Abstract This study addresses a critical gap in the innovation and entrepreneurship literature by proposing and empirically validating a novel, theory-grounded framework—“The Composite Effects Model of FinTech Adoption on Startup Performance”—to explain how digital transformation drives entrepreneurial success in emerging economies. Grounded in an integrated theoretical lens comprising the Resource-Based View, Diffusion of Innovations Theory, and Institutional Theory, the model conceptualizes FinTech not as a standalone technological tool but as a strategic, VRIN resource whose performance-enhancing effects are contingent upon enabling digital infrastructure and supportive institutional frameworks. Using a balanced panel dataset of 150 Saudi startups (2018–2023), the study employs a multi-stage analytical approach: (1) composite indices for FinTech Adoption, Digital Infrastructure, Government Support, Banking Inclusion, and Startup Performance were constructed via Principal Component Analysis (PCA), with factor score coefficients used to compute weighted index values ensuring methodological transparency and replicability; (2) multiple regression analysis estimated direct effects; and (3) path modeling via SmartPLS 4.0 (with 1,000 bootstrap replications) decomposed total effects into direct and indirect pathways, explicitly testing the mediated sequence Digital Infrastructure → FinTech Adoption → Startup Performance . Results confirm statistically significant positive relationships: FinTech adoption is associated with 24% higher annual revenue growth and 19% greater employment generation among adopters versus non-adopters (β = 0.49, p < 0.001), while digital infrastructure (β = 0.34, p < 0.01) and proactive regulatory support function as critical antecedents. Importantly, the analysis reveals that gaps in digital financial literacy constrain diffusion—a finding corroborated by cross-sectoral evidence from Saudi digital health transformation, suggesting that the logic of infrastructure-enabled, institutionally-mediated technology adoption transcends sectoral boundaries. Theoretically, this research extends the Resource-Based View to digital entrepreneurial ecosystems by demonstrating how state-market synergies transform FinTech into a sustainable competitive advantage in emerging economies. Methodologically, it advances replicable practices for composite index construction and path-analytic modeling in secondary panel data contexts. Practically, it offers evidence-based policy recommendations aligned with national diversification agendas, emphasizing inclusive infrastructure investment, institutionalized regulatory sandboxes, and targeted digital literacy programs. By explicitly modeling the causal mechanisms linking infrastructure, institutions, and entrepreneurial outcomes, this study contributes directly to scholarly discourse on innovation-driven ecosystems in transitional economies, while offering transferable insights for interdisciplinary research on digital transformation across finance, health, and public service sectors.
Walaa M. Rezk (Sun,) studied this question.
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