The Role of Empathy in Crowdfunding Channel Platform

Abstract

Purpose: Crowdfunding can be a complementary channel in which start-ups or small companies can obtain financial help and take advantage of exploiting the online potential. To activate crowdfunding, it is necessary to consider a consumer's empathic responses. This article examines the role of empathy in the crowdfunding channel platform. We adopted the identification-commitment model to prove the role of empathy. Research design, data, and methodology: Participants were asked to read the charitable crowdfunding campaign. More than 300 young adults completed an online questionnaire and we analyzed it with structural equation modeling (SEM). To find out the role of empathy, we postulate several models which use empathy variable for different purposes. Results: We conclude that empathy has the role of moderator in the identification-commitment model. This means the high empathic response helped the relationship between identification and commitment. However, low empathic response can negatively influence the process of identification to commitment. Conclusions: This study found that virtual empathy is positively related to crowdfunding participation if we can elevate empathy in the crowdfunding channel platform. The findings also show that we need to consider empathic response when we want to raise funds for specific projects such as protecting the natural environment.

1. Introduction

There are hundreds of organizations for an environmental charity and most major non-profits have been investigated and reviewed by a few major organizations including Charity Navigator, Charity Watch. But if you are considering supporting a specific organization, it is difficult to choose the right one. An environmental charity can be defined as an open call for monetary donations with missions from animal welfare to climate change-related to environmental issues. These days there is an increase in other forms of charity based on crowdfunding. For example, the “Save Australia‟s Heritage From Industrial Pollution” campaign raised a massive $86,300 to protect the world‟s largest collection of rock art in the Murujuja National Park. Charitable crowdfunding is an open call using the Internet for monetary donations to realize specific charity needs (Liu, Suh, & Wagner, 2018). Charitable crowdfunding platforms, such as Chuffed, Indiegogo provide chances for people to launch a project and request a certain amount of money that needs to be raised in a specified duration (Mollick 2018). Charitable crowdfunding is beneficial to society because it can raise money within a short period, and provide timely support to help people who want to take action on issues they care about. Charitable behavior can be a helping behavior based on altruism. According to Batson‟s empathy-altruism hypothesis, purely altruistic action can occur reliably, provided that it is preceded by a specific psychological state called empathic concern (Batson et al., 1991). This can be defined as an emotional reaction described by such feelings as compassion, benevolence, sympathy (Cialdini et al., 1997). With the development of the online environment, emotion touched cyber relationships in online communities are increasingly important these days. Researchers have found that funders are stimulated to donate money because of their feelings of empathy toward specific crowdfunding campaigns.

According to the relationship marketing researches, commitment played an important role in building strong relationships that contribute to marketing outcomes like loyalty (Dagger et al., 2011). This means if marketers can let donors feel loyalty, commitment to the project or its website, it will be easier for charitable donation communities to get fund. Building a dyadic relationship is dependent on the perception of the other‟s commitment to the relationship (Geyskens et al., 1996). This means that one's desire to build a strong partnership with the other side relies on the partner's willingness to make a commit. In charitable donations, it is important to make a connection between donors and fundraisers in the platform.

Researchers have established a strong link between identification and commitment (Bergami & Bagozzi, 2002). Besides, identification-based commitment is likely to be expressed through sustained preference. This means that positive word of mouth is a key consequence of the identification – commitment process.

Although this identification-commitment model explains much of the variance in the online relationship, there seems to be one important factor that has been overlooked or has received inadequate attention. It is empathy and it is important for donation-related behavior in the online platform.

Empathy has been recognized as a critical factor and was treated as an antecedent of identification. Markovic et al. (2018) showed that employee‟ empathy positively influences customer affective commitment. They also claimed that customer loyalty and commitment result in positive word of mouth.

However, it is hard to find research that considers empathy in the identification–commitment process in the online environment. Besides most previous research has only investigated employee–company relationships. Although these researches have offered considerable insight for online marketing managers and academics, there is little systematic research examining the relationship in the charitable crowdfunding websites and other constructs that impact to a relationship.

One of the goals of our study was to find the causal relationship between online identification – commitment, by considering the effect of empathy on it. We postulate that empathy has an important role in the motivation of participation in the charitable crowdfunding process. The research question is like this. If people feel empathy in the online environment, do people like to support the charitable crowdfunding more? If this is true, what kind of role does empathy have to support the identification and commitment model?

