Conformity by information or relation? An exploration of investors' response in equity crowdfunding
International Journal of Emerging Markets
ISSN: 1746-8809
Article publication date: 2 March 2022
Issue publication date: 5 December 2023
Abstract
Purpose
This paper aims to investigate the role of informational and relational mechanisms on equity crowdfunding investors' conformity behaviors by focusing on a relational culture of China.
Design/methodology/approach
The data of 108 financing projects and 7,688 investment records from a union of Chinese equity crowdfunding platforms are gathered. Lead investors' response to a campaign and follow-investors’ former links explain investors' conformity by social network analysis (SNA) and ordinary least squares (OLS) analysis.
Findings
The results show that informational and relational influences drive conformity in Chinese equity crowdfunding. Moreover, the informational influence weakens in a highly centralized structure of linked investors.
Research limitations/implications
The results add new knowledge to follow-investors’ conformity behaviors in equity crowdfunding and enrich the literature on conformity theory by finding the contextual effect of information-influenced conformity and the adaption of conformity theory to cultural uniqueness. Besides, this preliminary work also suggests opportunities for future research.
Practical implications
The paper inspires new consideration on a strategical use of follow-investors’ conformity mentality to promote successfully financing and reminds platform managers to be alert to the interference of small groups formed based on informal relationships to the normal financing order.
Originality/value
This is the first study that discovers the non-informational influence and the limited influence of information on equity crowdfunding conformity through contextual concerns.
Keywords
Acknowledgements
The study is funded by the National Social Science Fund of China, and the award number is 16BGL025.
Citation
Li, Y., Ling, L., Wu, J., Zhang, D. and Fu, W. (2023), "Conformity by information or relation? An exploration of investors' response in equity crowdfunding", International Journal of Emerging Markets, Vol. 18 No. 11, pp. 5299-5318. https://doi.org/10.1108/IJOEM-05-2021-0701
Publisher
:Emerald Publishing Limited
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