Program in Economic and Public Policy (PEPP) | General as well as scholarship admission available | University of Tsukuba

PEPP Seminar “Effects of Firms’ Networks on Their Participation in Business Seminars – Evidence from a Randomized Controlled Trial in Vietnam” (May 25)

2016/05/16

Title: “Effects of Firms’ Networks on Their Participation in Business Seminars –
Evidence from a Randomized Controlled Trial in Vietnam”
Presenter: Dr. Daichi SHIMAMOTO (Assistant Professor, Waseda Institute of Political Economy, Waseda University
Date: Wednesday, May 25th, 2016
Time: 15:30-17:00
Venue: 3K Building, Room 311 (Central Area)
Coordinator: Prof. Hisahiro NAITO

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Abstract

How is a decision maker’s decision affected by decisions of its peers? Such peer effects can hardly be identified because peers are endogenously determined. Therefore, we conducted a randomized controlled trial in traditional clusters of small and medium-sized enterprises (SMEs) in the garment industry in Vietnam and invited randomly selected firms to one-day seminars for export promotion. We identify causality of the peer effect by using the invitation of a firm’s peers (information exchange partners) as an instrumental variable for their actual participation. We find that a firm’s participation in the seminars is not encouraged when its peer firms in the same cluster participated in the seminar on the same day. This result implies that a positive effect of peers due to herd behavior and a negative effect due to free riding on peers’ information cancel out each other. However, we find a positive effect of participation of a firm’s peers in seminars before the seminar the firm was invited to, probably because good reputation of the seminars spread from earlier participants through firms’ networks. The presence of the word-of-mouth effect suggests that the number of adopters in the long run can vary substantially depending on the number of adopters in early stages.

 

Keywords: peer effect, network, randomized controlled trial, Vietnam

JEL classification: C93, D22

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