Crowdfunding in times of crisis – the interplay of uncertainty and backers' well-being in small business rescue campaigns

Abstract

Purpose

The economic crisis triggered by the COVID-19 pandemic seriously jeopardized small businesses. To survive, many small businesses turned to their networks by launching crowdfunding “rescue” campaigns, which were very successful in eliciting both funding and community support. This study aims to explain this success from the backers' perspective by addressing support intentions in uncertain times. The authors examine backers' paradoxical behavior by investigating the influence of ambiguity aversion (individual uncertainty), business-level uncertainty and environmental uncertainty on backers' intentions to support small businesses and the interaction of uncertainty with backers' well-being.

Design/methodology/approach

Survey data from 230 backers of small business rescue campaigns were analyzed using structural equation modeling.

Findings

The findings indicate that ambiguity aversion negatively dominates backers' support intentions. However, under the mediating effect of well-being, business-level and environmental uncertainties positively impact backers' intentions, whereas ambiguity aversion becomes non-significant.

Originality/value

Uncertainties are supposed to have a negative influence on individual well-being. By contrast, this study shows that backers' well-being is influenced by the context of the crowdfunding campaign. Uncertain conditions can provide value in addition to the benefits gained by backers from supporting crowdfunding campaigns.

Citation

Efrat, K., Gilboa, S. and Wald, A. (2023), "Crowdfunding in times of crisis – the interplay of uncertainty and backers' well-being in small business rescue campaigns", Baltic Journal of Management, Vol. 18 No. 5, pp. 703-719. https://doi.org/10.1108/BJM-11-2022-0416