Social Buying: The Effects of Group Size and Communication on Buyer Performance

Abstract

Viewing social communication on group-buying platforms as a new form of IT -enabled coordination mechanisms, we examine the impact of group size and communication capacity on buyer performance on group-buying platforms. Using an economic experiment, we found that although larger groups were able to extract moderately higher surplus on average than smaller groups, there was also a negative impact of group size on group coordination for time to task completion. Interestingly, when a private communication channel was introduced for buyers, it actually lowered group surplus. We explain this unexpected finding as caused by the increased task complexity that arises from the additional needs for information processing of the exchanged messages. In general, adding communication capacity slowed down task completion, and this effect was stronger for larger groups than smaller ones. Our study suggests that business managers of group buying sites should be concerned about both the level and the kind of communication tools they want to offer and they need to be mindful that larger buyer groups may need different kinds of communication support from those needed by smaller groups.

Keywords:

• Buying platforms
• coordination
• electronic market design
• experimental economics
• group buying
• information overload
• social buying
• task complexity