Platform economy and missing entrepreneurship: Evidence from E-commerce development policy in China

Abstract

This paper utilises the staggered county-level rollout of China's E-commerce entering villages policy to examine the effect of policy-driven platform economy development on local entrepreneurship. Exploiting county-level variations in yearly new business registration with a difference-in-differences strategy, we find that policy-driven platform economy development decreased the number of new business registrations and business entry rates by approximately 4.6% and 0.6%, respectively. The reduction effect is more prominent in business registration in micro-small scale, tertiary industries, eastern regions, and rural areas. Microfinance plays a positive role in this association. Mechanism analysis shows that the platform-driven supply chain transformation could rule out entrepreneurial opportunities, and the platform-enabled gig work opportunities could weaken entrepreneurial motivation. Loss of entrepreneurial opportunities and motivation leads to less entrepreneurship.