Institutional reform, path development and firm creation: evidence from China
Institutional reform, path development and firm creation: evidence from China
This paper examines whether and how government-led institutional changes can reshape regional industrial development trajectories. Using quarterly panel data from Chinese cities between 2019 and 2024, we assess the impact of reforms of the business environment on firm creation within both path creation and path dependent industries. Applying a staggered difference-in-differences approach combined with coarsened exact matching, our findings reveal that business environment reforms significantly increase firm creation in path creation industries, especially in high-tech sectors and cities with initially weaker business environments. Key mechanisms identified include enhancements in the market environment and government services, which are central to driving these effects.
Wang, Han
63374a4c-194e-474e-90a0-d773fc6db98b
Rodriguez-Pose, Andres
19afcdef-5321-4e93-94bb-750d815c13df
27 October 2025
Wang, Han
63374a4c-194e-474e-90a0-d773fc6db98b
Rodriguez-Pose, Andres
19afcdef-5321-4e93-94bb-750d815c13df
Wang, Han and Rodriguez-Pose, Andres
(2025)
Institutional reform, path development and firm creation: evidence from China.
Cambridge Journal of Regions, Economy and Society.
(doi:10.1093/cjres/rsaf039).
Abstract
This paper examines whether and how government-led institutional changes can reshape regional industrial development trajectories. Using quarterly panel data from Chinese cities between 2019 and 2024, we assess the impact of reforms of the business environment on firm creation within both path creation and path dependent industries. Applying a staggered difference-in-differences approach combined with coarsened exact matching, our findings reveal that business environment reforms significantly increase firm creation in path creation industries, especially in high-tech sectors and cities with initially weaker business environments. Key mechanisms identified include enhancements in the market environment and government services, which are central to driving these effects.
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rsaf039
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Accepted/In Press date: 28 July 2025
Published date: 27 October 2025
Identifiers
Local EPrints ID: 506181
URI: http://eprints.soton.ac.uk/id/eprint/506181
ISSN: 1752-1378
PURE UUID: 4bfadd20-e60a-4ebc-8e23-ad731f5efc76
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Date deposited: 29 Oct 2025 17:44
Last modified: 30 Oct 2025 03:04
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Author:
Han Wang
Author:
Andres Rodriguez-Pose
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