Does the utilization of information communication technology promote entrepreneurship: Evidence from rural China

Impacts on the probability of transition to entrepreneurship in rural China associated with the utilization of information communication technology (ICT) are estimated using longitudinal data from the China Family Panel Studies (CFPS) survey. We identify cell phone ownership and Internet use as proxy variables for ICT utilization and find that cell phone ownership and Internet use have positive impacts on entrepreneurship. After controlling for observables and time and regional fixed effects, cell phone users (Internet users) are 2.1 (6.2) percentage points more likely to engage in entrepreneurship than the others. Considering that the average entrepreneurship rate for rural households is only 9.2% in the sample, the influence of cell phone ownership and Internet use are very strong in the economic sense. Our results are robust to unobservable individual characteristics, model misspecification, and reverse causality of entrepreneurship to ICT utilization. Evidence also suggests that social network and information and knowledge acquisition play the mediating roles in the impact of ICT utilization on entrepreneurship.