Fintech Adoption as a Productivity-Enhancing Capability under Resource Constraints: Evidence from Young Entrepreneurs in an Emerging Economy

The rapid expansion of financial technology (fintech) is reshaping financial intermediation globally, particularly in emerging economies where entrepreneurs face persistent resource constraints. Despite its potential, evidence on whether fintech adoption enhances entrepreneurial productivity remains limited and often overlooks selection bias and heterogeneity across entrepreneurs. This study conceptualizes fintech adoption as a productivity-enhancing capability that enables entrepreneurs—particularly young entrepreneurs—to improve resource mobilization and operational efficiency. Using survey data from 637 young entrepreneurs in Indonesia, we employ an Endogenous Switching Regression (ESR) model to address non-random selection into fintech adoption and to estimate counterfactual outcomes. The results show that fintech adoption significantly increases entrepreneurial productivity, with substantial heterogeneity between adopters and non-adopters. Counterfactual estimates indicate that adopters would experience lower productivity in the absence of fintech, while non-adopters could achieve notable gains if they adopted fintech technologies. Theoretically, this study advances entrepreneurship research by reframing fintech adoption as a capability that mitigates resource constraints and by demonstrating the importance of selection and heterogeneity in evaluating digital technology effects. Practically, the findings highlight the role of fintech ecosystems in enhancing entrepreneurial efficiency, suggesting that policies aimed at strengthening digital financial capability and access can unlock productivity gains among young entrepreneurs in emerging economies.