Trust motivates funders to participate in Shari’ah crowdfunding

Shifa Mohd Nor, Noor Azuan Hashim

Abstract


The fourth industrial revolution has influenced many sector including Islamic Finance. The digital revolution has changed the traditional crowdfunding through the usage of technology with smart applications on mobile phones and websites. Among the advantage of crowdfunding is its accessibility, fast transaction, security, transparency, traceability and many more. Through crowdfunding platforms, financial inclusion groups could be reached. Hence, the demand for Shari’ah crowdfunding increases to fulfil the Muslims developmental needs in providing for projects that are compliant according to Shari’ah. Shari’ah crowdfunding platform such as Shekra, Yomken, Ethiscrowd, Waqfworld, KapitalBoost and many more attempts to realize the needs of Muslim society. These activities utilize the financial technology (FinTech) approach via social media or smartphone apps. Although FinTech is widely used nowadays, there is an issue of trust from the investors in gaining their interest to invest in Shari’ah crowdfunding projects since it is virtual. Hence, this study explores the possibility of funder’s motivation to invest in crowdfunding projects from the perspective of trust. This conceptual study highlights the element of trust from three elements which are calculus trust, relationship trust and religiosity (Islam). For future research, the study on trust from a social capital perspective would add value in contributing to the development of digital economy.

Keywords: crowdfunding, calculus trust, fintech, relationship trust, shari’ah, trust


Full Text:

PDF

References


Abdullah, A. (2016) Crowdfunding as an Emerging Fundraising Tool: With Special Reference to the Malaysian Regulatory Framework. Islam and Civilisational Renewal (ICR), 7(1), 98-119.

Abuznaid, S. (2009), Business ethics in Islam: the glaring gap in practice. International Journal of Islamic and Middle Eastern Finance and Management, 2(4), 278-288.

Achsien, I. H., & Purnamasari, D.L. (2016) Islamic crowd-funding as the next financial innovation in islamic finance: Potential and anticipated regulation in Indonesia. European Journal of Islamic Finance, 5, 1-10.

Adamu, I.M., Zulkarnain, K., & Osman-Gani, A.M. (2013). Entrepreneurial motivation, performance and commitment to social responsibility: Toward future research. International Journal of Entrepreneurship and Small Business, 18(2), 194-210.

Agarwala, R., Mishra, P., & Singh, R. (2018). Religiosity and consumer behavior: A summarizing review. Journal of Management, Spirituality & Religion, 1-23.

Al-Qaradawi, Y. (2001) Min Fiqh al-Dawla fi al-Islam. Cairo and Beirut: Dar al-Shuruq.

Alonso, I.M. (2015). Crowdfunding in Islamic finance and microfinance: A case study of Egypt in developing inclusive sustainable economic and financial systems: access to finance and human development – Essays on Zakah, Awqaf and Microfinance, Qatar Foundation Journal, Doha, Qatar.

Asutay, M. (2007). Conceptualisation of the second best solution in overcoming the social failure of Islamic finance: Examining the overpowering of homoislamicus by homoeconomicu. IIUM Journal of Economics and Management, 15(2), 167-195.

Asutay, M., & Marzban, S. (2015). Alternative ways of developing the GCC Islamic funds industry: entrepreneurial development. In M. Asutay, & A. Turkistani, (Ed). Islamic finance: Political economy perspectives, Berlin: Gerlach.

Beekun, R., & Badawi, J. (1999). The leadership process in Islam. Proteus-Shippensburg, 16, 33-38.

Belleflamme, P., Lambert, T., & Schwienbacher, A. (2013). Individual crowdfunding practices. Venture Capital, 15(4), 313-333.

Belleflamme, P., Lambert, T., & Schwienbacher, A. (2014). Crowdfunding: Tapping the right crowd. Journal of Business Venturing, 29(5), 585-609.

Biancone, P.P., & Secinaro, S. (2016). The equity crowdfunding Italy: A model sharia compliant. European Journal of Islamic Finance, 5, 1-10.

