Abstract
We investigate how firms react to their industry and local peers’ commitment to and adoption of corporate green innovation (CGI). We find that in addition to the industry link, the peer effects of CGI also exist on the basis of geographic proximity. We further explore several channels through which the peer effects of CGI are motivated. We show that the industry peer effect of CGI is a response to competitive pressure and risk aversion, while the local peer effect of CGI is mainly driven by a firm's incentives to enhance green reputation. Our findings remain robust when using a spatial econometric model and considering nonlocal leading industry CGI portfolio and regional variations in sensitivities to macro shocks.
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