COVID-19: COSTLY SIGNALS AND ENTREPRENEURIAL BRICOLAGE FOR SMES SURVIVABILITY FROM THE VIEW OF THE FINANCIAL-BASED CROWDFUNDING IN MALAYSIA

Crowdfunding has altered the entrepreneurial funding landscape in Malaysia. Statistics generated by Securities Commission of Malaysia indicates that a number of small-and-medium-sized enterprises (SMEs) have benefitted from the equity (ECF) and peer-to -peer (P2P) lending in the crowdfunding markets. The recent COVID-19 pandemic has badly affected many economic sectors, especially SMEs. They are thus forced to adapt to the “new normal” in order to sustain continued growth and create shared value. The objective of this study is to explore the significance of costly signals, which attempts to explain instances of public generosity in which individuals incur costs without any immediate benefits or entrepreneurial bricolage, creating something from nothing by making do and applying combinations of resources at hand to new problems and opportunities to aid SMEs in obtaining financial assistance from the online investors. This is a conceptual study that refers to previous literature on costly signals and entrepreneurial bricolage. This study also used a content analysis technique where the equity crowdfunding platform’s website during movement control order (MCO) from 18^th March, 2020 to 18^th November, 2020 was examined to gather the information. The contents related to ECF campaigns on the platform’s website was extracted and used in the analysis. However, due to limited available literature on ECF and P2P on the available platforms, this study focused solely on the ECF campaigns hosted on the PitchIn Platform Sdn Bhd’s website. Prompt and innovative decisions are crucial especially during the pandemic. Entrepreneurs need to be able to highlight vital information for stakeholders and potential investors. ECF platforms also need to be able to present and highlight their information as this could reduce the asymmetry of information. In this manner, both the platform and the entrepreneur will benefit from the growth of the crowdfunding market in Malaysia. As the sustainability of the crowdfunding ecosystem in Malaysia depends on the sustainability of the entrepreneurs and the platform providers policy measures by the government should not be restricted merely to eliminating cash flow burdens, but should also include the wider entrepreneurial landscape to improve its efficiency. The government needs to have real-time information so that any uncertainty facing the entrepreneurs can be handled accordingly. This study also suggests future research to further investigate the importance of costly signals under crowdfunding umbrella.