The (side-)effects of offering performance-pay at innovative firms: Evidence from borrowing discouragement
研究绩效薪酬对创新型与非创新型中小企业借贷抑制的影响，发现绩效薪酬不改变对拒绝的恐惧，但能减少因贷款条件产生的抑制；然而在激进创新企业中，绩效薪酬虽降低拒绝恐惧，却加剧了贷款条件带来的抑制。
Small and medium-sized enterprises (SMEs), particularly innovative SMEs, face significant challenges in accessing credit. This paper examines how performance-pay for executives affects borrowing discouragement in innovative vs non-innovative SMEs. While literature establishes a significant relation between performance-pay and leverage, no prior manuscript investigates its impact on borrowing discouragement as a form of credit-rationing. This study analyzes 17,404 SMEs from 47 countries using World Bank Enterprise Surveys data, focusing on performance-pay, innovation, and borrowing discouragement. Results show that performance-pay does not impact fear of rejection regardless of firm innovativeness. However, it reduces discouragement from loan terms due to better creditor alignment. In contrast, innovative SMEs—especially those pursuing radical innovation—face the opposite effect: performance-pay reduces fear of rejection but heightens discouragement from stricter loan conditions imposed by wary lenders. This highlights a trade-off where innovation incentives may improve long-term growth but worsen access to credit.