Investing for good – Uncovering crowd investors' motivations to participate in sustainability-oriented crowdlending

Dinh, Jeannette Mai; Isaak, Andrew Jay; Yahyaoui, Yasmine Article — Published Version Investing for good – Uncovering crowd investors' motivations to participate in sustainability-oriented crowdlending Technological Forecasting and Social Change Suggested Citation: Dinh, Jeannette Mai; Isaak, Andrew Jay; Yahyaoui, Yasmine (2024) : Investing for good – Uncovering crowd investors' motivations to participate in sustainability-oriented crowdlending, Technological Forecasting and Social Change, ISSN 1873-5509, Elsevier, Amsterdam, Vol. 207, pp. 1-15, https://doi.org/10.1016/j.techfore.2024.123584 , https://www.sciencedirect.com/science/article/pii/S0040162524003809 This Version is available at: https://hdl.handle.net/10419/329766 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. http://creativecommons.org/licenses/by-nc/4.0/ Technological Forecasting & Social Change 207 (2024) 123584 Available online 23 July 2024 0040-1625/© 2024 The Authors. Published by Elsevier Inc. This is an open access article under the CC BY-NC license (http://creativecommons.org/licenses/bync/4.0/). Investing for good –Uncovering crowd investors’motivations to participate in sustainability-oriented crowdlending Jeannette Mai Dinh a , Andrew Jay Isaak a,b,* , Yasmine Yahyaoui c a Manchot Graduate School “Competitiveness of Young Enterprises”, Heinrich Heine University, Universitaetsstraße 1, 40225 Duesseldorf, Germany b Vienna University of Economics and Business (“WU Wien”), Welthandelsplatz 1, 1020 Vienna, Austria c University of Bayreuth, Universit¨ atsstraße 30, 95447 Bayreuth, Germany ARTICLE INFO JEL classification: D26 G24 L26 M13 Q01 Keywords: Crowdfunding Sustainability Venture finance ABSTRACT Sustainable ventures that pursue social and ecological goals alongside economic profitability can contribute to innovative solutions aimed at conserving natural resources and creating social value. However, as these ventures are not solely focused on profit maximization, they often face particular difficulties in acquiring external funding from traditional capital sources, making crowdlending an attractive alternative. In this study, we explore investor motivations to partake in crowdlending for sustainable ventures by conducting a qualitative study based on 18 open-ended interviews (approximately 12 h of audio recordings) with investors of a crowdlending platform targeted at sustainable ventures. Our findings suggest that balancing financial, personal, prosocial, and communal motives shapes investors’decision-making approaches. Hereby, our research contributes to an ongoing debate on the role of financial and nonfinancial motivations in investor decisions, particularly in light of the rise of return-oriented crowdlending platforms specialized in sustainable ventures. 1. Introduction As societies become increasingly aware of the urgent challenges posed by climate change and global warming (as exemplified by the consensus reached at the December 2023 Global U.N. Climate Change Conference), the demand for innovative sustainable and social solutions to address problems such as natural resource depletion and migration crises is growing rapidly (Mansouri and Momtaz, 2022;Voegtlin et al., 2022). Sustainable ventures that pursue social or ecological goals alongside economic profitability can substantially contribute to sustainable economic development (Apostolidis et al., 2022;Johnson and Schaltegger, 2020). However, these ventures often face difficulties in accessing external funding from traditional sources, such as banks, given their focus on objectives beyond profit maximization (e.g., Anglin et al., 2022;Calic and Mosakowski, 2016). Therefore, crowdfunding is gaining relevance and momentum as an accessible alternative to finance sustainable ventures (Vismara, 2019). Notably, crowdfunding provides the potential for a bandwagon effect and corresponding changes in behaviors toward sustainability aims by amplifying societal awareness of sustainable topics (Messeni Petruzzelli et al., 2019). Especially lending-based crowdfunding, also called crowdlending, which addresses nonprofessional investors, holds considerable potential for sustainable ventures (H¨ orisch and Tenner, 2020;Penz et al., 2022; Slimane and Rousseau, 2020). Hereby, ventures are funded through many small loans from investors in the crowd based on fixed interest rates for a fixed period (Block et al., 2018). In this regard, crowdlending can appeal to retail investors seeking options to complement or substitute their private investments in conventional banks, stocks, or funds because it offers potential financial gains (Jiang et al., 2020;PalaciosGonz´ alez and Chamorro-Mera, 2018;Saiedi et al., 2020). Sustainable ventures can leverage crowdlending as a means to finance the realization and growth of their projects aimed at addressing poverty and environmental issues across the globe. Crowdlending platforms like bettervest.com specialize in facilitating funding for such ventures, which include projects such as providing affordable cooking stoves or solar home systems to underserved populations in regions like Zambia, Rwanda, or Kenya. 1 Through dedicated crowdfunding campaigns, these companies seek to raise a specified funding target from a large pool of * Corresponding author. E-mail addresses: [email protected] (J.M. Dinh), [email protected] (A.J. Isaak), [email protected] (Y. Yahyaoui). 1 For exemplary project descriptions, see the crowdlending campaigns for the projects “Solar home systems for Kenya”(https://www.bettervest.com/de/project/ pawame-1), “Sustainable cooking stoves for Zambia”(https://www.bettervest.com/de/project/greenway-cookstoves), or “Solar products for clean electricity in Rwanda”(https://www.bettervest.com/de/project/munyax-eco), accessed on May 5, 2024. Contents lists available at ScienceDirect Technological Forecasting &Social Change journal homepage: www.elsevier.com/locate/techfore https://doi.org/10.1016/j.techfore.2024.123584 Received 23 December 2023; Received in revised form 23 May 2024; Accepted 5 July 2024 Technological Forecasting & Social Change 207 (2024) 123584 2 investors, who in turn can receive a financial return on their investment if the project is successful. 2 Despite the increasing popularity of loans for sustainable ventures, return-oriented crowdlending remains under-researched (B¨ ockel et al., 2020;Messeni Petruzzelli et al., 2019;Tenner and H¨ orisch, 2021). This is surprising, given that crowdlending represents the most widely used form of alternative finance in Europe (Saiedi et al., 2020). Thus, it is especially important to further investigate and deepen our knowledge on return-oriented crowdlending (V´ asquez-Ord´ o˜ nez et al., 2023). Research examining return-oriented crowdlending for traditional ventures suggests that investors’participation is predominantly motivated by profit maximization (Borello et al., 2015;Dorfleitner et al., 2023). As these profit-oriented investors typically attempt to limit their risk of financial loss via portfolio diversification (Dorfleitner et al., 2023), they cognitively process campaign information presented online (e.g., the pitch video, project description, prospectus, and risk disclosures) and strongly consider potential financial outcomes of their crowdlending activities (Herzenstein et al., 2011). With regard to