Crowdfunding and Online Social Capital: A Research Idea

1. Background

Luo Er raised money for his daughter’s treatment fee through a WeChat media platform account in P2P finance. But people found that Luo actually is not so poor that he can’t afford his daughter’s treatment fee and the Shenzhen medical insurance can also cover part of her treatment fee.

In Zhihu, the largest Chinese Q&A online community, when answering a question about people’s opinions toward this case, Katy家怡 mentions that:


Therefore, we want to figure out whether people with more social capital can raise money quickly and easier than those with less social capital in China.

2. Research design

At first, we wanted to focus on crowdfunding projects on charity in China. But it seems quite difficult to identify different advocates’ social capital in those crowdfunding websites.

So we turned to venture projects. Rather than equity crowdfunding, we want to focus on reward-based crowdfunding projects. As for the online social capital, maybe we can define strong ties and weak ties in social media to describe the strength of social capital.

Suggestions from Prof. Xiaoyu Xia:

  • Compared with our idea that using discrete variables to describe the strength of social capital, it would be better if we could find a appropriate measurement of the strength of online social capital (a continuous variable);
  • Whether there exists a turning point of the social capital’s impact on crowdfunding;
  • Pay attestation to the endogeneity in research (the project’s characteristics v.s. the impact of online relationship).

3. Data

  1. Method: Data Mining
  2. Crowdfunding: Demohour
  3. Social capital: Sina Weibo official accounts of the projects in Demohour
    • # of followers, # of followers’ followers
    • # of Weibo posted during the period of crowdfunding
    • # of comments and forwards of the above Weibo posted

4. References

  1. Granovetter, M. S. (1973). The Strength of Weak Ties. American Journal of Sociology, 78(6), 1360–1380.
  2. Gee, L. K., Jones, J. J., & Burke, M. (2016). Social Networks and Labor Markets: How Strong Ties Relate to Job Finding On Facebook’s Social Network. Journal of Labor Economics, (February), 686225.
  3. Kang, L., Jiang, Q., & Tan, C.-H. (2016). Remarkable advocates: An investigation of geographic distance and social capital for crowdfunding. Information & Management, (January).
  4. Zheng, H., Li, D., Wu, J., & Xu, Y. (2014). The role of multidimensional social capital in crowdfunding: A comparative study in China and US. Information and Management, 51(4), 488–496.