Peer Effects with Multifaceted Network Dependence Structures in R&D Investment Decisions : Evidence from Chinese Listed Firms

Based on the sample of Chinese listed firms covering 2012-2020, we consider multifaceted (geographical, industrial, financial and technical) network dependence structures, and employ a spatial autoregressive model with convex combinations of multiple connectivity weight matrices to explore the peer effects in firms' R&D investment decisions. Then we investigate the mechanism and economic consequences of the peer effects. Our conclusions include: (1) A firm's R&D investment is mostly affected by its peer firms in the same industry, 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. Based on the above analysis, suggestions are put forward for the government and firms