2. Prior Research and Theoretical Background

Many studies claimed a positive relationship between identification and commitment construct and tried to explain the underlying mechanism and consequences of commitment theory. Individuals who are loyal to an organization will adhere to activities that benefit the organization according to the social identity theory (Dutton & Dukerich 1991). Bhattacharya and Sen (2003) suggested that identification leads to commitment. Identification based commitment tend to be conveyed through long-term preference and loyalty is a key consequence of the identification process. In online, people like to join online communities including SNS. Identification with other online members in the same community makes a strong bond of trust and leading to a commitment to the community with long-term relationships. From previous research we already learned that one‟s associal with a group is managed by an emotional attachment or affective connection to the group (Bagozzi & Dholakia 2002, Bergami & Bagozzi 2000). Identification also builds confidence and trust which contributes to community engagement and long-term relationships.

2.1. Identification-Commitment Model in Environmental Crowdfunding

To date, people understand that environmental issues are their problem to solve. Identification can be extended to the environment–human identification, nature-environment relationship with the human. The central outcome of this study is the identification and validation of a provisional model of the differentiated structure of the online commitment model. Identification causes people to become emotionally committed to the organization and take care of it, which motivates them to contribute to achieving their goals, to communicate favorably with members of the organization. Lots of research has suggested that among organizational members, loyalty is a key consequence of identification.

Morgan and Hunt (1994) insisted that trust and commitment are both keys to predicting exchange performance, whereas others suggest that either trust or commitment alone is the critically related construct. Commitment is “an enduring desire to maintain a valued relationship” (Moorman et al., 1992), Gundlach, Achrol, and Mentzer (1995) propose commitment as the “essential ingredient for successful long-term relationships,” and Morgan and Hunt (1994) suggest “commitment among exchange partners as key to achieving valuable outcomes.”, Palmatier et al. (2006) show commitment mediates the effect of the relationship marketing effort on outcomes. Relationship commitment has been found to effectively reflect consumers‟ perceptions of relationship quality (Dorsch, Swanson, & Kelley, 1998). Rabinovich et al., (2009) deal with goal commitment to the participation of environmental charity. Turner et al. (2001) claimed that a charity is value-driven by moral leaders rather than the shareholders, since profit is not the motivation. Membership is often focused on a contribution to the work of the charity.

Therefore, we expect a positive relationship between online identification – online commitment.

H1: In the online environment, if there is higher identification between the donor and environmental charity crowdfunding campaign, the online commitment between them will be strengthened.

2.2. Empathy

Empathy is an important variable that becomes a focus of study for social psychologists (Davis, 1994). Empathy is a complex socio-psychological construct. It can be defined as “the cognitive awareness of another person‟s internal states, that is, his thoughts, feelings, perceptions, and intentions” (Ickes 1997). Katz (1963) who was associated with empathy, unveils that the most important thing when it comes to defining and conceptualizing empathy is the process of putting oneself in another's place. Batson et al. (1997) found that feeling for a member of a stigmatized group improves feelings toward the group. We can think of empathy as a source of attitude change.

Three components of empathy are identified by social psychologists. First, the precedent is the self-consideration of the empathizer, the intent and affective state of the target, and the situation at hand. Second, the assessment consists of evaluating the antecedent. Third, empathetic outcomes include affective and non-affective outcomes (Davis 1994). Empathy can be defined as the understanding of and sharing in another‟s emotional state or context (Cohen & Strayer, 1996), as well as the behavior of comforting others (Caplan & Turner, 2007). Research showed that it is possible to have empathy through computer-mediated communication (Carrier et al., 2015). In this research, we investigated what is the relationship between identification and empathy. Gladstein (1983) defined empathy as a multistage interpersonal process (including emotional contagion, identification, and role-taking). Preston and Waal (2002) broadly defined empathy as a concept that includes cognitive empathy, recognition, and emotional contagion, and usually involves understanding others ' internal states. Classic research showed that perceived similarity increases empathic emotion. Krebs (1975) and Bornemark (2014) related empathy to "a feeling of oneness" and "mutual identification”. But a lot of research did not study the identification process related to empathy. In this view, empathy can be conceptualized as a trait. With these research results, we concluded that we should find out empathy‟s role in the online charity crowdfunding platform.

Empathy is a key component of social interaction (Hoffman, 2001). About 28.7% of positive word of mouth came from altruistic, helping behavior. Therefore, we can assume that empathy can be an antecedent of word of mouth and it is good for attracting potential donors, make it possible to accomplish funding goals, and evoke loyalty to the online platform. Therefore, we can expect that empathy will play a specific role in the identification–commitment model of charity crowdfunding.

