Can digital technology break the financing dilemma of innovative SMEs? Based on the perspective of enterprise innovation

Based on Signaling theory, this paper examines the mechanisms and effects of SMEs adopting digital technology to alleviate their own financing constraints from an innovation perspective. Empirical testing was conducted using data from enterprises in Zhongguancun, China, spanning the years 2014 to 2019. The study finds that the application of digital technology can effectively alleviate the financing constraints faced by enterprises. Additionally, the impact varies depending on the specific digital technology employed and the level of its adoption. The mechanism analysis reveals that enhancing innovation capability and integrating into innovation networks are crucial pathways through which digital technology alleviates financing constraints. Specifically, the application of digital technology improves firms' innovation capabilities, facilitates their integration into innovation networks, attracts external investment by effectively signaling high-quality attributes to the market, and thereby mitigates financing constraints. Further analysis of heterogeneity indicates that the alleviating effect of digital technology on financing constraints is more pronounced when entrepreneurs' cognitive abilities are stronger, when industry competition is intense, and when enterprise scale is larger. This paper provides an empirical foundation for addressing SMEs' financing dilemmas in the digital era and supports high-quality development of enterprises.