The influence of online information on investing decisions of reward-based crowdfunding

Abstract

How does online information influence investor decisions? Funders or investors have access to a variety of information about a project or product when they make investment decisions. Which kind of information affects investor behavior the most? Based on the elaboration likelihood model, we developed a research model and conducted an empirical study using objective data collected from a Chinese crowdfunding website. It was found that signals of quality and electronic word of mouth have significant positive effects on funder investment decisions. Results show that larger introduction word counts and video counts make funders feel the project has higher quality, and higher “Like” counts and online reviews make funders feel the project has good electronic word of mouth. Furthermore, analysis of the data here reveals that the central route information (signals of project quality) and the peripheral route information (e-word of mouth) have almost equal effects on funder investment decisions in the Chinese crowdfunding context. On the other hand, the central route was significantly more important for Science & Technology and Agriculture projects, whereas the peripheral route was more important for Entertainment and Art projects.