Author(s)

ShanShan Lin^1,2, XiaoHan Chen³, Rong Huang^4*

Affiliation(s)

¹School of Business Administration, Guangdong University of Finance, Guangzhou 510520, Guangdong, China.

²Center for Chinese Family Business, Sun Yat-sen University, Guangzhou 510275, Guangdong, China.

³Leliu Branch, Guangdong Shunde Rural Commercial Bank, Foshan 528300, Guangdong, China.

⁴Entrepreneurship Service Department, Guangdong Productivity Center, Guangzhou 510070, Guangdong, China.

Corresponding Author

Rong Huang

ABSTRACT

The rapid adoption of Artificial Intelligence (AI) has revolutionized productivity across various industries. However, the influence of peer effects—interactions between firms within the same industry—and external institutional factors on AI adoption remains insufficiently explored. This study examines how peer influence and institutional factors affect production efficiency in the adoption of AI technology. Using a sample of publicly listed Chinese firms from 2011 to 2022, the study finds that AI adoption by peer firms significantly increases the AI adoption by focal firms, creating a positive feedback loop that accelerates industry-wide innovation. Additionally, the results reveal a substitution effect between institutional factors and peer influences. Specifically, the impact of peer effects on production efficiency is constrained for firms in pilot cities with favorable AI-related policies. These findings highlight the importance of strategic networking and supportive policy frameworks in leveraging AI to gain a competitive edge. This study contributes to the literature on innovation diffusion and offers practical insights for policymakers and business leaders looking to foster a more efficient, technology-driven ecosystem.

KEYWORDS

Peer effect; Institutional environment; Production efficiency, Artificial intelligence

CITE THIS PAPER

ShanShan Lin, XiaoHan Chen, Rong Huang. Unlocking the power of AI: how peer effects and institutional environment drive production efficiency in china’s public listed firms. Trends in Social Sciences and Humanities Research. 2025, 3(5): 31-40. DOI: https://doi.org/10.61784/tsshr3170.

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