Planting the Seeds: The Digital Economy and the Rise of Entrepreneurial Activity in China

ABSTRACT

Drawing on recent research on digital entrepreneurship, digital technologies are reshaping the landscape of entrepreneurial opportunities. However, how the digital economy (DE) influences entrepreneurial activity (EA) in county‐level areas has not yet been fully examined. Using county‐level panel data from China for the period 2014–2020, this paper investigates the impact of DE development on EA and explores the underlying mechanisms. We find that the development of the DE significantly promotes EA in county‐level areas. Mechanism analysis reveals that increases in residents' disposable income and foreign direct investment serve as key transmission channels. Further analysis shows that the local business environment positively moderates this relationship. These findings carry clear policy implications. The government should coordinate the advancement of digital infrastructure, the expansion of consumer markets, and the continuous improvement of the institutional environment to fully unleash entrepreneurial vitality in county‐level areas.