IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v13y2021i16p9218-d615944.html

Innovative Finance, Technological Adaptation and SMEs Sustainability: The Mediating Role of Government Support during COVID-19 Pandemic

Author

Listed:
  • Ganlin Pu

    (School of Economics and Management, Wenzhou University of Technology, Wenzhou 325035, China)

  • Md. Qamruzzaman

    (School of Business and Economics, United International University, Dhaka 1212, Bangladesh)

  • Ahmed Muneeb Mehta

    (Hailey College of Banking and Finance (HCBF), University of the Punjab, Lahore 5400, Pakistan)

  • Farah Naz Naqvi

    (Hailey College of Banking and Finance (HCBF), University of the Punjab, Lahore 5400, Pakistan)

  • Salma Karim

    (School of Business and Economics, United International University, Dhaka 1212, Bangladesh)

Abstract

Small and medium enterprises (SMEs) survival is critical for economic sustainability due to the multifaceted role of the economy. Thus, halting SMEs operation hurts the aggregate economy. During the present pandemic, SMEs’ sustainability in Bangladesh is under-challenged because of limited market demand, supply constraints, financial incapacity, and capital restrictions. However, with the concerted effort from firms and the government, SME’s have been trying to reestablish from the unforeseen consequence by capitalizing on innovation, skills, and economic resources. The motivation of the study is to gauge the impact of innovative finance, technological adaptation, and the government’s role on SMEs’ sustainability during the COVID-19 pandemic in Bangladesh. As a study sample, 2000 SMEs were considered for data collection through a structured questionnaire from 10 December 2020, to 28 January 2021. A sample of 1895 SMEs was returned with their responses. However, after a careful data cleaning procedure, only a sample of 1395 (69.75%) responses was found suitable for study. The study applied structural equation modelling to explore causal effects and test the proposed hypothesis for the hypnotized model, i.e., more precisely, to explore the direct effects of technology adaptation and innovative finance and indirect effects through government support on SMEs. Study findings revealed that SMEs’ sustainability positively accelerates by applying innovative finance and integration of technological adaptation. In contrast, the mediating role of government was also established with indirect assessment. Study findings suggest that policy formulation and implementation must be initiated, focusing on effective online financial services, settling business transactions, and integrating IT advancements in operation.

