Susceptibility To and Impact of Interpersonal Influence in An Investment Context

J. of the Acad. Mark. Sci.
(2009) 37:488–503
DOI 10.1007/s11747-008-0128-7
ORIGINAL EMPIRICAL RESEARCH
Susceptibility to and impact of interpersonal influence

in an investment context
A. O. I. Hoffmann & T. L. J. Broekhuizen
Received: 20 September 2007 / Accepted: 18 December 2008 / Published online: 20 January 2009
# The Author(s) 2009. This article is published with open access at Springerlink.com
Abstract This paper demonstrates the relevance of con- Keywords Susceptibility to interpersonal influence .
sumers’ susceptibility to interpersonal influence (CSII) in Investments . Reference-group influence
an investment context. In Study 1, a survey of individual
investors, investment-related knowledge, psycho-social
risks, and social needs emerge as antecedents that explain
Introduction
investors’ susceptibility to informational and normative
influence. In turn, susceptibility to normative influences
increases transaction frequency, whereas susceptibility to
informational influences decreases transaction frequency. “We are influenced by others in almost every
The experiments in Studies 2 and 3 indicate the impact of activity, and this includes investment and financial
interpersonal influences on consumers’ investment deci- transactions.”
sions in a voluntary (free choice) and involuntary (con-
—Hirschleifer & Teoh 2003: 25
frontation) setting and check whether CSII moderates the
impact of interpersonal influences. Consumers’ investment Consumers often use social information when making
choices are consistently influenced by the information and their decisions, especially in uncertain situations (Mitchell
opinions of others, whereas CSII only strengthens the and McGoldrick 1996). The extent to which social
impact of interpersonal influence in a voluntary informa- information affects consumers’ decisions depends on their
tional setting. susceptibility to interpersonal influence.
Susceptibility to interpersonal influence is a consumer
We thank the editor, David W. Stewart, the four anonymous reviewers, trait that varies across individuals (McGuire 1968). The
and Arie Dijkstra, Peter C. Verhoef, Martin G. M. Wetzels, Debra important effects of consumers’ susceptibility to interper-
Trampe, Mirjam A. Tuk, and Robert P. Merrin for their useful comments sonal influence (CSII) on their decision-making processes
on previous versions of this article. Any remaining errors are our own.
have been documented extensively in consumer behavior
A. O. I. Hoffmann (*) and marketing literature (Bearden et al. 1989, 1990; Bristol
Department of Finance,
and Mangleburg 2005; Kropp et al. 1999; Mascarenhas and
Faculty of Economics and Business Administration,
University of Maastricht, Higby 1993; Mourali et al. 2005; Ratner and Kahn 2002).
P.O. Box 616, 6200 MD Maastricht, The Netherlands However, none of these studies address consumers’
e-mail: a.hoffmann@finance.unimaas.nl investment decisions. Existing CSII studies focus on
conspicuous and socially visible products such as cars
A. O. I. Hoffmann
Network for Studies on Pensions, Aging, and Retirement (Netspar), (Bearden and Rose 1990), apparel (Meyer and Anderson
P.O. Box 90153, 5000 LE Tilburg, The Netherlands 2000; Miller 1998), or women’s cosmetics (Chao and Schor
1998). To the best of our knowledge, this paper is first to
T. L. J. Broekhuizen
demonstrate the relevance of CSII for less conspicuous and
Department of Innovation Management and Strategy,
Faculty of Economics and Business, University of Groningen, visible product categories in general by examining its
P.O. Box 800, 9700 AV Groningen, The Netherlands effects in an investment setting.
J. of the Acad. Mark. Sci. (2009) 37:488–503 489
Although investments’ low visibility may suggest they can also be associated with the recent turmoil on financial
are privately consumed products, the opening quote markets sparked by the “credit crunch”. Policymakers worry
suggests that social information could play an important that herding can destabilize markets and increase the fragility
role in consumers’ investment decisions. On the one hand, of financial systems (Bikhchandani and Sharma 2000).
consumers often deliberately increase the visibility of their Therefore, it is important to investigate what kind of people
investment decisions and expose themselves to public are most likely to be highly influenced by others with respect
scrutiny by engaging in related social interactions, such as to their investment behavior and engage in conformist or
joining investment clubs (Barber and Odean 2000), or herding behavior.
discussing their investment decisions and performance with We investigate, through a survey study and two
other stock market participants (Hong et al. 2004). On the experimental studies, the kinds of consumers who are
other hand, consumer research argues that both the real and susceptible to interpersonal influence and how they react to
the imagined presence of others significantly influence those interpersonal influences. The survey study identifies
people’s behavior (Kropp et al. 1999: 537). Even in the the general traits and dispositions that make consumers
absence of direct visibility, investors may be concerned most susceptible to interpersonal influence and clarifies the
about which investments will make a good impression on effect of this susceptibility on the number of investment
others. transactions in which they participate. In the two experi-
Studying susceptibility to and the impact of interpersonal mental studies, we investigate the impact of the social
influences in an investment context is relevant for market- environment on actual investment behaviors by confronting
ing research and practice for several reasons. First, no subjects with informational and normative influences
theory of consumption can be complete without including (Study 2) or giving them the option to receive interpersonal
an understanding of how consumers manage their wealth information or opinions (Study 3). Thus, we investigate the
(Zhou and Pham 2004). Consumers’ current investment effects of both passively receiving and actively requesting
choices have considerable consequences for their current interpersonal influence. In both experiments, we test
and future consumption (cf. Browning and Crossley 2001), whether CSII moderates the effect of interpersonal influ-
so from this perspective, it seems surprising that marketing ence on consumers’ investment decisions.
research has paid so little attention to investment decisions In so doing, we contribute to the literature in several
(Johnson and Tellis 2005; Johnson et al. 2005; Zhou and ways. Most importantly, this is the first paper to empirically
Pham 2004), and even less attention to how they are investigate CSII and the effects of interpersonal influences
