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The Contribution of Crowdfunding Regulation to Cultural Entrepreneurship in a Supportive Ecosystem

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Cultural Initiatives for Sustainable Development

Part of the book series: Contributions to Management Science ((MANAGEMENT SC.))

Abstract

The rapid emergence of donation and reward crowdfunding for cultural and creative projects and ventures (CCCF) points to many benefits and barriers. Appreciating these benefits and barriers with a view of regulating crowdfunding’s operations and growth is central to promoting sustainable development and entrepreneurial processes. We first present and discuss the major benefits (lower transaction costs, broader geographic distribution of financing, better market research data, and, hence, higher odds of later commercializing the product and attracting more traditional venture capital, democratization, and cocreation and peer-to-peer innovation) and barriers (information asymmetries, moral hazard, favoring superstars, and discrimination). We explain CCCF’s main reasons for its untapped potential. A key role is played by national regulatory frameworks differently binding or supporting a cultural entrepreneurial ecosystem. We then outline the major areas over which regulatory action ought to be expected, including taxation and matching subsidies, consumer and investor protection, and information provision. As in most of these areas, public policy specific to CCCF is relatively underdeveloped, we discuss critical design features and identify how efficiency and equity might be affected by policy. We finally recommend key policy priorities toward a harmonized, balanced, and supportive regulation and suggest directions for future research in this emerging arena.

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Notes

  1. 1.

    Noticeably, the indirect intervention of US federal regulators on CCCF, leaving it to the state level, could be assimilated, to some extent, to the limited harmonization of the EU.

  2. 2.

    For a detailed comparison of US-EU CCCF regulation, please see Lazzaro and Noonan (2020).

  3. 3.

    Kickstarter now draws over 40% of its projects from outside of the US.

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Author information

Authors and Affiliations

  1. Business School for the Creative Industries, University for the Creative Arts, Epsom, Surrey, UK

    Elisabetta Lazzaro

  2. O’Neill School of Public and Environmental Affairs, Indiana University – Purdue University Indianapolis (IUPUI), Indianapolis, IN, USA

    Douglas Noonan

Authors
  1. Elisabetta Lazzaro
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  2. Douglas Noonan
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Correspondence to Elisabetta Lazzaro .

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Editors and Affiliations

  1. Department of Business Studies, Roma Tre University, Roma, Italy

    Paola Demartini , Lucia Marchegiani  & Michela Marchiori ,  & 

  2. Department of Mathematics, Computer Sciences and Economics, University of Basilicata, Potenza, Italy

    Giovanni Schiuma

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Lazzaro, E., Noonan, D. (2021). The Contribution of Crowdfunding Regulation to Cultural Entrepreneurship in a Supportive Ecosystem. In: Demartini, P., Marchegiani, L., Marchiori, M., Schiuma, G. (eds) Cultural Initiatives for Sustainable Development. Contributions to Management Science. Springer, Cham. https://doi.org/10.1007/978-3-030-65687-4_18

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