Civil recognition and urban entrepreneurship: Evidence from China

Abstract

Effectively stimulating urban entrepreneurial vitality remains a pressing policy challenge. However, existing literature largely overlooks the role of social honor policies as non-economic incentives. This study considers the Civilized City policy as an institutional embodiment of civil recognition. Using panel data from Chinese cities between 2004 and 2021, we apply a difference-in-differences approach to evaluate its impact on urban entrepreneurship. The findings show that the policy significantly enhances entrepreneurial activity, primarily by optimizing the business environment and increasing the supply of entrepreneurial resources. Heterogeneity analysis indicates stronger effects in central and western regions, small and medium-sized cities, and cities with greater fiscal decentralization and stronger promotion incentives. Moreover, spatial spillover effects suggest that the policy also fosters entrepreneurship in neighboring cities. These results provide novel insights for China and other countries in designing governance tools that leverage social honor mechanisms to promote entrepreneurship.