Self-operation or Authorization? Decision structure of crowdfunding supply chains with IP derivative products

Abstract

Reward-based crowdfunding has become a widely adopted financing mechanism in the creative economy, particularly for IP derivative products, resulting in a typical crowdfunding supply chain comprising an IP owner, a crowdfunding platform, and a manufacturer. Our study aims to build a theoretical model to explore the strategic issue regarding how to design the decision structure of crowdfunding supply chains with IP derivative products. Our analytic results reveal that when the product quality remains consistent across decision structures, the IP owner prefers the self-operation structure (i.e., structure O) if the quality level is either low or high; otherwise, the authorization structures are preferred. When the platform’s commission rate is relatively low, authorizing the manufacturer (i.e., structure M) outperforms authorizing the platform (i.e., structure T), which is counter-intuitive. However, structure O always achieves the highest funding amount and can lead to a tripartite win–win situation under certain conditions. When the quality level is determined endogenously by the creator, in addition to structure O, structure T can also achieve the highest funding target and lead to a tripartite win–win situation in some cases by regulating the quality level. Notably, due to the double marginalization effect, structure M always leads to a sub-optimal outcome for the manufacturer regardless of whether the quality is constant or endogenous.