Effects of Peer Firms’ Government Certification on Focal Firm's Innovation Investment

Researchers have investigated how receiving certification (i.e., from the government) affects a firm's investment in innovation. However, previous studies have paid little attention to the influence of the certification of peer firms on a focal firm's investment in innovation. Drawing from the literature on competitive dynamics and the awareness–motivation–capability (AMC) framework, in this article, we propose an indirect "certification spillover effect," where the extent to which the high-tech enterprises (HTEs) certification of peer firms in the industry positively affects the focal firm's investment in innovation. We further argue that this relationship is contingent on the awareness (i.e., HTE-certified industry peer firm's size), motivation (i.e., financial performance gap between HTE-certified industry peer firms and focal firm), and capability (i.e., top management team members have backgrounds in research and development) of the focal firm to react to competitive tension from its industry peers. Using data from Chinese-listed manufacturing firms from 2008 to 2017, we find support for our theory. We contribute to research on the antecedents of innovation, the role of certification, and extend the AMC framework to a new context.