Social media usage and entrepreneurial investment: An information-based view

Abstract

This paper investigates how entrepreneurs’ social media use affects the entrepreneurial reinvestment of the ventures. Drawing on the information-based view of entrepreneurship, we propose that social media use has an inverted U-shaped relationship with entrepreneurial investment due to the competing forces of information gathering and information processing associated with social media use. This relationship will be more prominent in ventures that are newly founded or in high-tech industries. Our empirical findings based on a large sample of Chinese private firms confirm the core assertions. This study provides important insights into the complex consequences of social media use for entrepreneurship activities.