sustainable ventures, however, literature typically highlights the importance of sustainability-related motivations and outcomes for tailoring crowdfunding offerings (e.g., Nielsen and Binder, 2021). While studies have explored the role of intrinsic and extrinsic motives (e.g., Chen et al., 2021) or egoistic and altruistic motives (e.g., Testa et al., 2020) in donation-based or reward-based crowdfunding, we lack relevant insights into the nature and heterogeneity of crowd investors’motives in return-oriented crowdlending. These insights are crucial for designing an effective crowdlending ecosystem that meets the crowds’needs in the context of sustainability. Further, while a recent literature review on crowdfunding and sustainability shows a rapidly growing research field, the authors identify specific gaps in our understanding of individual-level investor motives in return-oriented crowdlending (Dinh et al., 2024, p. 14), underscoring the importance of examining the composition of these motives and their linkages to decision making. Hence, this study aims at answering the following research question: Why do nonprofessional investors participate in return-oriented crowdlending for sustainable ventures and how do their motives shape their decision-making approaches? The research question of this study holds significant theoretical relevance due to the nature of crowdlending, which operates as a twosided market involving entrepreneurs and investors (e.g., Tang et al., 2023;Belleflamme et al., 2014), with the platform serving as the intermediary. While our knowledge of the influence of campaign attributes presented by entrepreneurs is expanding (e.g., Berns et al., 2020; Moss et al., 2018), there remains a gap in understanding the individual investors’perspective. Understanding the participation motives and decision-making processes of investors is particularly important in the context of sustainability, where funding outcomes may be less tangible and immediate compared to traditional crowdfunding (e.g., Messeni Petruzzelli et al., 2019;Tenner and H¨ orisch, 2021). Most crowdfunding studies based on platform data lack access to detailed information about individual investors and their motivations, often relying on inferred motives derived from observed behavior at an aggregate level (Cox et al., 2022). For example, previous work has inferred motives by examining the relationship between campaign success and campaign narratives (e.g., Allison et al., 2013;Robiady et al., 2021) or funding information (e.g., Anglin et al., 2020;Slimane and Rousseau, 2020) presented by the entrepreneurs. Thus, scholars particularly call for more qualitative research in the field of crowdfunding (e.g., Cox et al., 2022) to answer how and why questions regarding the investor perspective. Previous studies from related research fields underline the usefulness of taking the investor perspective to gain deeper insights into motivations (e.g., Berry and Junkus, 2013;Hong and Kostovetsky, 2012;PalaciosGonz´ alez and Chamorro-Mera, 2018). In light of this, we base our qualitative study on semi-structured interviews with crowd investors from a German sustainability-oriented crowdlending platform to explore the nature and variety of investor motivations and develop a clearer understanding of related drivers and considerations. Using an iterative data collection and analysis technique, our study comprises a total of 18 interviews. In a first step, we conducted an inductive analysis of our qualitative data according to the principles of grounded theory (Glaser and Strauss, 1967) to reveal the investors’underlying motivations. In a second step, we further enriched our analysis with an abductive approach whereby we triangulated our findings with existing theory to derive a conceptual model that sheds light on the drivers and focus of the motives for crowdlending participation in the sustainability context, as well as on the role these motives play for investors’decision-making processes. By increasing our conceptual knowledge of the underlying investor motivations in returnoriented crowdlending for sustainable ventures, we not only add to the existing qualitative studies in other crowdfunding contexts, such as reward-based or donation-based crowdfunding (e.g., Bagheri et al., 2019;Gerber and Hui, 2013;Mc Laren and Baldegger, 2021), but also make several key contributions to the literature on sustainable venture financing. First, we present crowd investor motivation as a multilayered concept encompassing heterogeneous financial, personal, prosocial, and communal motives, thereby extending previous research that is often based on broader conceptions primarily distinguishing between financial and nonfinancial motivations (Hajiheydari and Delgosha, 2023;Yoo et al., 2023). Illuminating the drivers (i.e., intrinsic or extrinsic) as well as the focus (i.e., selfor other-directed) of investor motives, our study adds to the theoretical discourse about different motivators for sustainability-oriented crowdfunding (e.g., Allison et al., 2015;Siebeneicher and Bock, 2022). Second, our findings indicate that crowd investors make different considerations regarding crowdlending outcomes based on weighing their underlying motives, leading to a dominant strategic,emotional or, lastly, blended decision-making approach that intertwines strategic and emotional concerns. Understanding how crowd investors adopt these different approaches provides valuable insights on the mix of strategies and emotions that drive investment decisions in the context of sustainable ventures. Thereby, this study enhances our understanding of the mixed investor motives at the individual level of analysis (e.g., Dinh et al., 2024). By revealing investors’considerations with regard to their decision making, we extend the findings from the emerging literature on return-oriented crowdlending (e.g., Penz et al., 2022;V´ asquez-Ord´ o˜ nez et al., 2023), while also adding to the broader debate on the potentially conflicting nature of investor decisions in the sustainability context (e. g., Agrawal and Hockerts, 2019;Richardson and Cragg, 2010). Third, the insights of this study advance our understanding of how crowdlending can help overcome the financing constraints of sustainable ventures by reaching and involving a heterogeneously motivated crowd (e.g., H¨ orisch, 2019;Vasileiadou et al., 2016).We reveal that investors in return-oriented crowdlending seem to adopt charitable considerations when driven more by otherthan self-directed motives. This differentiates crowdlending from other return-oriented funding options, such as equity-based crowdfunding, business angels, or sustainable venture capital (e.g., Bocken, 2015), which involve a larger proportion of professional investors who ultimately seek financial returns (e.g., Block et al., 2021;Bocken, 2015;Vismara, 2019). Finally, our study also provides practical insights. Specialized crowdlending platforms and sustainable entrepreneurs can use our findings to enhance the engagement and retention of nonprofessional investors, thereby maximizing the potential of this financing option for sustainable ventures (Cumming et al., 2021;Siebeneicher and Bock, 2022). Moreover, a deeper understanding of investor motives can inform policymakers and institutions that support and incentivize 2 The financial return rate offered on bettervest averages around 7.37 % (Status: August 2021, https://www.bettervest.com/de/projekt-statistik, accessed on December 13, 2023). J.M. Dinh et al. Technological Forecasting & Social Change 207 (2024) 123584 3 sustainability-oriented crowdfunding, thus developing mechanisms and policies to create a more conducive environment for sustainable development at large (Allison et al., 2022;Cumming et al., 2021). 