Journal
JOURNAL OF BUSINESS RESEARCH
Volume 108, Issue -, Pages 74-91Publisher
ELSEVIER SCIENCE INC
DOI: 10.1016/j.jbusres.2019.09.059
Keywords
Peer effects; Information diffusion; R&D tax exemptions; Innovation policy
Categories
Funding
- KU Leuven [BOF-KUB ZKC7171]
- National Bank of Belgium [NBB/15/012]
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Survey evidence suggests that firms are insufficiently aware of newly introduced R&D support measures due to the complexity of the public support landscape. As a result, adoption is slow and incomplete, which implies that eligible firms leave money on the table. We hypothesize that a key coping mechanism involves firms relying on their peers' behaviour to inform their own adoption decision. We test this hypothesis by analysing firms' first use of a newly-introduced R&D tax exemption scheme in Belgium. We identify endogenous peer effects in industry- and location-based peer groups by exploiting the intransitivity in firms' networks as well as variation in peer group size. The results show that firms' decisions to use R&D tax exemptions are influenced by the choices of their peers, primarily in the time window immediately following their introduction. The findings suggest that the efficacy of R&D policy can be improved by accounting for the structure of firm networks in the communication of new support initiatives.
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