The value implication of sellers’ following in social marketplaces: A structural holes perspective

Abstract

Sellers in social marketplaces actively engage in following behaviors. However, extant research has repeatedly reported a negative effect of the followee number on seller performance, raising questions about sellers’ value in following others. Intrigued by this question, this study applies the theory of structural holes to understand and explain sellers’ value in following. That is, sellers whose followee networks span more structural holes are better positioned to gain social capital and thus achieve better performance. An empirical study of panel data with 1023 Etsy sellers and their followee networks involving 156,176 alters per month supports this explanation—the structural holes in, instead of the size of, sellers’ followee networks have a significant, positive effect on their sales performance. The study further reveals that such effects are stronger for sellers with higher product diversification, more prominent followees, and lower followee status heterophily.