Search

Purpose: The study attempts to determine the extent to which the financing of microenterprises (from the retail sector) by a bank loan is dependent on current and expected changes in the unstable economic situation in Poland in 2019-2021 (sample period). Design/methodology/approach: The study used the Pearson's correlation and the DTW methods to explain the relationship between the number and value of loans granted to micro-enterprises (from retail sector) and economic indicators. Findings: The study shows a strong positive correlation between the change in a number and a value of working capital loans granted to micro-entrepreneurs and the assessment of a direction of change in the economic situation and an indication of a lack of barriers, a decrease in an importance of the barrier (a high competition) or an expected general economic situation of an enterprise. Using the DTW model, a strong adjustment of a change in the number of investment loans granted to micro-entrepreneurs to the assessment of a direction of changes: economic situation, market mechanism, barriers, towards high costs (staff and interest) was observed, and when a dominant sources of financing working capital loans were own funds, bank loans and trade credits. Theoretical implications: The survey results confirm: unstable times require decisions to be based on a variety of economic factors. Practical implications: The results of the study indicate a decision-making sensitivity of retail micro-sized enterprises regarding a choice of a type of bank loan in relation to the assessment of a direction of changes in an economic situation in the short term. They may help them build good business relationships with their suppliers. They may be used to banks and other financial providers for building a market offer and for forecasting a credit demand, too. Originality/value: The value of the study is to present (from two perspectives) a correlation between a number and a value of loans granted to micro-entrepreneurs with changes in selected economic indicators. Conclusions have application value for banks and other financial institutions, as well as micro-entrepreneurs to determine an impact of specific economic indicators on a loan market. [ABSTRACT FROM AUTHOR]

Micro-enterprises are at the heart of industrialized countries' political concerns, particularly in Europe. If the latter are the subject of such special attention, it is because of their important role in terms of economic growth. This study evaluated the factors of business success as a multidimensional and multifaceted construct that integrates three aspects: entrepreneurial continuity, economic success, and entrepreneur satisfaction. Together, we included these three aspects in an econometric analysis using an ordered Probit model. We propose, from a new angle, an understanding of the determinants of the sustainable performance of micro-enterprises, in this case, those financed by microcredit in France. Our results show that total success seems to be explained in particular by elements from financial and human capital, motivation, and entrepreneurial support. [ABSTRACT FROM AUTHOR]

Purpose: The paper identifies the influence of socio-economic factors and livelihood training in stimulating micro-entrepreneurship among women self-help group (SHG) members. Design/methodology/approach: The study is based on a sample of 416 women SHG members drawn from all the four districts of Sikkim using cluster sampling procedure. A multivariate binary logistic model is used to find the impact of socio-economic factors, and a Poisson regression has been used to find the impact of training on fostering micro-entrepreneurship. The result is validated using a propensity score matching approach which corrects for the potential self-selection bias in the sample. Subsequently, a covariate adjustment estimator verifies the robustness of the approach. Findings: The study finds that "size of landownership", "amount of loan borrowed", "member's age", "number of earning and dependent members", "number of years of SHG enrolment" as well as the "district to which the member belongs to" have a statistically significant influence on the graduation of SHG members to micro-entrepreneurs. Furthermore, it is found that members attending the livelihood training programmes had a significantly higher number of microenterprises. Originality/value: The study differentiates itself by providing empirical evidence on how socio-economic factors and livelihood training stimulate micro-entrepreneurship among SHG women of Sikkim, which has so far remained unexplored. Moreover, advanced econometric method has been used to eliminate the possible self-selection bias involved with training participation and thereby provides reliable and robust results. Peer review: The peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-01-2023-0070 [ABSTRACT FROM AUTHOR]

From 2022 onwards, a series of legislative changes announced the firm intention of the authorities to significantly reduce the number of micro-enterprises paying income tax. As the conditions for being a microenterprise, published in December 2023, sparked heated disputes, at the end of March 2024, the Ministry of Finance came up with changes to the notion of a related enterprise. The major surprise was that the intention of the regulation demonstrates the retroactivity of the amended conditions, which, in the view of the regulatory act, should apply even for the beginning of 2024, and not only after the publication of the emergency ordinance. In this article we illustrate with examples some differences between the term of related enterprises based on Law No. 346/2004 and the one based on Government Emergency Ordinance No. 31/2024 and we show that the newly introduced conditions cannot be applied retroactively. Also, we underline the importance of defining as soon as possible the notion of indirect holding.

