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Fintech, strategic incentives and investment to human capital, and MSEs innovation

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  • Chen, Siyu
  • Guo, Qing

Abstract

Using a nationally representative micro and small enterprises (MSEs) survey data and Digital Financial Inclusion Index in China, we empirically study whether and how fintech impacts the innovation of MSEs. We find that the development of fintech significantly increases the probability of engaging in innovation activities, and promotes MSEs innovation input and output. The mechanisms lie in that fintech promotes long-term strategic incentives and investment to human capital of MSEs, including choosing promotion and stock as incentives instead of gifts or trips, recruiting more university graduate students, increasing training fees and technician incomes. In the heterogeneity analysis, we find that fintech has a greater impact on those MSEs which are without government subsidies and with lower technical level, higher CEO education level. Further analysis shows that coverage breadth of fintech has greater impact on MSEs innovation. This paper enriches the micro mechanisms of fintech impacts on MSEs innovation, and provides a policy basis for releasing the innovation vitality of MSEs.

Suggested Citation

  • Chen, Siyu & Guo, Qing, 2023. "Fintech, strategic incentives and investment to human capital, and MSEs innovation," The North American Journal of Economics and Finance, Elsevier, vol. 68(C).
    • Handle: RePEc:eee:ecofin:v:68:y:2023:i:c:s1062940823000864
    DOI: 10.1016/j.najef.2023.101963
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    References listed on IDEAS

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    1. Bronwyn Hall, 2004. "The financing of research and development," Chapters, in: Anthony Bartzokas & Sunil Mani (ed.), Financial Systems, Corporate Investment in Innovation, and Venture Capital, chapter 2, Edward Elgar Publishing.
    2. Dirk Czarnitzki & Hanna Hottenrott, 2011. "R&D investment and financing constraints of small and medium-sized firms," Small Business Economics, Springer, vol. 36(1), pages 65-83, January.
    3. Alfonso Gambardella & Claudio Panico & Giovanni Valentini, 2015. "Strategic incentives to human capital," Strategic Management Journal, Wiley Blackwell, vol. 36(1), pages 37-52, January.
    4. Cohen, Wesley M., 2010. "Fifty Years of Empirical Studies of Innovative Activity and Performance," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 1, chapter 0, pages 129-213, Elsevier.
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    Cited by:

    1. Foguesatto, Cristian Rogério & Righi, Marcelo Brutti & Müller, Fernanda Maria, 2024. "Is there a dark side to financial inclusion? Understanding the relationship between financial inclusion and market risk," The North American Journal of Economics and Finance, Elsevier, vol. 72(C).
    2. Qing Guo & Siyu Chen & Xiangquan Zeng, 2024. "Digital finance, Bargaining Power and Gender Wage Gap," Papers 2405.15486, arXiv.org.

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