Multicollinearity test.

This paper aims to verify the impact of capital structure on business model innovation and firm performance and the mediating effect of business model innovation. We use the data of the Chinese growth enterprises market (GME) listed high-tech firms from 2016 to 2022 as a dynamic panel data model with the system–generalized method of moments (sys-GMM), adopting return on asset and earning per share as firm performance. Our results show that capital structure has a lag effect on firm performance. The total debt ratio in the last period has a significant non-linear impact on the performance and business model innovation level of nowadays, presenting a U-shaped relationship. The first-order lag short-term debt ratio positively improves firm performance. Business model innovation significantly promotes better firm performance, and business model innovation does exist in the mediating effect between enterprise capital structure and its performance. These results remain robust to different sample sizes or proxy variables. This paper proposes some suggestions for firm operations and government policies based on the findings.