To Provide Support or Not: Exploring Internal Social Capital and Reciprocity in Crowdfunding

Abstract

In this paper, we examine crowdfunding platforms as self-sustaining online communities of entrepreneurs, based on social capital and social exchange theories. Campaigns seeking funds on crowdfunding platforms do not operate in isolation; they are influenced by the dynamics at play between creators and backers on the platform. We examine resource acquisition patterns between creators operating on a crowdfunding platform. Exchange of financial resources between creators on crowdfunding platforms can result in the acquisition of social capital within the platform. We argue that financial resource exchange and the resulting internal social capital on the platform may establish norms of reciprocity among the community of creators. Moreover, we propose reciprocity is the mechanism through which the internal social capital acquired by a creator can influence the funding success of a campaign. The results of empirical analysis of 655 first-time creators on Kickstarter provide evidence for the existence of norms of reciprocity in a community of creators who operate on crowdfunding platforms. More importantly, we find support for our proposition, that reciprocity mediates the influence of internal social capital on funding success. The implications of this research on theory and practice are discussed.