Suggested Citation

  • Ganlin Pu & Md. Qamruzzaman & Ahmed Muneeb Mehta & Farah Naz Naqvi & Salma Karim, 2021. "Innovative Finance, Technological Adaptation and SMEs Sustainability: The Mediating Role of Government Support during COVID-19 Pandemic," Sustainability, MDPI, vol. 13(16), pages 1-27, August.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:16:p:9218-:d:615944
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/13/16/9218/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/13/16/9218/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Teixeira, Adriano Alves & Jabbour, Charbel José Chiappetta & Jabbour, Ana Beatriz Lopes de Sousa, 2012. "Relationship between green management and environmental training in companies located in Brazil: A theoretical framework and case studies," International Journal of Production Economics, Elsevier, vol. 140(1), pages 318-329.
    2. Guariglia, Alessandra & Liu, Xiaoxuan & Song, Lina, 2011. "Internal finance and growth: Microeconometric evidence on Chinese firms," Journal of Development Economics, Elsevier, vol. 96(1), pages 79-94, September.
    3. Myers, Stewart C. & Majluf, Nicholas S., 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Journal of Financial Economics, Elsevier, vol. 13(2), pages 187-221, June.
    4. Mirjam Schiffer & Beatrice Weder, 2001. "Firm Size and the Business Environment : Worldwide Survey Results," World Bank Publications - Books, The World Bank Group, number 13988, April.
    5. Andrea Calabrò & Mariateresa Torchia & Daniela Gimenez Jimenez & Sascha Kraus, 2021. "The role of human capital on family firm innovativeness: the strategic leadership role of family board members," International Entrepreneurship and Management Journal, Springer, vol. 17(1), pages 261-287, March.
    6. Iva Gregurec & Martina Tomičić Furjan & Katarina Tomičić-Pupek, 2021. "The Impact of COVID-19 on Sustainable Business Models in SMEs," Sustainability, MDPI, vol. 13(3), pages 1-24, January.
    7. Masukujjaman, Mohammad & Alam, Syed Shah & Siwar, Chamhuri & Halim, Sharina Abdul, 2021. "Purchase intention of renewable energy technology in rural areas in Bangladesh: Empirical evidence," Renewable Energy, Elsevier, vol. 170(C), pages 639-651.
    8. Tajdini, Saeed, 2021. "The effects of the subjective-experiential knowledge gap on consumers’ information search behavior and perceptions of consumption risk," Journal of Business Research, Elsevier, vol. 135(C), pages 66-77.
    9. Yasemin Y. Kor & Joseph T. Mahoney, 2000. "Penrose’s Resource‐Based Approach: The Process and Product of Research Creativity," Journal of Management Studies, Wiley Blackwell, vol. 37(1), pages 1-1, January.
    10. Kuckertz, Andreas & Brändle, Leif & Gaudig, Anja & Hinderer, Sebastian & Morales Reyes, Carlos Arturo & Prochotta, Alicia & Steinbrink, Kathrin M. & Berger, Elisabeth S.C., 2020. "Startups in times of crisis – A rapid response to the COVID-19 pandemic," Journal of Business Venturing Insights, Elsevier, vol. 13(C).
    11. Sarstedt, Marko & Hair, Joseph F. & Cheah, Jun-Hwa & Becker, Jan-Michael & Ringle, Christian M., 2019. "How to specify, estimate, and validate higher-order constructs in PLS-SEM," Australasian marketing journal, Elsevier, vol. 27(3), pages 197-211.
    12. Zhiwen Li & Oswin Aganda Anaba & Zhiqiang Ma & Mingxing Li, 2021. "Ghanaian SMEs Amidst the COVID-19 Pandemic: Evaluating the Influence of Entrepreneurial Orientation," Sustainability, MDPI, vol. 13(3), pages 1-27, January.
    13. Thorsten Beck & Asli Demirgüç‐Kunt & Vojislav Maksimovic, 2005. "Financial and Legal Constraints to Growth: Does Firm Size Matter?," Journal of Finance, American Finance Association, vol. 60(1), pages 137-177, February.
    14. Lingyan Meng & Md Qamruzzaman & Anass Hamad Elneel Adow, 2021. "Technological Adaption and Open Innovation in SMEs: An Strategic Assessment for Women-Owned SMEs Sustainability in Bangladesh," Sustainability, MDPI, vol. 13(5), pages 1-22, March.
    15. Takupiwa Nyanga & Herbert Zirima, 2020. "Reactions Of Small To Medium Enterprises In Masvingo, Zimbabwe To Covid 19: Implications On Productivity," Business Excellence and Management, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 10(5), pages 22-32, October.
