Social capital and crowdfunding: A multilevel perspective

Wanxiang Cai

Research output: ThesisDoctoral thesis 1 (Research UU / Graduation UU)


We build a multilevel model to explain the relationships between social capital and crowdfunding activities at both micro- and macro-levels, as well as the cross-level causal mechanisms behind these relationships. At the micro-level, we focus on the crowdfunders’ social capital. While previous social capital-based crowdfunding research mainly discusses the role of fundraisers’ social capital in crowdfunding, little attention has been paid to crowdfunders’ social capital. Built upon research on co-investment networks, we argue that crowdfunders’ decisions are influenced by their previous co-investors, and social networks can at least partially contribute to this relationship. The empirical results confirm our arguments. However, qualitative evidence suggests that most crowdfunders rely on their private networks to make investment decisions and co-investments in previous crowdfunding campaigns cannot create strong networks that facilitate information exchange among crowdfunders. At the macro-level, this thesis examines the relationship between interregional social networks and equity crowdfunding flows from one region to another. We argue that interregional social networks can explain local bias (i.e., the tendency to invest in nearby projects) to some extent: investors obtain information advantages on local firms through their social networks. Although the results suggest an insignificant relationship between interregional social networks and crowdfunding transactions among regions after controlling for their geographic distances, the negative influence of geographic distance on across-region crowdfunding investments decreases with interregional social networks. This suggests that interregional social networks may compensate for the disadvantages from physical distance in obtaining information. Finally, we conduct a cross-level study aiming to explore the causal mechanisms of the macro-level relationships between social capital and crowdfunding activity. We expect that national social capital can affect some fundraisers’ (e.g., those who have distinctive products or services) willingness to adopt crowdfunding, thereby influencing the national crowdfunding volume in the end. We propose a conceptual framework to explain the legitimacy of distinctiveness in the crowdfunding market (and other financial markets): investors’ expectations and sensitivity to information asymmetry affect distinctive firms’ intention to fundraise in that market. The empirical results confirm our framework, as distinctive firms tend to fundraise from private equity and crowdfunding markets instead of debt markets. Furthermore, the inclination to adopt crowdfunding is stronger in countries with a higher level of social capital (i.e., crowdfunders believe that fundraisers are less likely to default).
Original languageEnglish
QualificationDoctor of Philosophy
Awarding Institution
  • Utrecht University
  • Stam, Erik, Primary supervisor
  • Polzin, Friedemann, Co-supervisor
Award date27 Jun 2022
Place of PublicationUtrecht
Print ISBNs978-94-91870-47-7
Publication statusPublished - 27 Jun 2022


  • Crowdfunding
  • social capital
  • multilevel model


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