Relationship between Social Exchanges and Financial Performance: Examining a Virtual Community Sponsored by a Cloud Provider

ABSTRACT To attract a stream of potential clients and transform them into competent cloud adopters for sustained growth, cloud providers (CPs) sponsor YouTube virtual communities to build an interactive knowledge base and manage client relationships. This study investigates both the long- term equilibrium and the short-term dynamics of the relationships between social exchanges in CP sponsored virtual community and its financial performance. Social exchanges are measured with the number of unique posters (UP) and CP-posted quality content (QC), and financial performance is measured with quarterly CP revenue. With the advancement of CP-sponsored virtual community structure and dynamics laying the foundation, hypotheses are developed from multiple theoretical perspectives and time series data from Amazon Web Service sponsored YouTube community are analyzed. It is found that the long-run equilibrium and the short-run dynamics (of the relationships between social exchanges and financial performance) sharply contrast with each other, reminding community sponsors that they need to balance the long-run survival with the short-run success of their communities. Empirical results also reveal the steepness of the learning curve in the cloud computing industry as an entry barrier with implications for CPs and their clients. Further, based on empirical findings, both a stage model (about the impact of increase in CP revenue on increase in UP) and feedback loops (among participation, content, and value) are developed to help social media management visualize how their communities may dynamically evolve over time. This paper contributes not only to the cloud computing literature on the role social media plays in developing a competent client base, but also to the social media literature regarding the relationships between social exchanges and financial performance in knowledge intensive industries.