Click to success? Temporal Effects of Facebook Like on Crowdfunding

Small and medium-sized businesses, as well as individuals, increasingly use online crowdfunding platforms to raise funds in the fintech world. Creators of crowdfunding projects depend heavily on social networks such as Facebook to publicize their projects. Social media activities such as Facebook “like” bring massive traffic to crowdfunding projects and attract more contributions. Using data collected from Facebook and Kickstarter, our empirical tests demonstrate that social media activities significantly and positively impact the likely success of crowdfunding. Our duration model analysis reveals that social media activities’ impact on crowdfunding outcome follows a J-curve in the temporal space. We provide explanation of the J-curve by identifying two important effects of social media activities throughout the crowdfunding process: a quality-signaling effect in the opening period and a herding effect in the closing period. Especially in the “last mile”, there is a strong herding effect that helps crowdfunding projects reach their respective fundraising goals. Our results offer useful contributions to literature and implications for practitioners