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Informal Competition Effect on SMEs’ Innovation: Do Credit Constraints Matter? Evidence from Eastern European Countries

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  • Zaineb Hlioui

    (GEF2A-Lab, Higher Institute of Management of Tunis, University of Tunis, Le Bardo 2000, Tunisia)

  • Mohamed Gabsi

    (Higher Institut of Management, University of Tunis, Le Bardo 2000, Tunisia)

  • Abdelwahed Omri

    (GEF2A-Lab, Higher Institute of Management of Tunis, University of Tunis, Le Bardo 2000, Tunisia)

Abstract

This paper examines the influence of informal competition on SME innovation in the Eastern European transition economies. Using the BEEPS VI, which covers the period from 2018–2020, we investigated the conditional mediation of credit constraints moderated by business plan elaboration. Looking at SMEs’ product innovation, process innovation, radical innovation, and green innovation, we find that informal competition’s direct effect enhances all the innovation proxies. Besides, the informal sector increases SMEs’ credit constraints, which indirectly leads to less corporate innovation. The negative indirect effect is alleviated by the business strategy development. Finally, using bootstrap resampling, we confirm the significant conditional mediation effect of credit constraints on the informal competition and the innovation proxies.

Suggested Citation

  • Zaineb Hlioui & Mohamed Gabsi & Abdelwahed Omri, 2022. "Informal Competition Effect on SMEs’ Innovation: Do Credit Constraints Matter? Evidence from Eastern European Countries," Sustainability, MDPI, vol. 14(21), pages 1-23, October.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:21:p:13874-:d:953025
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    2. Haojue Zhang & Yifu Sun & Changyu Meng, 2023. "Sustainable Urban Competitiveness from a Financial Development Perspective: An Empirical Study of China," Sustainability, MDPI, vol. 15(5), pages 1-18, February.

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