Social Identity and Social Media Activities in Equity Crowdfunding

ABSTRACT

The existence of crowdfunding platforms has helped creators to bring their innovative products to market. In recent years, equity crowdfunding has increased in popularity as an alternative form of finance, and has helped thousands of innovating entrepreneurs to raise money, and join a broader conversation with large numbers of potential investors. Early-stage startup investment is no longer restricted to venture capital firms and high net worth angel investors. Using Social Identity Theory (SIT) as a basis, we look at a sample of crowdfunding campaigns from the UK-based platform, Crowdcube. In this study we are trying to understand how groups of potential crowdfunding investors act in relation to the social media activities of those campaigns. We examine how different social media activities of can have an impact upon the funding of a crowdfunding campaign. This study has significant implications for fundraisers who want to utilize social media to increase their chances of a successful crowdfunding campaign. In our study we identify that by being more active on social media, and having a higher level of engagement with the crowd, this will have a positive impact on the overall funding of a crowdfunding campaign.

References

1. Aaker, J. and Akutsu, S. (2009). "Why do people give? The role of identity in giving." Journal of Consumer Psychology 19(3), pp. 267--270.
2. Agarwal, Ritu, Anil K. Gupta, and Robert Kraut. (2008) "Editorial overview --- The interplay between digital and social networks." Information Systems Research 19(3):243--252.
3. Akerlof, G. A., & Kranton, R. E. (2000). Economics and identity. The Quarterly Journal of Economics, 115(3), 715--753.
4. Assadi, D. (2015). Strategic approaches to successful crowdfunding. IGI Global, pp. 154--163.
5. Bannerman, S., 2013. "Crowdfunding culture." Journal of Mobile Media 7(01), pp. 1--30.
6. Barnett, C. (2015). Trends Show Crowdfunding to Surpass VC in 2016. {online} Forbes.com. Available at: https://www.forbes.com/sites/chancebarnett/2015/06/09/trends-show-crowdfunding-to-surpass-vc-in-2016/#1b3ae3874547 {Accessed 21 Apr. 2017}.
7. Belleflamme, P., Lambert, T. and Schwienbacher, A. (2014). "Crowdfunding: Tapping the Right Crowd." Journal of Business Venturing.
8. Blumer, H. (1969). Symbolic interactionism. 1st ed. Englewood Cliffs, N.J.: Prentice-Hall.
9. Bradford, C. (2012). "Crowdfunding and the Federal Securities Laws." Columbia Business Law Review, pp. 1--150.
10. Chesbrough, H. W. (2006). Open innovation: The new imperative for creating and profiting from technology. Harvard Business Press.
11. Clark, M. S., & Mills, J. (1979). "Interpersonal attraction in exchange and communal relationships." Journal of personality and social psychology, 37(1), 12.
12. Dutton, J. E., Dukerich, J. M., & Harquail, C. V. (1994). "Organizational images and member identification." Administrative science quarterly, 239--263.
13. Enders, A., Hungenberg, H., Denker, H. P., & Mauch, S. (2008). "The long tail of social networking: Revenue models of social networking sites." European Management Journal, 26(3), 199--211.
14. Financial Conduct Authority (FCA) (2014). "The FCA's regulatory approach to crowdfunding over the internet, and the promotion of non-readily realisable securities by other media." Policy Statement 14.4.
15. Fink, A. (2012). "Protecting the crowd and raising capital through the JOBS Act." Available at SSRN 2046051.
16. Gabison, Garry A. (2015) "Equity Crowdfunding: All Regulated But Not Equal." DePaul Business. & Commercial. Law Journal Vol. 13: 359.
17. Gefen, David, Detmar Straub, and Marie-Claude Boudreau. "Structural equation modeling and regression: Guidelines for research practice." Communications of the association for information systems 4.1 (2000)
18. Gerber, E.M. and Hui, J. (2013). "Crowdfunding: Motivations and deterrents for participation." ACM Transactions on Computer-Human Interaction (TOCHI) 20(6), p. 34.
19. Gleasure, R. and Feller, J. (2016a). "Emerging technologies and the democratisation of financial services: A metatriangulation of crowdfunding research." Information and Organization 26(4), pp. 101--115.
20. Gleasure, R., & Feller, J. (2016b). "A Rift in the Ground: Theorizing the Evolution of Anchor Values in Crowdfunding Communities through the Oculus Rift Case Study." Journal of the Association for Information Systems 17(10), 708--736.
