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

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.

Critical thinking and creativity of MSMEs in improving business performance during the covid-19 pandemic

“…The total performance of a business is measured by the outcomes it has accomplished as well as the methods it has used to fulfil the necessary job or project (Paik et al, 2017). MSMEs may use past investment success to forecast future growth, as well as a rise in corporate profits to demonstrate that consumers are satisfied with the company's goods and services, to make predictions (Colovic, 2021;Pu et al, 2021). Companies that have been sold to the public on stock exchanges must maintain a continuous increase in earnings in order to retain their appeal to potential investors (Pu et al, 2021).…”

“…Businesses of all sizes, including Micro, Small, and Medium-sized Enterprises (MSMEs), play a critical and important part in the development of a country's economy (Amankwah-Amoah, Khan, & Wood, 2021;Bouwman, Nikou, & de Reuver, 2019;Paik, Kim, & Park, 2017;Prasetyo & Kistanti, 2020;Pu, Qamruzzaman, Mehta, Naqvi, & Karim, 2021;Ramli, Firdaus, Arief, & Setiawan, 2019;Tiago, Gil, Stemberger, & Borges-Tiago, 2020). The critical role of MSMEs not only contribute significantly to economic growth and employment, but they also play an essential role in the distribution of development outcomes and benefits (Amankwah-Amoah et al, 2021;Bouwman et al, 2019).…”

“…The COVID-19 outbreak, which was first detected in Indonesia in early March, has already spread across the nation, with the number of confirmed cases rapidly increasing. According to the Indonesian government, individuals should be encouraged to engage in a range of activities at home, such as working, learning, and praying, among others (Prasetyo & Kistanti, 2020;Pu et al, 2021). Individuals' economic activity is unquestionably affected as a result of these circumstances (Paik et al, 2017;Prasanna et al, 2019).…”

“…When it comes to the efficient use of time and resources, critical thinking will also help in the reduction of stress in the workplace, which is especially essential at this time, when businesses are coping with the challenges brought on by the COVID-19 pandemic epidemic (Amankwah-Amoah et al, 2021;Rakshit et al, 2021). Additionally, in order to effectively sell their products and generate profits in the current climate, companies must achieve a breakthrough in their operations (Pu et al, 2021). The growth of business managers' creativity is also very important, since when they have creativity on their side, their capacity to innovate, be more effective, and be more understandable is greatly improved (Bouwman et al, 2019;Viswanathan & Telukdarie, 2021).…”

Business Survival of Small and Medium-Sized Restaurants through a Crisis: The Role of Government Support and Innovation

“…In the Saudi Arabia context, the package provided by the government to support SMEs during the COVID-19 crisis includes the suspension of government tax payments, fees, and others to provide liquidity to the private sector and an increase in available financing through the National Development Fund [67]. In Bangladesh, the government supports SMEs by allocating a lump sum of cash for two months especially for those who work in tourism, farmers, wholesalers, retailers, and homemaker businesses [68]. In this case, the government support for SMEs' survival during the COVID-19 crisis in Indonesia can be considered more comprehensive compared to other countries since government support in Indonesia is not only focused on financial assistance.…”