Bock, G.W., Lee, J., Kuan, H.H., & Kim, J.H. (2012). The progression of online trust in the multichannel retailer context and the role of product uncertainty. Decision Support Systems, 53(1), 97-107.

Burke, C.S., Sims, D.E., Lazzara, E.H., & Salas, E. (2007). Trust in leadership: a multi-level review and integration. The Leadership Quarterly, 18(6), 606-632.

Cheshire, C., Antin, J., Cook, K.S., & Churchill, E. (2010). General and familiar trust in websites. Knowledge, Technology & Policy, 23, 311-331. https://doi.org/10.1007/s12130-010-9116-6.

De Buysere, K., Gajda,O., Kleverlaan, R., Marom, D., & Klaes, M. (2012). A framework for European crowdfunding, European Crowdfunding Network.

Fang, J., Shao, P., & Lan, G. (2009), Effects of innovativeness and trust on web survey participation. Computers in Human Behavior, 25(1), 144-152.

Gerber, M.E., & Hui, J. (2013). Crowdfunding: Motivations and deterrents for participation. Journal ACM Transaction on Computer-Human Interaction (TOCHI), 20(6), 1-34.

Gierczak, M.M., Bretschneider, U., Haas, P., Blohm, I., & Leimeister, J.M. (2016). Crowdfunding: Outlining the new era of fundraising. In: D., Brüntje, & O., Gajda. (eds). Crowdfunding in Europe. FGF Studies in Small Business and Entrepreneurship. Springer.

Hassan, A. (2015). Shari’ah Compliance under Islamic Financial Services Acts 2013 and its challenges (November). Muzakarah Penasihat Syariah Kewangan Islam Kali Ke-9. Kuala Lumpur Islamic Finance Forum 2014.

Hemer, J. (2011). A Snapshot on Crowdfunding. Fraunhofer Institute for Systems and Innovation Research, Karlsruhe.

Hsu, C.L., & Lu, H.P. (2004). Why do people play on-line games? An extended TAM with social influences and flow experience. Information & Management, 41(4), 853-868.

IFSB. (2017). Islamic Financial Services Industry Stability Report 2017. Bank Negara Malaysia, Kuala Lumpur.

Kang, M., Gao, Y., Wang, T., & Zheng, H. (2016). Understanding the determinants of funders’ investment intentions on crowdfunding platforms: A trust-based perspective. Industrial Management & Data Systems, 116(8), 1800-1819.

Kim, D.J., Ferrin, D.L., & Rao, H.R. (2008). A trust-based consumer decision-making model in electronic commerce: The role of trust, perceived risk, and their antecedents. Decision Support Systems, 44(2), 544-564.

Kuti, M., & Madarasz, G. (2014). Crowdfunding. Public Finance Quarterly, 59(3), 355-366.

Lehner, O.M. (2013). Crowdfunding social ventures: A model and research agenda. Routledge Venture Capital Journal, 15(3), 1369-1066.

Li, Y., Li, G., Feng, T., & Chong, A. (2015). Effects of suppliers’ trust and commitment on customer involvement. Industrial Management & Data Systems, 115(6), 1041-1066.

Littlewood, B., Neil, M., & Ostrolenk, G. (1995). The role of models in managing the uncertainty of software-intensive systems. Reliability Engineering & System Safety, 50(1), 87-95.

Luhman, N. (1979). Trust: A mechanism for the reduction of social complexity. In N., Luhman. (1979). Trust and power: Two works, Chichester: John Wiley and Sons.

Lutfi, M.A., & Ismail, M.A. (2016). Sadaqah-based crowdfunding model for microfinancing and health care. Journal of Muamalat and Islamic Finance Research (JMIFR), 13(2), 31-51.

Marzban, S., Asutay, M., & Boseli, A. (2014) Shariah-compliant crowd funding: An efficient framework for entrepreneurship development in Islamic countries. Eleventh Harvard University Forum on Islamic Finance. 24-27 April 2014, Cambridge MA.