influenced by others. Second, individual investors hold for a less conspicuous and visible product. In addition, by
about 50% of U.S. equity (Odean and Barber 2000), which taking the antecedents and consequences of CSII into
means consumers’ investment decisions can help explain account, we add to the emerging but limited body of
the overall dynamics of financial markets. This topic is research that positions CSII in a nomological net (Batra et
especially important with regard to the population’s aging al. 2001). Although current literature associates CSII with a
demographics and the increased self-responsibility of variety of variables, such as self-esteem, attention to social
consumers for their retirement accounts. Third, CSII has comparison information (ATSCI), motivation to comply,
important consequences for consumer behavior. Recent public self-consciousness, and consumer innovativeness
studies on consumer innovativeness (Clark and Goldsmith (Bearden et al. 1989, 1990; Bearden and Rose 1990; Clark
2006; Steenkamp and Gielens 2003), for example, show and Goldsmith 2006; Lascu et al. 1995; Steenkamp and
that consumers who are susceptible to the influence of Gielens 2003), it is uncommon that these accumulated
others are less inclined to purchase innovative products, research findings appear united in a theoretical framework.
such as new financial services, early. Considering the size Finally, we use experimental data for the first time to show
of the financial services industry, the failure of approxi- how interpersonal influences affect consumers’ investment
mately 50% of all financial innovations (Edgett 1994), and decisions. Existing studies are often limited to involuntary
the benefits of new products for financial service providers settings, which means they impose interpersonal influences
(Storey and Easingwood 1999), marketers must begin to on subjects (Burnkrant and Cousineau 1975; LaTour and
study the role of CSII in an investment context. Fourth, Manrai 1989). This article also examines the impact of
examining CSII in an investment context has societal interpersonal influences in a voluntary setting.
relevance. Consumers who are more susceptible to social
influences are more likely to engage in conformist behavior,
which affects asset prices (De Bondt 1998) and may result in Study 1
herding behavior (Bikhchandani et al. 1992; Hirschleifer
2001; Shiller 1995). Herding is considered one of the driving Our goal for Study 1 is to place the CSII concept within a
forces behind the Internet Bubble (Kindleberger 2000) and conceptual framework and test it with an empirical survey.
490 J. of the Acad. Mark. Sci. (2009) 37:488–503
We present the theoretical background, conceptual model, precede more situation-specific traits, which then influence
hypotheses, and results next. a larger set of secondary traits and actions (cf. Batra et al.
2001). In our conceptual model, susceptibility to interper-
Theoretical background sonal influence acts as a situation-specific trait, because it
represents a “weak trait” (McGuire 1968: 1132) with low
The most widely used measure of CSII is that developed by intercorrelations across situations and behaviors (Batra et
Bearden et al. (1989, 1990), which distinguishes between al. 2001). A person’s influenceability often appears as a
susceptibility to informational influences (SII) and suscep- consequence of personality variables, such as self-esteem or
tibility to normative influences (SNI). The former reflects a social anxiety (Batra et al. 2001; Bearden et al. 1990;
person’s tendency to accept information from others as McGuire 1968). Anxiety originating from a lack of
credible evidence about reality (Deutsch and Gerard 1955). knowledge or perceptions of psychological or social risk
Informational influence results from actively requesting therefore drives a person’s influenceability. Moreover,
information from knowledgeable others or passively ob- personal values, such as social needs, are assumed to be
serving others (Park and Lessig 1977). It operates through important antecedents or causes of situation-specific traits
the process of internalization, which occurs if information such as someone’s susceptibility to interpersonal influence
from others increases an individual’s knowledge about (Batra et al. 2001). Therefore, we argue that consumers’
some aspect of the environment. Informational influence is general traits and dispositions such as their investment-
driven by a desire to form accurate interpretations about related knowledge, perceptions of social and psychologi-
reality in order to make more informed decisions and cal risk, and strength of socially oriented needs determine
behave correctly (Cialdini and Goldstein 2004). SNI the more specific and situation-dependent trait of suscep-
reflects an individual’s tendency to comply with the tibility to interpersonal influences, which leads to even
positive expectations of others (Deutsch and Gerard 1955: more specific outcomes or behaviors, such as transaction
629) and is driven by an individual’s desire to enhance frequency.
one’s self-image by association with a reference group or The dimensions of CSII in an investment context thus
because individuals want to achieve rewards or avoid can be explained by motivations to increase the accuracy of
punishments mediated by others. investment decisions by building knowledge through social
Previous studies relate the CSII scale to several interactions, decrease the potential for social embarrassment
consumer factors, including demographics, general psycho- or psychological discomfort by learning about and con-
graphic traits, domain-specific knowledge, personal values, forming to socially accepted behavior, and fulfill social
and situational factors (Batra et al. 2001; Bearden et al. needs by creating and maintaining valuable relationships.
1989, 1990; Bearden and Rose 1990; Clark and Goldsmith
2005; D’Rozario and Choudhury 2000; Lascu et al. 1995; Hypotheses
Mangleburg et al. 2004). The aim of Study 1 is not to
provide an exhaustive list of potential correlates of invest- Antecedents of consumers’ susceptibility to interpersonal
ors’ susceptibility to interpersonal influence, but rather to influence
place this concept within a theoretical framework by
incorporating its primary antecedents and consequences. Domain-specific knowledge In an investment context,
domain-specific knowledge relates to consumers’ familiar-
Conceptual model ity with and expertise in making investment decisions (cf.
Alba and Hutchinson 1987). The amount of domain-
As we indicate in Fig. 1, Study 1 uses a hierarchical trait specific knowledge determines product decisions (Alba
model in which general traits and dispositions causally and Hutchinson 1987) and negatively influences suscepti-
Figure 1 Conceptual model of