Abstract Micro-enterprises have recently received increased research attention due to their contribution to economic growth and employment, and an increasing amount of research has focused on studying their performance. The current objective was to study factors affecting the growth and internationalization of micro-enterprises, as well as the most important barriers for growth in the sparsely populated region of South Savo in Finland. Owners or managers of 108 micro-enterprises responded to a questionnaire probing variables representing aspects of growth, internationalization, innovation, networking, digital maturity, and business environment, among others. Statistical analyses including multiple regressions were used to analyze the data collected on quantitative rating scales. The results suggested that intention to grow and level of networking with other companies and public actors were directly related to actualized growth. Intention to grow was, in turn, affected by innovativeness, growth capability, intention for internationalization, and business environment. In addition, the level of innovativeness and intention for internationalization were related to actual level of internationalization. The most important barriers for growth selected by the participants were lack of time for development activities, threshold to hire new employees, and sufficiency of funding. The results were utilized in guiding regional development activities in the South Savo region.

Copyright of Mercados y Negocios is the property of Universidad de Guadalajara, Centro Universitario de Ciencias Economico Administrativas and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Micro-enterprises have recently received increased research attention due to their contribution to economic growth and employment, and an increasing amount of research has focused on studying their performance. The current objective was to study factors affecting the growth and internationalization of micro-enterprises, as well as the most important barriers for growth in the sparsely populated region of South Savo in Finland. Owners or managers of 108 micro-enterprises responded to a questionnaire probing variables representing aspects of growth, internationalization, innovation, networking, digital maturity, and business environment, among others. Statistical analyses including multiple regressions were used to analyze the data collected on quantitative rating scales. The results suggested that intention to grow and level of networking with other companies and public actors were directly related to actualized growth. Intention to grow was, in turn, affected by innovativeness, growth capability, intention for internationalization, and business environment. In addition, the level of innovativeness and intention for internationalization were related to actual level of internationalization. The most important barriers for growth selected by the participants were lack of time for development activities, threshold to hire new employees, and sufficiency of funding. The results were utilized in guiding regional development activities in the South Savo region. [ABSTRACT FROM AUTHOR]

The Law No. 296/2023 regarding certain fiscal-budgetary measures for ensuring Romania’s financial sustainability on the long term brings a series of important modifications with regard to the taxation of activities in the IT field, which are applied partially from November 2023 and partially from January 2024. The article discusses a series of conceptual and practical issues regarding the taxation of these activities according to the provider’s status: employee within a company, certified natural person or micro-enterprise. Thus, starting with the 1st of November 2023, in accordance with the provisions of Law No. 296/2023, the employees carrying out this type of activities based on an employment contract within a company, at the place where there is the main employment, are tax-exempt for the gross monthly incomes from salaries and assimilated to salaries of up to 10,000 Lei included, and the part exceeding this amount does not benefit from facilities. From the 1st of January 2024 we witness the modification of the taxation method both for the certified natural persons providing services in the IT sector and for the persons who own a micro-enterprise with an object of activity specific to the information technology field. Likewise, the certified natural persons providing services in the IT field can use only the real taxation system, based on the accounting data, starting with the income for 2024. The practical examples highlight the taxation methods of these activities according to the status of the provider.

Background: Since the onset of the global pandemic, unemployment has increased to new levels. As a consequence, the need to stimulate economic growth through the development of the micro-enterprise sector has become a central vehicle to decrease unemployment and stimulate economic growth. The problem, however, is that despite the potential benefits of digitisation, the micro-enterprise sector has been unable to effectively integrate information and communication technologies (ICTs) into the fabric of their operations. Objectives: The objective of this study was to investigate the factors that influence the adoption and use of mobile applications for micro-enterprise operations in South Africa. Method: A quantitative methodology using a survey design was used to collect data from a sample of entrepreneurs, with 221 responses. Results: Performance expectancy (PE) and effort expectancy (EE) positively influence the micro-entrepreneurs' behavioural intention (BI) to adopt and use mobile applications, while social influence (SI) has no impact on the same. Facilitating conditions (FC) and BI are the strongest determinants of mobile application adoption and use for micro-enterprise operations. Conclusion: All the constructs of the unified theory of acceptance and use of technology (UTAUT) model showed a satisfactory level of reliability and discriminant validity, which was confirmed by testing the measurement model against two competing models. The UTAUT model is a good predictor of the intention to adopt and use mobile applications for micro-enterprise operations. Contribution: The findings provide parameters to develop a focussed strategy to catalyse the adoption and subsequent use of mobile applications among micro-entrepreneurs. It further informs initiatives to close the gap of a known reluctance in using technology among micro-enterprises. [ABSTRACT FROM AUTHOR]

