Following the Herd or the Bellwether: Peer Effects in Firms’ AI Adoption

Imitation and competition among peer firms serve as critical drivers of technology adoption and diffusion. Drawing on competitive dynamics and institutional theory, this study investigates the heterogeneous influence of peer firms on a focal firm's AI adoption by distinguishing between the peer group (the set of industry peers) and the peer leader (the most advanced AI adopter among industry peers). We use a panel dataset of publicly listed Chinese firms from 2012 to 2023 and estimate fixed-effects regression models to test the proposed hypotheses. The results show that the AI adoption levels of the peer group and peer leader positively influence the focal firm's AI adoption level, with the influence of the peer group being stronger. Industry digital maturity enhances the impact of the peer group while it weakens the effect of the peer leader. Chief Information Officer (CIO) presence strengthens the influence of the peer group and the peer leader, with the influence of the peer leader being more pronounced. In addition, firms with a high market position tend to imitate the peer leader, whereas firms in middle and low positions are more likely to follow the peer group. Multiple robustness checks confirm the validity of these findings. This study deepens the understanding of AI adoption antecedents and provides a more fine-grained perspective on peer effects, offering actionable insights for policymakers and engineering managers.