Entrepreneurial finance for student entrepreneurs: developing crowdfunding framework for Malaysian higher education institutions

The purpose of this study is to investigate the capabilities of Malaysian Higher Education Institutions (HEIs) in crowdfunding implementation. Crowdfunding is a technique that utilises incremental financial contributions from a 'crowd' of participants to assist entrepreneurs in funding their projects. Although crowdfunding is a relatively new phenomenon in Malaysia, it has been welcomed as an overwhelming new form of entrepreneurial finance by the government, industry players, entrepreneurs, and implementers in Malaysian HEIs. The implementation of crowdfunding in Malaysian HEIs has been found to be a new alternative to financing which complements traditional fundraising. However, there is a gap between the implementer’s capabilities and crowdfunding implementation in HEIs. The HEIs’ implementers have not yet understood the basic catalysts of crowdfunding implementation within their current practices. This study addresses this gap to help promote an understanding within the capabilities of Malaysian HEIs to implement suitable crowdfunding mechanism which fits the nature of HEI as a non-profit organization. The study uses a retroductive approach to understand the integration of HEIs’ regularities and their implementation of the crowdfunding mechanism for student entrepreneurs. This study adopts the purposive sampling and uses multiple case studies with semi-structured interviews as the main data collection technique. This study relies on this technique to explore the views and experiences of the selected HEIs’ implementers and how they develop their capabilities to implement crowdfunding. The interviewees consist of the key informants from the HEIs’ implementers, the students, crowdfunding operators, and policy makers. Two additional data collection methods: archival, and documentary research, were utilised; thus, improving the triangulation of the findings. Finally, the study reveals the important elements that lead to the best practices of crowdfunding implementation based on the HEIs’ capabilities to help the students’ entrepreneurs gain easy access to financing. The findings highlight four elements that HEIs should consider as catalysts to crowdfunding implementation including the (i) Higher Education Institution environment, (ii) crowdfunding platform, (iii) crowdfunding activity continuum, and (iv) external environment. This study contributes to the body of knowledge of entrepreneurial finance research through its understanding of how a new alternative source of entrepreneurial finance such as crowdfunding, in the context of HEIs, can be integrated by looking through the lens of the New Capital Structure Theory. In so doing, this study seeks further into the capabilities of HEIs in implementing crowdfunding within the nature of HEIs’ environments. This study exposes the existence of a suitable model for crowdfunding that was used in other countries and was found to be useful in Malaysian implementations, particularly in the context of HEIs. By making implicit features of crowdfunding explicit through the explanation of the crowdfunding activity continuum, the model adds precision to the understanding of the crowdfunding framework for HEIs. This is shown through the consolidation of important elements in the development of the crowdfunding framework that reveals how Malaysian HEIs develop the capabilities of crowdfunding implementation which contributes by leveraging their current practices.