How Internet Use Spurs Entrepreneurial Activities? Evidence from China

Abstract

Digital literacy has been increasingly important among workers in the labour market, and it also has been viewed as a micro reflection of the growing of China’s digital economy. Internet use is an integral part of workers’ digital literacy, which has a significant influence on entrepreneurial decision-making. This paper aims to explore the direct impact of Internet use on entrepreneurship, analyzing the mechanism and group differences of Internet use. It has a practical meaning to China’s policies of promoting employment. Based on the data of China Labour Dynamics Survey (CLDS), the paper uses Probit model and 2SLS regression analysis to examine the direct impact of Internet use on entrepreneurship, and to analyze its mechanism by adopting the mediation effect model. The study indicates that Internet use has significantly increased the probability of starting a business, the impact has been stronger on the new generation, rural residents and the groups with work experience. Further analysis shows that Internet use not only increases venture capital, social capital and income, but also helps to shape individual workers’ learning ability, which has an indirect effect on promoting entrepreneurship. The above results show the way of promoting workers’ willingness of entrepreneurship, which are expanding Internet access, promoting policies of improving workers’ Internet skills, focusing on cultivating comprehensive cognitive abilities including risk awareness and learning abilities.