the participants were ranged between 21 to 47 years old. Additionally, two of the participants were students based in Holland and Indonesia, while the other participants were currently employed and living in Indonesia. The majority of the participants were currently studying and working in the financial sector. There was only one participant who was working in a non-profit organization. Moreover, three out of five participants have contributed in a crowdfunding platform before. The different background of age, gender, and history in crowdfunding has met the qualitative study’s expectation of diversifying the participants’ background.
Coded Interviews
The five participants perceived a similar concept on their incentives in crowdfunding, however opinions differed when the conversation shifted to collectivism and the importance of social tie in crowdfunding. The analysis of each interview and the relations between these five interviews yielded four themes that are shown in Figure 3. Accountable Impact has summarized the four themes in this qualitative study. These themes are; the importance of project developer’s strong tie in the crowdfunding platform, Indonesian collectivistic society, the wisdom of gotong royong, and the credibility of the crowdfunding project. The descriptions of each theme are as follows.
Accountable Impact
As the core category of the model, Accountable Impact has summarized the four themes that support Indonesian incentives in crowdfunding. Based on its cultural roots, Indonesian high motives in giving and helping others tend to support their incentives to crowdfund. But this does not diminish their overall judgment on their surrounding or in this case, a crowdfunding project. One participant emphasized the importance of impact that a crowdfunding project could make as he stated,
The last time I did crowdfunding was because the national disaster in Aceh. The impacts I could make from the money I share, I think it is the main motivator for me to crowdfund.
The accountability of the crowdfunding project, along with the social tie between the project developer and the backers, is a way for the backers to ensure the realization of the crowdfunding objective and for them to deliver a real impact. A participant statement explained this concern,
Yes, of course it's different when it raised by a friend. But still, the objective matters more than that, well, for me at least.
In conclusion, Indonesian main incentive in crowdfunding is to make impacts and the crowdfunding project realization become the backers’ priority. Thus, we concluded that for the backers to pledge into a crowdfunding project, an accountable procedure should support the crowdfunding objective.
The Importance of Project Developer’s Strong Tie in Crowdfunding
A social tie has been perceived as one of the key sources for a crowdfunding project to become successful. A close relationship between the project developer and the backers become one of the drivers of the backers’ incentives to crowdfund. As supported by Krackhardt et al. (2003), a strong tie could become a base of trust and confidence for the backers to do a crowdfunding in the first place (pp. 84). The participant mentioned,
I would definitely have less doubt on the project because I personally know the person and I also mentioned that the organization that started this project is one of the important parts of the decision I made when contributing in crowdfunding.
Aside from the relationship between the project developer and the backers, a participant elaborated the effects of the social ties on their judgment and objectivity on the crowdfunding project,
It actually affects my judgment, but even though it’s my friend’s, I treat them the same. I still need the updates, the clear purpose, and the picture or just a visual representation of the project.
These statements by the participants approved the theoretical concept of this study. The participants’ higher willingness to contribute explained on how a strong social tie could positively impact the backers’ incentives to do a crowdfunding. With an example of an unreliable crowdfunding project, another participant also supported the effects of a strong social tie, by stating, “Well, if I am really close to her, I would still pledge in but not as much.” This explained how a close relationship between the
project developers and the backers slightly guaranteed the backers’ incentives to crowdfund. In terms of financial contribution, it could impact the backers’ incentives in crowdfunding but not utterly their judgments on the crowdfunding project's credibility.
Indonesian Collectivistic Culture
A long-standing collectivistic culture in Indonesia has been perceived since the seventh century (Azra, 2010). The values of being united is plagued as part of Indonesia’s main ideology called Pancasila, a word that embodies the Indonesian national philosophy (Azra, 2010). As mentioned by the interviewees,
It’s from Indonesia’s ideology itself, as part of the third principle of Pancasila, the unity of Indonesia, and also the culture of fedeolisme since we had many kingdoms in the prior era. Where we had to work together and be united to achieve Indonesian purpose.
