The Influence of Entrepreneurship and Social Networks on Economic Growth—From a Sustainable Innovation Perspective

Abstract

A large body of evidence demonstrates the key role played by entrepreneurship in promoting economic growth. However, the potential connections between entrepreneurship, social networking, and economic development still require in-depth exploration and discussion. This paper first establishes a theoretical framework combining entrepreneurship capital theory, resource dependence theory and transaction cost theory, then examines the possible associations between entrepreneurship, social networks, and economic growth based on the dynamic panel data model. To achieve the research objectives, the investigators collected data spanning the period between 2007 and 2016 from 31 provinces and cities in China. The authors adopted the enterprise employment rate as a measure of entrepreneurship and used the information sharing rate to assess social networks, which were then both introduced into the economic growth model. Additionally, by using the system of generalized method of moments (GMM) estimation, this article measures the influence of entrepreneurship and social networks on the economic growth of a local area. The empirical results reveal that both entrepreneurship and social networking significantly promote regional economic growth in China. Further, the effect of entrepreneurship is significantly enhanced after introducing the joint effects of entrepreneurship and social network. The findings also expound that entrepreneurship of the eastern zone and social networking of the central section exhibit the strongest potential for economic development of the respective areas. Conversely, entrepreneurship may actually hinder the economic advancement of the central areas of China. Corresponding to the findings, the researchers suggest that it is necessary to devise flexible policies for heterogeneous entrepreneurial environments and to appropriately utilize interpersonal networks to maximize the efficiency of the outputs of economic activity, which are likely to strengthen the role of entrepreneurship and social networks in contemporary economic and business milieu.