Study 1. H1: -
Knowledge SII
H2: - H7: -
H3: +
Psycho-Social H9: + Number of
Risks Transactions
H4: +
H5: +
H8: +
Social Needs SNI
H6: +
bility to both informational and normative interpersonal accept their investment choices or that they will embarrass
influence (Furse et al. 1984; Gilly et al. 1998; Mangleburg themselves in public or “not fit in” with specific reference
et al. 2004). Individuals with more knowledge tend to be groups (social risk). Moreover, consumers run the risk of
more confident about making correct decisions and dem- experiencing psychological discomfort or frustration if their
onstrate less interest in others’ information and opinions actions are not consistent with their self-concept or self-
(Bearden et al. 1990; Clark and Goldsmith 2006; Kahle image (psychological risk). In general, status-conscious
1995; Locander and Hermann 1979). That is, knowledge- consumers perceive greater psycho-social risks, because
able consumers depend less on others to obtain relevant they are more concerned about their self-image and worried
product information, but they also depend less on others about not fitting in, which makes them more likely to be
with respect to the normative aspects of decision making. affected by interpersonal influences (O’Cass and McEwen
They tend to be more self-confident and have higher self- 2004). Research into the concept of purchase pals indicates
esteem, which relates negatively to the need for social that teens frequently shop together and adjust their
approval (Cox and Bauer 1964). Hence, more knowledge- decisions according to the information and opinions of
able consumers should be less susceptible to both informa- relevant others to reduce not only their functional (product
tional and normative interpersonal influences. or performance) risks but also the perceived psycho-social
Conversely, individuals with less knowledge are more risks associated with purchases (Kiecker and Hartman
susceptible to informational and normative interpersonal 1993).
influences. On the one hand, those with less knowledge A recent study by Yim et al. (2007) investigates the role
may doubt their ability to make good decisions and of multiple referents on the evaluations of services. They
perceive higher risks (Alba and Hutchinson 1987), so to suggest that the evaluation of services depends on the
reduce this risk, they may feel more compelled to ask approval of others, and in particular on how well the service
knowledgeable others for advice and rely more strongly on fits with the self-image. They argue that higher levels of
this advice compared with those consumers who know self-image congruity (i.e., services that more closely match
more and perceive less risk (Festinger 1954; Furse et al. one’s self-image) are associated with lower levels of
1984; Gilly et al. 1998; Mangleburg et al. 2004; Mitchell psychological discomfort or risk (cf. Sirgy 1985) and less
and McGoldrick 1996). On the other hand, individuals with consideration for attractive alternatives. In a similar vein,
less knowledge lack a sense of personal adequacy and may Kleijnen et al. (2005) find that consumers with low self-
suffer low self-confidence and self-esteem, which often image congruence are more susceptible to their surround-
makes them excessively fearful of social disapproval and ings than are consumers with high self-image congruence
strongly motivated to conform to others’ demands or when adopting service innovations.
suggestions (Janis 1954; Cox and Bauer 1964). Their This discussion implies that consumers who perceive
compliance can be interpreted as a defensive form of psycho-social risks may actively seek and rely on
behavior that permits these consumers to agree with information from and the opinions of social others to
everyone in an attempt to guarantee that nobody will be reduce their risk. That is, consumers’ perception of
displeased with them (Janis 1955). psycho-social risks should relate to SII and SNI. First,
consumers who perceive greater psycho-social risks tend
H1. The amount of consumers’ investment-related knowl-
to be more susceptible to informational influence,
edge is negatively associated with their susceptibility
because they are motivated to build their knowledge
to informational influences when making investment
about socially accepted behaviors and the consequences
decisions.
of their actions for their self-concept (Cialdini and
H2. The amount of consumers’ investment-related knowl-
Goldstein 2004). These consumers ask relevant others so
edge is negatively associated with their susceptibility
that they may learn about the correct way to behave and
to normative influences when making investment
avoid future social embarrassment or psychological dis-
decisions.
comfort. Therefore, psycho-social risks are positively
associated with the informational dimension of interper-
Psychological and social risk In addition to product or sonal influence, operating through internalization (Burnkrant
performance risk, consumers may also experience social and Cousineau 1975). Second, consumers who perceive
and psychological risk that discourages them from engag- greater psycho-social risks want to fit in and seek the
ing in behaviors that are not accepted by their reference approval of social others by currently complying with
group or that conflict with their personality or self-image their social norms. As such, psycho-social risks should be
(Cialdini and Goldstein 2004; Sirgy 1982, 1985). Beyond positively associated with the normative dimension of
the possibility of losing money (product or performance interpersonal influence, operating through processes of
risk), consumers may be anxious that their peers will not identification (maintaining a positive self-concept) and
compliance (achieving social rewards) (Burnkrant and consumers and policymakers alike, because overtrading
Cousineau 1975). generally results in poor performance through the accumu-
lation of transaction costs (Odean and Barber 2000).
H3. Consumers’ level of perceived psycho-social risk is
Furthermore, through commissions, consumers’ transaction
positively associated with their susceptibility to
frequency directly affects banks’ and brokerage firms’
informational influences when making investment
profitability.
decisions.
Existing literature presents mixed and inconclusive
H4. Consumers’ level of perceived psycho-social risk is
results regarding the possible effect of CSII on transaction
positively associated with their susceptibility to
frequency (Mangleburg et al. 2004). Prior research finds a
normative influences when making investment
negative relationship between CSII and willingness to
decisions.
adopt new products, which may relate to hesitation to
trade. Individuals who are more susceptible to interpersonal
Social needs Consumers engage in social interactions not influences are less willing to make an adoption decision
only to reduce perceived purchase risk but also to fulfill until a majority of relevant others also supports the new
their social needs. Humans are fundamentally motivated to concept (Clark and Goldsmith 2006; Steenkamp and
create and maintain meaningful and rewarding social Gielens 2003). Conversely, we can assume a positive
relationships (Maslow 1954). The strength of social needs relationship between CSII and transaction frequency,
differs across individuals, and just as personal values do, because consumers who are susceptible to interpersonal
they guide individuals’ behavior by affecting the criteria influence are more receptive to environmental cues and
used to evaluate actions, people, and events. Personal or more likely to act on this social information. By either
human values include internal values (e.g., self-fulfillment, conforming to or deviating from this new information, they
sense of accomplishment, self-respect) and social or may trade more frequently.
external values (e.g., being well-respected, having warm On the basis of social comparison theory (Festinger
relationships with others) (Batra et al. 2001). Values are 1954), we hypothesize a negative relationship between SII
