The joint production of confidence – self-regulation in European crowdfunding markets

Abstract

Purpose: The paper discusses the rationale for a widespread reliance on Codes of Conduct (CoC) in European crowdfunding through the lenses of economic theories of self-regulation. By analysing the institutional design of CoCs in crowdfunding, the paper illustrates the differences in their regulatory context, inclusiveness, monitoring and enforcement. It offers the first systematic overview of substantial rules of CoCs in crowdfunding. Design/methodology/approach: A comparative case study of nine CoCs in Europe is used to illustrate differences in their institutional design and discern the economic purpose of the CoC. Findings: The institutional design of different CoCs in Europe mainly supports voluntary theories of self-regulation. In particular, the theory of reputation commons has the most explanatory power. The substantial rules of CoC in different markets show the potential sources of market failure through the perspectives of platforms. Research limitations/implications: CoCs appear in various regulatory, cultural, and industry contexts of different countries. Some of the institutional design features of CoC might be a result of these characteristics. Practical implications: Crowdfunding associations wishing to develop their own CoC may learn from a comparative overview of key provisions. Social implications: For governments in Europe, contemplating creating or revising bespoke crowdfunding regimes, the paper identifies areas where crowdfunding platforms perceive market failure. Originality/value: This paper is the first systematic study of self-regulatory institutions in European crowdfunding. The paper employs a theoretical framework for the analysis of self-regulation in crowdfunding and provides a comparison of a regulatory context, inclusiveness, monitoring and enforcement of different CoCs in Europe.