IDEAS home Printed from https://ideas.repec.org/a/eee/reveco/v99y2025ics1059056025002187.html
   My bibliography  Save this article

An analysis of the path of labor protection in the innovation of small and medium-sized enterprises - A moderated mediation model

Author

Listed:
  • Ma, Shengchun
  • Zhang, Zixuan
  • Wang, Yaohui

Abstract

Small and medium-sized enterprises (SMEs) are important forces in technological innovation. How labor protection affects innovation in SMEs is a question worth paying attention to in current research on SME innovation. On the basis of data from 203 SMEs listed on China's SME board from 2009 to 2022, this study employs a fixed effects model to explore the effects of labor protection on the innovation of heterogeneous SMEs. Empirical and mechanism analyses reveal that strengthening labor protection fosters SME innovation and that labor protection promotes innovation through the mediating role of wage incentives. Wage incentives act as a moderated mediator that reflects the heterogeneity of enterprises. In the short run, labor protection significantly influences innovation in SMEs with elevated domestic trade levels. SMEs that receive robust government support significantly benefit from the enforcement of labor protections. This study contributes to the research on the impact of labor protection on enterprise innovation and provides valuable insights for SME innovation management and adjustments in labor protection policies by relevant government departments.

Suggested Citation

  • Ma, Shengchun & Zhang, Zixuan & Wang, Yaohui, 2025. "An analysis of the path of labor protection in the innovation of small and medium-sized enterprises - A moderated mediation model," International Review of Economics & Finance, Elsevier, vol. 99(C).
    • Handle: RePEc:eee:reveco:v:99:y:2025:i:c:s1059056025002187
    DOI: 10.1016/j.iref.2025.104055
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1059056025002187
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.iref.2025.104055?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Gustavo Manso, 2011. "Motivating Innovation," Journal of Finance, American Finance Association, vol. 66(5), pages 1823-1860, October.
    2. Bruno Amable & Lilas Demmou & Donatella Gatti, 2011. "The effect of employment protection and product market regulation on labour market performance: substitution or complementarity?," Applied Economics, Taylor & Francis Journals, vol. 43(4), pages 449-464.
    3. Lee, Sungjoo & Park, Gwangman & Yoon, Byungun & Park, Jinwoo, 2010. "Open innovation in SMEs--An intermediated network model," Research Policy, Elsevier, vol. 39(2), pages 290-300, March.
    4. Mark C. Anderson & Rajiv D. Banker & Surya N. Janakiraman, 2003. "Are Selling, General, and Administrative Costs “Sticky”?," Journal of Accounting Research, Wiley Blackwell, vol. 41(1), pages 47-63, March.
    5. Federico Cingano & Marco Leonardi & Julián Messina & Giovanni Pica, 2010. "The effects of employment protection legislation and financial market imperfections on investment: evidence from a firm-level panel of EU countries [Technology and labour regulations]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 25(61), pages 117-163.
    6. Viral V. Acharya & Ramin P. Baghai & Krishnamurthy V. Subramanian, 2014. "Wrongful Discharge Laws and Innovation," The Review of Financial Studies, Society for Financial Studies, vol. 27(1), pages 301-346, January.
    7. repec:bla:ecpoli:v:25:y:2010:i::p:117-163 is not listed on IDEAS
    8. Chen, Huafeng Jason & Kacperczyk, Marcin & Ortiz-Molina, Hernán, 2011. "Labor Unions, Operating Flexibility, and the Cost of Equity," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 46(1), pages 25-58, February.
    9. Zhao, Liupeng & Zhang, Ke, 2024. "Labor protection and corporate labor investment efficiency - Evidence based on the implementation of the "Labor Contract Law"," Finance Research Letters, Elsevier, vol. 69(PA).
    10. repec:oup:ecpoli:v:25:y:2010:i::p:117-163 is not listed on IDEAS
