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The role of peer effects in firms' usage of R&D tax exemptions

Journal Contribution - Journal Article

Survey evidence suggests that firms are insufficiently aware of newly introduced R&D support measures due to the complexity of the public supportlandscape. Asaresult,adoptionisslowandincomplete,whichimpliesthateligiblefirmsleavemoneyonthetable.Wehypothesizethatakeycopingmechanisminvolvesfirmsrelyingontheirpeers’behaviourtoinformtheirownadoptiondecision.Wetestthishypothesisbyanalysingfirms'firstuseofanewly-introducedR&DtaxexemptionschemeinBelgium.Weidentifyendogenouspeereffectsinindustry-andlocation-basedpeergroupsbyexploitingtheintransitivityinfirms’networksaswellasvariationinpeergroupsize.Theresultsshowthatfirms’decisionstouseR&Dtaxexemptionsareinfluencedbythechoicesoftheirpeers,primarilyinthetimewindowimmediatelyfollowingtheirintroduction.ThefindingssuggestthattheefficacyofR&Dpolicycanbeimprovedbyaccountingforthestructureoffirmnetworksinthecommunicationofnewsupportinitiatives.
Journal: Journal of business research
ISSN: 0148-2963
Volume: 108
Pages: 74 - 91
Publication year:2020
Keywords:Peer effects, Information diffusion, R&D tax exemptions, Innovation, policy
BOF-keylabel:yes
IOF-keylabel:yes
BOF-publication weight:3
CSS-citation score:1
Authors from:Government, Higher Education, Private
Accessibility:Open