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Peer effects with multifaceted network dependence structures in R&D investment decisions: Evidence from Chinese listed firms

Author

Listed:
  • Zhu, Yanli
  • Yin, Li
  • Lu, Xueyan

Abstract

The literature has demonstrated that firms in the same network exhibit significant peer effects, but barely from the perspective of multiple networks. Using a novel spatial econometric model with convex combinations of multiple weight matrices, we investigate the peer effects with multifaceted network dependence structures in Chinese listed firms’ R&D investment decisions, and the underlying mechanism as well as the economic consequences. Our main conclusions include: (1) A firm’s R&D investment is mostly affected by its industry peer firms, followed by those with similar technical and financial characteristics, and geographical peer firms are negligible. (2) The intensity of peer effects is significantly affected by the degree of information incompleteness and market competition. (3) A firm’s R&D investment can benefit its performance in the short run, while peer firms’ R&D investments would inhibit its performance after a period of time. The research can provide practical guidance for market participants and regulators.

Suggested Citation

  • Zhu, Yanli & Yin, Li & Lu, Xueyan, 2024. "Peer effects with multifaceted network dependence structures in R&D investment decisions: Evidence from Chinese listed firms," Research in International Business and Finance, Elsevier, vol. 70(PA).
    • Handle: RePEc:eee:riibaf:v:70:y:2024:i:pa:s0275531924001338
    DOI: 10.1016/j.ribaf.2024.102340
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    More about this item

    Keywords

    Peer effect; Multifaceted network dependence structures; R&D investment decision; Spatial econometric model; Convex combination;
    All these keywords.

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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