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Zhou, Y.; Cai, Z.; Wang, J. Digital Rural Construction and Rural Household Entrepreneurship. Encyclopedia. Available online: https://encyclopedia.pub/entry/50496 (accessed on 17 May 2024).
Zhou Y, Cai Z, Wang J. Digital Rural Construction and Rural Household Entrepreneurship. Encyclopedia. Available at: https://encyclopedia.pub/entry/50496. Accessed May 17, 2024.
Zhou, Yunwen, Zhijian Cai, Jie Wang. "Digital Rural Construction and Rural Household Entrepreneurship" Encyclopedia, https://encyclopedia.pub/entry/50496 (accessed May 17, 2024).
Zhou, Y., Cai, Z., & Wang, J. (2023, October 19). Digital Rural Construction and Rural Household Entrepreneurship. In Encyclopedia. https://encyclopedia.pub/entry/50496
Zhou, Yunwen, et al. "Digital Rural Construction and Rural Household Entrepreneurship." Encyclopedia. Web. 19 October, 2023.
Digital Rural Construction and Rural Household Entrepreneurship
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This entry is adapted from the peer-reviewed paper 10.3390/su151914219

Promoting rural entrepreneurship is an important approach to achieving rural revitalization, accelerating the construction of a new development pattern, and enhancing the well-being of farmers. Based on the County Digital Rural Index (CDRI) and the China Household Finance Survey (CHFS), the impact and role of digital rural construction (DRC) on rural household entrepreneurship is examined. 

digital rural construction rural entrepreneurship opportunity identification

1. Introduction

Currently, the most prominent development imbalance in China continues to be the widening urban–rural gap, with the most significant deficiency still being the underdevelopment of rural areas (Yin et al. [1]). Certain research indicates that rural entrepreneurship catalyzes rural economic development, contributing to job creation and narrowing the urban–rural development gap (Kushalaksh and Raghurama [2]; Stephens et al. [3]; Korsgaard et al. [4]; Steiner and Atterton [5]). In this context, rural households, as individual economic entities within society, participate in entrepreneurial endeavors at the family level, constituting a crucial element of rural entrepreneurship. Rural household entrepreneurship encounters several challenges, including information asymmetry, limited access to financial services, inadequate rural infrastructure, and a mismatch between available financial resources and services (Li et al. [6]; Zhao et al. [7]). Enhancing the rate of rural household entrepreneurship and improving entrepreneurial performance are pressing issues that both academia and the government must urgently tackle.
In China, the “No. 1 central document” of 2018 marked the formal introduction of the digital rural construction (DRC) strategy. Subsequently, a series of documents were released, including the Outline of Digital Village Development Strategy, Digital Village Construction Guide 1.0, and Digital Village Development Action Plan (2022–2025). These documents collectively outline the vision, direction, and specific action plan for the implementation of DRC. DRC represents a model that harnesses the power of the digital economy and utilizes digital technology as a conduit to achieve the digital transformation of rural production, lifestyle, and governance (Mei et al. [8]; Cui et al. [9]). In the context of rural China, DRC plays a pivotal role in the development strategy aimed at establishing digital villages. DRC yields a diverse range of functional benefits, essentially crafting a parallel ‘digital realm’. It empowers rural governance, fortifies production capacities, and elevates the overall quality of life. Simultaneously, it acts as a bulwark against uncertainty in rural areas while substantially reducing transaction costs associated with commercial activities. This cost reduction, in turn, kindles the innovative spirit of farmers and fosters entrepreneurial dynamism. An equally remarkable facet of DRC lies in its ability to transcend geographical and temporal boundaries. Its delocalization features break down the physical confines, thereby activating key entrepreneurial elements such as identifying market opportunities, mobilizing dormant capital, and tapping into the reservoir of rural talent firmly rooted in these areas. DRC facilitates the optimal allocation and innovative amalgamation of diverse elements, thus catalyzing a transformation from the current scenario characterized by feeble agricultural competitiveness and resource-intensive practices in China. This strategic approach not only propels China’s agriculture towards high-quality development but also cultivates an ecosystem conducive to farmers’ entrepreneurial endeavors. It signifies a significant shift towards a more vibrant, sustainable, and economically prosperous rural landscape.
Existing research has extensively explored the reasons for the low rural entrepreneurship rate, which can be classified into two main categories. At the macro level, the primary factors include political conditions (such as national policies, laws, and market incentives), the geographical environment (including the terrain, soil, hydrology, and climate), the social culture (encompassing language, religion, and values), and the overall entrepreneurial atmosphere (Kotey [10]; Vessey [11]; Gaddefors et al. [12]; Wang et al. [13]). On the micro level, key factors encompass the characteristics of entrepreneurial individuals (such as gender, age, and personality), family attributes (such as income, assets, and social networks), and specific entrepreneurial traits (Ajayi et al. [14]; Kangogo et al. [15]; Wang et al. [16]). The absence of macro-environmental and micro-level conditions may lead to inadequate entrepreneurial motivation in rural areas. The renewability, external economy, and increasing marginal benefits of the digital economy play a vital role in solving these entrepreneurial problems (Camero and Alba [17]; Nambisan et al. [18]; Sahut et al. [19]). A favorable digital environment can empower and optimize other production factors through seamless integration and embedding (Tauscher and Laudien [20]). Over the past few years, many scholars have been actively discussing a wide range of topics related to DRC. For instance, Dillon et al. [21] confirmed that rural infrastructure indeed effectively boosts agricultural production. Furthermore, rural governance and rural living directly impact farmers’ input capacity. By constructing rational interest-sharing mechanisms, Zhang et al. [22] discovered that rural governance enhances farmers’ collective action capacity and achieves income growth and material capital accumulation in rural areas. Zhou et al. [23] found that an improved rural governance system, through providing basic public services and enhanced rural welfare, partially reconstructs rural social capital, reinforces incentives for farmers’ education investment, and influences the accumulation of rural human capital. Popkova and Sergi [24] proposed that digital villages can promote diversification in agricultural products and services, stimulating consumption.
Overall, the extensive literature does not explore the relationship between DRC and rural household entrepreneurship. Additionally, according to the County Digital Rural Index (CDRI), the scope of DRC encompasses multiple dimensions, including digital rural infrastructure (DRI), digital rural economy (DRE), digital rural governance (DRG), and digital rural lifestyle (DRL). However, few studies have comprehensively analyzed the impact and mechanisms of DRC on rural household entrepreneurship from a multidimensional perspective. This research empirically examines the relationship between DRC and rural household entrepreneurship using county-level digital rural index data and the 2019 China Household Finance Survey (CHFS). The findings indicate that DRC promotes rural household entrepreneurship. It achieves this by indirectly facilitating resource acquisition and opportunity identification for rural entrepreneurship. Heterogeneity analysis reveals that DRC has a stronger promotion effect on local and risk-averse individuals’ entrepreneurship. Furthermore, DRC has a more pronounced effect in stimulating EB within lower-income families, while its impact on EP shows the opposite trend. The promotion effect of DRC on rural household entrepreneurship is notably significant in regions with a higher level of digital village development but less pronounced in regions with a lower level of digital village development.

