A proposed hybrid crowdfunding model to mitigate financial challenges of micro enterprise in Indonesia

Abstract

This study proposes a hybrid crowdfunding model to enhance financial services for microenterprises in Indonesia. The hybrid concepts of the proposed model are threefold namely product offering, services provided and service modes. The model encourages community involvement by engaging local investors who are geographically close to the microenterprises, allowing them to retain offline interactions with each other. Thus, this model suggests ways of improving and meeting the needs of microenterprises in Indonesia by providing affordable financial services. The research applied a mixed qualitative and quantitative methodology. The interview was conducted to validate the hybrid crowdfunding model's suitability, sustainability, and prospects. The experts confirmed the proposed model have the suitability for unbanked and marginalized communities. Besides, the experts opine that the model is applicable in Indonesia, which has large Muslim population and microenterprises. They emphasized that the model could significantly enhance financial accessibility for these businesses by fostering a sense of community-based support. Additionally, experts highlighted the potential for this model to increase financial inclusion, especially in underserved rural areas, by leveraging local networks and trust. The quantitative part of the study examines the factors influencing the behavioural intention of microenterprises to use the proposed hybrid crowdfunding model. An extended technology acceptance model (TAM) was adopted, which incorporates perceived risk (PR), perceived trust (PT), government support (GS), and two moderating variables, Age and Experience, in addition to two original TAM factors, perceived ease of use (PEOU) and Perceived Usefulness (PU). All predictors' direct and indirect effects are examined using Partial Least Squares Structural Equation Modelling (PLS-SEM) and logit regression. The result of the PLS-SEM found that all hypothesized relationships between predictors (PR, PT, PEOU, PU, GS) and the criterion (BI) are statistically significant. Age moderates the relationship between predictors, namely perceived risk (PR), government support (GS), and endogenous variable behaviour intention (BI). On the other hand, the moderating effect of experience on the relationships between the constructs specified is found to be insignificant. Based on the logit regression result, both the basic and interaction models (the simple effect) confirmed that only three predictors, perceived risk (PR), government support (GS), and perceived ease of use (PEOU), are statistically significant in affecting outcomes, but PT and PU are found to be insignificant. The interaction term between age and four predictors (PR, PT, PEOU, and GS) is statistically significant. The interaction term between experience and three predictors (PT, PEOU, and GS) are confirmed to be significant. The study concluded that the hybrid crowdfunding model is acceptable in general. It highlights the need for strong support from the government in establishing robust data protection and privacy regulations for microenterprises who may be concerned about the security of their personal and financial information. Therefore, policymakers should consider formulating policies and guidelines, promoting the use of the proposed hybrid crowdfunding model, and building related infrastructure, such as widening internet penetration, especially in rural areas, to support model implementation