Innovation has always been a key driver of economic development, particularly in the context of small and medium-sized enterprises (SMEs). Despite their significant contributions, many of these enterprises currently lack strong research and development capabilities, face challenges in innovation investment, and struggle to produce high-quality innovative results. To address these issues and overcome funding obstacles, many SMEs are turning to supply chain finance (SCF) as a supplementary financing method. This study utilizes stata16 and fixed effects models to analyze the impact and mechanism of SCF on enterprise innovation performance (EIP), focusing on companies listed on the SME Board and GEM in Shenzhen, China from 2011 to 2020. The findings reveal that SCF can effectively enhance enterprise innovation output, facilitating the conversion of resources into high-quality innovation results. Additionally, the study demonstrates that supply chain concentration acts as a mediator between SCF and EIP. Moreover, SCF is found to significantly boost EIP with low supplier concentrations and high customer concentrations. This suggests that SMEs encounter obstacles to innovation from suppliers and customers, and SCF may not fully address the challenges posed by these relationships. Overall, this research offers new empirical insights into the economic implications of companies adopting SCF, providing valuable guidance for enterprises in optimizing innovation decisions and for the government in enhancing supplier and customer information disclosure systems.

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