2. Literature background 2.1. Crowdlending for sustainable ventures Crowdfunding describes the mechanism of pooling smaller capital amounts from a large group of individuals to fund projects through internet platforms (Block et al., 2018;Short et al., 2017). Sustainable ventures frequently encounter financial hurdles as they strive to simultaneously pursue both financial and social/ecological goals, which can deter traditional profit-oriented investors. In this regard, crowdfunding represents an attractive fundraising alternative to traditional entrepreneurial finance (Calic and Mosakowski, 2016). In the case of lendingbased crowdfunding (crowdlending), individual investors grant small loans to entrepreneurs and receive their investments back if the projects are successfully implemented (Block et al., 2018). Literature distinguishes between two types of crowdlending platforms: prosocial and return-oriented (Short et al., 2017). In prosocial crowdlending, only the invested amount is returned to investors without any interest payments (Allison et al., 2013). In return-oriented crowdlending, investors earn interest on their invested capital and therefore expect financial returns in addition to repayment of the principal (H¨ orisch and Tenner, 2020). So far, research on crowdfunding for sustainable ventures has predominantly focused on crowdfunding forms without financial returns, that is, donation-based crowdfunding (e.g., Gleasure and Feller, 2016; Logue and Grimes, 2022), reward-based crowdfunding (e.g., Calic and Mosakowski, 2016;Otte and Maehle, 2022) which is often pre-selling or prosocial crowdlending (e.g., Anglin et al., 2020;Luo et al., 2022). In comparison, return-oriented crowdlending has received less attention in the sustainability context (H¨ orisch, 2019). Nonetheless, taking into account the large volume of capital raised through crowdlending within the European Union 3 and thus its practical relevance (Block et al., 2018), it is essential to comprehend dynamics and mechanisms of returnoriented crowdlending for unlocking its potential to attract a broader crowd of investors to foster the development of sustainable ventures. Previous quantitative studies have analyzed how campaign attributes impact crowd investor decisions by predominantly investigating data from platforms. For example, existing crowdfunding studies indicate that ventures’sustainability-oriented narratives or framing can impact investor decisions (e.g., Moss et al., 2018). However, due to the limited public availability of individual-level information about investors on crowdfunding platforms (Pierrakis, 2019), research on investors’participation motivations remains scarce. In this regard, Gerber and Hui (2013) qualitatively reveal that in reward-based crowdfunding backers are not only motivated by rewards, but also by helping the entrepreneurs, interacting in communities or contributing to product design. Further studies based on primary data explore motivations in donation-based crowdfunding, where backers are driven by the desire to help others related to charitable and philanthropic causes (e.g., Bagheri et al., 2019;Chen et al., 2021;Choy and Schlagwein, 2016). Relying on semi-structured interviews with crowdfunding stakeholders, Mc Laren and Baldegger (2021) compare different crowdfunding forms and state that, in contrast to donationand reward-based crowdfunding, financial factors are relevant in the lending and equity context, while environmental and social factors have little to no relevance. Hence, assuming that crowd investors approach crowdlending participation with a similar mentality as retail investors, the findings of previous research cannot be directly transferred to return-oriented crowdlending (Mollick, 2014; Vasileiadou et al., 2016). 2.2. The motivation of crowd investors Motivation refers to the extent to which people are induced to engage in behavior through particular drivers (Deci and Ryan, 2012;Deci et al., 1991). According to cognitive evaluation and self-determination theory, motivation is categorized into extrinsic and intrinsic motives (Deci and Ryan, 1985). In line with these theories, intrinsically driven motives stem from the psychological gains of performing an action, whereas extrinsically driven motives are connected to an external outcome, such as receiving a (monetary) reward or some form of external recognition or feedback (Allison et al., 2015;Bagheri et al., 2019;Ryan and Deci, 2000). In this context, Allison et al. (2015), based on an analysis of campaign rhetoric, emphasize the relevance of intrinsic factors, such as human interest, for crowd investor decisions. They conclude that investors in prosocial crowdlending are dominantly driven by altruism (Allison et al., 2015). Other crowdfunding studies, in contrast, suggest that crowd investor decisions are primarily motivated by extrinsic factors, such as product rewards in reward-based crowdfunding, or financial returns in equity-based crowdfunding (e.g., Cholakova and Clarysse, 2015;Vismara, 2019). Such a distinction between financial and nonfinancial motives is common in the crowdfunding literature (Berns et al., 2020) because it helps researchers to understand the complex interplay between motivating factors. Further existing crowdfunding studies focusing on motivation delve into self-directed and other-directed motives (e.g., Hashinaga et al., 2023;Zhang and Chen, 2019). These studies often refer to the concepts of egoistic and/or altruistic motives, which correspond to the orientations either directed toward the self or toward others (Zhang and Chen, 2019). In this regard, self-directed motivation is associated with a benefit for the individuals themselves linked to individual goals and standards, whereas other-directed motivation is associated with a benefit for others, such as society or the community, linked to social interactions or social norms (e.g., Hashinaga et al., 2023;White and Peloza, 2009). For example, the findings of Zhang and Chen (2019) reveal that self-directed motives exert a more pronounced positive influence than other-directed motives on the crowd investors’funding decision. In the realm of sustainability-oriented crowdfunding, Hashinaga et al. (2023) observe a greater influence of other-directed motives over self-directed motives on individuals’willingness to participate in crowdfunding, while also noting that motivational factors may vary in diverse socioeconomic contexts and cultures within different countries. Return-oriented crowdfunding forms are assumed to attract growthoriented investors who seek financial gains (e.g., Bento et al., 2019a; Nitani et al., 2019;Vasileiadou et al., 2016) and act in a way to maximize their financial returns (Dorfleitner et al., 2021;Nitani et al., 2019). In this respect, previous studies have stressed the relevance of factors such as interest rates, risks, and market conditions for driving crowd investor behavior (e.g., Bento et al., 2019a;Penz et al., 2022;Pierrakis, 2019). Slimane and Rousseau (2020), for example, compare the behavior of crowd investors to that of traditional banks, which