The role of multidimensional social capital in crowdfunding: A comparative study in China and US


With the rise of web 2.0 technologies, it empowers firms to outsource their business tasks to the individuals or crowd, who are capable to complete these tasks for them. On the other hand, the crowd can also invest some money to the business idea and project that initiated by entrepreneurs who do not have enough money. And this is crowdfunding (Zheng et al. 2014).

The word crowdfunding actually comes form crowdsourcing, which is defined as “the act of a company or institution taking a function once performed by employees and outsourcing it to an undefined (and generally large) network of people in the form of an open call.’’ (Howe, 2006). Instead of collecting ideas or solutions, crowdsourcing can be used to collect monetary and financial resources (Howe, 2006). This type of crowdsourcing which crowd is an investor who invest the project, is called crowdfunding (Zheng et al. 2014).

According to Zheng et al. (2014), they only focus on one type of crowdfunding, which is called reward-based crowdfunding. the definition of this type of crowdfunding is “the crowdfunding involves an open call, essentially through the Internet, for the provision of financial resources either in the form of a donation or in exchange for some form of reward and/or voting rights in order to support initiatives for specific purposes’’ ( Schwienbacher, 2010). different from crowdfunding, social capital is a multidimensional concept. based on Nahapiet and Ghoshal (1998), the social capital has three basic dimensions: structural, relational and cognitive. To be more specific, the structural dimension is the structural characteristics, which are vital for the development of social capital. the relational dimension is the capital derived from the obligation, expectation of the social network. last but not least, the cognitive dimension suggests that shared language could actually help people gain the social capital in the organization.

In this article, Zheng et al. (2014) studied the moderating roles of culture on the social capital in two different countries and the relationship between the relational dimension and crowdfunding performance.

1. Structural dimension: social network ties

The fundamental proposition for the structural dimension is the network ties provide the access to resources, like knowledge and funds. Moreover, Mollick (2014) found that the personal network of an entrepreneur helps predict the success of crowdfunding. in this case, the degree of an entrepreneur’s social network ties is positively associated with crowdfunding performance.

2. Relational dimension: obligation

The relational dimension of social capital can be seemed as the strength or quality of the relationship, and this can be evaluated by trust, obligations and identification (Nahapiet & Ghoshal, 1998). On the perspective of crowdfunding, an entrepreneur may feel such an obligation in the crowdfunding initiative. In this case, the obligation to fund other entrepreneurs is positively associated with crowdfunding performance.

3. Cognitive dimension: shared meaning

Shared meaning plays an important role in the cognitive dimension of social capital (Nahapiet & Ghoshal, 1998). Based on Lehner (2012), the crowdfunding is a co-production process in which investors and entrepreneur are in the close relationship which are cooperative and active in the development of the crowdfunding project though word-of-month. In this case, shared meaning about a crowdfunding project is positively associated with crowdfunding performance.

Reference:

J. Howe, Crowdsourcing: A Definition, 2006

J. Nahapiet, S. Ghoshal, Social capital, intellectual capital, and the organizational advantage, Acad. Manage. Rev. 23 (2), 1998, pp. 242–266.

E.Mollick,The dynamics of crowdfunding: an exploratory study,J.Bus.Venturing 29 (1), 2014, pp. 1–16.

O.M. Lehner, A literature review and research agenda for crowdfunding of social ventures, Presented at the 2012 Research Colloquium on Social Entrepreneurship, University of Oxford, Skoll Center of SAID Business School, UK, 16–19 July, 2012

T. Lambert, A. Schwienbacher, An Empirical Analysis of Crowdfunding, 2010

Zheng, Haichao, et al. “The role of multidimensional social capital in crowdfunding: A comparative study in China and US.” Information & Management 51.4 (2014): 488-496.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s