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Digitalization of SMEs toward an inclusive and sustainable social development

Digitalization has become an important theme in the SMEs supporting sustainable social development. Nevertheless, how SME digitization affects their access to finance, innovation, and other societal benefits is still largely uncharted territory. In this paper we explore how digitization eases the access of SMEs to finance, stimulates sustainable development-oriented innovation; and encourages SMEs to grow inclusively within the developing world. Based on the panel of province-level digital finance indicators in 2013–2021 as well as firm-level survey data of 339 SMEs, we conclude that digital financial services significantly lower financing constraints via improving information transparency and operating efficiency. However, the positive impacts vary across: private, high-technology, and eastern-region SMEs benefit more and the benefits diminish at higher than moderate levels of digital intensity. Cross-country validation further suggests that convergence between technology strategy and sustainability objectives will be essential in ensuring that technology investment does in fact achieve its desired social or environmental impact. These findings suggest that  firm-level digitalization activities could contribute towards an inclusive society, regional convergence, and sustainable development, subject to the integration of financial inclusion, capacity-building, and specific enforcement guidance.

Asia Pacific Academy of Science Pte. Ltd.

Hanzhou Wang

Sustainable Social Development

2026

Title: Digitalization of SMEs toward an inclusive and sustainable social development

Description:

<p class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph; line-height: 120%; layout-grid-mode: char; mso-layout-grid-align: none; margin: 12.

0pt 0cm 6.

0pt 0cm;"><span lang="RU" style="font-size: 10.

0pt; line-height: 120%; font-family: 'Times New Roman',serif; mso-fareast-font-family: 'Times New Roman'; color: black; mso-themecolor: text1;">Digitalization has become an important theme in the SMEs supporting sustainable social development.

Nevertheless<span lang="RU" style="font-size: 10.

0pt; line-height: 120%; font-family: 'Times New Roman',serif; color: black; mso-themecolor: text1; mso-fareast-language: ZH-CN;">, <span lang="RU" style="font-size: 10.

0pt; line-height: 120%; font-family: 'Times New Roman',serif; mso-fareast-font-family: 'Times New Roman'; color: black; mso-themecolor: text1;">how SME digitization affects their access to finance, innovation, and other societal benefits is still largely uncharted territory.

In this paper we explore how digitization eases the access of SMEs to finance<span lang="RU" style="font-size: 10.

0pt; line-height: 120%; font-family: 'Times New Roman',serif; color: black; mso-themecolor: text1; mso-fareast-language: ZH-CN;">, <span lang="RU" style="font-size: 10.

0pt; line-height: 120%; font-family: 'Times New Roman',serif; mso-fareast-font-family: 'Times New Roman'; color: black; mso-themecolor: text1;">stimulates sustainable <span lang="RU" style="font-size: 10.

0pt; line-height: 120%; font-family: 'Times New Roman',serif; color: black; mso-themecolor: text1; mso-fareast-language: ZH-CN;">development-oriented<span lang="RU" style="font-size: 10.

0pt; line-height: 120%; font-family: 'Times New Roman',serif; mso-fareast-font-family: 'Times New Roman'; color: black; mso-themecolor: text1;"> innovation; and encourages SMEs to grow inclusively within the developing world<span lang="RU" style="font-size: 10.

0pt; line-height: 120%; font-family: 'Times New Roman',serif; color: black; mso-themecolor: text1; mso-fareast-language: ZH-CN;">.

<span lang="RU" style="font-size: 10.

0pt; line-height: 120%; font-family: 'Times New Roman',serif; mso-fareast-font-family: 'Times New Roman'; color: black; mso-themecolor: text1;">Based on the panel of province-level digital finance indicators in 2013–2021 as well as<span lang="EN-US" style="font-size: 10.

0pt; line-height: 120%; font-family: 'Times New Roman',serif; color: black; mso-themecolor: text1; mso-ansi-language: EN-US; mso-fareast-language: ZH-CN;"> firm-level<span lang="RU" style="font-size: 10.

0pt; line-height: 120%; font-family: 'Times New Roman',serif; mso-fareast-font-family: 'Times New Roman'; color: black; mso-themecolor: text1;"> survey data of 339 SMEs, we conclude that digital financial services significantly lower financing constraints via improving information transparency and operating efficiency.

However, the positive impacts vary across: private<span lang="RU" style="font-size: 10.

0pt; line-height: 120%; font-family: 'Times New Roman',serif; color: black; mso-themecolor: text1; mso-fareast-language: ZH-CN;">, <span lang="RU" style="font-size: 10.

0pt; line-height: 120%; font-family: 'Times New Roman',serif; mso-fareast-font-family: 'Times New Roman'; color: black; mso-themecolor: text1;">high-technology, and eastern-region SMEs benefit more and the benefits diminish at higher than moderate levels of digital intensity<span lang="RU" style="font-size: 10.

0pt; line-height: 120%; font-family: 'Times New Roman',serif; color: black; mso-themecolor: text1; mso-fareast-language: ZH-CN;">.

Cross-country<span lang="RU" style="font-size: 10.

0pt; line-height: 120%; font-family: 'Times New Roman',serif; mso-fareast-font-family: 'Times New Roman'; color: black; mso-themecolor: text1;"> validation further suggests that convergence between technology strategy and sustainability objectives will be essential in ensuring that technology investment does in fact achieve its desired social or <span lang="RU" style="font-size: 10.

0pt; line-height: 120%; font-family: 'Times New Roman',serif; color: black; mso-themecolor: text1; mso-fareast-language: ZH-CN;">environmental<span lang="RU" style="font-size: 10.

0pt; line-height: 120%; font-family: 'Times New Roman',serif; mso-fareast-font-family: 'Times New Roman'; color: black; mso-themecolor: text1;"> impact.

These findings suggest that <span lang="RU" style="font-size: 10.

0pt; line-height: 120%; font-family: 'Times New Roman',serif; mso-fareast-font-family: 'Segoe UI'; color: black; mso-color-alt: windowtext; background: white;"> <span lang="EN-US" style="font-size: 10.

0pt; line-height: 120%; font-family: 'Times New Roman',serif; color: black; mso-themecolor: text1; mso-ansi-language: EN-US; mso-fareast-language: ZH-CN;">firm-level digitalization activities <span lang="RU" style="font-size: 10.

0pt; line-height: 120%; font-family: 'Times New Roman',serif; mso-fareast-font-family: 'Times New Roman'; color: black; mso-themecolor: text1;">could contribute towards an inclusive society<span lang="RU" style="font-size: 10.

0pt; line-height: 120%; font-family: 'Times New Roman',serif; color: black; mso-themecolor: text1; mso-fareast-language: ZH-CN;">, <span lang="RU" style="font-size: 10.

0pt; line-height: 120%; font-family: 'Times New Roman',serif; mso-fareast-font-family: 'Times New Roman'; color: black; mso-themecolor: text1;">regional convergence, and sustainable development, subject to the integration of financial inclusion, capacity-building<span lang="RU" style="font-size: 10.

0pt; line-height: 120%; font-family: 'Times New Roman',serif; color: black; mso-themecolor: text1; mso-fareast-language: ZH-CN;">, <span lang="RU" style="font-size: 10.

0pt; line-height: 120%; font-family: 'Times New Roman',serif; mso-fareast-font-family: 'Times New Roman'; color: black; mso-themecolor: text1;">and specific enforcement guidance.

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Digitalization of SMEs toward an inclusive and sustainable social development

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