Foreign business presence and local entrepreneurship development

Evidence from China

Bibliographic Data

ID22232247
AuthorsShiyong Zhao (0000-0003-0654-4669, Macau University of Science and Technology, corresponding author)
Year2024
Volume11
Issue1
Publication date2024-09-16
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueHumanities and Social Sciences Communications (JOURNAL)
Journal identifiersISSN: 2662-9992 • E-ISSN: 2662-9992
PublisherSpringer Science and Business Media LLC (PUBLISHER)
DOI10.1057/s41599-024-03732-9
OpenAlexW4402801883
LanguageEN
Citations received2
References cited30

Does the entry of foreign-invested enterprises (FIEs) enhance host economies’ entrepreneurship? Empirical findings in the literature are far from conclusive because of diverse local conditions. This article investigates the effect of FIEs on local private business creation in China. Using a panel dataset of 31 provinces from 1992 to 2019 and two-way fixed effect models, this study finds that the entry of foreign-invested firms significantly enhances China’s provincial-level entrepreneurship. The effect is robust to various sets of control variables and different measurements of FIEs (either FDI stock or flow). The findings also suggest that the effect of FIEs on local entrepreneurship is lower in the second subperiod (2001–2019) than in the first subperiod (1992–2001). Moreover, the improved legal status of private businesses and better protection of private property, as amended in the Constitution, decrease the role of FIEs in enhancing local entrepreneurship

Business · Business administration · Business development · China · Entrepreneurship · Political science · Economic Growth and Productivity · Fiscal Policy and Economic Growth · International Business and FDI · Finance

Tools

Open DOIOpen Access