How crowdfunding platforms change the nature of user innovation – from problem solving to entrepreneurship

Abstract

Crowdfunding has become a key research trend in recent years providing a new form of acquiring funding for innovation projects from users prior to the realization of the product in a ‘market before the market’. In this paper, we link the concept of crowdfunding with the user innovation phenomenon and show how user innovators harness crowdfunding to complement their innovative behavior and obtain funding to build firms and produce products in a more professional way. Conducting three case studies ranging from low- to high-tech crowdfunding campaigns, we investigate how crowdfunding impacts constituent dimensions of user innovation theory such as user motivation, user role, user community, collaboration between users and user investments. In particular, we argue that crowdfunding platforms (CFPs) may give rise to a more widespread occurrence of user entrepreneurs, who found a firm to commercialize their product or service in a marketplace they have created for their own need. Hence, we show the development from traditional user innovation to crowdfunding-enabled user innovation, which democratizes not only the creation but also the more large-scale commercialization of new products and services.