Village E‐Commerce Penetration and Agricultural Enterprise Growth: Evidence From China

ABSTRACT E‐commerce is increasingly becoming a mainstream model for business development worldwide. Utilizing comprehensive business registration data and accounting data for agricultural enterprises in China, we take China's National Rural E‐commerce Comprehensive Demonstration Policy as a quasi‐natural experiment to investigate the effects of e‐commerce penetration in villages on agricultural enterprise growth and the underlying mechanisms. We find that e‐commerce penetration in villages significantly boosts the number of agricultural enterprises, a result that remains robust across various checks. Further analysis indicates that e‐commerce penetration in villages also enhances the economic performance of agricultural enterprises and fosters their innovation activities. Mechanism analysis reveals that e‐commerce penetration boosts agricultural enterprise growth by enhancing the entrepreneurial ecosystem, as evidenced by broadening sales channels for agricultural products, enriching agricultural inputs, and expanding financial access. This study offers valuable insights for China and other developing countries on leveraging e‐commerce to promote agricultural enterprise growth.