Moreover, the Indonesian values and history of collectivism still rooted in the present-day generation. The importance of working in groups, concerning of others’ needs, or gatherings that the Indonesian simply called ‘rame-rame’, were explained by a participant stating,
I agree with the Indonesian term of being a collectivist society. In my neighborhood, they always have monthly events for people to gather or celebrate something. And this happens a lot of time, not only for a big event but just for the sake of being ‘rame-rame’ (laugh).
As part of their collectivism history and values, Indonesian high concerns for their surrounding have made their willingness to contribute and make impacts higher to their society. This attitude is a good indication for a crowdfunding platform to strive in Indonesia, which also correlated with the theoretical concept of this study.
The Wisdom of Gotong Royong
Aside from the collectivistic culture in Indonesia, another term called Gotong Royong has been one of the sources of its cooperating values. Indonesian put importance on the needs and goals of their surroundings, as stated by a participant, “Gotong Royong is kind of helping each other in one community. It is not merely based on personal goal but also the whole community goals.” As Hofstede (1985) found a high collectivism index of Indonesia, the statement of the interviewee has confirmed this prior finding. Through prioritizing their community, the aim of making impacts and the act of helping others have supported Hofstede’s concept of collectivistic culture.
Another participant elaborated how the value of gotong royong had remained a part of his childhood, “From when I was a child, I have applied the term of gotong royong by making a time to help my neighbors.” Moreover, the act of gotong royong also appeared in the form of working together toward the community goals. As stated,
From the common things happen in my neighborhood, each week people do Gotong Royong for the purpose of cleaning the environment or public spaces together.
I’m very aware of Gotong Royong, since I was in an elementary school, there’s always a term called Gotong Royong in one of the subjects. Which all students have to learn to work together in a brotherhood and sisterhood.
As the term of gotong royong and collectivism correlated, both have emphasized the act of helping, working together, and prioritizing the needs of others as part of their way of living. The main purpose of these acts was to make impacts to their surrounding which also correlated with their incentives in crowdfunding. Thus it supported the second and third hypothesis of this study, in which collectivistic culture positively impacts the incentives in crowdfunding and it moderates the relationship between project developer’s social tie and the backers’ incentives in crowdfunding.
The Credibility of The Crowdfunding
As a platform of sharing and giving, crowdfunding has relied on the crowd’s judgment on their objective and credibility. Even though the strong social tie and Indonesian collectivistic culture could impact the backers’ incentives, the credibility of the crowdfunding still becomes the main driver of this incentive. As stated by a participant,
Because as a person who gives the money to that cause, I would like to know a frequent update, so the good information would keep me realized about what Impact have I made.
As impacts become one of the sources of the backers’ incentives in crowdfunding, the backers’ contribution has become a responsibility of the crowdfunding project
developer to endure. In order to ensure the backers’ trust and incentives to crowdfund, the crowdfunding project must not solely provide a clear objective but also frequent updates of its project. As supported by a participant stating, “ Still, the impact and the cause are the most important factors. But, now I think the following updates of where your money goes is also important.” Along with the clear purpose and frequent updates, another participant also emphasized the importance of the urgency of the project,
I think the first important thing is the urgency of that project. For example, education crowdfund for the children in Papua, they are more likely deserved more crowdfunding rather than a tech project in Java.
The perceptions of a crowdfunding project legitimacy differed among the five participants, but their incentives in crowdfunding are comparable. They wanted to make impacts on their community and to make it become a realization; they needed to ensure the credibility of the project along with avoiding frauds that could come out of the project. As explained by the interviewee,
Even though the founder is my friend, I don’t wanna be involved in a fraud project. It does matter; the clarification needs to be exposed to the public.
The negativity avoidance became one of the main concerns of the backers when deciding to do a crowdfunding. Although the backers have a close relationship with the project developer, they prioritize the objective aspects of the project and not simply rely on their relationship with the project developer.
Summary of the Quantitative and Qualitative Results
The qualitative findings of this study have explored the source of insignificance of the first hypothesis in the quantitative results, which tested the main effects of project developer’s social tie on the incentives in crowdfunding. The findings of this qualitative data were stimulating because it has raised greater questions about which variable was more important to the backers; their strong social ties with the project developer or the credibility of the crowdfunding project itself. Along with these raising questions, the most possible response that could recapitulate the drivers of the Indonesian backers’ incentives to crowdfund was Accountable Impact.
