Small beer? peer‐to‐peer lending in the craft beer sector

• Published date: 01 January 2019
• Author: Ciarán Mac an Bhaird,Robyn Owen,Juliette Wilson,Sarah Drakopoulou Dodd,Angelo Bisignano
• Date: 01 January 2019
• DOI: http://doi.org/10.1002/jsc.2246

RESEARCH ARTICLE

Small beer? Peer-to-peer lending in the craft beer sector

Ciarán Mac an Bhaird

1

| Robyn Owen

2

| Sarah Drakopoulou Dodd

3

| Juliette Wilson

3

|

Angelo Bisignano

4

1

Fiontar, Dublin City University, Dublin,

Ireland

2

Business School, Middlesex University,

London, United Kingdom

3

Hunter Centre for Entrepreneurship,

University of Strathclyde, Glasgow, United

Kingdom

4

Nottingham Business School, Nottingham

Trent University, Nottingham, United Kingdom

Correspondence

Ciarán Mac an Bhaird, Dublin City University,

Dublin, Ireland.

Email: ciaran.macanbhaird@dcu.ie

Abstract

Peer-to-peer lending has advantages of ease of access to finance, timely and efficient delivery

of funding and is particularly beneficial at a specific time in the lifecycle of the firm.

1|INTRODUCTION

The significant increase in provision and use of alternative sources of

finance, particularly crowdfunding, has been variously hailed as “trans-

forming”entrepreneurial finance, as “democratizing finance,”and as

“unleashing great economic p otential”(Vasileiadou, Huijben, & Raven,

2015). It is potentially revolutionary for young firms and startups at a

disadvantage in securing investment in the early stages of business

(Harrison, 2013). The concept of crowdfunding is not novel (Everett,

2014). Celebrated examples of early use include the financing of the

Statue of Liberty in New York and the funding of concerts and music

publications by Mozart and Beethoven (Hemer, 2011). Use of crowd-

funding has recently increased very rapidly (Moenninghoff & Wieandt,

2013), from a reported $880 millionin 2010 to an estimated $34 billion

in 2015 (Massolution, 2015), raisingthe question of whether this repre-

sents a transformational changein entrepreneurialfinance or whether it

is a passing fad(Harrison, 2013). The rapid increase in investmentactiv-

ity through crowdfunding has been expedited by the expansion of the

Internet andthe use of online platforms.This presents increasedfinanc-

ing options for small firms, which are important in ameliorating the

adverse effectsof pro-cyclical lendingobserved in private debt markets.

Academic studies have lagged the large increase in the number of

sources, types, and volume of alternative finance. The study of the

phenomenon has concentrated largely on dynamics of success and

failure (Mollick, 2014), geographical analysis (Agrawal, Catalini, &

Goldfarb, 2011; Kim & Hann, 2013), contractual mechanisms

(Hornuf & Schwienbacher, 2014b), historical aspects (Everett, 2014),

default risk (Everett, 2015), the role of platforms (Belleflamme & Lam-

bert, 2014a, 2014b), the influence of the banking system (Paulet &

Relano, 2017), transformation of the business angel market (Hornuf &

Schwienbacher, 2014a), disintermediation (Rubinton, 2011), cross-

country comparisons (Tuomi & Harrison, 2017), and theoretical

aspects (Belleflamme, Lambert, & Schwienbacher, 2014). The vast

majority of studies have concentrated on investors and intermediaries

(Moritz & Block, 2014), with surprisingly few studies related to capital

seekers or “creators.”This is a significant deficit in the literature, as

the potential for the use of a resource is largely dependent on the

response and intentions of potential consumers or users. It is some-

what surprising that these issues are ignored. Although motivations of

investors are important, from a sustainability, public policy, and mar-

kets perspective, the experiences and views of those using crowd-

funding are paramount. A number of studies have identified this gap

in the literature, including Moritz and Block (2014) and Bruton, Kha-

vul, Siegel, and Wright (2015). Questions identified by the latter

encompass a broad range of issues including substitution and comple-

mentarity effects, cognitive aspects, and social networking.

Our study addresses this research agenda by investigating the

experiences, motivations, and intentions of entrepreneurs who have

sought finance through crowdfunding campaigns. We do not examine

crowdfunding in isolation, rather we investigate the use of alternative

finance in relation to resourcing and resource requirements, based on

long-standing theoretical propositions in entrepreneurial finance. We

interview the principals in firms in the craft brewing sector that have

recently raised finance. This methodology is important as it facilitates

investigation of a number of issues not commonly addressed in

financing the small firm sector. The craft brewing sector was selected

JEL Classification Codes: G32, L11, L15, L21, L26.

DOI: 10.1002/jsc.2246

Strategic Change. 2019;28:59–68. wileyonlinelibrary.com/journal/jsc © 2019 John Wiley & Sons, Ltd. 59