Social Ties among Fundraisers and Crowdfunding Performance: The Impact of Tie Strength and Network Closure

Abstract

ABSTRACT This study examines how the strength of social ties between focal and peer fundraisers interacts with the network structure generated by these social ties to determine crowdfunding performance. With relationship intensity and preference similarity between focal and peer fundraisers as the two dimensions of tie strength, our study discloses how the benefits and costs associated with these tie strength dimensions are affected by network closure, the degree to which peer fundraisers are connected to each other. Our estimation results indicate that (1) relationship intensity and preference similarity exhibit inverted U-shaped relationships with crowdfunding performance, and (2) network closure attenuates the effectiveness of tie strength dimensions. Together, our study findings reveal an important interplay between indirect and direct social ties. In essence, social ties among peer fundraisers facilitate a group identity that reduces the returns of time and resources a fundraiser spends on strengthening ties with these peer fundraisers.