Can Government Internet Service Levels Enhance Urban Entrepreneurship?—An Empirical Test Based on Data from 278 Chinese Cities

Abstract

As economic globalization accelerates and big data and artificial intelligence dominate our era, enhancing urban entrepreneurship in China has become increasingly vital for national economic development. Policies aimed at improving government internet service capabilities align with this trend, making it crucial to investigate whether such capabilities can elevate urban entrepreneurship.This paper first introduces the conceptualization and measurement of government internet service capacity and urban entrepreneurial activity. It then examines domestic and international theoretical frameworks to analyze the underlying mechanisms through which government internet service levels may enhance urban entrepreneurship. Considering the global economic context and China’s specific economic conditions at the time these policies were introduced, the paper assesses the current state of urban entrepreneurship in Chinese cities.To empirically examine whether government internet service levels can elevate urban entrepreneurship, this study utilizes panel data from 278 Chinese cities spanning 2019-2021 in the era of big data and artificial intelligence. It constructs both a two-fixed-effects model and a mediation effect model to empirically investigate the impact of government internet service capacity on urban entrepreneurship levels.

The main findings are as follows: (1) Enhancing local government internet service capabilities significantly and positively impacts urban entrepreneurship levels, with this conclusion remaining robust after stability tests. (2) Local government internet service capabilities primarily elevate urban entrepreneurship levels through the mediating effect of the business environment. (3)Heterogeneity analysis, which categorizes cities by geographical location (central, eastern, and western regions) and smart city status (smart or non-smart), reveals that the positive effect of government internet service capacity on urban entrepreneurship is more pronounced in central and western cities, as well as in non-smart cities. Based on these findings, in the era of big data and artificial intelligence, it is imperative to steadfastly enhance local government internet service capacity. Governments should proactively implement policies that support improvements in the business environment, thereby strengthening the positive role of business environment quality in leveraging internet service capacity to boost entrepreneurship levels.