Copyright of Revista Internacional y Comparada de Relaciones Laborales y Derecho del Empleo is the property of ADAPT University Press and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Micro-enterprises are at the heart of industrialized countries’ political concerns, particularly in Europe. If the latter are the subject of such special attention, it is because of their important role in terms of economic growth. This study evaluated the factors of business success as a multidimensional and multifaceted construct that integrates three aspects: entrepreneurial continuity, economic success, and entrepreneur satisfaction. Together, we included these three aspects in an econometric analysis using an ordered Probit model. We propose, from a new angle, an understanding of the determinants of the sustainable performance of micro-enterprises, in this case, those financed by microcredit in France. Our results show that total success seems to be explained in particular by elements from financial and human capital, motivation, and entrepreneurial support.

Early-career crafts graduates often face a perceived dilemma, that of balancing passionate work with their need to make a living. This paper explores the negotiation undertaken by early-career crafts graduates and the entrepreneurial strategies they adopted which variably combine the logics of passion and economics. The paper draws on qualitative interviews with 25 early career crafts graduates in England conducted in 2018. Five strategies -support, streams, synthesis, segment and synergy – are identified, including the different income generation and creative production models they represent. The challenges associated with particular strategies are also considered. The identification of these strategies provides a more nuanced understanding of the organisation and management of craft practices, particularly during the early career period, that goes beyond the acknowledgement of portfolio working as prominent feature of creative work. The paper contributes to the literatures on the organisation of craft work and creative entrepreneurship by identifying ways in which craft practitioners structure and manage their work to sustain and develop their practice. It argues that the positioning of craft micro enterprises as hybrid organisational forms provides an opportunity to redress the binary opposition between passion and work in the creative economy in favour of a more balanced approach. A call for further research on craft production at the micro-enterprise and sole trader level is made to develop new knowledge and recommendations to support the growth and sustainability of the craft sector. [ABSTRACT FROM AUTHOR]

Entities are registered in Romania in the fiscal vector in 2023 as income taxpayers or profit taxpayers. Due to the legislative changes, the execution of the financial year 2023 radically changes the status of the entities, and each economic agent must be separately analyzed to be included in the correct fiscal vector. The classification is made according to several criteria. One of the criteria is that of an employee or its equivalent. The quality of employees implies the conclusion of an administration contract, which is highlighted in REVISAL. The management contract only requires an act that refers to the entity's management. However, a minimum wage per economy is required, which in Romania at present is 3,000 lei.

Purpose – This article explores the value of engaging a hybrid learning strategy in a micro-enterprise setting when responding to a global pandemic. The research question asks: “Does a hybrid learning strategy enhance a micro-enterprise's response to extreme events?”. Design/methodology/approach – A micro-enterprise owner–manager (OM) reflects on their experience running a business during the coronavirus disease 2019 (COVID-19) pandemic, which resulted in the complete decimation of the organization’s revenue stream in early 2020. Captured in conversation with an academic peer, these practitioner insights provide valuable case evidence relating to micro-enterprise response to extreme commercial events, such as a global pandemic. Findings – The journey from initial survival-mode to emergent market opportunity recognition and subsequent growth is recorded. The paper contributes to the limited research on the impact of learning strategy plans on micro-enterprise crisis response strategies and provides insights into the value of engaging a hybrid learning strategy when responding to a significant external business shock. Originality/value – Drawing from these insights, the authors offer a literature-informed framework from which to consider the dynamics of an adaptive strategic response in a micro-enterprise setting, offering a means through which micro-enterprises can plan for and respond to extreme events in the future.