The backers were attentive in helping their project developer friend and the impact they could make from contributing to the crowdfunding project, but they were also objective in judging the credibility of the project. Likewise, they wanted to ensure if the impacts they contributed could become an accountable realization. In conclusion, if the credibility of the crowdfunding was questionable, the aspect of Indonesian collectivistic culture and project developer’s social tie was not sufficient to intensify the Indonesian incentives to crowdfund. The explanations of these findings will be further discussed in the discussion section.
Discussion
The purpose of this mixed methods sequential explanatory study was to identify factors contributing to Indonesian incentives in crowdfunding. In predicting Indonesian incentives to crowdfund, this study has explored the sources of backers’ incentives in crowdfunding based on the interacting role of project developer’s social tie and Indonesian collectivistic culture The research answered the research question; to what extent does collectivistic culture moderate the relationship between project developer’s social tie and incentives to crowdfund in Indonesia?
In the quantitative phase, two moderator variables affecting the incentives, “collectivism” and “gotong royong”, were found to be significant predictors to Indonesian incentives to crowdfund. Meanwhile, the independent variable, “project developer’s social tie”, was not found to be a significant impact on Indonesian incentives in crowdfunding. The qualitative follow up semi-structured interviews revealed four reasons that were pivotal: (1) strong social tie; (2) collectivistic culture; (3) gotong royong; and (4) crowdfunding credibility. The credibility of the crowdfunding project had the most encouraging effect on the incentives to crowdfund. The project developer’s strong social tie contributed to the backers’ willingness to do a crowdfunding in the first place, but their judgments on the crowdfunding credibility determined their final decisions. The Indonesian culture of collectivism and gotong royong were found to be suitable, since it defined the Indonesian positive behaviors toward the idea of crowdfunding. This comprised the act of helping, sharing, and community-based responsibility.
All participants in quantitative and qualitative phase of this study were willing to contribute in a crowdfunding, especially, if they personally know the project developer. The quantitative and qualitative results have highlighted the importance of project developer’s social tie and Indonesian collectivistic culture on the backers’ incentives to crowdfund. These findings were consistent with the concepts by Mollick (2014) and Hofstede (1985). Additionally, external factors could have played a secondary role to the internal factors related to their incentives to crowdfund. These factors are the backers’ level of income, level of education, gender, and their history in contributing to a crowdfunding.
The Main Effect of Social Tie on the Incentives to Crowdfund The Subjective Aspect of Social Tie
Based on the quantitative results, the relation between the project developer’s social tie and Indonesian incentives in crowdfunding was not found to be significant. Thus, the first hypothesis was not confirmed in the first phase of this study. Even though the measurement reliability of social tie was high, this unexpected result could occur because the participants’ subjectivity on the importance of interrelationships. Although Indonesian collectivism index was rated high by Hofstede (1985), this study had found that it did not guarantee a strong basis for the backers’ incentives to do a crowdfunding. The importance of interrelationship among community must have differed amongst individuals. Especially in the era of globalization, people become more individualistic, materialistic, and more critical in judging others (Elliott and Lemert, 2009). Thus, the Indonesian backer’s incentive to crowdfund must have depended on their subjective opinions on the importance of social tie or interrelationships.
The Backers’ Objective
This result was further explored in the second phase of this study. Through interviews, most of the participants clearly stated that the objective of the crowdfunding project mattered more than their relationship with the project developer. Although the participants indicated that a close relationship did affect their incentive in crowdfunding, it was not their primary driver in contributing to crowdfunding in the end. As found by the qualitative study, the objective of the participants persisted along the interviews, showing the importance of the crowdfunding’s credibility among other factors; particularly the social tie between them and the project developer.
Moreover, unexpected results came from the financial contribution difference in the quantitative study. Almost half of the respondents contributed less to a crowdfunding project raised by a friend rather than someone they do not personally know. If the backers see the project developer to have a sufficient fund, it could affect their financial decision in crowdfunding. Meaning, the financial background of their project developer friend could affect the backers’ financial contribution concurrently. Likewise, the backers’ objective on the crowdfunding’s project credibility also stands with the credibility of the project developer himself. Thus, the findings from the qualitative data also aligned with the quantitative results.