H2: In the online environment, empathy has a role in the identification-commitment model.

3. Empirical Study

3.1. Procedure

For this study, participants were asked to log on to the online survey site Survey Monkey. The audience were selected who have experience of charity in the online environment. Then the researcher asked them to select a specific charity platform website that is most familiar to them. After that, participants were asked to read the brief cover story regarding the charitable crowdfunding campaign called “Everyday Plastic: What we throw away and where it goes”. We assumed that this project was presented on their favorite charity crowdfunding platform (see Appendix 1). The cover story contained manipulations of empathy. Regarding the manipulation of empathy, research on empathy and empathy-altruism hypothesis by Batson et al. (1991) has suggested that two conditions are necessary and sufficient for the creation of empathy: perception of another person as in need and adoption of the other‟s perspective. First, participants in the survey read the fundraiser‟s note from the person‟s perspective, asked to imagine how the fundraiser felt. The project was selected from real charitable fundraising projects. For this survey, three hundred eleven people answered survey questions. Young people can be a good sample because we have to target people who were interested in social marketing and millennials are usually interested in cause-related marketing. The survey was subsequently pre-tested by 30 master students for content validity. We use structural equation modeling (SEM), which is a multivariate statistical technique for structural theory. SEM has been a popular statistical method in psychology and social sciences research. Among the approaches adopted for this methodology, the model comparison is a highly useful strategy (MacCallum, 2003).

3.2. Measurement Instruments

When possible, we adopted measurement scales from previous research. Table 1 lists the reliability measurements and significant results. Based on confirmatory factor analysis, the composite reliabilities and average variance extracted (AVE) indicate construct reliability and validity. They exceed the commonly used indices of 0.6 and 0.5 All Cronbach‟s α and composite reliability were over 0.7, the cut-off for research. The AVE of each construct was over 0.5.

Table 1: Mean, standard deviation, Cronbach’s α, AVE, and CR of the constructs

3.3. Result

The hypotheses were tested using Structural Equation Modeling (SEM). IBM SPSS statistics 23, AMOS 23 were used. Table 2 shows the demographics of the subjects. A two-step model-building approach was used, in which the confirmatory factor models were tested before testing the structural model. The maximum likelihood (ML) estimation method, which has desirable asymptotic properties, was used.

Table 2: Demographic background of the subject(N=311)

Although their validity had been acquired in former studies, we retested the validity of the four construct – identification, commitment, empathy, and WOM. A confirmatory factor analysis(CFA) was conducted for all constructs.

Many goodness-of-fit criteria can be formulated to assess an acceptable model fit. Bentler (1992) suggested that the comparative fit index (CFI) and normed fit index (NFI) are the preferred measures. The final list of retained items is

given in Table 3. The final CFA results are acceptable (Chi-square α = 50.765 , CFI =0.989 , NFI=0.973). In order to check discriminant validity, every pair of the four constructs was united(setting covariance =1) and tested if the change in chi-square was statistically significant. The chi-square of the original model was significantly (p < 0.01) smaller than any possible union of any two constructs. As summarized in Table 3, Table 4, the model showed a very good fit as most fit indices were in the desirable range.

Table 3: Confirmatory factor analysis fitness

Table 4: Correlation matrix of the constructs

Empathy has often been used as an antecedent of identification or helping behavior like WOM in many previous studies. The five models were tested by running different SEM models as shown in Table 5. In this research, empathy is modeled as an antecedent or a moderating variable. Based on the description of the measurement model, this study proposes a hypothetical route relation approach. In Figure 1, a competing model strategy explains five models, from which we develop the best fitting model. Their normed fit index (NFI), goodness-of-fit index (GFI), and adjusted goodness-of-fit index (AGFI) are greater than 0.9. Their root means square error of approximation (RMSEA) is less than 0.08, which suggests that the Model V is better options than the others.

Table 5: Model Comparison

Figure 1 : Model Comparison

The models were :

1) Model Ⅰ: Original model(Fig. 1(a)).

2) Model Ⅱ: Empathy was modeled as an antecedent of identification (Fig. 1(b)).

3) Model Ⅲ: Empathy was modeled as an antecedent of commitment (Fig. 1(c)).

4) Model Ⅳ: Empathy was modeled as a mediator of the identification-commitment relationship (Fig. 1(d)).

5) Model Ⅴ: Empathy was modeled as a moderating variable (Model V-1 and V-2). The sample was divided into a high empathic group and a low empathic group and the original model, the same as model I, was run for each group (Fig. 1(e)).

