The complementary role of corporate governance, business government relationship, gender equality, firm size and commercial legal disputes, in the effect of management practices on digital financial inclusion, through innovation in small and medium enterprises in Pakistan

Abstract

This study investigates the relationship between management practices and digital financial inclusion (DFI) of small and medium enterprises (SMEs) in Pakistan, with the mediation of innovation and moderation of business-government relationship, corporate governance, gender equality, commercial legal disputes, and firm size. Based on the Unified Theory of Acceptance and Use of Technology (UTAUT) and Institutional Theory, it posits that digital financial inclusion is a manifestation of internal organizational factors as well as external institutional factors. The analysis uses secondary firm-level data from the World Bank Enterprise Survey (Pakistan) 2022, a stratified random sample of 1,300 formal firms, restricted to a SME analytic sample of 990 small and medium firms. Constructs are operationalized as composite indices from theoretically aligned survey items: management practices from the management module, innovation from product, process, and research-and-development items, and digital financial inclusion from the use of mobile money, electronic payments, formal accounts, and credit. The model is estimated using survey-weighted path analysis, with the indirect effect assessed through bootstrapping and moderation tested through interaction terms. Management practices are positively and significantly associated with digital financial inclusion. Innovation does not mediate this relationship; as formal innovation is rare among the firms sampled. Among the moderators, only firm size is significant, and negatively, indicating a stronger management-inclusion link in smaller SMEs; the remaining four moderators are not significant. Because the data are cross-sectional, the findings represent explanatory associations rather than causal effects