The enabling power of transport infrastructure: A case of entrepreneurship in China

Abstract

Prior literature on economic geography highlights the role of transport infrastructure in shaping economic growth, while its implications for entrepreneurship have received less attention. Shedding new light on the decision-making processes of entrepreneurs, this paper examines how transport infrastructure affects entrepreneurship and explores potential mechanisms beyond the focal relationship. Based on the construction of high-speed railways (HSRs) in China, we find that local cities’ connections to HSR networks increase the probability of individuals’ entrepreneurship. Furthermore, we find that this positive relationship will be stronger for people with fewer social networks and no migration experience, revealing a substitute effect of HSRs. Our study contributes to the literature on transport infrastructure and research on entrepreneurship ecosystems by linking HSRs and personal decision making in entrepreneurship. We also provide a more comprehensive understanding of the information asymmetry and complementary asset mechanisms involved, which in turn explains the spillover of improved transport infrastructure. Finally, the findings of this study provide insight into the geography of entrepreneurial policies in coordinating “regional” transportation and “local” entrepreneurs.