    16. Weaven, Scott & Quach, Sara & Thaichon, Park & Frazer, Lorelle & Billot, Ken & Grace, Debra, 2021. "Surviving an economic downturn: Dynamic capabilities of SMEs," Journal of Business Research, Elsevier, vol. 128(C), pages 109-123.
    17. Tarisai Kudakwashe Manyati & Morgen Mutsau, 2019. "Exploring technological adaptation in the informal economy: A case study of innovations in small and medium enterprises (SMEs) in Zimbabwe," African Journal of Science, Technology, Innovation and Development, Taylor & Francis Journals, vol. 11(2), pages 253-259, February.
    18. Ganotakis, Panagiotis & D'Angelo, Alfredo & Konara, Palitha, 2021. "From latent to emergent entrepreneurship: The role of human capital in entrepreneurial founding teams and the effect of external knowledge spillovers for technology adoption," Technological Forecasting and Social Change, Elsevier, vol. 170(C).
    19. Lukman Raimi & Ifeatu Uzodinma, 2020. "Trends in Financing Programmes for the Development of Micro, Small and Medium Enterprises (MSMEs) in Nigeria: A Qualitative Meta-synthesis," FGF Studies in Small Business and Entrepreneurship, in: Alexandra Moritz & Joern H. Block & Stephan Golla & Arndt Werner (ed.), Contemporary Developments in Entrepreneurial Finance, pages 81-101, Springer.
    20. McGuinness, Gerard & Hogan, Teresa & Powell, Ronan, 2018. "European trade credit use and SME survival," Journal of Corporate Finance, Elsevier, vol. 49(C), pages 81-103.
    21. Watson, Warren & Stewart, Wayne Jr. & BarNir, Anat, 2003. "The effects of human capital, organizational demography, and interpersonal processes on venture partner perceptions of firm profit and growth," Journal of Business Venturing, Elsevier, vol. 18(2), pages 145-164, March.
    22. Wang, Yonggui & Hong, Aoran & Li, Xia & Gao, Jia, 2020. "Marketing innovations during a global crisis: A study of China firms’ response to COVID-19," Journal of Business Research, Elsevier, vol. 116(C), pages 214-220.
    23. Asem Alkahtani & Norfarah Nordin & Rizwan Ullah Khan, 2020. "Does government support enhance the relation between networking structure and sustainable competitive performance among SMEs?," Journal of Innovation and Entrepreneurship, Springer, vol. 9(1), pages 1-16, December.
    24. Andrea Calabrò & Mariateresa Torchia & Daniela Gimenez Jimenez & Sascha Kraus, 0. "The role of human capital on family firm innovativeness: the strategic leadership role of family board members," International Entrepreneurship and Management Journal, Springer, vol. 0, pages 1-27.
    25. Bruno Cassiman & Reinhilde Veugelers, 2002. "R&D Cooperation and Spillovers: Some Empirical Evidence from Belgium," American Economic Review, American Economic Association, vol. 92(4), pages 1169-1184, September.
    26. Fosfuri, Andrea & Tribø, Josep A., 2008. "Exploring the antecedents of potential absorptive capacity and its impact on innovation performance," Omega, Elsevier, vol. 36(2), pages 173-187, April.
    27. Li, Hongbin & Meng, Lingsheng & Wang, Qian & Zhou, Li-An, 2008. "Political connections, financing and firm performance: Evidence from Chinese private firms," Journal of Development Economics, Elsevier, vol. 87(2), pages 283-299, October.
    28. Oya Pinar Ardic & Nataliya Mylenko & Valentina Saltane, 2012. "Access to Finance by Small and Medium Enterprises: a Cross-Country Analysis with A New Data Set," Pacific Economic Review, Wiley Blackwell, vol. 17(4), pages 491-513, October.
    29. Amankwah-Amoah, Joseph & Khan, Zaheer & Wood, Geoffrey, 2021. "COVID-19 and business failures: The paradoxes of experience, scale, and scope for theory and practice," European Management Journal, Elsevier, vol. 39(2), pages 179-184.
    30. Jianmu Ye & KMMCB Kulathunga, 2019. "How Does Financial Literacy Promote Sustainability in SMEs? A Developing Country Perspective," Sustainability, MDPI, vol. 11(10), pages 1-21, May.
    31. Berranger, Pascale de, 2002. "The adoption of e-business technology by SMEs," Research Memorandum 033, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
