Analysing the roles of CEO's financial literacy and financial constraints on Spanish SMEs technological innovation

Drawing on human capital and upper echelons theories, this study analyses how CEO's financial literacy influences a firm's technological innovation and investigates the mediating role of alleviating financial constraints of Small and Medium-sized Enterprises (SMEs) in the former relationship. We develop and test hypotheses applying a Structural Equation Model to a sample of 310 Spanish SMEs. The results show that CEO's financial literacy exerts both a direct and an indirect impact, through alleviating financial constraints, on a firm's technological innovation. [Display omitted] •CEO's financial literacy alleviates SMEs' financial constraints.•CEO's financial literacy provokes greater innovation capabilities in SMEs.•Relaxing Financial Constraints helps Technological Innovation in SMEs.•Relaxing Financial Constraints mediates in the relationship between financial literacy and Technological Innovation in SMEs.