Do peer firms influence innovation?

Machokoto, Michael; Gyimah, Daniel; Ntim, Collins G.

doi:10.1016/j.bar.2021.100988

Cited by 63 publications

(54 citation statements)

References 111 publications

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“…Overall, the results are in line with our prediction (H3) and consistent with the findings of Machokoto et al (2021) and Raffaelli et al (2013) that firms imitate institutional equivalents when the difference between local and industry peers is greater.…”

Section: Ajarsupporting

confidence: 93%

Earnings management contagion: evidence from institutional equivalence

Bansal

2022

AJAR

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PurposeThe study aims to investigate how the presence and absence of institutional equivalents (interaction of industry peers and local peers) affect the earnings management practices of firms.Design/methodology/approachThe study uses discretionary accruals to operationalize earnings management. A sample of 18,744 Bombay Stock Exchange (BSE) listed firm years spanning over 12 financial years (March 2010–March 2021) has been considered and analyzed through panel data regression models.FindingsThe author’s results show that the earnings management practices of a firm's institutional equivalents and the firm's own earnings management are positively associated, implying that firms closely follow their institutional equivalents. This association is found to be more pronounced among focal firms when the difference between the earnings management levels of industry peers and local peers is greater. Further, the author find that large firms aggressively imitate their industry peers and local peers, whereas profitability does not influence their imitation behavior.Practical implicationsThe author’s findings have implications for understanding peer imitation processes, particularly when firms face increasingly multifaceted institutional environments. It suggests auditors and analysts take into account the earnings management practices of local and industry peers while analyzing the client's financial statements and making forecasts, respectively.Originality/valueThe study is among the pioneering attempts to explore the domain of earnings management from the lens of institutional equivalence and provides compelling evidence that the interaction of industry peers and local peers impacts the earnings management practices of firms.

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Section: Ajarsupporting

confidence: 93%

Earnings management contagion: evidence from institutional equivalence

Bansal

2022

AJAR

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“…It indicates that when penalized enterprises are subject to environmental administrative penalties, peer enterprises will perceive their possible illegal risks due to similar business structures (Wang et al, 2019). At the same time, the relevant response measures of the penalized enterprises also put competitive pressure on the peer enterprises and affect their competitive position (Machokoto et al, 2021). And companies tend to believe that other companies have superior information and thus prefer to follow the decisions of other companies, so peer companies will accordingly carry out GTI and improve their own GTI level (Machokoto et al, 2021).…”

Section: Test Resultsmentioning

confidence: 99%

“…At the same time, the relevant response measures of the penalized enterprises also put competitive pressure on the peer enterprises and affect their competitive position (Machokoto et al, 2021). And companies tend to believe that other companies have superior information and thus prefer to follow the decisions of other companies, so peer companies will accordingly carry out GTI and improve their own GTI level (Machokoto et al, 2021). On the one hand, peer enterprises' GTI will bring first-mover advantage incentives to themselves, enabling them to obtain environmental protection benefits as well as social benefits.…”

Section: Test Resultsmentioning

confidence: 99%

Does environmental administrative penalty promote the quantity and quality of green technology innovation in China? Analysis based on the peer effect

Chen

Zhan

2022

Front. Environ. Sci.

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As the guarantee for the effective implementation of environmental policies, the spillover of the deterrent effect of environmental administrative penalties is crucial for solving the environmental regulatory dilemma. It is also unclear whether environmental administrative penalties can affect green technology innovation of the peer enterprises and whether they have an impact on both the quantity and quality dimensions. Taking listed firms of heavily polluting industries in China’s Shanghai and Shenzhen A-share from 2016 to 2020 as the sample, this paper analyzes the impact of the environmental administrative penalty on the quantity and quality of corporate green technology innovation based on the perspective of peer effect. The results indicate that: 1) Environmental administrative penalty significantly promotes the quantity and quality of peer enterprises’ green technology innovation. 2) Heterogeneity analysis shows that the diversity of penalties, the competitiveness of the penalized enterprises, and the property rights of peer enterprises all contribute to the different impacts of the environmental administrative penalty on the peer enterprises’ green technology innovation. 3) Further analysis shows that the promotion effect will be weakened when peer enterprises face high financing constraints. The research results expand the related research on direct government regulation and green technology innovation from the perspective of peer effect and provide policy reference for the government to formulate differentiated penalty policies according to the heterogeneity of enterprise.

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“…The differences between the innovativeness of firms have also attracted considerable academic interest in general management and accounting literature. In a recent study covering 4545 American firms between 1968 and 2018, Machokoto et al [71] found significant relationship between competition and firms' innovativeness. The willingness and ability of firms to learn innovative activities over time in Machokoto [71] was entirely consistent with the general feature that not all firms in an industry may be equally innovative, although they may learn in the long term.…”

Section: Literature Reviewmentioning

confidence: 99%

Competition and Innovation in Markets with Technology Leaders

Tsao

Mukherjee

Ray

2021

Games

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In this article, we consider technology leaders (which are innovators) and technology followers (which are non-innovators) to provide a new theoretical explanation for the well-cited empirical evidence of an inverted-U relationship between competition and aggregate innovation. We consider a two-stage game with a deterministic Research and Development (R&D) process, where the leaders first determine their R&D investments simultaneously and then all leaders and followers determine their outputs simultaneously. We show that the inverted-U relationship between competition and aggregate innovation occurs if competition is affected by the number of technology followers. However, the presence of more technology leaders decreases individual R&D investments while increasing aggregate R&D investments. If the total number of firms remains the same but the composition of technology leaders and followers changes in favor of leaders (followers), individual R&D investments decrease (increase) but aggregate R&D investments increase (decrease). The relationship between competition and R&D investments can be U-shaped if the intensity of competition is measured by product substitutability. Contrary to the standard expectation, the presence of more firms may reduce welfare.

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Do peer firms influence innovation?

Cited by 63 publications

References 111 publications

Earnings management contagion: evidence from institutional equivalence

Earnings management contagion: evidence from institutional equivalence

Does environmental administrative penalty promote the quantity and quality of green technology innovation in China? Analysis based on the peer effect

Competition and Innovation in Markets with Technology Leaders

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