Massolution, C.F. (2015). Crowdfunding Industry Report, 2015.

Massolution, C.F. (2013). Crowdfunding Industry Report, 2013.

Minton, E.A. (2018). Believing is buying: religiosity, advertising skepticism, and corporate trust. Journal of Management, Spirituality & Religion, 1-22.

Mohd Nor, S., Abdul Rahim, R., & Che Senik, Z. (2016). The potentials of internalising social banking among the Malaysian Islamic banks. Environment, Development and Sustainability, 18(2), 347-372.

Mohd Thas Thaker, M.A., Mohd Thas Thaker, H., & Allah Pitchay, A. (2018). Modeling crowdfunders’ behavioral intention to adopt the Crowdfunding-Waqf Model (CWM) in Malaysia: The theory of the Technology Acceptance Model. International Journal of Islamic and Middle Eastern Finance and Management, 11(2), 231-249.

Morgan, R.M., & Hunt, S.D. (1994). The Commitment-Trust Theory of relationship marketing. Journal of Marketing, 58(3), 20-38.

Mubarak, M.Z., Abd Rahman, A., & Yaacob, M.R. (2014). Spirituality in Islamic entrepreneurship: Motivation and achievements of successful entrepreneurs in Kelantan. Journal of Techno Social, 6 (2), 27 -36.

Ordanini, A., Miceli, L., Pizzetti, M., & Parasuraman, A. (2011). Crowdfunding: Transforming customers into investors through innovative service platforms. Journal of Service Management, 22(4), 443-470.

Oukil, M.S. (2013). Entrepreneurship and entrepreneurs in an Islamic context. Journal of Islamic and Human Advanced Research, 3(3), 111-131.

Pae, J.H., & Hyun, J.S. (2002). The impact of technology advancement strategies on consumers’ patronage decisions. Journal of Product Innovation Management, 19(5), 375-383.

Pavlou, P.A. (2002), Institution-based trust in interorganizational exchange relationships: The role of online B2B marketplaces on trust formation. Journal of Strategic Information Systems, 11(3/4), 215-243.

Schwienbacher, A., & Larralde, B. (2010). Crowdfunding of Small Entrepreneurial Ventures. Handbook of Entrepreneurial Finance, Oxford University Press, Oxford.

See-To, E.W.K., & Ho, K.K.W. (2014), Value co-creation and purchase intention in social network sites: The role of electronic word-of-mouth and trust – a theoretical analysis. Computers In Human Behavior, 31(2), 182-189.

Shah Alam, S., Ahmad, M., Ali Khatibi, A., Nilufar Ahsan, M. (2016). Factors affecting trust in publishing personal information in online social network: an empirical study of Malaysia’s Klang Valley users. Geografia-Malaysian Journal of Society and Space, 12(2), 132-143.

Shofiyyah, M., Abdul-Rahman, A., & Mohd Nor, S. (2019). Awareness and motivation in crowdfunding for Islamic banking and finance research. Global Journal of Al-Thaqafah, special issue, 7-18.

Taha, T., & Macias, I. (2014). Crowdfunding and Islamic finance: A good match? In: F.M., Atbani, & C., Trullols. (eds) Social Impact Finance. IE Business Publishing. Palgrave Macmillan, London

Wahjono, S.I. (2015). Islamic crowdfunding: Alternative funding solution. Paper presented at 1st World Islamic Social Science Congress (WISSC 2015), Putrajaya, Malaysia, 1-2 December 2015.

World Bank. (2013). Crowdfunding’s potential for the developing world. The World Bank, Washington.

Xu, B., Zheng, H., Xu, Y., & Wang, T. (2016). Configurational paths to sponsor satisfaction in crowdfunding. Journal of Business Research, 69(2), 915-927.

Zheng, H., Hung, J., Qi, Z., & Xu, B. (2016). The role of trust management in reward-based crowdfunding. Online Information Review, 40(1), 97-118.


Refbacks

  • There are currently no refbacks.