Underdog entrepreneurship in the digital era: The effect of digital servitization on household entrepreneurship in China

Abstract

In today's digital era, households are empowered by digital servitization, which could potentially impact their ability to become entrepreneurs. Using data from the China Family Panel Studies (CFPS) and the National Bureau of Statistics of China, we construct the digital servitization index to analyze the impact of digital servitization on household entrepreneurship. The results show that the utilization of digital servitization by households significantly increases the likelihood of them engaging in entrepreneurial endeavors. This result remains robust after a series of robustness tests. We also find that digital servitization can help households identify entrepreneurial opportunities and access entrepreneurial resources by alleviating information and financial constraints, and increasing social capital. Further, the effect is more among households with rural residences, low material assets, elderly household heads, and household heads with low cognitive abilities, which means that digital servitization can promote underdog entrepreneurship. In conclusion, this paper provides micro-level evidence supporting the idea that digital servitization can foster household entrepreneurship, particularly among underprivileged groups. Ultimately, this paper highlights the potential of digitization as an essential resource to drive economic growth and help households in need become successful entrepreneurs.