primarily seek a solid return on investment (ROI). In contrast, H¨ orisch and Tenner (2020) argue that crowdfunding campaigns’environmental sustainability orientation may positively influence funding success, even in a context where financial incentives exist. Hence, literature has presented partly contradictory arguments concerning the motives of crowd investors in the return-oriented crowdlending context (e.g., Caputo et al., 2022;Mendoza et al., 2023). In addition, scholars argue that financial returns may crowd out the intrinsic motivation of investors in the context of return-oriented crowdfunding (e.g., Kollenda, 2022;Mendoza et al., 2023). For example, the quantitative study by Kollenda (2022) suggests that the expectation of financial gains potentially diminishes the effect of social impact in crowdlending decisions. These observations underscore the relevance of analyzing the 3 In 2015, € 3.2 billion was raised from the crowd through loans in the European Union (see European Commission, 2016). https://finance.ec.europa. eu/document/download/a1a70784-607a-4ca2-ad00-110eb692b93b_en?fi lename=crowdfunding-report-03052016_en.pdf, accessed on May 19, 2024. J.M. Dinh et al. Technological Forecasting & Social Change 207 (2024) 123584 4 granular composition of motives in return-oriented crowdlending and related mental linkages to crowd investors’decision-making deliberations. Given that crowdlending involves the risk of monetary loss for crowd investors (Bento et al., 2019a), it is important to grasp their considerations with regard to crowdlending outcomes. In addition, a deeper knowledge of motives is useful for informing the platforms’ practices with regard to presenting and reporting on project implementation as well as social or environmental improvements, which are considered especially relevant for sustainable ventures (H¨ orisch, 2019). Therefore, the present study uses a qualitative approach to develop a model of how investor participation motives may shape considerations in the decision-making process, while providing a comprehensive picture of investor motives in return-oriented crowdlending. 3. Methodology and research context 3.1. Semi-structured interviews Qualitative analyses can help scholars to gain a deeper understanding of the motivations of crowd investors and provide insights into their decision-making processes, contributing to a more nuanced view of return-oriented crowdlending in the context of sustainability. Thus, this research form is particularly suitable to answer “why”and “how” questions related to phenomena that are shaped by contextual factors (Gioia et al., 2013;Huy et al., 2014), such as prevalent societal problems or personal reasons of individuals (see, e.g., Mittermaier et al., 2021). In particular, qualitative research allows the exploration of the true complexities of motivations (Bagheri et al., 2019;Brem et al., 2019;Gerber and Hui, 2013), taking into account contextual factors such as crowd investors’personal circumstances, for example, their living and professional situations, or perceived societal and environmental issues. While existing research highlights the relevance of early studies on crowd investor motivations, it so far offers limited in-depth insights from the investor perspective to adequately answer the research question of this study (e.g., Cox et al., 2022;Tenner and H¨ orisch, 2021;Yoo et al., 2023). We base our qualitative research on semi-structured interviews with actual investors. Specifically, we examine why crowd investors participate in crowdlending for sustainability ventures and how these motives may shape their outcome considerations. To capture both the initial investor motivations and their considerations regarding the possible outcomes of their participation in crowdlending, we structured the interview content as follows: (1) initial interest and engagement in participating in crowdlending for sustainable ventures (e.g., how the participant became involved in investing in young companies with social and/or environmental goals via crowdlending), and (2) individual approach to funding decisions considering potential crowdlending outcomes (e.g., the relevant decision-making factors and considerations when financing sustainable projects). The interview guideline involved a series of open-ended questions to enable a candid conversation with the interviewees (see Appendix). Throughout the data collection process, this interview guideline was slightly adjusted and expanded by building on prior observations (Gioia et al., 2013;Glaser and Strauss, 1967;Strauss and Corbin, 1998).In addition to the opening and ending questions, the guideline initially included seven main questions, which were increased to nine during the data collection process. We uncovered two additional questions in the initial interviews and added them to the guideline to reflect the structured follow-up inquiries on the multifaceted nature of initial participant engagement. As we followed a semistructured approach, the structured main questions were expanded by follow-up questions based on the narratives of individual interviewees to gain an in-depth perspective (Helfferich, 2011;Rubin and Rubin, 2005). In addition, interviewees were encouraged to provide any emergent narrative description that they felt was relevant in relation to the questions. Interviews were recorded with a voice recorder and transcribed for analysis. Finally, they were scheduled and conducted until the authors believed that theoretical saturation was sufficient to develop the characteristics of the categories (Glaser and Strauss, 1967). 3.2. Sample selection and data collection Our study was conducted in cooperation with the German-based return-oriented crowdlending platform bettervest, which is listed among the top 10 crowdfunding platforms specialized in financing renewable energy projects (e.g., solar, wind, and hydroelectric power) worldwide (Slimane and Rousseau, 2020;Cogan et al., 2023) and quantitatively measures the impact of these in terms of total carbon dioxide (CO 2 ) reduction. The platform, founded in 2012, offers an average financial return rate of 7.37 % with a project duration of typically between 3 and 8 years (average: 6.3 years) and minimum investment amounts starting at € 50 4 (bettervest, 2023), having achieved a total investment volume of roughly 16 million Euro in over 100 projects in 20 different countries as of August 2021. 5 With over 10 years of market experience since its establishment in 2012, bettervest offers a robust foundation for our study. Additionally, due to its central location within Europe, the German market can be viewed as indicative of other neighboring European countries (Berger et al., 2015;H¨ orisch and Tenner, 2020). Primarily addressing private investors, bettervest offers the opportunity to financially benefit from investments in ecologically and socially sustainable projects with an increasing focus on the African market. For example, one project distributes solar home systems to Kenyan families, offering them sustainable and cost-effective electricity alternatives while eliminating harmful kerosene lamps and candles. This project not only contributes to climate protection by reducing carbon emissions, but also empowers economically disadvantaged families by acting as a credit agency. The funding goal of the project amounted to € 323,500 and was nearly reached with € 316,850 collected from 393 investors. 