The Main Effect of Indonesian Collectivistic Culture The Value of Helping Others
As the positive relationship between collectivism and the backers’ incentives in crowdfunding was found to be significant in the quantitative results, the second
hypothesis was supported. Both gotong royong and collectivistic culture proposed the values of giving and helping others that correlate with the idea of crowdfunding in the first place. The qualitative study found that prioritizing the community has become a tradition of gotong royong in Indonesia. Indonesian society tended to be collectivist, and the idea of crowdfunding aligned with the Indonesian culture of giving. Collectivistic culture was perceived from the great concern of the society on their surrounding (Hofstede, 1985). Thus, both quantitative and qualitative phase of this study confirmed the theoretical concept by Hofstede (1985) that found a high level of collectivism index of Indonesian.
Contribution in Crowdfunding
Quantitatively, more than half of the respondents have contributed to a crowdfunding platform. Likewise, in the second qualitative phase of this study, more than half of the participants have also pledged in a crowdfunding platform beforehand. Confirming the findings by Statista (2017), Indonesia has made significant progress on the platform of crowdfunding. The majority of the participants’ previous contributions in crowdfunding have shown the awareness and significant incentives to crowdfund in Indonesia. Stanko (2017) studied the important role of the backers in the crowdfunding project’s advertisement that could attract more future backers to crowdfund into the project. Meaning, the backers could support the initial of financial resources of a crowdfunding project and lead them to a success (Shane and Stuart, 2002; Mollick, 2014). Conforming to prior researches, both quantitative and qualitative results of this study found that Indonesian collectivism and gotong royong culture have increased their incentives to crowdfund in Indonensia.
The Interaction Effect of Social Tie and Collectivistic Culture Crossover Interaction
As mentioned in the quantitative results, the main effect of the independent variable project developer’s social tie was not found to be significant. However, the interaction effect of the independent and moderator variable was found to be significant. This situation was called a crossover interaction, which referred to a reversal effect of one independent variable on a dependent variable at a certain level of a moderator variable (McClelland and Judd, 1993). Crossover was also defined as an interaction from the results of a factorial experiment in which the graphed lines representing the independent and moderator variables cross each other (Baron and Kenny, 1986). The significance of the moderator variable Indonesian collectivistic culture on the dependent variable incentives in crowdfunding supported the interacting effect of social tie and collectivistic culture. Thus, the third hypothesis was supported.
Although the first hypothesis was not confirmed, the culture of collectivism and gotong royong have added the effects of project developer’s social tie in the backers’ incentives to crowdfund in Indonesia. As many studies had found, the collectivistic culture of Indonesia inclined to make them prioritize their surroundings into their self-conception and values (Kharis, 2016; Hofstede, 1985). Which then emphasized the act of working together, sharing, giving and helping others within a community (Hofstede, 1985). Furthermore, as crowdfunding offered the idea of gotong royong into a digital form, it has given a wider access for Indonesian to collectively help each other virtually (Freischland, 2015). To conclude, the strong effect of Indonesian collectivistic culture has overcome the insignificance effect of the project developer’s social tie on the incentives in crowdfunding.
Accountable Impact
Further explanations of the interaction effect were developed from the second qualitative phase of this study. Likewise, the qualitative results have found accountable impact as the primary driver of the backers’ incentives in crowdfunding. This core category has also explained why the project developer’s social tie was not found to be significant in the first quantitative phase of this study. The study implied that the majority of the participants in both quantitative and qualitative research prioritized the credibility of the crowdfunding project more than their relationship with the project developer. It contradicted with the theoretical concept of Indonesian collectivism and gotong royong that defined them as a society who tend to place their family, friends, and community as a priority (Kharis, 2016; Hofstede, 1985). Although the collectivistic culture impacted the backers’ willingness to crowdfund, it did not diminish their objective judgment on the credibility of the project.
