CEO social capital and Fintech innovation: the moderating role of financial flexibility in Chinese A-share listed firms
Mushahid Hussain Baig, Jin Xu, Obaid Gulzar, Faisal Shahzad, Rizwan AliPurpose
This study aims to examine the influence of CEO social capital (CEOS) on fintech innovation (FintechINN), a relationship that is not well understood. The research further explores the role of financial flexibility (FF) as a moderating factor in this relationship.
Design/methodology/approach
Utilizing a sample of Chinese A-share listed firms from 2014 to 2022, the study constructs a structural model based on upper echelons theory (UET). The analysis employs rigorous statistical methods, including 2SLS, two-step GMM and Heckman two-stage selection analysis, to ensure robust findings and to address potential endogeneity issues.
Findings
The results support all three hypotheses: (H1) CEO social capital (CEOS) has a positive and significant effect on fintech innovation (FintechINN); (H2) financial flexibility (FF) independently promotes FintechINN; and (H3) financial flexibility (FF) positively moderates the CEO social capital–fintech innovation relationship, such that the effect of CEOS is stronger in firms with higher FF.
Practical implications
For practitioners, the study underlines the importance of strong social networks for CEOs and maintaining FF to drive FintechINN. Managers should focus on building and leveraging CEOS and ensuring their firms have diverse and flexible financial resources. For policy makers, the insights suggest the need for strategies that support the development of CEO networks and improve access to diverse funding sources for firms.
Originality/value
This research makes a significant contribution to the literature by explaining the conditions under which CEOS facilitate FintechINN. It extends the upper echelons theory by highlighting the critical role of CEOS in promoting firm-level FintechINN.