Preprint Article Version 1 Preserved in Portico This version is not peer-reviewed

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

Version 1 : Received: 23 September 2022 / Approved: 28 September 2022 / Online: 28 September 2022 (03:39:39 CEST)

A peer-reviewed article of this Preprint also exists.

Hlioui, Z.; Gabsi, M.; Omri, A. Informal Competition Effect on SMEs’ Innovation: Do Credit Constraints Matter? Evidence from Eastern European Countries. Sustainability 2022, 14, 13874. Hlioui, Z.; Gabsi, M.; Omri, A. Informal Competition Effect on SMEs’ Innovation: Do Credit Constraints Matter? Evidence from Eastern European Countries. Sustainability 2022, 14, 13874.

Abstract

This paper examines the influence of informal competition on SMEs innovation in the Eastern European transition economies. It investigates whether credit constraints mediate this relation. SMEs innovation is presented through four measures: Product innovation, Process innovation, Radical innovation and Green innovation. Using the BEEPs VI that covers the period from 2018-2020, we show that informal competition affects positively the product, process and radical innovation. Yet, it has a non-significant effect on green innovation. Besides, the informal sector increases SMEs credit constraints, which indirectly leads to less corporate innovation. The negative indirect effect restrains the positive direct effect. Hence, a partial mediation effect of credit constraints on the informal competition and the innovation proxies is reported with the exception of green innovation.

Keywords

Innovation; Informal competition; credit access; Business plan; emerging countries

Subject

Business, Economics and Management, Finance

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