motivational in nature and provide important antecedents of and transaction frequency. That is, consumers susceptible to
situation-specific predispositions, such as CSII (cf. Batra et informational influences may—after requesting and receiv-
al. 2001). Consumers’ importance of social values is ing information from other, more knowledgeable people—
positively related to SNI (Batra et al. 2001; Kropp et al. receive reinforcement of their belief that they have
1999). On the basis of these arguments, we expect insufficient knowledge to make well-informed investment
consumers with stronger social needs to be more suscep- decisions or obtain contradictory information. They can
tible to informational and normative interpersonal influen- limit the impact of wrong decisions by minimizing their
ces when they invest than are consumers who have less transactions, and they might be informed by others that a
explicit social needs. Consumers with stronger social needs buy-and-hold strategy is best.
tend to be more open to and derive greater value from We hypothesize a positive relationship between SNI and
social interactions, such as investment-related interpersonal transaction frequency, because consumers who are suscep-
information exchanges (SII). Moreover, they prefer buying tible to normative influence are more likely to get carried
stocks that they expect their reference group to approve of away by others’ opinions and may transact to reinforce their
or that enable them to identify with others and thus create social bonds or comply with others’ expectations. Then,
and maintain rewarding relationships (SNI). SNI may lead to chameleon-like changes in response to any
H5. The strength of consumers’ social needs is positively new source of persuasive influence (Janis 1955), which
associated with their susceptibility to informational suggests more transactions.
influences when making investment decisions. H7. Consumers’ susceptibility to informational influence
H6. The strength of consumers’ social needs is positively is negatively associated with the number of invest-
associated with their susceptibility to normative ment transactions they make.
influences when making investment decisions. H8. Consumers’ susceptibility to normative influence is
positively associated with the number of investment
transactions they make.
Consequences of consumers’ susceptibility to interpersonal
influence Finally, we expect a direct relationship between con-
sumers’ level of investment-related knowledge and the
This study examines the effect of consumers’ susceptibility number of investment transactions. More knowledgeable
to interpersonal influence on their yearly number of consumers have more expertise and are more familiar with
investment transactions, which is an important variable for investing (cf. Alba and Hutchinson 1987), which likely is
associated with lower perceptions of risk, easier access to with estimates from the Dutch National Bank (2006) that
financial markets, more involvement with the product show an average portfolio size per investing household of
category, and a higher likelihood to transact. €70,000. The respondents’ transaction frequency also
matches another Dutch sample (Bauer et al. 2007). In
H9. Consumers’ level of investment-related knowledge is
conclusion, the sample appears similar to the overall
positively associated with the number of investment
population of Dutch investors with regard to selected
transactions they make.
background characteristics, though we also note that our
sample consists of fairly experienced investors.
Research approach: Study 1
Measures and research instrument
Method
All items use five- or seven-point Likert scales to measure
We used a survey approach to collect data from individual the relevant constructs (Table 1). Respondents’ susceptibil-
investors and test the hypotheses of our conceptual model ity to interpersonal influence employs the CSII scale
(Fig. 1). We developed and tested an online questionnaire proposed by Bearden et al. (1989, 1990). The SII measure
among 78 undergraduate and graduate students. After includes all four items of the original scale, whereas the
revising the questionnaire wording and layout, we asked a SNI measure for our study drops one of the original eight
panel of five academics to confirm whether the items items because it explicitly refers to purchasing the latest
closely resembled the intended constructs. Next, we fashion. This item was potentially distracting for our
collected the empirical data through an online questionnaire respondents and irrelevant to the investment context.
that targeted visitors to four investment-related Web sites, Following Bloch et al. (1989), we measure domain-
selected because they attempt to attract respondents with specific knowledge with self-reported measures. The two
various levels of experience and backgrounds. The call to items measuring psychological and social risk come
participate provided a summary of the purpose of the study directly from work by Kaplan et al. (1974). To measure
and a link to the online questionnaire. We carefully checked respondents’ strength of social needs, we use items from
the final sample for duplicates using respondents’ IP Cheek and Buss’s (1981) sociability study.
address and contact details. Furthermore, we told respond- We employ standard psychometric procedures to test the
ents that their responses would remain anonymous and that reliability and validity of the scales (Netemeyer et al. 2003;
all data would be treated confidentially. Nunnally and Bernstein 1994). After performing reliability
analyses, we test the validity of the constructs with
Sample confirmatory factor analyses (CFA) using AMOS 7 (see
Table 1). As a result, we remove two items from the SNI
The net sample consisted of 287 investors with an average age scale that indicated low loadings (<0.50).
of 53 years (SD=13). Twelve percent of the respondents are The final measurement model using maximum likelihood
women, and more than two-thirds have at least a college estimation demonstrates acceptable fit (χ2/df=1.68, GFI=
degree. These respondents note a considerable length of 0.94, CFI=0.96, RFI=0.89, TLI=0.95, RMSEA=0.049).1
investing experience (M=16 years, SD=11) and, on average, We also find evidence of convergent validity and unidimen-
transact 77 times per year (SD=122, median=30). Almost sionality, because each item loads significantly (p<0.001) on
all respondents (98%) invest for their own accounts. The its assigned factor and reveals insignificant cross-loadings.
dominant purchasing channels that these investors use are as Next, the average variance extracted (AVE) of all constructs
follows: 56% online brokers, 36% banks, 4% direct was greater than 0.50 with the exception of the SII scale,
telephone order lines, and 4% expert advice. The average which falls marginally below the required level (Fornell and
portfolio size is €207,000 (approximately $310,500) with a Larcker 1981). To establish discriminant validity, we first
median of €70,000 (approximately $105,000). Among the note that the intercorrelations between the latent factors
sample, 20% belong to an investment club.
1
To investigate potential selection bias, we compared these Previous research has subdivided the concept of normative influen-
sample characteristics with the characteristics of the general ces into value-expressive and utilitarian influences, but then collapsed
them into one normative dimension after extensive empirical analyses
population of investors with direct investments in the Dutch (Bearden et al. 1989, 1990; Mangleburg et al. 2004). We test for a
stock market (VEB 2002). Our respondents are slightly older three-factor model that divides susceptibility to normative influence
(53 years compared with 48 years) and more likely to be into two dimensions: utilitarian and value-expressive. The two-factor
men (88% compared with 71%). The modal portfolio size, solution results in better fit indices, and the three-factor solution leads
