Innovation of crowdfunding - Essay Example

Crowdfunding, as a process, has a series of unique features. For this reason, the specific process is considered to meet the requirements of innovation. However, a carefully review of the characteristics of this process reveals similarities to an existing framework/ idea: the crowdsourcing, a term denoting ‘the use of crowd to obtain ideas, feedback and solutions in regard to corporate activities’ (Danmayr, 2013, p.4). In addition, before crowdfunding creative projects were funded using ‘traditional funding methods, such as self-financing or bank-financing’ (Metzler, 2011, p.4). In this context it could be supported that crowdfunding is a process that has replaced traditional financing schemes, especially in regard to projects of the creative sector.

As of the innovative character of crowdfunding reference should be made to the following fact: crowdfunding seems to meet all the criteria used for defining a process as innovative. However, problem could possibly appear when trying to categorise crowdfunding as innovation. Initially, crowdfunding could be possibly considered to be a radical innovation, as this type of innovation is explained further in the next sections. A series of studies in the literature seem to promote this view; the studies of Castaldo (2013) and Deffains-Crapsky and Sudolska (2014), as analyzed below, are examples of this approach.

However, most academic studies lead to another view: crowdfunding is rather an incremental innovation, i.e. an innovation based on existing technology. This study refers to crowdfunding as an incremental innovation. Relevant literature is presented in the Literature Review section for supporting the specific approach. In crowdfunding three types of participants can be identified: ‘the creators, the funders and the online platform’ (Danmayr, 2013, p.18). Crowdfunding involves in two, key,