Relationship Between Stakeholders And The Entrepreneur Essay

Relationship Between Stakeholders And The Entrepreneur Essay

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The easy and trustworthy nature of crowdfunding is good for enhancing the relationship between stakeholders and the entrepreneur[s]. This relationship is necessary if the business is going to grow and operate within the confines of trust and ethical behaviors. The relationship between the stakeholder and the entrepreneur is explained using the Stakeholder Theory. According to Freeman, stakeholder theory is one that underscores the significance of each stakeholder (employer, employee, shareholder, suppliers, customers, community and the environment) to an organization as opposed to the shareholder only, the manner in which they are affected from a moral and ethical perspective (Freeman, et al. 2010). An entrepreneur’s relationship with all stakeholder from the onset determines how successful he or she is in persuading them in promoting the project or idea. If successful from the onset, an entrepreneur will have to operate the business or project in an ethical way considering factors like economic, legal, philanthropic and environmental implications of their projects (Mansell 2013). Crowdfunding puts the investor and other stakeholders in direct relationship with the entrepreneur (creator) so that the former is able to track the entrepreneur’s progress and even assist them endorse their brands (for business investors) through their networks. Therefore, entrepreneurs should consider acknowledge the interests of each entity that has a stake in the project.
The whole idea of crowdfunding is dynamic, and as mentioned earlier, some studies focus on the motivation of financier in crowdfunding process. Innovation has a big part to play in the financing process, but this does not mean that it is the sole reason. Understanding some of the ...


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... may provide more than the necessary funds for entrepreneurs (Young 2013). This is because conventional funding sources such as banks and angel investors are limited sufficient funds based on the budget that is typically on the business plan. As for crowdfunding, there is a dilemma since financiers contribute the funds for myriad reasons, making it possible for entrepreneurs to be overfunded. The moral problem goes beyond overfunding and touches on the issue of information asymmetry where financiers are provided with little or inadequate information on the nature of the startup and valuation as they contribute their funds (Young 2013). Another pitfall for crowdfunding, especially for those who are motivated to gain equity, is that they do not have sufficient time to make the right investment judgment. This sometimes leads to overfunding or wrong investment.



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