Conflicting or Complementary? Peer Effects on Green Breakthrough Technological Innovation: Evidence from China

Abstract

This study examines the impact and mechanisms of peer effects on green breakthrough technological innovation in Chinese manufacturing firms. Using data from firms listed on the Shanghai and Shenzhen stock exchanges between 2007 and 2022, we find that: (i) peer effects influence green breakthrough innovation in Chinese manufacturing firms; (ii) these effects are mainly driven by firms' proactive responses to government-led, market-oriented regulations, rather than complying with government command regulations; (iii) stronger peer effects are observed in state-owned enterprises, firms with fewer financial constraints, better governance, and those in sectors with high climate uncertainty or advanced manufacturing; (iv) firms with green credit support and strong intellectual property protection exhibit more pronounced peer effects.

Keywords: green breakthrough technological innovation, Peer Effect, government regulation, Market power