Employee protection and innovation in small and medium-sized enterprises: the moderating effect of regional digitalization

Abstract

Prior research suggests the increasingly important role of employees in identifying and generating innovative opportunities in the digital economy, yet our understanding of the effect of employee protection on the innovation of small and medium-sized enterprises (SMEs) remains limited. This study addressed this gap, we integrate the resource-based view and institutional perspective to examine how employee protection affects SMEs innovation in emerging economies. Using negative binomial regression and the analysis of a national survey of 1698 Chinese private SMEs, we show that employee protection has an inverted U-shaped effect on SMEs innovation. Furthermore, this curvilinear relationship is positively moderated by regional digitalization such that the inverted U-shaped relationship is intensified when firms are in regions with higher levels of digitalization. Overall, this study contributes to the literature on SMEs innovation by examining how SMEs innovation is shaped by employee protection in the digital age. We also contribute to the employee protection literature by investigating its complicated effect on SMEs innovation in emerging economies.

RÉSUMÉ

Des recherches antérieures suggèrent le rôle de plus en plus important des employés dans l’identification et la création d’opportunités innovantes dans l’économie numérique. Pourtant notre compréhension de l’effet de la protection des employés sur l’innovation des petites et moyennes entreprises (PME) demeure limitée. Cette étude comble cette lacune. Nous y intégrons la vision fondée sur les ressources et la perspective institutionnelle pour examiner comment la protection des employés impacte l’innovation des PME dans les économies émergentes. En utilisant une régression binomiale négative et l’analyse d’une enquête nationale portant sur 1698 PME privées chinoises, nous montrons que la protection des employés a un effet en forme de U inversé sur l’innovation des PME. En outre, ce rapport curviligne est positivement modéré par la numérisation régionale, de sorte que le rapport en forme de U inversé est accentué lorsque les entreprises se trouvent dans des régions où le niveau de numérisation est le plus élevé. Dans l’ensemble, cette étude contribue à la littérature sur l’innovation des PME en examinant la manière dont celle-ci est façonnée par la protection des employés à l’ère numérique. Nous contribuons également à la littérature sur la protection des employés en examinant l’effet compliqué de cette dernière sur l’innovation des PME dans les économies émergentes.

Keywords:

• Employee protection
• SMEs innovation
• resource-based view
• institutional perspective
• regional digitalization

MOTS-CLÉS:

• Protection des employés
• innovation des PME
• vision basée sur les ressources
• perspective institutionnelle
• numérisation régionale

Disclosure statement

No potential conflict of interest was reported by the author(s).

Data availability statement

All data that support the findings of this study are included in this manuscript and its Supplementary Information files.

Additional information

Funding

This work was supported by the National Social Science Foundation of China under Grant [number 20BGL203].

Notes on contributors

Qian Xu

Qian Xu ([email protected]) is a PhD candidate at the College of Economics and Management, Nanjing University of Aeronautics and Astronautics. Her research focuses on innovation strategy for SMEs.

Wanming Chen

Wanming Chen ([email protected]) is a professor at the College of Economics and Management, Nanjing University of Aeronautics and Astronautics. His research interests revolve around the analysis of innovation and entrepreneurship strategies. He presided over the National Social Science Foundation of China.

Beilei Dang

Beilei Dang ([email protected]) is a lecturer at School of Digital Commerce, Nanjing Vacational College of Information Technology. Her main research interests are innovation, entrepreneurship, and digital strategy.

Yuling Shi

Yuling Shi ([email protected]) is a PhD candidate at the College of Economics and Management, Nanjing University of Aeronautics and Astronautics. Her research focuses on entrepreneur status and enterprise green innovation.