How to Motivate Enterprises to Use New Technologies: From the Perspective of Digitalization Cost in Digital Supply Chain Finance

ABSTRACT Digital technologies, such as blockchain, enhance the security of supply chain finance (SCF) and improve access to financing for small and medium‐sized enterprises (SMEs). However, SMEs often lack the digital skills needed to keep pace with rapid technological advancements. The network effects in digital supply chain finance (DSCF) further intensify this challenge: the benefits of joining DSCF increase with the number of users, but limited early adoption discourages participation, creating a “chicken‐and‐egg” dilemma. To address this issue, we develop a sequential game model to analyze how SMEs can be motivated to upgrade their digital capabilities. Findings reveal that digitalization transforms SMEs from “pure contenders” to “cooperative competitors” owing to the inherently shared nature of digital information. This shift prompts SMEs to proactively enhance their digital capabilities and foster the co‐creation of a digital ecosystem. Banks play a pivotal role in the development of such ecosystems by offering financial support, training, and strategic guidance, which elevates SME managers' confidence in their peers while mitigating the risks of failure from technological barriers or capital constraints. Without bank collaboration, distrust among SMEs hinders digital transformation. For banks, training the SME employees in digital and management skills is more cost‐effective than providing them with digital devices. This study highlights the vital role of collaboration in bridging technological progress with practical implementation and advocates prioritizing skill‐building over hardware provision in digital strategies.