Technological change and entrepreneurial activities: Evidence from China

Abstract

This study is among the first to examine the impacts of technological change on entrepreneurial activities. Using new registered enterprises data and industrial robot data from 2010 to 2018, we find that robot adoption is broadly negatively associated with regional entrepreneurial activities. However, our analysis reveals a more nuanced understanding, in which robot adoption boosts high-quality entrepreneurial activities in regions, specifically those in technology-based industries, but reduces low-quality entrepreneurial activities. We also find that a favorable labor allocation environment and sufficient labor resources, as well as abundant high-skilled labor resources, can mitigate the negative impact. Credit constraints and the upgrading of industrial structures are effective in mitigating the crowding-out effect. In cities with higher unemployment risks, the negative effect is attenuated. The extent of the negative effect varies depending on the prevailing macroeconomic conditions, and the hukou reform helps to mitigate the negative impact. In addition, robot adoption has a significant spatial spillover effect between adjacent cities. These findings shed light on the effects of industrial robot adoption on local entrepreneurial activities, as well as the role of technological change in fostering entrepreneurial activities. Our findings suggest that it is crucial to grasp the strategic opportunities embedded in technological change to spur entrepreneurship.