The taxation regime of the micro-enterprises incomes is amended starting with the 1st of January 2023, according to the Government Ordinance No. 16/2022 for amending and supplementing the Law No. 227/2015 on the Fiscal Code, the abrogation of normative acts and other financial-fiscal measures. The micro-enterprises income tax becomes optional. We are witnessing the redefining of the microenterprises and the exceptions regarding the entities that can apply this regime and the amendment of the rules for exiting the micro-enterprises income tax application. Changes include the reduction of the achieved incomes ceiling to 500,000 Euro, the elimination of the 3% tax rate, the obligation that the company should have at least one employee, the limitation of the number of micro-enterprises owned by the same shareholder/associate. The ordinance clearly states the tax decrease order of the fiscal facilities. Likewise, the companies applying the specific tax in 2022 are provided with the possibility to select the payment of the micro-enterprises income tax starting next year.

تعتبر وكالة أناد من بين أولى هيئات دعم السلطات الوطنية لقطاع المؤسسات الصغيرة والمتوسطة حيث مكنت العديد من الشباب من انشاء مشاريع استثمارية مدرة للمداخيل ومستحدثة لمناصب الشغل، غير أن لوكالة مؤخرا أعلنت عن نسب ضخمة لتعثر مؤسساتها، مما استوجب طرح التساؤل حول أسباب هذا التعثر ومعرفة خطة الوكالة في مساعدة المؤسسات المتعثرة. اعتمدنا في دراستنا على المنهج الوصفي لتحليلي، القائم على وصف الظاهرة وتحليل احصائيات عمل الوكالة خلال سنة 0202 ، والتي عكست جهود الوكالة في محاولة للحفاظ على المؤسسات المستحدثة. ANADE agency is considered among the first bodies to support the SME sector, as it enabled many young people to create investment micro-projects, however, lately the agency announced huge percentages of institutional stumble. Our study aims to discover the phenomenon causes and the strategy of ANAD agency to help the stumbling institutions by analyzing the statistics of the agency work during the year 2021, which reflects its efforts to preserve the new institutions created.

Entities are registered in Romania in the fiscal vector in 2023 as income taxpayers or profit taxpayers. Due to the legislative changes, the execution of the financial year 2023 radically changes the status of the entities, and each economic agent must be separately analyzed to be included in the correct fiscal vector. The classification is made according to several criteria. One of the criteria is that of an employee or its equivalent. The quality of employees implies the conclusion of an administration contract, which is highlighted in REVISAL. The management contract only requires an act that refers to the entity's management. However, a minimum wage per economy is required, which in Romania at present is 3,000 lei. [ABSTRACT FROM AUTHOR]

This study aims to identify the key determinants of the level of informalization of micro-enterprises in Nigeria. We seek to understand the motives of entrepreneurs doing business in different segments of the informal sector and to clarify further the relationship between formal and informal economic activity. To fill the research gap, we developed a theoretical framework that focuses on a decision matrix regarding the level of informality. The quantitative approach involved a sample of 120 entrepreneurs operating in the Nigerian informal economy. Our results show that institutional constraints significantly affect the decision to engage in the informal sector. The institutional constraint is related to ambiguity in tax assessment and business registration policies and procedures, including the mismanagement of those in power. We conclude that the presence of informal firms is not always as harmful as it sometimes is considered to be. [ABSTRACT FROM AUTHOR]

In the last five years, accounting entities in Estonia have had to adopt a number of changes resulting from various EU directives, and soon they will have to start taking into account the changes arising from the vision of the real-time economy. Quite a few accounting entities have not yet adopted even the current requirements (for example, machine-processed invoices), and many accounting entities do not comply with the reporting obligation properly (fail to submit the annual report or fail to submit the report on time). The article reflects on the future directions of the accounting field and the fulfillment of the accounting obligations of Estonian micro-entrepreneurs, and the readiness for changes resulting from the vision of the real-time economy. A micro-entrepreneur in Estonia is a private limited company whose annual turnover does not exceed 50,000 euros, and the balance sheet volume does not exceed 175,000 euros; in addition, its liabilities may not exceed the equity capital, and such a limited company must be founded by one natural person who is also a member of the board of this private limited company. Micro-entrepreneurs have a simplified reporting obligation to the state: their annual report only consists of a balance sheet and a profit and loss account. Starting in 2018, micro-entrepreneurs are allowed to submit their annual report in a simplified form. The conducted research revealed that it is mainly private limited companies, including micro-entrepreneurs, who fail to submit annual reports. Among the micro-entrepreneurs who have not submitted annual reports, the majority have been operating for less than five years and are not registered as VAT payers. Half of the micro-entrepreneurs do not consider proper monthly accounting to be important, and only half are ready for the changes resulting from the vision of the real-time economy, and the submission of a simplified annual report has not led to a cognitive reduction of the administrative burden.