The impact of gotong royong on the backers’ incentives in crowdfunding was found to be significant in both quantitative and qualitative study. As gotong royong taught Indonesian of the act of giving and helping others, this explained the fact that Indonesian favor the idea of making an impact that could help their community. Additionally, the project developer’s strong social tie with the backers could initiate the backers to crowdfund in the first place. But to ensure the backers to make a final contribution to the crowdfunding project, the realization of the impact they could make have to be guaranteed through a credible method of the crowdfunding project. Meaning, for the Indonesian backers, the crowdfunding project could ensure its credibility through providing clear objective, frequent updates, visual representation, the urgency of the project, and legitimacy.
Limitations and Future Suggestions Quantitative Phase
Along the research process, several limitations were found. The quantitative study only consists of 172 respondents out of 264 million population of Indonesia. Meaning, this study’s external validity is low and could not generalize Indonesian incentives in crowdfunding. However, this study has contributed essential ideas and initial starting point for future research. More respondents should be included in the future study to increase the external validity and reliability of the results.
Moreover, as part of measuring the importance of social tie to the participants in the survey, a visualization of the researcher’s friend profile was shown in the survey. As the surveys were distributed to the researcher’s personal links, this was intended to intrigue the participants’ judgments on the importance of social tie between them, as the backers, and the project developer. Different participant’s perception on this profile could impact their trust on this person and affect the insignificance of the first hypothesis. Meaning, putting a single profile to test the importance of social tie could lead to a participant bias and unreliable measurement of the variable. Future research should reframe the measurement of social tie in a more general way. So it could seize Indonesian’s perception on the importance of social tie between them as the backers and the project developer. As the measurement of social tie was not fully replicated by prior study but based on the summary of prior’s study, future research should reform the questionnaires for the part of social tie.
Furthermore, the crossover interaction in this study was not further tested in the SPSS due to the limited timescale. Future study should conduct the crossover interaction
testing if the independent variable was not found to be significant. Along with the measurement of crossover interaction, further analyses of the study could be further elaborated. Moreover, future study should add more open variable for its moderator such as collectivism and individualism. Social phenomena have shifted and Hofstede (1985) findings on Indonesian collectivism should also be further assessed, although enchanting his studies into account as part of discussion would help the study to explore the source of the Indonesian behaviors in general.
Qualitative Phase
Although the research has answered its research question and objectives, it also has limitations. The themes of the research were also limited due to its small size of data sampling that affected the reliability of the research. As the data collection of the qualitative research was conducted differently, some of the interviews that were processed by phone could diminish the intensity of the interview process. Future study should conduct a Skype interview to intensify the discussion and the semi-structured interviews. The timescale of the data collection was merely short, thus the length of the interview was limited to explore the social phenomenon of collectivism in Indonesia and the people incentives in crowdfunding. Some of the interview questions were not leading enough as it was expected; some of the participants answer the questions shortly although further questions have been asked.
Furthermore, it only conducted to five participants with the majority of financial sector employees and students. Although the responses of all participants were positive in pledging in to a crowdfunding project, the incentives in helping others could be further driven by their surrounding. For example, Dewi, who was working in
a social sector, has a greater sensitivity in helping others compared to the other four participants who were studying and working around in the financial sector. Future study should diversify more the background of the participant so it could give the study more supporting details on the sources of the backers’ incentives in crowdfunding. In conclusion, future study should increase the sample size and variety of backgrounds of the participants in order to have a more generalized data.
Contributions and Implications
This study has further explored the sources of the project developer’s social tie in Indonesia and the sources of the backers’ incentives to crowdfund. Findings from this research have found collectivistic culture and gotong royong as the sources of the backers’ incentives to crowdfund in Indonesia. This study also suggested what items should be provided in the crowdfunding project to gain trust from the future backers such as; clear objective, frequent updates, visual representation, the urgency of the project, and legitimacy.
In practice, the project developer could initiate a crowdfunding project in Indonesia based on the Indonesian cultural values. As crowdfunding has been recognized as an alternative to financial resources and advertising strategy for a temporary project or a start-up business, this could benefit the project developer in the long term in Indonesia (Hekman and Brussee, 2013; Mollick, 2014; Santos, 2015). Along with the high value of helping others and the priority of their community, project developer could get the advantage from this when starting a crowdfunding project in Indonesia.
