Financial Performance of Innovation Investment in SpecializedSMEs Under A Digital Business Environment: A ComparativeAnalysis of China and Thailand (2019-2024)
Year: 2025
Type: article
Abstract: This study investigates the financial performance implications of innovation investment in specialized small and medium enterprises (SMEs) operating within digital business environments, comparing China and Thailand from 2019-2024. Using a mixed-methods approach, this research employs Partial Least Squares Structural Equation Modeling (PLS-SEM) and Data Envelopment Analysis (DEA) to analyze primary survey data from 284 specialized SMEs (184 Chinese, 100 Thai) and secondary financial data covering the pre- and post-digital trans-formation periods. The Sustainable Digital Transformation (SDT) framework is integrated with the Technology-Organization-Environment (TOE) model to examine innovation investment impacts. Results reveal significant positive relationships between innovation investment and financial performance in both countries, with Chinese SMEs demonstrating 23% higher ROI from digital innovation investments compared to Thai counterparts. Digital transformation mediates 68% of the innovation investment-performance relationship in China versus 45% in Thailand. Manufacturing SMEs in both countries outperform service-sector SMEs by 31% in innovation-driven financial performance. The study is limited to two countries and may not generalize to other emerging economies. Cultural and institutional differences between China and Thailand provide valuable insights but limit broader applicability. Practical implications: Before applying innovation strategies, SME managers need to invest in digital infrastructure. Government-pushed policies that encourage digital transformation yield 2.3× more productive innovation investment. It is the first comprehensive comparative study examining the financial performance of innovation investment in China and Thailand's specialized SMEs for the critical digital transformation period of 2019-2024, providing theoretical and practical implications to emerging market SMEs.
DOI: 10.14419/2hdnc414
Authors: Yanwei Fu, J. Yunlong Duan
Institution: Panyapiwat Institute of Management
Language: English
Subfield: Strategy and Management
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W4415342003
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