Does the digital economy promote “innovation and entrepreneurship” in rural tourism in China?

Abstract

This paper focuses on the impact of the "Digital Economy" on rural entrepreneurship. Unlike previous literature, the perspective of this paper focuses on a specific industry-tourism-and identifies a new mediating mechanism by which the "Digital Economy" affects rural tourism entrepreneurship-the promotion of innovation. The paper further clarifies the fact that the "Rural Digital Economy Index," which is a dimension of the Digital Economy Indicator System, is the key to the mechanism of action. Theoretically, first, through a literature review, this paper provides a rationale for the "Digital Economy" to promote innovation behavior by reducing the cost of innovation. Second, using a product matching model, this paper argues that a rural tourism market characterized by innovation can stimulate more entrepreneurship. Empirically, using a sample of 150 counties in the Yangtze River Delta region of China, this paper argues that the higher the digitalization index of a county's rural economy, the more national model villages and towns this county has (all of which include product innovation in the selection criteria) and more tourism entrepreneurial activities. Econometric methods such as endogeneity, spatial econometric regression, and sensitivity analysis proved the findings robust. Our recommendation is that the Chinese government could focus on improving the innovation environment for rural residents in the future, so that entrepreneurial activities will be spontaneously stimulated by market mechanisms.

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