to inadmissible solutions (e.g., negative error terms, correlation
however, equals that of the general investment population, at between value-expressive and utilitarian greater than 1). Therefore,
€50,000. Also, the median portfolio size closely corresponds we prefer the two-factor model.
Table 1 Measurement model results of Study 1
Construct Item wordinga SL α/CR AVE
Domain-specific knowledge Knowl1: How would others characterize you with regard to the level of 0.79 (–) 0.87/0.88 0.79
(Bloch et al. 1989) KNOWLEDGE you have about investing? (1=Very little knowledge,
5=Very much knowledge)
Knowl2: How would others characterize you with regard to the level of 0.98 (6.39)
EXPERIENCE you have with investing? (1=Very limited experience,
5=Very extended experience)
Psycho-social risk Psych/socrisk1: What is the probability that an investment in an 0.64 (–) 0.71/0.74 0.59
(Kaplan et al. 1974) unfamiliar stock will lead to a PSYCHOLOGICAL LOSS for you
because it would not fit well with your self image or self-concept?
(1=Very unlikely, 7=Very likely)
Psych/socrisk2: What is the probability that an investment in an 0.88 (5.22)
unfamiliar stock will lead to a SOCIAL LOSS for you because others
would think less highly of you? (1=Very unlikely, 7=Very likely)
Social needs SocNeed1: I invest because I like to participate in investment related 0.75 (7.15) 0.74/0.74 0.59
(Cheek and Buss 1981) conversations with others
SocNeed2: I invest because I like to affiliate with other investors 0.79 (–)
Susceptibility to SII1: I frequently gather information about (type of) stock from friends 0.69 (10.37) 0.78/0.78 0.47
informational influence (SII) or family before I invest in them
(Bearden et al. 1989) SII2: To make sure I buy the right stock, I often observe what other 0.62 (9.47)
investors invest in
SII3: I often consult other people to help choose the best stock to 0.69 (9.99)
invest in
SII4: If I have little experience with a (type of) stock, I often ask my 0.77 (–)
friends and acquaintances about the stock
Susceptibility to normative SNI1: I like to know what investment decisions make good impressions 0.66 (11.50) 0.86/0.87 0.57
influence (SNI) on others
(Bearden et al. 1989) SNI2: I generally purchase those stocks that I think others will 0.70 (12.40)
approve of
SNI3: I often identify with other people by purchasing or selling the 0.81 (14.76)
same stocks they sell or purchase
SNI4: I achieve a sense of belonging by purchasing or selling the same 0.79 (14.19)
stocks that others purchase or sell
SNI5: If others can see in which stocks I invest, I often invest in stocks 0.81 (–)
that they invest in
a
All items, unless otherwise noted, use five-point Likert scales, anchoring at 1 = totally disagree and 5 = totally agree
SL maximum likelihood standardized loadings with t-values in parentheses, α Cronbach’s alphas, CR composite reliabilities, AVE average
variance extracted
(± two standard errors) do not include unity (Anderson and 0.93, RMSEA=0.059) and explains a reasonable amount of
Gerbing 1988) (Table 2). Furthermore, the AVE of each the variance in SNI (R2 =36.6%) and SII (R2 =38.1%). The
latent construct is greater than the squared correlations antecedents account for 9.9% of the variance of consumers’
between any set of two constructs (Fornell and Larcker transaction frequency. The maximum variable inflation
1981). Finally, the composite reliabilities range from 0.74 to factor (VIF) for each independent variable in a set of
0.88, which indicate high levels of construct reliability regression analyses is 1.35, which suggests some but not
(Bagozzi and Yi 1988). These analyses demonstrate that strong multicollinearity.2
our scales have sufficient levels of reliability, unidimension-
ality, convergent validity, and discriminant validity. 2
We also investigated the influence of age, gender, and investment club
membership on SII and SNI. The means do not differ across age
Results categories for SII (F(3, 283)=0.82, p=0.48) or SNI (F(3, 283)=0.30,
p=0.83). The means of SII and SNI also did not differ significantly
We depict the structural model of Study 1 and the between men and women according to a t-test (p>0.10). Members of
investment clubs are significantly more susceptible to both SII (t(283)=
significance of its relationships in Fig. 2. The data confirm 2.58, p=0.01) and SNI (t(283)=1.96, p=0.05). Because performing the
all hypotheses (H1–H9). The structural model fits the data structural analyses without the investment club members provides very
well (χ2/df=2.00, GFI=0.92, CFI=0.94, RFI=0.87, TLI= similar results, we use the complete data set in our subsequent analyses.
Table 2 Construct correlations and AVE of Study 1
Construct Knowledge Psycho-social risk Social needs SII SNI Number of transactions
Knowledge 0.89
Psycho-social risk 0.04 (0.08) 0.77
Social needs 0.15 (0.09) 0.24*** (0.07) 0.77
SII −0.08 (0.07) 0.31*** (0.08) 0.47*** (0.08) 0.69
SNI −0.06 (0.07) 0.42*** (0.07) 0.40*** (0.07) 0.62*** (0.06) 0.75
# Transactions 0.24** (0.08) −0.01 (0.07) −0.03 (0.06) −0.15** (0.06) 0.01 (0.06) N/A
The numbers below the diagonal represent the correlations between two latent constructs; the numbers in parentheses refer to the standard errors
The numbers in bold represent the square root of the average variance extracted (AVE)
Standard errors were derived from bootstrapping with 500 replications
*p<0.05; **p<0.01; ***p<0.001
Consistent with previous studies in other contexts (Gilly differences in the strength of the unstandardized path
et al. 1998; Mangleburg et al. 2004; Park and Lessig 1977), coefficients. The results confirm our expectations. Knowl-
we find that consumers’ level of domain-specific knowledge edge has a stronger influence on SII than on SNI
is negatively associated with both SII (H1: β=−0.19, p= ðBknow!SII ¼ 0:22 vs: Bknow!SNI ¼ 0:13; t ¼ 16:4; p < 0:001Þ,
0.005) and SNI (H2: β=−0.16, p=0.010) in an investment and social needs have a more pronounced effect on SNI
context. The results also support the proposed positive than on SII ðBsocneeds!SNI ¼ 0:48 vs: Bsocneeds!SII ¼ 0:26; t ¼ 39:3;
associations between psycho-social risk and SII (H3: β= p < 0:001Þ.
0.25, p<0.001) and SNI (H4: β=0.37, p<0.001). Further- We also find support that SII is negatively associated
more, consumers’ strength of social needs appears strongly (H7: β=−0.22, p=0.002) and SNI is moderately positively
positively related to both SII (H5: β=0.40, p<0.001) and associated (H8: β=0.15, p=0.030) with the number of
SNI (H6: β=0.51, p<0.001). transactions. Because these results contradict findings by
Since the dimensions of SII and SNI are conceptually Mangleburg et al. (2004), who find that SII positively and
different and operate through different mechanisms with SNI negatively influences teens’ shopping frequency with
different goals (e.g., Cialdini and Trost 1998), the relative friends, we call for replication studies that can help
strength of the antecedents may differ across these generalize these results.
dimensions. In particular, SII relates more strongly to Finally, we find that knowledge (H9: β=0.22, p<0.001)
personal values, such as self-fulfillment and self-respect, is positively associated with transaction frequency.
because it is driven by the motivations to learn and increase
the accuracy of investment decisions, whereas SNI appeals
to social values, such as having warm relationships with
others and achieving a sense of belonging, which are Study 2
inherently linked to the motivations to fulfill socially
oriented needs (Batra et al. 2001). Therefore, we expect Study 2 tests how consumers’ investments decisions are
knowledge to relate more strongly to SII than to SNI, and altered when they are confronted with informational versus
social needs should relate more strongly to SNI than to SII. normative interpersonal influences in an involuntary set-
We used the procedure suggested by Chin (2000) to test the ting. This study also tests whether CSII moderates the
differences between these relationships by analyzing the impact of interpersonal influences.
Figure 2 Structural model