6 The annual return rate was stated as 8 % with a project duration of 5 years. The project description includes two presentation videos showcasing the company, along with comprehensive details on the project’s background, repayment structure, social and environmental impacts, as well as financial information regarding the business model (see Fig. A1 in the Appendix for a visual excerpt of the project description on the crowdlending platform). Other typical projects on bettervest include deploying photovoltaic systems, solar water heaters, solar water pumps, or clean cooking stoves in regions like Rwanda or Zambia. To facilitate partial repayment in the case of insolvencies, project investments are typically structured as special purpose vehicles (SPVs). In exchange for their intermediary services, the platform charges a periodic handling fee and a success-dependent commission. 7 By strategically approaching our sample from the platform bettervest, we aim to describe the particular subgroup of crowdlending investors with regard to the specific topic of how participation motivation shapes investor decision making (Neergaard, 2007, p. 264). Based on the method of purposeful sampling (Lincoln et al., 1985;Patton, 1990), we defined and followed specific characteristics to reach out to potential participants. As we were interested in the investors who fully recall their 4 The minimum investment amount has decreased to € 50 from the previously required € 250. 5 According to the project statistic of August 2021, of 102 projects, 76 held the status “currently repaying investors”, 16 had fully repaid investors, while 10 projects were bankrupt (i.e., insolvency proceedings). Therefore, this puts the failure rate at or above 9.8 % (since a percentage of the projects currently repaying their loans could cease repayment prior to the end of their respective loan timeframe). (https://www.bettervest.com/de/projekt-statistik, accessed on December 13, 2023). 6 https://www.bettervest.com/de/project/pawame-1 (accessed on May 5, 2024). 7 https://www.bettervest.com/en/2022/12/06/ausfallgarantie,https ://www.bettervest.com/de/intrasparenz-beim-crowdfunding (accessed on December 13, 2023). J.M. Dinh et al. Technological Forecasting & Social Change 207 (2024) 123584 5 crowdlending activity, we only approached active investors with two or more investments that had invested in a bettervest project within the last six months before the interviews. Following this procedure helped us to avoid or significantly reduce potential recall bias (i.e., incomplete or inaccurate recollections) because the closer in time the object of cognition, the less severe the recall bias is likely to be (Cassar, 2007). We approached a total of 130 investors in successive groups based on the recency of their investments, with a final response rate of approximately 14 %. The semi-random approach has advantages over simple snowball sampling often used in other studies, because we did not know the interviewees prior to approaching them, thus increasing the objectivity of the findings. To signal trust, investors were contacted via e-mail together with bettervest and asked whether they were interested in participating in the study. 8 As an incentive, bettervest offered participants a voucher for their next investment ( € 20 toward the minimum investment amount of € 100). Such participation incentives have been shown to improve engagement in consumer research studies (Keller et al., 2020). The semi-structured interviews were conducted by the first author between October 2021 and January 2022 and took place predominantly via telephone (14 of 18 interviews) or the digital conferencing tool Webex by Cisco Systems (4 of 18 interviews). The final dataset includes 18 interviews with a duration of 38 min on average, ranging from 24 to 60 min. In our study, we employed purposeful sampling to ensure the characteristics of participants closely mirrored those typically found in crowd investors (Neergaard, 2007). Thus, this method allowed us to select individuals whose sociodemographic characteristics and experiences are representative of the examined population. Table 1 provides an overview of the characteristics of each investor, demonstrating the investors’age, gender, and general investment experience, as well as crowdfunding experience. In our sample, 14 interviewees were male and the same number of interviewees were under the age of 50. Further, 15 interviewees had investment experience with stocks, funds, bonds, or other financial products before participating in crowdlending for sustainable ventures via bettervest or other platforms. The remaining three reported that they began their general investment activities around the same time as they began participating in crowdlending. According to their own recall and estimations, investors had approximately 17 years of investment experience on average before starting with crowdlending. In addition, seven respondents reported that they had additional experience with investing in crowdfunding before their crowdlending activities on bettervest. At the time of contact, the investors from our final sample had made between 2 and 61 crowdlending investments via bettervest. These sample characteristics represent typical sociodemographic characteristics of crowd investors as revealed in previous quantitative crowdfunding studies (e.g., Penz et al., 2022;Tenner and H¨ orisch, 2021). In addition, research has highlighted the relevant role of previous investment experience in the crowdfunding market (e.g., Kim and Viswanathan, 2019). Ultimately, the characteristics of the interviewees in our study were comparable to those in previous work and, thus, suitable for our analysis. 3.3. Data analysis Our initial analysis and coding process of the gathered interview data follows an inductive procedure, which is enriched with an abductive approach in a subsequent step to better comprehend how investors’ motives in return-oriented crowdlending may shape their decision making (for a similar analytical approach, see Farny et al., 2019). Such an analytical approach involves a dynamic iteration between data analysis and the emergence of theoretical constructs by further drawing inspiration from existing theory (e.g., Huy et al., 2014;Williams and Shepherd, 2016). In a first step, we implemented grounded theory in our analysis, because it is known to have several advantages for studying complex and dynamic phenomena like return-oriented crowdlending. For instance, it can identify the situated nature of knowledge and adapt to diverse phenomena or changes (Milliken, 2010). We used the software MAXQDA for our data analysis and followed an iterative technique based on constant comparison according to the principles of grounded theory (Glaser and Strauss, 1967). By employing the technique of constant comparison (Glaser and Strauss, 1967;Strauss and Corbin, 1998), the methodology of grounded theory generates insights from underlying data while increasing the rigor of qualitative studies as called for by Maula and Stam (2020). Thus, we first segmented the data into initial codes and then aimed to identify variations between the interviews. The identification of initial codes involved an open coding procedure of the underlying data that resulted in a list of first-order concepts related to the research question (Strauss and Corbin, 1998). Subsequently, we iteratively compared and contrasted the