Financial Resilience and Sustainable Growth of Small and Medium Enterprises: The Role of Digital Finance, Financial Management, and Entrepreneurial Decision-Making

Abstract

The financial sustainability of small and medium-sized enterprises (SMEs) is of growing importance to ensure their continued growth in times of economic challenges, technological innovation, and limited resources. The study was done on a sample size of 500 small and medium businesses (SMEs) from India, Indonesia, Malaysia, Philippines and Vietnam, to analyze the impact of digital finance, financial management and entrepreneurial decision making on financial resilience and sustainable growth. The research design was quantitative, cross-sectional and the principal constructs were measured using multi-item scales. The proposed relationships were assessed using descriptive statistics, reliability analysis, Pearson correlation, multiple regression and bootstrapped mediation analysis. It was found that digital finance, financial management and entrepreneurial decision-making all had positive significant influences on financial resilience. Financial resilience was the most important factor predicting sustainable growth, with the three explanatory capabilities having significant direct impacts on growth as well. The results of mediation analysis also showed that financial resilience partly mediated the effects of digital finance, financial management, and entrepreneurial decision-making on sustainable growth. The results illustrate that technical financial use, financial practices and entrepreneurial learning ability integrate to enhance the ability of SMEs to absorb shock and to move towards longer-term development. The study underscores the need for a digital financial access program that is coupled to internal financial capability and strategic decision making to foster resilient and sustainable SME growth in the various economic and sectoral environments in Asia.