Does Digitalization Have a Bi-Directional Causal Relationship With the Entrepreneurship Ecosystem?

Abstract

This chapter created entrepreneurship ecosystem development index (EEDI) and information and communication technology evolution index (ICTEI) for 58 countries during 2010 – 2020 using principal component analysis. The statistical values of EEDI and ICTEI are used to explain the comparative performance of these countries in entrepreneurship ecosystem (EE) and digitalization, respectively. Accordingly, log-linear regression model is used to assess the impact of digitalization and certain control variables on EE and vice-versa. The Granger casualty co-integration test is employed to perceive the existence of bi-directional causal relationship between digitalization and entrepreneurship ecosystem. EE and digitalization have a positive and bi-directional causal relationship and vice-versa. Hence, determinants of EE will promote digitalization. Digitalization and ICTs infrastructure may be helpful to increase EE. The findings of this chapter proposed several policy implications to increase digitalization and EE across countries.