-.19*** .38
results of Study 1. Notes: a.
Knowledge SII
*p<0.05, **p<0.01; -.22**
-.16** .10
***p<0.001. b. Standardized
coefficients are shown. c. .25***
Numbers in bold are squared Psycho-Social Number of
Risks .22***
multiple correlations. .37*** Transactions
.40***
.15*
Social Needs SNI
.51*** .37
Method without reference to whether the subjects were closely or

remotely related to these other investors, because the
Study 2 uses a 2×3 full-factorial between-subjects design diagnosticity of and reliance on the source can vary across
with a hanging control group. We vary the type of respondents and thus influence the decision. To manipulate
interpersonal influence (informational vs. normative) and the valence of informational interpersonal influence, we
the valence of the influence (positively skewed toward stock provide either favorable information about stock A (“15
A, neutral, positively skewed toward stock B). Participants investors mention positive information about stock A and
may be exposed to informational influence, normative negative information about B, and 5 investors mention
influence, or no interpersonal influence (hanging control positive information about stock A and negative about B”),
group). A sample of 154 students (38% female, mean age neutral information (“10 investors mention positive infor-
23 years) volunteered to participate and were assigned mation about stock A and negative about B, and 10
randomly to each cell of the design. No significant differ- investors mention negative information about stock A and
ences exist among the cells in terms of gender, age, SNI, SII, positive about B”), or favorable information about B (“15
knowledge, psycho-social risk, or social needs (all F-tests, investors mention positive information about B and
p>0.50). Therefore, the randomization was effective. negative about A, and 5 investors mention positive
information about A and negative about B”).
Procedure The normative influence manipulation provides subjects
with a summary of the personal opinions of 20 relevant
After entering the study room, each subject completed a investors, indicating these investors’ opinion about what
questionnaire that asked about background characteristics subjects should prefer, after making a personal request for
(age, gender, and risk profile) and included the CSII scale these opinions. The manipulation of the valence of the
(Bearden et al. 1989).3 The proctor told subjects there were normative interpersonal influence uses the same approach
no good or bad answers and all data would be treated as that for informational influence (e.g., “based on their
anonymously and confidentially. We took care to avoid personal opinion 15 investors say you should prefer stock
heightening the salience of social cues by including an A, 5 investors say you should prefer stock B”).
explicit stop and a filler task between the administration of In the absence of any interpersonal influence (hanging
the questionnaire and the portion of the study in which control group), we expect subjects to prefer stock B, which
subjects made their investment decisions. For all condi- provides superior historical payoff characteristics. Although
tions, we told participants that they unexpectedly had Fama’s (1991) efficient market hypothesis suggests that past
received €1,000 (approximately $1,500), not needed for trends in stock prices carry no useful information for
their current expenses, that they could invest (in stock A or consumers to trade on, consumers typically do take into
stock B) or put in a savings account that earned 2% interest. consideration past information about investment products
All subjects also received objective information about the (Johnson and Tellis 2005). People prefer to buy past winners
past performance of two shares, such that stock A had a and sell past losers, even when neither should be preferred
historical rate of return of 5% per year, and stock B had (Johnson et al. 2005). Yet if subjects receive interpersonal
identical risk characteristics but a historical rate of return of influences indicating that stock A is preferable, we expect it
5.5%. After being told that there were no transaction costs or will lead them to select stock A, despite its lower historical
taxes, the subjects indicated, using Likert scales, which portion returns. That is, subjects may choose the stock with lower
of their money they would invest, and, if they had to invest, expected returns because they (1) believe others have
what percentage they would invest in stock A versus stock B. information that they can use to make better informed
The manipulation confronts subjects with an informa- decisions, (2) expect to obtain social rewards or avoid social
tional influence, normative influence, or no interpersonal punishments, and/or (3) want to increase their self-image.
influence. The study does not refer to the actual presence of
relevant others to invoke feelings of observability, because Manipulation check
in most cases, this influence would be absent during the
real-life investment decisions. Following Perdue and Summers (1986), we performed
We manipulate informational interpersonal influence by manipulation checks during a pilot test, using 38 students.
providing subjects with a summary of the information of 20 The subjects performed the complete experiment receiving
relevant investors. The summary was neutrally framed, either informational or normative influence. We measured
the strength of our manipulation by asking them to identify
3
In Studies 2 and 3, we used the same items to measure CSII as in
the degree to which the investors’ evaluations were
Study 1. To obtain an index score, we averaged respondents’ informational (“in the sense that the 20 investors provided
responses for each type of interpersonal influence. information about the performance of stocks A and B”) or
normative (“in the sense that the 20 investors provided their injunctive norms may be less effective for changing
personal opinion about what stocks you should buy”). Five- behavior (Cialdini 2003, 2007), because they exert strong
point Likert scales, ranging from 1 (totally disagree) to 5 control effects, limit people’s freedom, and often produce
(totally agree), indicate that subjects in the informational feelings of resentment or psychological reactance (Brehm
influence condition (N=19) found the evaluations more 1966; Cialdini 2007). The arousal of psychological reac-
informational than those in the normative influence condition tance in a social influence situation leads to a tendency to
(N=19) (Minformational =3.53 vs. Mnormative =2.32, p<0.001) disagree with the communicator (Brehm 1966; Burnkrant
and those in the normative influence condition found the and Cousineau 1975). The effect of normative influence in
evaluations more normative than those in the information the stock A scenario may be particularly weak because it
influence condition (Minformational =2.26 vs. Mnormative =4.00, lacks persuasiveness as it was contrary to the objective
p<0.001). Hence, the manipulation was effective. information (Cialdini 2003: 109).
We performed separate tests to investigate the interaction
Results effect of SNI on normative influence and SII on informa-
tional influence, because we posit that the impact of
The analyses support our expectations. Confronting con- normative influences may be magnified for consumers
sumers with interpersonal influences significantly alters who score high on SNI, whereas the impact of informa-
their investment decisions, especially their relative prefer- tional influences may be magnified for consumers scoring
ence for different stocks (F(6, 147)=5.02, p<0.001). The high on SII. Using a median split to divide the subjects into
amount of money invested, however, does not vary with high or low susceptibility to interpersonal influence
interpersonal influence (F(6, 147)=1.44, p=0.20).4 samples (cf. Aaker 1999), we find no significant interaction
Subjects in the informational influence scenarios signifi- effects. That is, the effects of normative influence (F(2, 54)=
cantly differ in their relative preference for stocks, depending 0.51, p=0.60) and informational influence (F(2, 63)=0.44,
on the valence of the information they receive (F(2, 66) = p=0.65) on subjects’ preference for stock A or stock B are
13.40, p<0.001, η2 =0.29). Similarly, those in the normative not strengthened or attenuated by their susceptibility to each
influence conditions significantly differ according to the type of influence (Table 4).5
valence of the normative message (F(2, 57) = 2.62, p=0.081,
η2 =0.08), but at the less restrictive 10% level.
As we show in Table 3, subjects in the informational Study 3
influence condition that favors stock A report a greater
preference for stock A (M=2.60) compared with those in Study 3 tests the effects of interpersonal influence in a
the control condition (M = 3.23, t(48)= 2.54, p= 0.01). voluntary setting rather than the involuntary setting of
Subjects who receive normative influences in favor of Study 2. We investigate whether CSII affects the likelihood
stock A also tend to choose stock A more than the control of asking others’ opinions and evaluations and if it
group (M=3.05 vs. M=3.23), but the difference is too small moderates the strength of interpersonal influence.
to distinguish from chance variation (t(42)=0.83, p>0.10).
When confronted with interpersonal influences that favor Method
stock B, subjects indicate a greater preference for this stock
in the informational (M=3.83, t(46)=2.33, p=0.02) and The method is similar to that for Study 2, except that the
normative (M=3.80, t(43)=2.02, p=0.05) setting compared subjects are free to choose to make their investment
with the control group. decisions without receiving any interpersonal influence
The insignificant findings for the normative influence (hanging control group) or request either information
group in the stock A scenario and the lower significance of (informational influence) or opinions (normative influence)
normative influence compared with informational influence from others about the stocks. For subjects requesting to
in the stock B scenario can be explained in the following receive interpersonal information or opinion, we varied the
way. In all normative influence conditions, subjects valence of the influence in a similar manner to Study 2.
confront injunctive norms, as they are told what they Subjects remain unaware of the manipulation, because they
should do (Cialdini 2003, 2007). In comparison with receive blank envelopes labeled “information” or “opin-
descriptive norms that describe what others have done, ion.” A sample of 277 students (33% female, mean age
23 years) volunteered to participate.
4
We also studied the potential effect of domain-specific knowledge on
5
investment behavior. Subjects’ level of investment-related knowledge We rule out the possibility that this insignificance is due to a trait-
influences the amount of money invested (more knowledgeable state incongruity (Shedletski and Endler 1974; Rusting 1999), because
subjects invest more) but not their relative preference for stocks. The our measured “trait” CSII and the “state” of interpersonal influence
same results apply to Study 3. both refer to the same domain: investment decisions.
Table 3 Relative preference for stock A and B as a function of interpersonal influence in Study 2 and Study 3
Study 2 Study 3
Informational Normative No Informational Normative No influence

