How does Social Media Affect Contribution to Public versus Private Goods in Crowdfunding Campaigns?

This paper examines the interplay among crowdfunding campaigns, social media activity and accumulated capital. Drawing on the emerging literature around social media and crowdfunding, and leveraging task-technology fit theory, we propose a set of hypotheses relating to the interaction between social media and crowdfunding campaign objective (public good campaign versus private good campaign), highlighting the importance of the alignment between a crowdfunding campaign’s objectives and the characteristics of a social media platform that plays hosts to chatter about that campaign. We construct a panel dataset that incorporates information about crowdfunding campaigns hosted at one of the worlds largest reward-based crowdfunding platforms, Indiegogo, as well as social media activities relating to the campaign, collected from Twitter and Facebook APIs. We demonstrate that, while social media activities matter in general, buzz on Twitter is more influential for campaigns that intend to produce private goods, because Twitter is more likely to be used for objective information gathering and is therefore a better source for information about product or service quality. In contrast, sharing activities on Facebook is more influential for campaigns that aim to supply a public good, because Facebook primarily supports connections, and thus provides the conditions necessary for the manifestation of social norms. In addition, we found different contribution patterns for public versus private good campaigns, wherein “crowding out” is only observed for public good campaigns, but not private good campaigns. We discuss the theoretical implications for the literatures on social media and crowdfunding, and we highlight the practical implications for campaign organizers and crowdfunding platform operators.