An analysis of the path of labor protection in the innovation of small and medium-sized enterprises - A moderated mediation model

Small and medium-sized enterprises (SMEs) are important forces in technological innovation. How labor protection affects innovation in SMEs is a question worth paying attention to in current research on SME innovation. On the basis of data from 203 SMEs listed on China's SME board from 2009 to 2022, this study employs a fixed effects model to explore the effects of labor protection on the innovation of heterogeneous SMEs. Empirical and mechanism analyses reveal that strengthening labor protection fosters SME innovation and that labor protection promotes innovation through the mediating role of wage incentives. Wage incentives act as a moderated mediator that reflects the heterogeneity of enterprises. In the short run, labor protection significantly influences innovation in SMEs with elevated domestic trade levels. SMEs that receive robust government support significantly benefit from the enforcement of labor protections. This study contributes to the research on the impact of labor protection on enterprise innovation and provides valuable insights for SME innovation management and adjustments in labor protection policies by relevant government departments.