21. Greenberg, M.D., Pardo, B., Hariharan, K. and Gerber, E. (2013). "Crowdfunding support tools: predicting success & failure." In CHI'13 Extended Abstracts on Human Factors in Computing Systems (pp. 1815--1820). ACM.
22. Griffin, Z.J. (2012). "Crowdfunding: fleecing the American masses." Case W. Res. JL Tech. & Internet 4, p. 375.
23. Henseler, Jörg, et al. "Common beliefs and reality about PLS: Comments on Rönkkö and Evermann (2013)." Organizational Research Methods 17.2 (2014): 182--209.
24. Hoffman, D. L., and Fodor, M. (2010). "Can You Measure the ROI of Your Social Media Marketing." MITSloan Management Review 52.1.
25. Hogg, M. and Terry, D. (2000). "Social Identity and Self-Categorization Processes in Organizational Contexts." The Academy of Management Review 25(1), p.121.
26. Howe, J. (2006). "The rise of crowdsourcing." Wired magazine, 14(6), 1--4.
27. Hughes, D., Rowe, M., Batey, M. and Lee, A. (2012). "A tale of two sites: Twitter vs. Facebook and the personality predictors of social media usage." Computers in Human Behavior 28(2), pp. 561--569.
28. Kaplan, Andreas M., and Michael Haenlein. (2010) "Users of the world, unite! The challenges and opportunities of Social Media." Business horizons 53.1 59--68.
29. Kromidha, E. and Robson, P. (2016). "Social identity and signalling success factors in online crowdfunding." Entrepreneurship & Regional Development, pp. 1--25.
30. Massolution, C. L. (2015). "Crowdfunding Industry Report."
31. McLeod, S. (2008). "Social identity theory." Simply Psychology.
32. Mead, G. (1934). Mind, self & society from the standpoint of a social behaviorist. 1st ed. Chicago, Ill.: University of Chicago Press.
33. Mitra, T. and Gilbert, E. (2014). "The language that gets people to give: Phrases that predict success on kickstarter." In Proceedings of the 17th ACM conference on Computer supported cooperative work & social computing (pp. 49--61). ACM.
34. Mollick, E. (2014). "The dynamics of crowdfunding: An exploratory study." Journal of business venturing 29(1), pp. 1--16.
35. Parvanta, C., Roth, Y. and Keller, H. (2013). "Crowdsourcing 101: A Few Basics to Make You the Leader of the Pack." Health Promotion Practice 14(2), pp. 163--167.
36. Rapp, A., Beitelspacher, L.S., Grewal, D. and Hughes, D.E. (2013). "Understanding social media effects across seller, retailer, and consumer interactions." Journal of the Academy of Marketing Science 41(5), pp. 547--566.
37. Rishika, R, et al. (2013) "The effect of customers' social media participation on customer visit frequency and profitability: an empirical investigation." Information systems research 24(1): 108--127.
38. Stanko, M. and Henard, D. (2016). How Crowdfunding Influences Innovation. MIT Sloan Management Review.
39. Schwienbacher, A. and Larralde, B. (2012). "Crowdfunding of Small Entrepreneurial Ventures." In: Cumming, D., The Oxford handbook of entrepreneurial finance. 1st ed. New York: Oxford University Press, UK.
40. Stelzner, M.A. (2012). Social Media Marketing Industry Report: How Marketers Are Using Social Media To Grow Their Businesses. Social Media Examiner.
41. Stemler, A. (2013). "The JOBS Act and crowdfunding: Harnessing the power---and money---of the masses." Business Horizons 56(3), pp. 271--275.
42. Tajfel, H. and Turner, J.C. (1979). "An integrative theory of intergroup conflict." The social psychology of intergroup relations 33(47), p.74.
43. Turner, J.C. and Tajfel, H. (1986). "The social identity theory of intergroup behavior." Psychology of intergroup relations, pp. 7--24.
44. Thies, F., Wessel, M., Rudolph, J. and Benlian, A. (2016). Personality Matters: How Signaling Personality Traits Can Influence the Adoption and Diffusion of Crowdfunding Campaigns. Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
45. Trepte, S. and Krämer, N. (2008). "Expanding social identity theory for research in media effects: Two international studies and a theoretical model."
46. Waters, R.D., Burnett, E., Lamm, A. and Lucas, J. (2009). "Engaging stakeholders through social networking: How nonprofit organizations are using Facebook." Public relations review 35(2), pp.102- 106.
47. Wilson, H.J., Guinan, P.J., Parise, S. and Weinberg, B.D. (2011). "What's your social media strategy." Harvard Business Review 89(7/8), pp. 23--25.
48. Wilson, Karen E., and Marco Testoni. "Improving the role of equity crowdfunding in Europe's capital markets." (2014).