This paper investigates how nepotism culture affects SMEs’ innovation behavior. Using a large international datasets of small and medium enterprises, we establish the negative effect of nepotism culture on SMEs’ innovation, and observe the heterogeneous impact based on the presence of informal payments, financial constraints, and female ownership. Our results suggest that nepotism culture hinders highly skilled human capital and formal training, both of which are paramount for technological advancement and economic development. The policy implication is that promoting merit-based recruitment and reducing nepotistic practices could enhance innovation capacity, especially by fostering a more competitive environment.

中文翻译：

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无形的手铐：裙带关系文化与中小企业的创新


本文研究了裙带关系文化如何影响中小企业的创新行为。使用大型中小型企业的国际数据集，我们确定了裙带关系文化对中小企业创新的负面影响，并观察了基于非正规支付、财务限制和女性所有权存在的异质影响。我们的结果表明，裙带关系文化阻碍了高技能人力资本和正规培训，这两者都对技术进步和经济发展至关重要。政策含义是，促进择优招聘和减少裙带关系做法可以提高创新能力，特别是通过营造更具竞争力的环境。