Does Sustainable Digital Infrastructure Drive New Venture Creation? Evidence from China’s Smart City Pilots

Abstract

Sustainable Digital Infrastructure plays an increasingly important role in strengthening regional economic resilience and promoting inclusive growth. However, its dynamic effects on nascent entrepreneurship remain underexplored. Treating China’s smart city pilot policy as a quasi-natural experiment, this study uses data on newly registered enterprises in 288 Chinese cities from 2005 to 2019 and a multi-period difference-in-differences (DID) model to examine this relationship. The results show that Sustainable Digital Infrastructure significantly promotes new venture creation. Owing to environmental dynamism—manifested in creative destruction, strategic wait-and-see behavior, and learning-curve effects—its entrepreneurial impact is initially volatile before becoming significantly and persistently positive. The industry-level analysis reveals heterogeneous effects across sectors: the largest estimated effect occurs in wholesale and retail trade, while the estimated effect in scientific research and technical services strengthens over time. Mechanism analyses provide suggestive evidence for three channels: technological innovation, human capital development, and digital finance. The effects are also more pronounced in eastern China and smaller cities. This study provides empirical evidence and practical guidance for emerging economies seeking to promote new venture creation through digital infrastructure. It conceptualizes “sustainability” in the SDI context as the capacity of digital infrastructure to support enduring and inclusive economic development, rather than as a property of the infrastructure’s environmental performance.