Innovation, Financial Culture, and the Social-Economic Environment of SMEs in Hungary

Despite the numerous pieces of research that have been undertaken to aid understanding of the innovative activities of small- and medium-sized enterprises (SMEs), only a few have dealt with the interaction between innovation activity and the finance-related attitudes, literacy, and knowledge (competencies) of these companies. The current research focuses on specific aspects of the innovation activities of SMEs in a postcommunist society (Hungary) by taking into consideration elements of both entrepreneurial financial culture and the social-economic environment. Our analysis is based on a national representative survey, 2017. Results show that the presence of a creative financial culture, and the grounding of management decisions correlate with company innovation. We found that subsidies as external financial sources contribute to a larger extent to the innovation activities of SMEs than other external and internal financial resources. Moreover, the study explores the effects of some economic and social competition-related factors.