Are Females More Effective at Harnessing Social Media for Entrepreneurial Fundraising? Evidence from Crowdfunding

Abstract

Crowdfunding has the potential to democratize access to financing, especially among women entrepreneurs. This paper examines whether social media activity provides an advantage for women entrepreneurs in raising funding from crowds. The results of our study, based on tracking the daily fundraising and social media activity for a sample of 11409 campaigns launched in Kickstarter, show that by diffusing electronic word-of-mouth information and signaling popularity, social media is beneficial in high search-cost situations such as crowdfunding efforts for all entrepreneurs, even more so for women entrepreneurs. Our theoretical discussions implicitly attribute this finding to the role of social media in altering investors’ perceptions about legitimacy of women entrepreneurs, which views entrepreneurship as a masculine-typed endeavor that women are incapable of successfully undertaking. The broader implications of this research are to address the influence of social media in helping mobilize resources for entrepreneurs, especially those imbued with greater initially-perceived legitimacy concerns.

Keywords: crowdfunding, gender, electronic word of mouth, social media

JEL Classification: G11