PROGRESS IN GEOGRAPHY ›› 2021, Vol. 40 ›› Issue (3): 410-421.doi: 10.18306/dlkxjz.2021.03.005

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Spatiotemporal pattern and determinants of Internet firm survival in China

LIU Tingting1,3(), WANG Mingfeng1,2,3,*(), ZHANG Yinghao1,3, WANG Fan1,3, WU Mingyu1,3   

  1. 1. The Center for Modern Chinese City Studies, East China Normal University, Shanghai 200062, China
    2. Research Center for China Administrative Division, East China Normal University, Shanghai 200241, China
    3. School of Urban and Regional Science, East China Normal University, Shanghai 200241, China
  • Received:2020-05-29 Revised:2020-10-26 Online:2021-03-28 Published:2021-05-28
  • Contact: WANG Mingfeng E-mail:liutingtinghh@126.com;mfwang@re.ecnu.edu.cn
  • Supported by:
    Key Program of the National Social Science Foundation of China(19AZD007)

Abstract:

With the implementation of the "mass entrepreneurship and innovation" strategy, China has entered a golden era of entrepreneurship. As one of the most important innovations, Internet has increasingly become a new driver of regional competitive advantage. Drawing on a unique dataset of Chinese Internet firms during 1994-2019, this study investigated the spatiotemporal dynamics and survival determinants of startups in China by the spatial econometric and survival analysis methods (Kaplan-Meier method and time-dependent Cox regression model). We found that: 1) The number of Internet startups in China reached a high speed of increase during the past 25 years. It grew slowly in the early stage and then rose sharply around 2015, showing a "S-shaped" trend. The survival time of Internet firms across four cohorts is significantly different—those who entered earlier usually have a longer survival time. It is common that new firms face a high survival risk regardless of cohorts, because they are not strong enough to compete with the big companies and resist various risks. 2) The spatial pattern of Internet firm survival varies significantly among regions. There is an obvious urban preference in the existing numbers. Regions with long firm survival time are mainly located in the eastern areas of China, which enjoy a high level of economic development and population concentration. However, with the industrial development and increasing number of entries, both the regional resource advantage and competition pressure of the eastern region have become greater. As a result, the survival advantage of the central areas of China starts to appear. 3) In terms of survival determinants, firm heterogeneity, cohort, and entrepreneurial environment all show significant effects. Among the firm features, larger scale and higher investment rounds usually have a stable protective effect and would reduce the survival risk remarkably. At the cohort level, the average survival time of the early-entering startups is significantly higher, and favorable entrepreneurial environment imposes survival risk as a whole mainly because of the competition effect. 4) While the incubation environment changes from incentive effect to competitive effect over cohorts, the protection effect of firm scale and life cycle, as well as Internet infrastructure, gradually weakens. This study could provide empirical support for the longitudinal development of Chinese Internet innovation and entrepreneurship wave, as well as an interesting case study for the geography of entrepreneurship.

Key words: Internet entrepreneurship, spatial pattern, firm survival, cohort effect, digital economy, China