The Impact of Government-Business Relations on Entrepreneurship : A Study from China

In this paper, we sort entrepreneurship into two types, innovation entrepreneurship and business entrepreneurship, and measure the government-business relations from two perspectives, specifically the closeness index and the innocence index. Using the panel data of 220 cities in China from 2001 to 2016, we empirically investigate the effect of government-business relations on entrepreneurship. We find that in general, government-business relations have a significant impact on the stimulation of entrepreneurship. Specifically, this effect is mainly reflected in the Eastern region, in non-Northeast China and in the capital cities. Meanwhile, before 2011, the role of government-business relations in relation to entrepreneurship is positive. However, after 2012, this effect is mainly embodied in innovation entrepreneurship. Additionally, in the process of jointly fostering entrepreneurship, government-business relations yield diverse mutual effects with factors such as foreign direct investment, population density, science and technology investment, and economic cycles