emerging themes in an ongoing process to aggregate similar concepts into a meaningful data structure of second-order themes and aggregated categories (Gioia et al., 2013; Strauss and Corbin, 1998). In a second step, we incorporated procedures from an abductive approach to achieve a valuable contribution to theory development (Vila-Henninger et al., 2024;Sætre and Van de Ven, 2021). More specifically, we further reviewed relevant literature on motivation to provide support for the reasoning of the derived themes and dimensions and to evaluate if any further concepts could be developed after the preliminary stages of analysis (e.g., Sætre and Van de Ven, 2021). In this process, the reviewed literature and existing theory on motivation in sustainability-oriented crowdfunding served as a lens for the classification of the emerged themes and categories (e.g., “compensate for their moral conscience”or “establish a personal connection”). Hence, the consideration of theoretical work concerning focus and drivers of motives arose from analyzing data and gaining emergent insights through an initially inductive coding procedure (see, e.g., Choy and Schlagwein, 2016), while the insights from previous studies on intrinsic and extrinsic drivers of motives (e.g., Alam and Campbell, 2012;Bagheri et al., 2019; Choy and Schlagwein, 2016) and self-directed and other-directed motives (e.g., Hashinaga et al., 2023;Zhang and Chen, 2019) inspired the further analysis of findings. Based on this, we developed a model to add further depth to the analysis of how motives can shape crowd investors’ decision making, advancing the discussion of the theoretical implications and contributions to existing literature in the field. 4. Results Our findings across the interviews revealed that the investors’ motivation to engage in crowdlending for sustainable ventures is multilayered and appears to be a combination of financial, personal, prosocial, and communal motives. Fig. 1 depicts the first-order concepts, second-order themes, and aggregated dimensions resulting from the analysis. Exemplary interviewee statements for the evolving themes and our inductive coding procedure are presented in Tables A1 through A4 in the Appendix. The identified themes and subthemes of our findings are interrelated rather than mutually exclusive, as is often the case in qualitative studies (Meng et al., 2022). The results of our analysis indicate that investor considerations about crowdlending outcomes are based on their weighting of the distinct motives. In the following, we first describe the results of our qualitative study in more detail, after which we provide insights into the role these motives play in the decision-making approach of crowd investors. 8 The authors received no financial compensation or other incentives from bettervest to conduct this study and cooperation on this study was limited to providing access to the platforms’investor pool for the purpose of conducting the interviews. J.M. Dinh et al. Technological Forecasting & Social Change 207 (2024) 123584 6 Table 1 Overview of interviews and characteristics of interviewees. ID Profession Education (degree) Prior investments Investment experience (years) Prior crowdfunding Age category (years) Gender Length (minutes) Date of interview 1 IT Manager Master’s Yes 5–10 Yes 30–39 M 24 21/10/2021 2 Property Manager Apprenticeship Yes 21–30 Yes 40–49 M 45 27/10/2021 3 Quality Manager Master’s Yes 5–10 No 20–29 M 29 29/10/2021 4 Public Administrator Master’s Yes 21–30 No 40–49 M 40 03/11/2021 5 Credit Analyst Apprentice-ship Yes 11–20 No 50–59 M 30 10/11/2021 6 Psychotherapist Master’s Yes 41–50 No 60–69 F 38 15/11/2021 7 Official Master’s Yes 21–30 Yes 50–59 M 51 16/11/2021 8 IT Administrator Master’s Yes 21–30 No 40–49 M 39 25/11/2021 9 Engineer Master’s Yes 11–20 No 40–49 M 30 01/12/2021 10 Sustainability Consultant Master’s No 0–4 Yes 30–39 F 42 07/12/2021 11 Consultant Master’s Yes 5–10 Yes 30–39 F 41 09/12/2021 12 Research Assistant PhD No 0–4 No 30–39 F 29 14/12/2021 13 Business IT Specialist Master’s Yes 21–30 Yes 50–59 M 60 13/01/2022 14 Marketing Manager Master’s Yes 11–20 No 40–49 M 28 18/01/2022 15 Research Assistant PhD Yes 11–20 No 30–39 M 34 18/01/2022 16 Research Assistant PhD Yes 11–20 Yes 30–39 M 43 24/01/2022 17 Software Engineer Master’s No 0–4 No 40–49 M 49 26/01/2022 18 Electrical Engineer Master’s Yes 11–20 No 40–49 M 29 28/01/2022 Note: M =Male, F =Female. Prior crowdfunding indicates additional experience on any type of crowdfunding platform, Master’s degree refers to any university degree as well as to Diploma holders before the Bologna Process. Dates are presented in the DD/MM/YYYY format. Fig. 1. Data structure of motives in return-oriented crowdlending. J.M. Dinh et al. Technological Forecasting & Social Change 207 (2024) 123584 7 4.1. Motives to engage in return-oriented crowdlending for sustainable ventures 4.1.1. Financial motives The investors we interviewed indicated that their engagement in crowdlending for sustainable ventures was tied to the basic idea of preserving or increasing their financial wealth (see Table A1 in the Appendix). Financial motives thus represent one of the main participation criteria that were consistent across all interviews. The majority of interviewees emphasized the desire to supplement or substitute traditional financial products and described looking for sustainabilityfocused options to invest in an alternative with potential financial returns. For most crowd investors, the initial impetus to participate in crowdlending for sustainable projects was to critically question traditional investment opportunities. For example, Investor 7 explained: “The first is to invest one’s money, one’s savings, in such a way that it has a chance of retaining its value in the long term or even growing. But above all, to ensure, so to speak, on the international financial markets that one does not contribute to financing the bad in the best case.” And Investor 16 stated: “Before that, I was also looking for forms of investment that moved away from the traditional bank account and, in some cases, invested in specific projects. The aim is to achieve a return, but also to create added value for society or, in my case, above all for the environment.” Comparing crowdlending with the economic appeal of financial products offered by traditional banks, the interviewees underlined the attractiveness of return rates in crowdlending. With respect to the increased risk, they stressed the practice of distributing small investment amounts across different sustainable crowdlending projects to diversify as broadly as possible. Most investors further indicated that they had experience with traditional investments as retail investors prior to participating in crowdlending for sustainable ventures and thus had an existing investment portfolio. In view of this, the interviewees considered crowdlending as a part of their overall investment strategy which, in most cases, also included traditional investment options such as stocks and shares. For example, Investor 13 stated that the share of alternative investments amounts to around 5 to 10 % of the overall portfolio. While for the majority of investors crowdlending accounts for a smaller share of the overall investment portfolio, some investors show tendencies to increasingly shift larger shares toward crowdlending. Hence, their focus on crowdlending in relation to their investment