Characteristics of Validity for Research of Crowdfunding in a Global


Characteristicsof Validity for Research of Crowdfunding in a Global Environment

Characteristicsof Validity for Research of Crowdfunding in a Global Environment

Crowdfundinghas generated to become a popular process of business fundraising inthe current society due to the availability of virtual platformsoffered by the Internet. Campaigns to raise finances over theInternet continue to attract significant praise and research fromdiverse individuals. Non-profit and profitable organizations areutilizing the concept to raise funds in a virtual environment. Themodel requires proper preparation through strategic networks thatlead to the attainment of positive outcomes. Leadership in a virtualenvironment has necessitated stakeholders to adopt styles andpractices that enhance confidence, commitment, teamwork, and trust.Nonetheless, critics of the model remain skeptical about thesignificance of project quality in influencing the outcomes. In someinstances, crowdfunding has been ineffective in the selection orattraction of potential investors. Some critics consider that themodel is open to abuse and fraud.

Byresponding to quality signals, crowdfunding, just as it offersentrepreneurial capital, will reinforce the validity of its capacityto promote fundraising in a virtual environment. The backers need torespond to quality issues through appropriate examination of theinternal and external factors. It is also necessary to explore theopportunities and weaknesses in the concept. The paper seeks toexamine the characteristics of validity for research of crowdfundingin a global environment. In particular, the study will look into theinternal, external, and construct validity and their relationship tocrowdfunding. Addressing the threats and significance of thevalidity issues will be instrumental in understanding the bestapproaches when undertaking crowdfunding.


Characteristicsof External, Internal, and Construct Validity in Crowdfunding

Accordingto Coldwell and Herber (2014), validity in a research process is thedegree showing how the sampled subjects represent the actual contentunder study. When discussing research, many concepts are important toconsider, however the issue of validity is central to any solidmeasure and research design. The study will consider three validityissues, namely, internal, external, and construct. The accuracy ofthe data and relevance to the study conducted proves the validity ofthe research process. The principle is also established through theutilization of the data for the purposes the research was intended.The degree to which the results of a study are methodologically soundand free of confounds that may threaten internal validity is a vitalconsideration to research design and any interpretation of results.Developing stringent methods and strategies to strengthen internalvalidity is the best way for researchers to avoid misinterpretingdata. Looking at the consistency of the information is one of themeasures used by a researcher to confirm the reliability of thecollected and analyzed records. The methods have contributed positiveresults in other studies hence, have proven reliable.

Whetherone is undertaking qualitative or quantitative research, it isappropriate to examine the validity and reliability issues. Theinternal validity seeks to explore the possibility of getting thecorrect conclusions based on the available data. It tends to generatea link between the causes and effects. Mainly linked to quantitativeresearch and the internal validity ensures the researcher`sexperiment design utilizes the principle of causes and effects. Someof the risks related to internal validity include maturation,selection, and testing effects. In such instances, the risks emanatefrom unforeseen circumstances in the business environment (Coldwell &ampHerber, 2014). For purposes of the study, the global crowdfundingmarket is changing by the day. As such, it is possible to getconclusions on the risk of history likely to influence the outcomes.Many societies around the world are yet to develop legislations andpolicy documents to guide the process. Legislations are crucial inunderstanding the status of crowdfunding at any given time.Development of laws at the moment would have resultant effects on thevalidity of results in a study.


Theobjective of an investment manager is to identify factors that canaffect the performance of an organization in a given organization. Toachieve this goal, the managers utilize external validity, whichprimarily focuses on establishing whether the factors that influencethe good or poor performance of a team could be generalized todiverse factors such as certain time, individuals and settings. According to Oginni and Adesanya (2013), all successful businessesare interconnected and reliant on different factors, institutions,and variables. Furthermore, the researchers note, “Businessorganization exists and operates within an environment where there iscomplex interplay in terms of activities as well as networks of therelationship between and among human resources, material resourcesand other systems” (p. 146). Consequently, the business decisionsare dependent on an accurate evaluation of the environment, whichdetermines the problems, opportunities, and threats for a startupenterprise. For example, the performance of a business that issurrounded by several rival companies may fail to succeed despitehaving all the requirements needed to operate successfully.

Theway an organization relates to other businesses in the environmentdetermines its ability to relate to the clients, competitors andother factors that help it to adjust to its operation environment. Inthe views of DaSilva and Trkman (2014), a business model is one ofthe significant external validity characteristics that may influencethe success of an organization. The term ‘model’ refers to theapproach an organization utilizes in generating value for differentstakeholders. Crowdfunding entrepreneurs are interested in learninghow a startup intends to invest the capital raised, the expectedreturns, and the sustainability of the organization.

Businessesare classified as either small-scale or large-scale operations. Theamount of money injected in an enterprise determines itsgeneralization in its operation environment. DaSilva and Trkman(2014) also observe that the resources of an organization determineits success in the competitive environment. Nevertheless, thevalidity of the resources that help an enterprise to grow is bestdetermined by the transaction cost economics. This implies that oneneeds to calculate the difference between the input and the returnsgenerated from a business venture.


