Financial Performance of Innovation Investment in Specialized‎SMEs Under A Digital Business Environment: A Comparative‎Analysis of China and Thailand (2019-2024)‎

  • Authors

    • Yanwei Fu Panyapiwat Institute of Management
    • J. Yunlong Duan Panyapiwat Institute of Management
    https://doi.org/10.14419/2hdnc414

    Received date: September 23, 2025

    Accepted date: October 7, 2025

    Published date: October 18, 2025

  • Innovation Investment; SME Financial Performance; Digital Transformation; China; Thailand; Comparative Analysis

  • Abstract

    This study investigates the financial performance implications of innovation investment in specialized small and medium enterprises (SMEs) ‎operating within digital business environments, comparing China and Thailand from 2019-2024. Using a mixed-methods approach, this ‎research employs Partial Least Squares Structural Equation Modeling (PLS-SEM) and Data Envelopment Analysis (DEA) to analyze primary survey data from 284 specialized SMEs (184 Chinese, 100 Thai) and secondary financial data covering the pre- and post-digital trans-‎formation periods. The Sustainable Digital Transformation (SDT) framework is integrated with the Technology-Organization-Environment ‎‎(TOE) model to examine innovation investment impacts. Results reveal significant positive relationships between innovation investment and ‎financial performance in both countries, with Chinese SMEs demonstrating 23% higher ROI from digital innovation investments compared ‎to Thai counterparts. Digital transformation mediates 68% of the innovation investment-performance relationship in China versus 45% in ‎Thailand. Manufacturing SMEs in both countries outperform service-sector SMEs by 31% in innovation-driven financial performance. The ‎study is limited to two countries and may not generalize to other emerging economies. Cultural and institutional differences between China ‎and Thailand provide valuable insights but limit broader applicability. Practical implications: Before applying innovation strategies, SME ‎managers need to invest in digital infrastructure. Government-pushed policies that encourage digital transformation yield 2.3× more productive innovation investment. It is the first comprehensive comparative study examining the financial performance of innovation investment in ‎China and Thailand's specialized SMEs for the critical digital transformation period of 2019-2024, providing theoretical and practical implications to emerging market SMEs‎.

