ICT Usage and Business Performance of SMEs in Sri Lanka: The Mediation Effect of Bounded Rationality

Priyanath, H. M. S.; Megama, R. G. N.

doi:10.4038/wjm.v11i2.7470

Cited by 1 publication

(2 citation statements)

References 35 publications

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“…Likewise, Lestari et al (2020) pointed out some indicators to build the competitiveness of SMEs using digital channels, such as superior efficiency capabilities, quality and ability. On top of that, Kulathunga et al (2020) and Ranatunga et al (2020) exclaimed that techno-finance literacy is an imperative predictor of sound SME business performance. In addition, Lu et al (2022) and Kumarasinghe and Lakmali (2020) postulate that a business model is positively impacted by strategy, technology, communication and innovation economics.…”

Section: Digitalization Of Corporate Financementioning

confidence: 99%

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Digitalization of corporate finance and firm performance: global evidence and analysis

Hossain,

Sultana

2024

JFEP

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Purpose As of now, the digitization of corporate finance presents a paradigm shift in business strategy, innovation, financing and managerial capability around the globe. However, the prevailing finance scholarly works hardly document the impact of the digitalization of corporate finance on firm performance with global evidence and analysis. Hence, the contemporary debate on whether firm performance is genuinely stimulated because of the digitalization of corporate finance or not has been a pressing issue in the relevant literature. Therefore, the purpose of this study is to identify a data-driven, concise response to an unaddressed finance issue if the performance of high-digitalized firms (HDFs) outperforms that of their counterpart peers for wealth maximization. Design/methodology/approach The first stage test models examine the firm performance of relatively high-digitalized firms as opposed to low-digitalized firms based on the system GMM. The second stage test of the probabilistic (logit) model infers that the probability of being HDFs explores because of better performance. Then, the authors execute robust checks based on the different quantile regressions and Z-score-based system GMM. In addition, the authors recheck and present the test results of the fixed effect and random effect to capture time-invariant individual heterogeneity. Finally, the supplementary test findings of firms’ credit strength by using Altman five- and four-factor Z-score models are presented. Findings By using cross-country panel analysis as 15 years’ test bed for HDFs and low digitalized firms (LDFs), the test results indicate that the overall firm performance of a digitalized firm is significantly better than that of a non-digitalized firm. The global evidence documents that HDFs are exposed to higher values and are financially more persistent as compared to their counterparts. The finding is remarkably concomitant across several possible subsample analysis, such as country–industry–size–period analysis. Practical implications This study can be remarkably effective in encouraging managers, policymakers and investors to acknowledge the need for adopting the required digitalization. Overall, this original study addresses a core research gap in the corporate finance literature and remarkably provides further direction to rethink the assumptions of firm digitalization on additive value and thereby identify optimal decisions for wealth maximization. The findings also imply that investors require an additional risk premium if they invest in relatively LDFs, which have relatively lower market value and weaker firm performance. Originality/value From an investors point of view, the academic novelty contributes to an innovative and unsettled issue on the impact of digitization of corporate finance on firm performance because there is a new question of high or low digitization of corporate finance in the global market. Hence, this academic novelty contributes to sharing global evidence of the digitalization of corporate finance and its effect on firm performances. In addition, an intensive critical review analysis is conducted based on the most recent and relevant scholarly works published in the top-tier journals of finance and business stream to fix the hypothesis. Overall, this study addresses a core research gap in the corporate finance literature; notably provides further direction to rethink firm digitalization; and thereby identifies optimal decisions for shareholders’ wealth maximization.

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Section: Digitalization Of Corporate Financementioning

confidence: 99%

“…On top of that, Kulathunga et al. (2020) and Ranatunga et al. (2020) exclaimed that techno-finance literacy is an imperative predictor of sound SME business performance.…”

Section: Literature Review and Hypothesismentioning

confidence: 99%

Digitalization of corporate finance and firm performance: global evidence and analysis

Hossain,

Sultana

2024

JFEP

View full text Add to dashboard Cite

show abstract

ICT Usage and Business Performance of SMEs in Sri Lanka: The Mediation Effect of Bounded Rationality

Cited by 1 publication

References 35 publications

Digitalization of corporate finance and firm performance: global evidence and analysis

Digitalization of corporate finance and firm performance: global evidence and analysis

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