Inthe business environment, internal validity (IV) refers to themanagement efficiency, existence of precise operations guideline andthe ability to achieve change as per the independent variables asopposed to unrelated factors. In the views of Dereli (2015), IVmainly focuses on human capital. This implies that the businessdepends on the innovation of the people in charge. Investmentmanagers evaluating the eligibility of an organization incrowdfunding begins by assessing the history of an organization. Thepast of an organization can tell if an organization has thecombination of factors that are needed to help it thrive in acompetitive environment. In the case that a firm has a history ofoperating in a given environment for a long time, it proves thatindependent variables influence the actions that the businessmanagers have already considered.


Constructvalidity is the extent to which an instrument measures the subjectbeing studied or the degree to which the theoretical definitionsmatch the operational descriptions. Construct validity entails manycontexts. Some of these include external and internal validity. Bothof them offer different variables to which a certain subject can beevaluated. Construct validity can be used to measure many aspects,including crowdfunding (Boezeman, et al. 2015). The method can beused to measure the extent to which crowdfunding can be used tosource fund.

Whenyou compare and contrast external/ internal validity with constructvalidity about global crowdfunding, many differences can be noted.The major variables of crowdfunding include low costs and multiplefinanciers. The investors help to reduce the amount everyonecontributes. Previously, a small number of people contributed towardsfinancing a project, but they gave huge sums of money (Boezeman etal., 2015). The principle is used to measure the effect of the smallnumber of individuals to a project as compared to the alternativefinancing, which consists of several people contributing a littleamount each. When several people share the cost of a project acrossthe globe, its returns are also shared at the same score. Therefore,construct validity helps to measure the extent to which profits canbe maximized in crowdfunding (Boezeman et al., 2015).

Threatsto External and Construct Validity for Research of Crowdfunding

Thereexist several threats that affect the validity of either external orconstruct forms when undertaking research in crowdfunding within aglobal environment. To begin with, the external validity encounterschallenges due to reactive or interaction between the variables thatend up either increasing or reducing the subject’s sensitivity.Selection bias and experimental variable also affect the level ofresponsiveness. It is appropriate that the parameters used in thestudy on crowdfunding to assess the most critical parameters thataffect the industry. Issues such as legislations and policies withindifferent jurisdictions are likely to influence the outcomes(Henderson et al., 2013). Potential entrepreneurs often developbusiness models that are promising to give huge returns. Nonetheless,since they lack capital, they engage crowdfunding platforms to helpthem sell their ideas to investors through the internet. Moreover,threats from history and maturation period arise due to the minimaladoption of the crowdfunding idea. The maturation depends on thecapacity of the initiators, financiers, and viability of the idea.

Hypotheticalguessing and understanding the evaluation criteria are major commonthreats associated with the construct validity. The constructvalidity operates within the confines of generalization. It isprobable for the researcher to make a wrong assumption about thematter under study and the research findings. In some instances, theanswers are less dependable that cannot enhance the realization ofoutcomes for use in other contexts. Inadequate preoperationalexplanation of the constructs before undertaking the study is also agreat contributor to threats affecting the research on crowdfunding.

Theother variance is low cost or a small amount of funds. Thecharacteristic of construct validity comes in when individualscontribute a little money to a project but what changes is thenumber. A high figure translates to sharing of losses as well asprofits uniformly. The difference is that the amount of profit orloss is reduced. Construct validity is applied in determining theglobal advantage of crowdfunding as compared to personalization ofprojects (Boezeman et al., 2015).

Impactsof Validity Issues in Research

Thethree forms of validity affect results and policy recommendationsdifferently depending on the range of parameters. For constructvalidity, one can undertake comparisons on the various researchquestions highlighted in the study. As such, the variables used bythe researcher are only valid if they have the capacity to enhancethe attainment of the measurement goals. In the research, one mayexplore the global crowdfunding market from the context of theplatforms and the leadership needs. Competition, threats, andlegislation also form important measurements criteria to identify thevalidity of the research. Moreover, the perceptions and motivators ofcompanies on crowdfunding may also assist considerably inunderstanding the global market. It is important for the researcherto ensure that all measures are utilized in the right manner toenhance the attainment of dependable findings (Moritz &amp Block,2016).

Theresearch on crowdfunding in the global market has a great interest inidentifying approaches that can contribute to the copying of theideas in different contexts. It is notable that crowdfunding has beenon different platforms, including profit making and not -for-profitventures. External validity is about generalization, whereby oneexplores the potential of implementing the findings in othercontexts. The design used in the study should help the researcher tohave a good understanding of the perception, motivators, andleadership styles in the global market (Scholz, 2015). The validityof the findings in a study is crucial in determining the actualimplementation in a practical manner. The parameters used shouldassist in measuring the reliability of the findings as it is asignificant pointer on the ability to answer the research questions.Such an achievement means that one can easily generalize thesignificance of the results besides reducing chances of time andeffort wastage.


Giventhat some entrepreneurs contribute millions of dollars to the startupbusinesses, understanding the characteristics of validity forresearch of crowdfunding is essential to the managers of theorganizations involved in the management of the platforms. Theexecutives need excellent knowledge that would enable them to analyzeand, then, determine the workability of the business idea presentedby a capitalist. In the case the idea can be proven workable, themanager can then proceed to seek financiers willing to support thecommerce. There are several people with business ideas they claimprofitable if they are implemented, but putting money in a venturethat has not been tested is perilous. Examining the characteristicsof validity for research of crowdfunding in a global environment is amajor step towards generating the right approaches to undertaking theconcept. Bottom line, the results in a research study should assistin better understanding of the idea besides easing the executionprocess.


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