Previous　studies　have　investigated　the　factors　that　influence　firms＇　decision　engaging　in　government　innovation　programme,　but　some　important　horizontal　factors　have　been　largely　ignored,　such　as　the　effect　from　industry　peers.　Based　on　signal　theory　and　expectancy　theory,　this　paper　studies　the　role　of　industry　peers　who　have　obtained　government　R&D　subsidies　in　raising　awareness　and　motivation　of　other　non-funded　firms　to　engage　in　the　same　project.　Using　Chinese　listed　firms　between　2008　and　2016　as　the　empirical　sample,　this　paper　introduces　the　awareness-motivation-capability　(AMC)　framework　and　uses　the　Logit　regression　to　examine　the　associations　between　peer　effects　and　strategy　choice.　The　empirical　results　indicate　that　the　number　of　funded　firms　in　an　industry　and　their　superior　performance　have　positive　impact　on　non-funded　firms　to　obtain　government　R&D　subsidies,　and　these　relationships　are　further　strengthened　by　non-funded　firms＇　innovation　ability　and　profitability.　This　study　makes　contributions　to　literature　on　government　R&D　subsidies　and　peer　effect　by　providing　a　view　of　imitation　behaviour　in　innovation　activities.