Conformity by information or relation? An exploration of investors' response in equity crowdfunding

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.