    11. Andrea Bassanini & Danielle Venn, 2007. "Assessing the Impact of Labour Market Policies on Productivity: A Difference-in-Differences Approach," OECD Social, Employment and Migration Working Papers 54, OECD Publishing.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Francis, Bill B. & Kim, Incheol & Wang, Bin & Zhang, Zhengyi, 2018. "Labor law and innovation revisited," Journal of Banking & Finance, Elsevier, vol. 94(C), pages 1-15.
    2. Daniel Bradley & Incheol Kim & Xuan Tian, 2017. "Do Unions Affect Innovation?," Management Science, INFORMS, vol. 63(7), pages 2251-2271, July.
    3. Omesh Kini & Mo Shen & Jaideep Shenoy & Venkat Subramaniam, 2022. "Labor Unions and Product Quality Failures," Management Science, INFORMS, vol. 68(7), pages 5403-5440, July.
    4. Kong, Dongmin & Zhang, Bohui & Zhang, Jian, 2022. "Higher education and corporate innovation," Journal of Corporate Finance, Elsevier, vol. 72(C).
    5. Nguyen, Justin Hung & Qiu, Buhui, 2022. "Right-to-Work laws and corporate innovation," Journal of Corporate Finance, Elsevier, vol. 76(C).
    6. Rong, Yuen & Tian, Cunzhi & Li, Lifang & Zheng, Xinwei, 2020. "Labor hiring and stock return: A model and new evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 59(C).
    7. Bratti, Massimiliano & Conti, Maurizio & Sulis, Giovanni, 2018. "Employment Protection, Temporary Contracts and Firm-Provided Training: Evidence from Italy," IZA Discussion Papers 11339, Institute of Labor Economics (IZA).
    8. Chen, Chong & Huang, Qianqian & Shi, Chang & Yuan, Tao, 2024. "Opioid epidemic and corporate innovation," Journal of Corporate Finance, Elsevier, vol. 86(C).
    9. Jeon, Haejun & Cui, Xue & Zhang, Chuanqian, 2023. "The effects of labor choice on investment and output dynamics," Journal of Corporate Finance, Elsevier, vol. 83(C).
    10. Wu, Qiang & Dbouk, Wassim & Hasan, Iftekhar & Kobeissi, Nada & Zheng, Li, 2021. "Does gender affect innovation? Evidence from female chief technology officers," Research Policy, Elsevier, vol. 50(9).
    11. Ramana Nanda & William R. Kerr, 2015. "Financing Innovation," Annual Review of Financial Economics, Annual Reviews, vol. 7(1), pages 445-462, December.
    12. Andrea Bassanini, 2012. "Aggregate Earnings and Macroeconomic Shocks: the Role of Labour Market Policies and Institutions," Review of Economics and Institutions, Università di Perugia, vol. 3(3).
    13. Fan, Di & Li, Yi & Chen, Liang, 2017. "Configuring innovative societies: The crossvergent role of cultural and institutional varieties," Technovation, Elsevier, vol. 66, pages 43-56.
    14. Nico Dewaelheyns & Cynthia Van Hulle & Yannick Van Landuyt & Mathias Verreydt, 2021. "Labor Contracts, Wages and SME Failure," Sustainability, MDPI, vol. 13(14), pages 1-15, July.
    15. Viral V. Acharya & Ramin P. Baghai & Krishnamurthy V. Subramanian, 2013. "Labor Laws and Innovation," Journal of Law and Economics, University of Chicago Press, vol. 56(4), pages 997-1037.
    16. Lisi, Domenico & Malo, Miguel, 2014. "Cross-Sectors Skill Intensity, Productivity and Temporary Employment," MPRA Paper 56470, University Library of Munich, Germany.
    17. Hsu, Po-Hsuan & Tian, Xuan & Xu, Yan, 2014. "Financial development and innovation: Cross-country evidence," Journal of Financial Economics, Elsevier, vol. 112(1), pages 116-135.
    18. Nguyen, Phuong-Anh & Kecskés, Ambrus & Mansi, Sattar, 2020. "Does corporate social responsibility create shareholder value? The importance of long-term investors," Journal of Banking & Finance, Elsevier, vol. 112(C).
    19. Caroline Flammer & Aleksandra Kacperczyk, 2016. "The Impact of Stakeholder Orientation on Innovation: Evidence from a Natural Experiment," Management Science, INFORMS, vol. 62(7), pages 1982-2001, July.
    20. Maria De Paola & Roberto Nisticò & Vincenzo Scoppa, 2020. "Fertility Decisions And Employment Protection: The Unintended Consequences Of The Italian Jobs Act," Working Papers 202003, Università della Calabria, Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:reveco:v:99:y:2025:i:c:s1059056025002187. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/620165 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.