This paper examines the key issues that emerge in the understanding of traditional music as micro-enterprise in the rural creative economy of Argyll and Bute, Scotland. Using evidence from detailed ethnographic fieldwork, with musicians, festival organisers, tour operators, business owners and civil servants, this paper examines how issues such as geographical and social distance, internet connectivity, and cultural tourism are understood in relation to the musical life of Argyll and Bute. We advocate for greater ethnographic engagement with local communities in order to provide a more sophisticated, real-world understanding of rural cultural policy and the impact of current policies on local musicians. The paper therefore foregrounds ethnography as an important method in local, rural contexts such as Argyll and Bute, where typically, much of the creative economy is embedded in statistically invisible economic and cultural activity and portfolio employment. [ABSTRACT FROM AUTHOR]

Purpose: The objective of the paper is to study the impact of the global coronavirus pandemic on the standing of micro-enterprises in the Silesian Voivodeship. Design/methodology/approach: A study sample of 120 micro-enterprises from the Silesian Voivodeship has been selected. The study methods such as an interview and a survey have been used. A questionnaire has been used as a tool. The properly completed surveys have been obtained from 43 enterprises. Findings: It has been established that depending on the specific nature of a given enterprise and the area in which it operates, enterprises are, to varying degrees, susceptible to the impact of adverse factors related to the emergence of the global coronavirus pandemic, which, in turn, results in the differences in the standing of these enterprises. Research limitations/implications: In view of the small study sample, the studies carried out do not create a complete picture of the impact of the pandemic on micro-enterprises in the Silesian Voivodeship. They are rather a contribution to further studies. These should be conducted on the basis of a larger study sample. Originality/value: The global coronavirus pandemic which affected the world in the years 2019-2022 has left a strong mark on many aspects of human functioning, including pursuing business activity. It is important to gain knowledge on the impact of pandemic-related restrictions on the functioning of micro-enterprises in order to develop mechanisms to mitigate the adverse effects on entrepreneurship based on micro-enterprises. [ABSTRACT FROM AUTHOR]

This paper applies the Random Forest (RF) method for the robust modelling of credit default prediction. This technique has been proven as an efficient classifier and can provide better interpretability in comparison to other classifiers. Using Chines micro‐enterprise credit data set, this study emphasizes the multidimensional analysis of credit risk, such as the whole sample, subsample, and the incremental effect of the group of predictors. To that end, relative variable importance (RVIs) has been presented for all predictors according to the contribution in the prediction accuracy so that to ensure interpretability of the model. The empirical findings confirm that RF technique is reliable and efficient across all of the criteria used in this study. In addition, the examined experimental analysis indicates that non‐traditional variables have a significant effect on the classification accuracy. Thus, this paper recommends some alternative predictors like the legal representative's basic information, internal non‐financial factors, along with traditional financial variables for sustainable model development. The performance is compared from the perspective of five different performance measures. This modelling algorithm can be used by different financial markets participants to measure systematically credit default prediction of individual and institutional customers. [ABSTRACT FROM AUTHOR]

Sustainable enterprises are essential for developing economies' progress and prosperity. Micro-enterprises (MEs) play an important role in creating jobs and actively participating in socioeconomic activities. However, little is known about how MEs use internal capabilities to achieve long-term success. This study explores the influence of the strategic orientations (i.e., sales, consumer, competitive, emotional, business, and networking) instigating the sustainability orientation. The sustainability orientation nurtures the sustainable performance of the MEs. The cross-sectional data collected from the 450 MEs with the structured interviews and samples were randomly selected from the list of MEs registered in seven districts of Kelantan, Malaysia. The collected data were analyzed with partial least square structural equation modeling (PLS-SEM). The data analysis discovered that the sale, consumer, competitive, and emotional orientation significantly impact the MEs' sustainable orientation. The business and networking orientations insignificantly facilitate the sustainable orientation among the samples. The MEs' sustainable orientation suggestively influences the sustainable performance among the MEs. Furthermore, the study analysis postulated a significant mediating effect of sustainable orientation among the orientations (sale, consumer, competitive, and emotional) on the MEs' sustainable performance. Our study offers a better understanding of the RBV in the MEs and brings significant empirical evidence to attain sustainable performance with the firm's level orientation for the MEs. The study brings forward the practical implication for business and policymakers that the MEs require internal and external support to align the business and networking orientation to harness the sustainable performance among the MEs. In the end, the study limitations and future research options are highlighted. [ABSTRACT FROM AUTHOR]