influence influence influence influence influence
Preference for A a: 2.60c,d,e,f (25) b: 3.05e,f (19) g: 3.28a,e (25)

a: 2.21c,d,e,f,g (70) b: 2.45c,d,e,f,g (22) g: 3.60a,b,e (52)
Neutral position c: 3.43a (21) d: 3.48a (21) c: 3.65a,b,e (57) d: 3.46a,b,e (13)
Preference for B e: 3.83a,b,g (23) f: 3.80a,b,g (20) e: 3.96a,b,c,d,g (49) f: 3.93a,b (14)
The preference for stocks is based on the following Likert scale: 1=invest 100% in stock A; 2=75% in stock A and 25% in stock B; 3=50% in
stock A and 50% in stock B; 4=25% in stock A and 75% in stock B; 5=100% invest in stock B
Superscripts represent significant mean differences between cells based on independent sample t-tests (p<0.05), and report cell sizes between
brackets
Procedure ther dimension increases the overall percentage of correct

classifications of subjects who open either the informational
The procedure is similar to that of Study 2 with a few or the normative envelope (Nagelkerke R2 values<0.03).
notable exceptions. Before the experiment started, we told The low significance may result from subjects’ low level of
subjects they could open one of two envelopes, containing knowledge (Mknow =2.32) and their resultant strong need
either a summary of personal information or the personal for interpersonal information (i.e., 81% opened an enve-
opinion of 20 relevant investors, or else open no envelope. lope) to learn from other investors about appropriate
In the first part of the experiment, subjects made their investment behavior. Alternatively, the limited amount of
investment decision after deciding whether and which type objective information provided in the experiment may have
of interpersonal influence to receive. In the second part, led the subjects to ask for other investors’ information and
they completed the CSII scale after finishing a filler task opinions, just to increase their confidence in their invest-
and taking a 10 min break, which we use to minimize the ment decision.
salience of the social cues. As in Study 2, the analyses again support our expect-
ations that consumers who are confronted with interperson-
Results al influences significantly alter their relative preference for
each stock (F(6, 270)=30.78, p<0.001), but not the amount
Of the total sample of 277 subjects, 176 (64%) chose to they invest (F(6, 270) = 1.27, p = 0.27). These results
open the envelope containing interpersonal information demonstrate that interpersonal influences affect consumers’
(informational influence), 49 (18%) opened the envelope investment decisions, irrespective of whether the setting is
containing interpersonal opinions (normative influence), voluntary or involuntary. Subjects who choose to be
and 52 (19%) did not open an envelope (control group). We exposed to informational influence differ significantly in
use logistic regression to test whether each subject’s level their relative preference for stocks, depending on the
of SII and SNI determines whether he or she opened an valence of the information received (F(2, 173)=78.37,
envelope with information or opinions, respectively. Nei- p<0.001, η2 =0.48). Similarly, those who ask for normative
Table 4 Relative preference for stock A and B as a function of interpersonal influence and susceptibility to interpersonal influence in Study 2 and
Study 3
Study 2 Study 3
Informational influence Normative influence Informational influence Normative influence
Low SII High SII Low SNI High SNI Low SII High SII Low SNI High SNI
Preference for A 2.40 2.73 3.00 3.10 2.49** 1.91** 2.40 2.50
Neutral position 3.20 3.64 3.25 3.78 3.59 3.75 3.60 3.38
Preference for B 3.83 3.82 3.88 3.75 3.81* 4.14* 3.80 4.00
The preference for stocks is based on the following Likert scale: 1=invest 100% in stock A; 2=75% in stock A and 25% in stock B; 3=50% in
stock A and 50% in stock B; 4=25% in stock A and 75% in stock B; 5=100% invest in stock B
*p<0.10; **p<0.01: Mann–Whitney U tests are used to test for significant differences between low vs. high cells
influences differ significantly in their choices according to Although existing literature implicitly assumes that suscep-
the valence of the normative message (F(2, 46)=11.27, tibility to interpersonal influence plays an important role
p<0.001, η2 =0.33). Interpersonal influence exhibits a only for conspicuous or (socially) visible products, we
stronger effect in Study 3 than in Study 2 in terms of the demonstrate its relevance for investments, a less conspic-
variance explained, which suggests that subjects follow uous and less visible product category.
interpersonal influences more closely when they actively The results of Study 1 confirm our hypotheses and
request them compared with when they receive them demonstrate that consumers are especially susceptible to
involuntarily. Furthermore, we again find that informational interpersonal influences when they lack necessary invest-
influence has a stronger influence than normative influence ment-related knowledge, perceive investing to be a risky
on consumers’ investment choices. activity in terms of the associated psychological and social
As shown in Table 3, the subjects report a greater risks, and have strong social needs. Although extant
preference for stock A when they receive informational literature pays little attention to the influence of social
influences (M=2.21) favoring stock A compared with those needs (cf. Batra et al. 2001), the results from Study 1 show
in the control condition (M=3.60, t(120)=8.80, p<0.001). that these needs have the greatest influence on CSII in an
Subjects who receive normative influences (M=2.45) in investment context. To increase our understanding of CSII
support of stock A also tend to favor stock A more strongly in an investment situation, researchers should devote more
compared with the control group (M=3.60, t(72)=4.92, attention to investing as a social activity (Shiller 1984;
p<0.001). When receiving interpersonal influence that favors Hoffmann 2007) and its potential expressive benefits
stock B, subjects indicate a greater preference for this stock in (Statman 2004). Another important finding from Study 1
both the informational (M=3.96, t(99)=2.42, p=0.018) and reveals that consumers who are more susceptible to
the normative (M=3.93, t(64)=1.34, p>0.10) settings com- informational influences trade less, whereas those who are
pared with the control group, though the difference is not more susceptible to normative influences trade more.
significant for the latter, likely because of the relatively Study 2 and Study 3 show how consumers, with varying
strong preference for stock B in the control group. levels of CSII, are affected by interpersonal influences in a
As in Study 2, we again perform separate tests to voluntary and non-voluntary context. Overall, the results
investigate whether the dimensions of CSII moderate the show that consumers strongly alter their preference for
impact of interpersonal influence. Median splits divide the stocks when experiencing interpersonal influences, and
sample of subjects into high or low susceptibility to make decisions that are in line with the valence of the
interpersonal influence groups. In the voluntary setting of social influence, even though this may result in selecting
Study 3, we observe a significant interaction effect between investments with lower past returns.
SII and informational influence; that is, the effect of Study 2 and Study 3 display the differences between
informational influence (F(2, 173)=5.36, p=0.006) on consumers who involuntary receive or actively (voluntary)
subjects’ preference for stock A or stock B is strengthened request interpersonal influence. Consumers follow the
by subjects’ SII (Table 4). However, as in Study 2, we do information and opinions of others more closely when they
not find a significant interaction effect between SNI and can choose the type of interpersonal influence they obtain
normative influence (F(2, 46)=0.17, p=0.85). The relative- rather than when they are involuntary confronted with it.
ly small cell sizes (i.e., the smallest cell contains 5 We also observe that SII strengthens the effect of
