Make the Crowdfunders Work : An explorative study of knowledge transfer in equity crowdfunding

Abstract: Equity crowdfunding is a financing tool argued to be the future of small business financing. Beside financial benefits it is argued to be several non-financial benefits, one being the ability to use the crowdfunders for knowledge. Knowledge transfer has been widely researched, but little has been done to investigate how knowledge is transferred between firms and crowdfunders in an equity crowdfunding context. This study aim to address this research gap by using Szulanski’s (1996) model for the knowledge transfer process and four influencing factors: knowledge, absorptive capacity, motivation and relationship. This study qualitatively investigates five equity crowdfunded firms by conducting semi- structured interviews and reviewing secondary data. The findings indicate that a majority of the firms consider crowdfunders as a potential source of explicit knowledge regarding consumer insights. Knowledge was found to be transferred via social media, email, surveys and social interaction. The crowdfunders need encouragement in order to share knowledge and social interaction was the most effective way to acquire and transfer knowledge. The large number of crowdfunders creates a weak relationship that is difficult to manage, but it does not impede the transfer of explicit knowledge. The desire to use the crowdfunders as a source of knowledge is high yet limited by time and resources as well as experience and ideas for how to best transfer knowledge from the crowdfunders.