    32. Richard P. Bagozzi, 1983. "A Holistic Methodology for Modeling Consumer Response to Innovation," Operations Research, INFORMS, vol. 31(1), pages 128-176, February.
    33. Lin, Hsiu-Fen, 2014. "Understanding the determinants of electronic supply chain management system adoption: Using the technology–organization–environment framework," Technological Forecasting and Social Change, Elsevier, vol. 86(C), pages 80-92.
    34. Md. Qamruzzaman & Jianguo Wei, 2019. "Financial Innovation and Financial Inclusion Nexus in South Asian Countries: Evidence from Symmetric and Asymmetric Panel Investigation," IJFS, MDPI, vol. 7(4), pages 1-27, October.
    35. Beck, Thorsten & Demirgüç-Kunt, Asli & Maksimovic, Vojislav, 2008. "Financing patterns around the world: Are small firms different?," Journal of Financial Economics, Elsevier, vol. 89(3), pages 467-487, September.
    36. Jan Brinckmann & Soeren Salomo & Hans Georg Gemuenden, 2011. "Financial Management Competence of Founding Teams and Growth of New Technology–Based Firms," Entrepreneurship Theory and Practice, , vol. 35(2), pages 217-243, March.
    37. Kevane, Michael & Wydick, Bruce, 2001. "Microenterprise Lending to Female Entrepreneurs: Sacrificing Economic Growth for Poverty Alleviation?," World Development, Elsevier, vol. 29(7), pages 1225-1236, July.
    38. Wiklund, Johan & Shepherd, Dean, 2005. "Entrepreneurial orientation and small business performance: a configurational approach," Journal of Business Venturing, Elsevier, vol. 20(1), pages 71-91, January.
    39. McGeever, Niall & McQuinn, John & Myers, Samantha, 2020. "SME liquidity needs during the COVID-19 shock," Financial Stability Notes 2/FS/20, Central Bank of Ireland.
    40. Grzegorz Zimon & Robert Dankiewicz, 2020. "Trade Credit Management Strategies in SMEs and the COVID-19 Pandemic—A Case of Poland," Sustainability, MDPI, vol. 12(15), pages 1-16, July.
    41. Benyamin M. Bergmann Lichtenstein & Candida G. Brush, 2001. "How Do “Resource Bundles†Develop and Change in New Ventures? A Dynamic Model and Longitudinal Exploration," Entrepreneurship Theory and Practice, , vol. 25(3), pages 37-58, April.
    42. Clay M. Voorhees & Michael K. Brady & Roger Calantone & Edward Ramirez, 2016. "Discriminant validity testing in marketing: an analysis, causes for concern, and proposed remedies," Journal of the Academy of Marketing Science, Springer, vol. 44(1), pages 119-134, January.
    43. Qianwei Ying & Hazrat Hassan & Habib Ahmad, 2019. "The Role of a Manager’s Intangible Capabilities in Resource Acquisition and Sustainable Competitive Performance," Sustainability, MDPI, vol. 11(2), pages 1-20, January.
    44. Mario Arturo Ruiz Estrada & Evangelos Koutronas & Minsoo Lee, 2021. "Stagpression: The Economic and Financial Impact of the COVID-19 Pandemic," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 15(1), February.
    45. Storey, D. J. & Tether, B. S., 1998. "Public policy measures to support new technology-based firms in the European Union," Research Policy, Elsevier, vol. 26(9), pages 1037-1057, April.
    46. Alexandre Moeuf & Samir Lamouri & Robert Pellerin & Romain Eburdy & Simon Tamayo, 2017. "Industry 4.0 and the SME: a technology-focused review of the empirical literature," Post-Print hal-01836173, HAL.
    47. John Joseph & Alex J. Wilson, 2018. "The growth of the firm: An attention‐based view," Strategic Management Journal, Wiley Blackwell, vol. 39(6), pages 1779-1800, June.
    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. Zhang, Dongyang, 2020. "How do firms overcome financial constraint anxiety to survive in the market? Evidence from large manufacturing data," International Review of Financial Analysis, Elsevier, vol. 70(C).
    2. Guo, Kai & Ke, Bin & Tang, Song, 2023. "Private firms' financial constraints and share pledging by controlling shareholders of publicly listed firms: Evidence from China," Journal of Corporate Finance, Elsevier, vol. 80(C).
    3. Liu,Tingting & Ullah,Barkat & Wei,Zuobao & Xu,L. Colin, 2015. "The dark side of disclosure : evidence of government expropriation from worldwide firms," Policy Research Working Paper Series 7254, The World Bank.