Purpose: The reason for writing the article was the surge of interest in internet marketing. The aim of the research was to describe the benefits of a micro-enterprise by resigning from traditional marketing tools for the use of Internet marketing. Design/methodology/approach: In the theoretical part of the work, the definition of internet marketing was reviewed and the expectations of enterprises in this regard were indicated. The research method used to solve the problem was the case study. Research carried out in the company allowed to recognize the problem in business practice. Findings: The paper found that internet marketing in Visign Studio is much more effective than traditional marketing. It allows you to reach a much larger number of customers with your offer, allows you to collect much more information about them, and all this at much lower costs. Research limitations/implications: The identified problem requires further research, including cross-industry research, and diversification of research approaches and methods used in social sciences, including quantitative ones. Practical implications: The results of the study clearly indicated the high effectiveness and high efficiency of internet marketing in a micro-enterprise. Enterprises should not be afraid of transferring marketing activity to the Internet, as generally available tools create low barriers to entry to the Internet. Currently, online marketing tools allow you to reach a wide audience with your offer, acquire new customers and increase sales. Social implications: The issues raised in the article fall within the spectrum of society's transition to the impact of virtual reality, to the information society. Internet marketing has a pro-ecological character because it is based on intangible resources. Originality/value: The paper presents, on an example selected from economic practice, how to set up a micro-company and then develop it using generally available Internet marketing tools. The article is addressed to entrepreneurs who create new enterprises or run their businesses for years, but are afraid of innovative technologies offered on the Internet. The added value is a detailed description of a thriving, young company that is rapidly developing and expanding its reach thanks to internet marketing. [ABSTRACT FROM AUTHOR]

Innovation is an essential driver of companies' growth and is important in securing and sustaining their competitive advantage and in the implementation of their entire strategies. In this process, a special role is played by companies' capabilities, especially those related to innovation capability (IC). Despite many years of research into identifying the factors that influence IC, there are still many research gaps. One such concerns the IC of micro-enterprises. Only a few studies indicate certain factors that may affect micro-enterprise ICs. Thus, this article aims to analyse the determinants of micro-enterprises' ICs from the perspective of implementing new-to-the-market product and process innovations. The theoretical framework adopted distinguishes between three groups of factors affecting micro-enterprise IC: personal, organizational and external environmental characteristics. The data examined come from an empirical study of a randomly selected representative sample of 1105 Polish micro-enterprises. To analyse these data, a logistic regression model was used. The results indicate that seven factors are common and significant determinants that explain the new-to-the-market product and process dimensions of micro-enterprise IC. Among them, the following have the greatest influence: engagement in initiatives for solving social problems, intensive cooperation with research centers, experience/skills and financial support. [ABSTRACT FROM AUTHOR]

Studying the impact of the former Pollution Charge System (PCS) on enterprise innovation will provide a reference for China to improving the current environmental protection tax system (EPTS). Based on innovation panel data and the sewage charges applied to polluting enterprises in China, this paper empirically analyzes the impact of the PCS on enterprise innovation. The results show that the PCS significantly inhibits the patent output of enterprises. The study analyzes heterogeneity in these findings in three respects: enterprise scale, enterprise ownership, and regional development level. The results are as follows: 1) The PCS has a greater inhibitory effect on smaller enterprises' innovation than on larger enterprises; 2) The inhibitory effect on non-state-owned enterprises' innovation is greater than on state-owned enterprises; 3) The inhibitory effect is greater for enterprises located in western regions of China. We also use a difference-in-differences strategy to address endogeneity concerns. The mediation analysis finds that the mechanism of the PCS affecting innovation is to reduce enterprise cash flow and R&D expenditure. • The Pollution Charge System (PCS) significantly inhibits enterprise innovation in China. • The PCS has a greater inhibitory effect on smaller enterprises' innovation than on larger enterprises. • The inhibitory effect on non-state-owned enterprises' innovation is greater than on state-owned enterprises. • The inhibitory effect is greater for enterprises located in western regions of China. [ABSTRACT FROM AUTHOR]