Dark side of resource dependence: Inadequate entrepreneurship

Abstract

Encouraging entrepreneurship offers substantial assistance in enhancing the economic structure and fostering economic growth. Nevertheless, the phenomenon known as the “resource curse”, which arises from heavy dependence on resources, often undermines regional organizational culture, innovation, and the entrepreneurial climate. Regrettably, little attention has been devoted to exploring the impact of resource dependence on economic development from an entrepreneurship perspective. To bridge this gap, this study employs panel data from 283 cities between 2003 and 2019 to look into whether and how resource dependency threatens entrepreneurship. We reveal resource reliance severely hampered entrepreneurship, implying the existence of the “resource curse” in the process of encouraging entrepreneurship. Most notably, cities in central, northeastern, and non-centric cities, as well as resource-based communities undergoing both expansion and decline and lower-tier urban centers with a limited commercial appeal where this reduction is most prevalent. Finally, mechanism analysis indicates that the negative impact was caused by undermining marketization, fostering government corruption, and weakening intellectual property protection. Overall, these finding sheds new light on how to avoid the “resource curse,” improve business climates and successfully safeguard entrepreneurship.