    4. Sasan Bakhtiari & Robert Breunig & Lisa Magnani & Jacquelyn Zhang, 2020. "Financial Constraints and Small and Medium Enterprises: A Review," The Economic Record, The Economic Society of Australia, vol. 96(315), pages 506-523, December.
    5. Lau, Siew Yee & Parinduri, Rasyad & Lee, Yoong Hon, 2019. "Does Social Health Insurance Help Owners of Micro- and Small Firms Cope with Family Hardships? Evidence from Indonesia," MPRA Paper 95295, University Library of Munich, Germany.
    6. Didier, Tatiana & Schmukler, Sergio L., 2013. "The financing and growth of firms in China and India: Evidence from capital markets," Journal of International Money and Finance, Elsevier, vol. 39(C), pages 111-137.
    7. Paola Bongini & Annalisa Ferrando & Emanuele Rossi & Monica Rossolini, 2021. "SME access to market-based finance across Eurozone countries," Small Business Economics, Springer, vol. 56(4), pages 1667-1697, April.
    8. Ali Zackery & Joseph Amankwah-Amoah & Zahra Heidari Darani & Shiva Ghasemi, 2022. "COVID-19 Research in Business and Management: A Review and Future Research Agenda," Sustainability, MDPI, vol. 14(16), pages 1-32, August.
    9. Love, Inessa & Peria, Maria Soledad Martinez & Singh, Sandeep, 2013. "Collateral registries for movable assets : does their introduction spur firms'access to bank finance ?," Policy Research Working Paper Series 6477, The World Bank.
    10. Colombelli, Alessandra & Grilli, Luca & Minola, Tommaso & Mrkajic, Boris, 2020. "To what extent do young innovative companies take advantage of policy support to enact innovation appropriation mechanisms?," Research Policy, Elsevier, vol. 49(10).
    11. Segarra Blasco, Agustí, 1958- & Teruel, Mercedes, 2010. "Are small firms more sensitive to financial variables?," Working Papers 2072/151623, Universitat Rovira i Virgili, Department of Economics.
    12. Michal Hrivnák & Peter Moritz & Marcela Chreneková, 2021. "What Kept the Boat Afloat? Sustainability of Employment in Knowledge-Intensive Sectors Due to Government Measures during COVID-19 Pandemic," Sustainability, MDPI, vol. 13(15), pages 1-21, July.
    13. Muhammad Aslam & Bilal Ahmad & Tuba Rasheed, 2025. "Navigating the Impact of Green Innovation, Technological Linkages, and Knowledge Management on Sustainable Performance of SMEs," Journal of International Entrepreneurship, Springer, vol. 23(3), pages 593-618, September.
    14. Ding, Sai & Guariglia, Alessandra & Knight, John, 2013. "Investment and financing constraints in China: Does working capital management make a difference?," Journal of Banking & Finance, Elsevier, vol. 37(5), pages 1490-1507.
    15. Wolday Amha & Tadele Ferede & Mulat Demeke, . "The Impact of Financial Access on Firm Growth: evidence from Ethiopian Grain Traders and Millers," Ethiopian Journal of Economics, Ethiopian Economics Association, vol. 22(01).
    16. Dongmin Kong & Lu Shi, 2023. "Financial constraints and political catering disclosures of non‐state‐owned firms: Evidence from textual analysis," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(4), pages 4533-4563, December.
    17. Lisana B. Martinez & M. Belén Guercio & Aurelio F. Bariviera, 2022. "A meta‐analysis of SMEs literature based on the survey on access to finance of enterprises of the European central bank," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(2), pages 1870-1885, April.
    18. Ek, Chanbora & Wu, Guiying Laura, 2018. "Investment-cash flow sensitivities and capital misallocation," Journal of Development Economics, Elsevier, vol. 133(C), pages 220-230.
    19. Li, Xishu & Voorneveld, Maarten & de Koster, René, 2022. "Business transformation in an age of turbulence – Lessons learned from COVID-19," Technological Forecasting and Social Change, Elsevier, vol. 176(C).
    20. AHMAD Idris & ALNI Rahmawati & ARNI Surwanti & MAMDUH M. Hanafi, 2023. "Financial Literacy To Improve Sustainability: A Bibliometric Analysis," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 18(3), pages 24-43, December.

    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:gam:jsusta:v:13:y:2021:i:16:p:9218-:d:615944. 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: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    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.