Convergence of Corporate Digital Innovation: Herding Behavior or Peer Effects?

Following and imitating others’ digital innovation decisions is not always grounded in rational judgment; it may also arise from blind conformity, reflecting a “herding behavior”. Drawing on a panel dataset of Chinese listed firms from 2010 to 2022, this study takes firms in the same industry as the reference group to investigate the existence, driving mechanisms, and economic consequences of corporate digital innovation convergence. The findings show that both breakthrough and incremental digital innovation exhibit convergence at the firm level and are jointly driven by information transmission, market competition, and resource dependence. However, the economic consequences of these two types of innovation convergence differ significantly. The convergence of breakthrough digital innovation enhances firms’ total factor productivity, return on equity, and capital market value, representing a positive peer effect, whereas the convergence of incremental digital innovation weakens these core indicators, reflecting a herding behavior. The heterogeneity analysis indicates that breakthrough digital innovation convergence is more pronounced in regions with stronger intellectual property protection and in industries with higher technology intensity, while incremental digital innovation convergence is more pronounced among private firms and in industries with lower technology intensity. Our findings provide valuable insights into the interactive dynamics of corporate digital innovation decisions and carry important implications for both theory and practice.