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.