portfolio ranges from small to large. Further, Investor 11 explained: “Since I am employed and also earn a little money, I invest money. I have a relatively good knowledge and for me, crowdlending is more of a small […] addition to my profile.”In contrast, Investor 2 declared: “I’ve been trying to turn that around for two years. And I’m getting more and more money out of the things that are simply based on security and my financial advantage […].”All investors, however, stressed that at the given time they do not rely on the money they invest in crowdlending, so they have some leeway to make this type of investment with high returns and high risk. Actively comparing crowdlending with traditional investment options that claim to meet sustainability and financial criteria, investors perceived the ability to control the investment flow by directly selecting sustainable projects as another benefit of crowdlending. In contrast, when investing in large stock funds, for example, they would have to rely on the decisions of fund managers as the intermediaries. In this regard, one interviewee noted that crowdlending represents one of the few investment opportunities in the retail segment to “invest directly” (Investor 9) into projects of new ventures that create social and ecological value. Other investors highlighted the possibility of making a direct monetary contribution to physical “asset value”(Investor 7). Referring to the link between the investments and the projects, Investor 9 explained: “I have the possibility to influence that actually physically somewhere a solar plant is built, which ensures every year that hundreds of kilos of CO₂do not end up in the atmosphere. […] The money that goes into it ensures that these solar plants and so on are built there. This direct link to the individual project is what I invest in.” 4.1.2. Personal motives Second, we identified a range of personal motives related to individual perceptions, needs, and desires of the interviewed crowd investors (see Table A2 in the Appendix). Our study revealed that some investors were driven by their perceived need to compensate for their moral conscience, that is, their desire to compensate or counterbalance their bad conscience regarding their personal carbon footprint or their previous or current traditional investment activities. Referring to the personal “moral compass”, Investor 1 stated: “If I know I’m making money through the bad [companies] in the world because I’m investing, then somehow I have to create something good in return.”Further Investor 2 explained: “So I include that for myself in my CO₂calculator. It’s important to me that I’m definitely below the average European CO₂ footprint with my family.” Investors also expressed that they participate in crowdlending for sustainable ventures for hedonistic reasons related to their personal interests and joy. For instance, Investor 11 stated: “[…] I kind of do that a little bit besides for fun, to somehow make my portfolio a little bit more interesting.”Another described investing in crowdlending projects of sustainable projects as “adventurous”(Investor 15). In addition, crowd investors referred to their personal interest in specific project topics such as photovoltaic technology or certain project countries that were closely related to the sustainable ventures’field of activity. Relatedly, crowdlending investments in sustainable projects can be considered a substitute for the realization of own projects or entrepreneurial ventures that individuals would like to undertake but lack the time or opportunity to do so. Given that circumstances do not always allow individuals to launch or participate in sustainable projects on their own, crowdlending provides investors with the opportunity to contribute to the implementation of sustainable ventures and pursue their progress through their crowdlending investments instead. Investor 7 explained: “I would like to finance my own huge photovoltaic system someday. […] It would be my thing and it would have to function, then I would be an entrepreneur. But I haven’t managed to do that yet. And that’s why it’s also a bit of substitution via crowdfunding.” Other crowd investors stressed the desire to establish a personal connection with the project beneficiary or the crowdlending platform team. Building a relationship can create a feeling of trust and fulfill the needs of interpersonal contact and exchange of individual investors. As Investor 13 described: “We had such a nice little [project] where they said the kids can go to school or do homework longer because they just get light. And I actually wrote to the village elders [a message] and got feedback.” 4.1.3. Prosocial motives Third, we identified prosocial motives as another consistent motive referenced by all crowd investors interviewed. Prosocial motives revolve around the societal impact of crowdlending investments in sustainable ventures (see Table A3 in the Appendix). Having realized that monetary investments represent a “good lever”(Investor 4) to make a difference and create impact, crowd investors commonly emphasized the prosocial motive of advancing environmental and societal change. They, for example, stated that they promote change by fostering the shift to renewable energy around the globe or helping to improve the lives of people in the project country. With a focus on renewable energy, Investor 2 pointed out: J.M. Dinh et al. Technological Forecasting & Social Change 207 (2024) 123584 8 “It’s actually more about pushing forward the energy transition worldwide. […] And that’s what I’m trying to achieve through my volunteer work [...]. And through finances that are not invested in coal and fossil energy.” Further, Investor 3 highlighted: “[…] because of course I want my money to do something positive not only for me somewhere but also for the society or the population.”In addition, crowd investors stressed that they pursue sustainable values and beliefs through supporting sustainable ventures with their investments.They often understand sustainability and ecological awareness as guiding principles of their lives that are also reflected in other areas, such as their consumption behavior, and view their investment decisions as a way of fulfilling their civic responsibility. In this context, Investor 10 revealed: “Because at some point it became clear to me that my own consumption decisions are an important factor, not just my own ecological footprint.”Subsequently, Investor 10 added: “We have to use the power of the consumer, which goes beyond consumption, also in the investment decision for our leverage [where] it is actually much bigger.”In addition, Investor 11 clarified: “But for me, it’s actually also clear that I pay attention to social and ecological criteria in my investments because I do that usually in my own life now, that is, my lifestyle. And also at the ballot box, not only for me as a consumer or investor but actually also just as a citizen or political fellow citizen.” 