Following Joreskog and Sorbom (1996), this study selects six criteria for assessing model fitness. Models V has lower χ² and χ²/df values among the five models, indicating better fit.

For more accurate comparisons, the chi-square difference test was computed. The Δχ²/Δdf value for model II and model III was significant, which indicated that when the increase in χ² was added to the model exceeded the increase in d.f. The Δχ²/Δdf value for model IV was also large, although statistically insignificant.

Therefore, it could be concluded that model I was a better fit than model II, model III, and model IV. Model V had the same construct as the original model (model I), but it had different sample sizes because we divide it into two groups. Therefore, Model V could not be compared head to head with the original model (the value of Chi-square likelihood ratio statistics was directly dependent on the sample size). However, the value of chi-square dropped significantly, without sacrificing other statistics, when empathy was modeled as a moderating variable. Hence, it could be concluded that identification-commitment model was better explained when empathy was modeled as a moderating variable.

Therefore, it could be concluded that Model V was better fitted than other models

4. Discussion

4.1. Findings

There is a study that virtual empathy can exist among participants in online health support communities (Nambisan, 2011). Charitable crowdfunding can be successful if we can find the role of virtual empathy in the identification-commitment process. The present results show that empathy has a moderating role in the commitment model. There is a study that virtual empathy is weaker than real-world empathy, but virtual empathy can be a good trigger for loyalty in the charity crowdfunding websites. In a practical sense, marketers should concentrate on the emphatic response in dealing with online communication. They can communicate successfully by emphasizing empathy based on emotional attachment. In this study, we consider empathy as an important moderating variable. While analyzing the effect of the variables, this study also demonstrated a systematic manner of testing the moderating effect using SEM.

The purpose of this study was to examine the impact of empathy on the identification-commitment model. For this, an anonymous online survey was conducted with more than 300 young adult members of the millennial generation. The survey measured various constructs such as empathy, identification, commitment using a well-known scale. Concerning the purpose of this study, the analyses were designed to test the hypothesis that empathy will play a role in the charity crowdfunding platform. The major findings related to these analyses were like these. Empathy plays a moderator‟s role in the identification – commitment model.

This means that if empathy can be generated in the online platform, it will strengthen the relationship between identification and commitment. Hence, empathy can have a major role in the charity crowdfunding platform. If you are going to make a project of fundraising, empathy can lead to more commitment of people, thus increasing the chances of spreading word of mouth.

4.2. Limitation

Our study had several limitations due to the sampling methods and measurement. First, the participants were a student group in a university. This means that the sample was homogenous and they do not represent the real-world population. But the participants were appropriate for this study‟s purpose because they are more used to computer-mediated communication than other segments. Second, the empathy examined in this study was a one-dimensional approach but some researchers claimed that empathy should be treated as a multidimensional construct. Third, the subjects‟ familiarity with IT technology was not controlled. Therefore, it is possible that different levels of familiarity could result in different outcomes. Finally, it is required to consider the variety of constructs not limited to a small set of constructs.

4.3. Implications

The results of this research make a few key contributions. This study demonstrates that emotional state positively affects intention to donate. Empathy is an important construct in interpersonal communication. So far, the impact of empathy on identification-commitment in online textual communication has not been studied. Overall, our primary finding is that empathy is likely to serve as a moderate construct in the identification-commitment model.

This study showed that empathy has the role of moderator in the identification-commitment model. Empathy changes the effect of identification on the commitment process. It means that marketers should concentrate on „empathy‟ to grow positive word of mouth. This study also supports previous results from Liu, Shu, and Wagner (2018). They find that individuals‟ empathy and the perceived credibility of a charitable crowdfunding project are key determinants for their intention to donate in charitable crowdfunding. This study expands that computer-mediated interaction can elicit empathy. While previous research focused primarily on exploring why people participate in charitable crowdfunding, this study compares various models and finds its exact role with using identification-commitment theory.

Our result can serve to support managers in their decisions on how to set up a crowdfunding platform and its contents. The findings indicate that it should consider the empathic response in the project content.

5. Conclusions

Crowdfunding is quite attractive as consumers participate as producers. In recent years, many crowdfunding projects are emerging and diversifying. In this study, it was confirmed that empathy plays an important role in crowdfunding platforms.

Empathy can be reinforced with the perception of another person as in need and adoption of the other's perspective. As confirmed in the study, empathy increases the commitment to crowdfunding-related projects. Marketers planning crowdfunding in the future should come up with a plan to increase empathy in the structure and appeal of the message.

Appendixes