Can Non-Financial Performance Metrics Increase the Crowdfunding Success of Sustainable Enterprises? An Exploratory Experiment

Purpose: In this study, we aim to establish whether sustainable enterprises can increase their crowdfunding success by communicating non-financial performance (NFP) metrics that enhance different types of organizational legitimacy with investors in a crowdfunding market. Study design: We carried out an exploratory online incentivized experiment with investors of a crowdfunding platform to establish whether communicating NFP metrics of a venture affects different forms of legitimacy and therewith crowdfunding success (investment decision and amount). Findings: We show that higher perceived general organizational legitimacy and pragmatic legitimacy of a sustainable enterprise by investors is related to a higher incidence of positive investment decisions, but only pragmatic legitimacy increases the amount invested. Secondly, we find that NFP metrics do not directly increase the relative amount of positive investment decisions, but they do increase the average size of crowdfunding contributions towards sustainable enterprises of those positive investment decisions. Contributions: We show that quantifying and communicating NFP in the sustainable crowdfunding context increases the amount of resources mobilized, mainly through enhanced pragmatic and cognitive legitimacy. We show the importance of disentangling ‘crowdfunding success’ into a two-step decision process - investment decision and amount invested. Implications: Our results lead to practical implications for sustainable entrepreneurs and crowdfunding platforms in deciding how to communicate NFP to investors in crowdfunding markets.