4.1.4. Communal motives Fourth, the crowd investors in our sample referred to communal motives that were linked to their influence on communities. Similar to personal motives, communal motives seem to be rather based on individual desires of investors and appeared less consistently than financial and prosocial motives throughout the conducted interviews (see Table A4 in the Appendix). Investors who mentioned communal motives emphasized the motive of encouraging others to contribute to crowdlending. Some actively recommended crowdlending for sustainable ventures to their friends and acquaintances, while others aimed to become role models for others through their crowdlending activities. One investor referred to a desired “imitator effect”(5) to increase positive impact, while another investor in our study saw great potential in arousing the interest of other nonprofessional investors. In this context, Investor 4 described: “But if you look around now as an investor on the market in Germany about loans, there is as good as no interest for these. So some people might well come up with the idea of saying, okay, I’m going to invest in a solar project in an emerging country. And I think you need to encourage more people [...] to invest in such things.” Furthermore, investors stated that they can influence local communities by driving further implementation of renewable energy projects or stimulating imitation by local actors. As Investor 5 explained: “[…] and ultimately also to animate and also show there locally that a whole lot is possible in the area of renewable energies.”In addition, Investor 2 mentioned the importance of showing people in the region that “it is possible to work economically with such projects.”According to this investor, showing communities that the projects being implemented can function and yield profit may encourage the local expansion of similar projects. 4.2. Crowd investor considerations in return-oriented crowdlending The following stage of analysis revealed how the identified motives shape crowd investor decision making in return-oriented crowdlending for sustainable ventures and uncovered different considerations of crowdlending outcomes. The findings suggest that crowd investors in our sample appear to either emphasize or balance motives when forming their considerations regarding possible outcomes and potential financial losses in crowdlending. Tables A5 and A6 in the Appendix present further evidence of these results. Crowd investors who emphasized financial or personal motives reflected this emphasis in their dominant return considerations. They, for example, stated that “[…] having more than zero or minus [as an overall financial outcome from the investments]”(Investor 7) represented a prevailing goal for their investment in sustainable ventures. Investors with dominant return considerations referred typically to a strategic and long-term investment approach. Taking such a strategic perspective on crowdlending, Investor 1, for example, stated: “I realized that if I diversified broadly in crowdlending, I would get a roughly similar return. [...] So in principle, I can get the same return that I get from a fairly high-performing market-wide ETF (Exchange Traded Fund), but which is conventional.”Further, investors who emphasize financial or personal motives seem to base their crowdlending decisions rather on hard facts, such as project duration or refinancing modalities, and put additional effort into understanding the business model and calculations. In this regard, Investor 7 also added: “This is about money and not about very big emotions.”Hence, crowd investors with dominant return considerations tend to follow a strategy-based approach to decision making. In contrast, crowd investors who emphasized either communal or prosocial motives overall showed dominant charitable considerations. In this context, they highlighted the fact that the “incentive is rather the contribution [itself]”(Investor 12). In this regard, Investor 10 outlined: “[...] if the money was then completely gone, it would still be important to me that the investments had been made. And then […] I would also be satisfied with a purely nonfinancial return, [...], even if all the money was gone. But of course, that only works if the amounts are not that large. So that you just say, okay, otherwise, I just donated.” In addition, Investor 8 explained: “And even if it doesn’t lead to anything, it has at least led to something blossoming somewhere temporarily. And you never know what that will lead to. So it’s the butterfly effect. And somehow it’s still positive.” Therefore, investors focusing their decision making predominantly on charitable aspects appear to involve emotions in the decision-making process, relying on their gut feeling. In this context, Investor 6 described the decision-making approach in crowdlending as going “pretty much through the gut and less through the front brain.”Further, Investor 8 explained that it is “such a bit of feeling”and Investor 10 described: “I hesitate much less. […] As long as I somehow think that the principle essentially corresponds to my values […].”Hence, their approach appears to be more “spontaneous”(Investor 4) and follows “no professional strategy”(Investor 6). Thus, in contrast to the strategy-based approach, other investors showed a rather emotions-based approach to crowdlending decision making. However, the majority of investors in our sample explained that they would aim at least at the repayment of the initially invested amount and thus accept receiving no financial returns on their investment. As Investor 2 emphasized: “The main goal is to not make a big loss.”In addition, Investor 3 noted: “First of all, it is important to me that I get my invested amount back at the end. And I see this interest payment as a benefit for me for the time being.”Regarding their crowdlending decisions, the majority of investors in our sample engaged in a blended approach in their decision making, involving a mix of both strategybased as well as emotion-based elements. 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Jeannette Mai Dinh is a third year PhD candidate at the Manchot Graduate School for the Competitiveness of Young Firms of the University of Düsseldorf, Germany. Her research interests include crowdfunding and sustainability. Her work has been published in the Journal of Cleaner Production and in the proceedings of international conferences. She is also Senior Marketing and Sales Manager at Sunhat, a sustainability-focused software start-up based in Germany. E-mail: [email protected] Andrew Isaak is currently an Assistant Professor at the Heinrich-Heine University of Düsseldorf (Germany) and transitioning to the Vienna University of Economics and Business (Austria). His research focuses on digital entrepreneurship, sustainable finance, open user innovation and family enterprises. His work has been published in outlets such as Journal of Business Research, Journal of Behavioural and Experimental Economics,Journal of Cleaner Production, Journal of Small Business Management and in the Academy of Management Best Paper Proceedings. He also serves on the Editorial Review Board of Information Systems Journal and on the Supervisory Board of the Startup Certiff b.V. (Netherlands). Email: [email protected] Yasmine Yahyaoui is a Postdoctoral Researcher at the University of Bayreuth, Germany. Her research investigates challenges and opportunities in social ventures and (social) entrepreneurial teams. More specifically, she explores research questions centering around deep-level characteristics and psychological well-being in (social) entrepreneurship. Her work has been published in Nonprofit Management and Leadership, Frontiers of Entrepreneurship Research, and in the Academy of Management Proceedings. E-mail: yasmine.yahya [email protected] J.M. Dinh et al.