  • References

    1. Baker, J. (2011). The technology–organization–environment framework. Information Systems Theory, 28(1), 231–245. https://doi.org/10.1007/978-1-4419-6108-2_12.
    2. Bank of Thailand. (2024). Virtual bank licensing framework and regulatory guidelines. Bank of Thailand Official Publication.
    3. Barney, J. (1991). Firm Resources and Sustained Competitive Advantage. Journal of Management, 17(1), 99–120. https://doi.org/10.1177/014920639101700108.
    4. Chen, Y.-Y. K., Jaw, Y.-L., & Wu, B.-L. (2016). Effect of digital transformation on organisational performance of SMEs. Internet Research, 26(1), 186–212. https://doi.org/10.1108/IntR-12-2013-0265.
    5. Davis, F. D. (1989). Perceived usefulness, perceived ease of use, and user acceptance of information technology. MIS Quarterly, 13(3), 319–340. https://doi.org/10.2307/249008.
    6. Dejardin, M., Raposo, M. L., Ferreira, J. J., Fernandes, C. I., Veiga, P. M., & Farinha, L. (2022). The impact of dynamic capabilities on SME per-formance during COVID-19. Review of Managerial Science, 17. https://doi.org/10.1007/s11846-022-00569-x.
    7. Elkington, J. (1997). Cannibals with forks: the triple bottom line of 21st century business. Www.proquest.com. https://search.proquest.com/openview/804cc9d98196ef6e26d88748e89f8db0/1?pq-origsite=gscholar&cbl=35934.
    8. EUSME. (2023, August 24). SMEs in China: 2023 Policy Environment Report. EU SME Centre: China Market Research, Training, Advice | Get Ready for China. https://www.eusmecentre.org.cn/publications/smes-in-china-2023-policy-environment-report/.
    9. Hang, L. (2024). Business climate for SMEs showed further improvement in 2024: report - Global Times. Globaltimes.cn. https://www.globaltimes.cn/page/202505/1334436.shtml.
    10. Krisanaraj, J. (2025, March 30). Experts urge SMEs to embrace AI for business growth and efficiency. Nationthailand; Jarupong Krisanaraj. https://www.nationthailand.com/business/tech/40048074.
    11. Li, H., Ma, S., & Pan, X. (2025). The influence of stock market liberalization on labor investment decisions: Evidence from China. Pacific-Basin Finance Journal, 93, 102859. https://doi.org/10.1016/j.pacfin.2025.102859.
    12. Liu, J., Zhou, K., Zhang, Y., & Tang, F. (2023). The Effect of Financial Digital Transformation on Financial Performance: The Intermediary Effect of Information Symmetry and Operating Costs. Sustainability, 15(6), 5059–5059. https://doi.org/10.3390/su15065059.
    13. Liu, W., & Suzuki, Y. (2024). Stock liquidity, financial constraints, and innovation in Chinese SMEs. Financial Innovation, 10(1). https://doi.org/10.1186/s40854-023-00597-w.
    14. Marketing and Communications. (2025, June 2). Empowering Businesses Through Thailand SME Digital Transformation. Market Research Thai-land Consulting Firm. https://marketresearchthailand.com/insights/articles/empower-businesses-thailand-sme-digital-transformation.
    15. Martínez-Peláez, R., Escobar, M. A., Félix, V. G., Ostos, R., Parra-Michel, J., García, V., Ochoa-Brust, A., Velarde-Alvarado, P., Félix, R. A., Oli-vares-Bautista, S., Flores, V., & Mena, L. J. (2024). Sustainable Digital Transformation for SMEs: A Comprehensive Framework for Informed De-cision-Making. Sustainability, 16(11), 4447–4447. https://doi.org/10.3390/su16114447.
    16. Merín-Rodrigáñez, J., Dasí, À., & Alegre, J. (2024). Digital transformation and firm performance in innovative SMEs: The mediating role of busi-ness model innovation. Technovation, 134, 103027. https://doi.org/10.1016/j.technovation.2024.103027.
    17. Reuters. (2024, May 27). China sets up third fund with $47.5 bln to boost semiconductor sector. Reuters. https://www.reuters.com/technology/china-sets-up-475-bln-state-fund-boost-semiconductor-industry-2024-05-27/.
    18. Rujirawanich, P., Addison, R., & Smallman, C. (2011). The effects of cultural factors on innovation in a Thai SME. Management Research Review, 34(12), 1264–1279. https://doi.org/10.1108/01409171111186397.
    19. Teece, D. J., Pisano, G., & Shuen, A. (1997). Dynamic Capabilities and Strategic Management. Strategic Management Journal, 18(7), 509–533. https://www.jstor.org/stable/3088148. https://doi.org/10.1002/(SICI)1097-0266(199708)18:7<509::AID-SMJ882>3.0.CO;2-Z.
    20. Teng, X., Wu, Z., & Yang, F. (2022). Impact of the Digital Transformation of Small- and Medium-Sized Listed Companies on Performance: Based on a Cost-Benefit Analysis Framework. Journal of Mathematics, 2022(1), 1–14. https://doi.org/10.1155/2022/1504499.
    21. Thawesaengskulthai, N., Chatmarathong, A., & Koiwanit, J. (2024). Impact and policy supporting Thailand innovation driven enterprise: orchestrat-ing university innovation and entrepreneurship ecosystem with public and private stakeholders. Journal of Innovation and Entrepreneurship, 13(1). https://doi.org/10.1186/s13731-024-00371-x.
    22. Troise, C., Corvello, V., Ghobadian, A., & O’Regan, N. (2022). How can SMEs successfully navigate VUCA environment: The role of agility in the digital transformation era. Technological Forecasting and Social Change, 174(174), 121227. https://doi.org/10.1016/j.techfore.2021.121227.
    23. Venkatesh, V., & Davis, F. D. (2000). A theoretical extension of the technology acceptance model: Four longitudinal field studies. Management Science, 46(2), 186–204. https://doi.org/10.1287/mnsc.46.2.186.11926.
    24. Venkatesh, V., Morris, M. G., Davis, G. B., & Davis, F. D. (2003). User Acceptance of Information technology: toward a Unified View. MIS Quarterly, 27(3), 425–478. https://doi.org/10.2307/30036540.

  • Downloads

  • How to Cite

    Fu, Y. ., & Duan, J. Y. . (2025). Financial Performance of Innovation Investment in Specialized‎SMEs Under A Digital Business Environment: A Comparative‎Analysis of China and Thailand (2019-2024)‎. International Journal of Accounting and Economics Studies, 12(6), 646-654. https://doi.org/10.14419/2hdnc414