observations) in the normative setting make these results informational influences on consumers’ investment choices
difficult to interpret and warrant additional research with in the voluntary context but not in the involuntary context.
larger samples. This significant interaction effect does not appear to be a
demand artifact, because more susceptible respondents are
not more likely to open a corresponding envelope.
Discussion and conclusion The overall pattern of findings of our three studies
suggests that in comparison with normative influences,
Discussion of results informational influences play a stronger role in shaping
consumers’ investment-related behavior. This result is
To the best of our knowledge, this paper is the first to consistent with prior studies that imply consumers are more
investigate empirically the antecedents and consequences of motivated to build knowledge by requesting information
CSII and the impact of interpersonal influences in an from and observing their social environment rather than
investment context. We provide a theoretical explanation conforming to others’ expectations as a means to mediate
for why some consumers are more susceptible to interper- social punishments and rewards and/or improve their self-
sonal influence in an investment context than are others, as images (Burnkrant and Cousineau 1975; Park and Lessig
well as what consequences this susceptibility may create. 1977; Mangleburg et al. 2004).
Implications for marketing and public policy function as an early warning system for crashes and hypes
related to conformist behavior.
This research has several important implications for
marketing managers and public policymakers. In particular, Limitations and further research
by elaborating on the role of others in consumers’
investment decision making, it can help marketers to better Our study contains several limitations that provide interest-
target and promote their products to clients. ing avenues for further research. First, though our research
Specifically, consumers who are susceptible to interper- demonstrates both how susceptibility to interpersonal
sonal influences when they make investment decisions will influences affects consumers’ transaction frequency (Study
be attentive observers of others’ product and portfolio 1) and how consumers change their investment decisions in
choices and rely on the opinions of these others more often. the presence of such interpersonal influences (Study 2 and
These consumers therefore may be more responsive to 3), it does not address how CSII and interpersonal
certain types of advertising, such as testimonials, expert influences may affect returns on investment portfolios.
opinions, or celebrity endorsements. Furthermore, because Additional research could link susceptibility to interperson-
these consumers likely find the social aspects of investing al influences to investors’ returns and address the poten-
particularly important, a valuable marketing strategy would tially different impacts of SII versus SNI.
offer them the possibility of interacting with similar others Second, survey approaches, such as that we used in
and discussing their investment decisions, such as through Study 1, may suffer from common-method variance, which
an online broker’s Web forum. may inflate (or deflate) relationships (Doty and Glick
Another important implication for managers emerges 1998). We checked for potential method bias by performing
from the finding that consumer innovativeness relates a Harman’s single-factor test, using CFA (Podsakoff et al.
negatively to CSII (Clark and Goldsmith 2006). Since CSII 2003), and find poor fit for the one-factor model (χ2/df=
relates negatively to consumers’ level of investment-related 7.44; GFI=0.75; CFI=0.60; RMSEA=0.15), which sug-
knowledge, financially educating consumers may benefit gests common-method variance does not pose a serious
both consumers and companies. Providing financial educa- threat for Study 1. However, a selection bias also could
tion makes consumers more independent and prudent affect the results of Study 1, because our respondents come
investors. Moreover, it limits their susceptibility to inter- from investment-related Web sites and were willing to
personal influences, which may prompt them to adopt new invest their free time to complete the questionnaire.
financial products and services more readily and earlier in Therefore, they likely have a greater interest in investment
the product life cycle. Marketers could capitalize on CSII research and knowledge than does the general population.
by organizing “master classes,” during which consumers Because visitors to these Web sites can post messages and
can learn and talk about new financial products. Such interact with others, it is also more likely that these
meetings also may reduce consumers’ perceived (psycho- respondents perceive investing as a “social activity” (Shiller
social) risks and increase their confidence about making 1984).
accurate investment decisions. Companies should strike a Third, the homogeneous samples of Study 2 and 3 and
careful balance between confronting consumers with the specific context of all studies (investing in stocks)
interpersonal influences (e.g., through bank employees) warrant follow-up studies to investigate whether the effects
and letting them interact with those employees and relevant we find in the voluntary and involuntary contexts hold for
others, because consumers are most strongly influenced different situations (e.g., bonds, mortgages) and different
when they are free to ask others, not when they are demographic and socio-economic groups.
involuntarily confronted with (company-driven) interper- Fourth, Study 2 uses psychological reactance to explain
sonal influence. Facilitating consumers’ interactions seems the less significant impact of normative influence, but we
to provide the most effective strategy, though at the expense do not measure it. In Study 3, we gauged subjects’
of less company control over the timing, frequency, and reactance by measuring the extent to which the interper-
content of these interactions. sonal influences irritated them. As we expected, reactance
Finally, considering the strong connections between was relatively low in this voluntary setting, which may help
susceptibility to interpersonal influence and conformity explain the stronger impact of normative influences in
(Clark and Goldsmith 2006) and between conformist Study 3. However, further studies are needed to draw any
behavior and herding (Hirschleifer 2001), public policy- final conclusions about the impact of reactance.
makers should take notice of the situations in which Fifth, the current measure of CSII focuses on personal
investors are more or less likely to be susceptible to influences, that is, the influence of friends and relatives.
interpersonal influences and monitor changes in investors’ Additional research could broaden this concept by consid-
susceptibility over time. A steady rise in susceptibility may ering the susceptibility of consumers to other, less closely
related, sources of information, such as business experts, Anderson, J. C., & Gerbing, D. W. (1988). Structural equation
modeling in practice: A review and recommended two-step
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J. of the Acad. Mark. Sci.

ORIGINAL EMPIRICAL RESEARCH

Susceptibility to and impact of interpersonal influence

Figure 1 Conceptual model of

Table 1 Measurement model results of Study 1

Construct Item wordinga SL α/CR AVE

Table 2 Construct correlations and AVE of Study 1

Figure 2 Structural model

Method without reference to whether the subjects were closely or

Informational Normative No Informational Normative No influence

Preference for A a: 2.60c,d,e,f (25) b: 3.05e,f (19) g: 3.28a,e (25)

Procedure ther dimension increases the overall percentage of correct

Informational influence Normative influence Informational influence Normative influence

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