2. Digital Rural Construction and Rural Household Entrepreneurship

Rural household entrepreneurship, as defined in the relevant literature, involves rural families relying on family organizations or creating new entities to pursue economic benefits. This includes expanding the production scale, venturing into new activities, or initiating new businesses by investing productive capital in rural areas (Pato and Teixeira [25]; Wong et al. [26]). The market is the driving force behind farmer entrepreneurship (Boppart [27]). However, in the context of the modern digital economy, DRC acts as a booster to further stimulate rural residents’ entrepreneurial development.
Recent developments in digital technology have prompted scholars to explore the impact of digitalization on rural household entrepreneurship. The existing literature primarily examines e-commerce, digital finance, and Internet usage. For instance, Barnett et al. [28] found that smartphone and Internet use positively influence entrepreneurship through social networking and information access channels. Tang et al. [29] focused on rural tourism, empirically testing the positive impact of the digital economy on rural entrepreneurial behavior at the micro level. Kim and Orazem [30] examined the effect of Internet use on the location of rural household entrepreneurship in the U.S., showing that broadband availability positively influences the location decisions of new businesses in rural areas. Additionally, Mack et al. [31] found that the Internet allows entrepreneurial subjects to identify more opportunities before starting a business and enhances productivity after the business’s launch.
The concept of the digital village possesses both relative significance and novelty. However, the meaning of digital village is slightly different in different countries. In the Chinese context, “digital village” encompasses the indigenous progression and evolution of agricultural and rural modernization. It involves the integration of networking, informatization, and digitalization into the economic and social development of rural areas, along with the enhancement of farmers’ proficiency in modern information technologies. This concept not only serves as a strategic pillar for rural revitalization but also constitutes a pivotal aspect of China’s broader ambition to construct a digitally empowered nation (Zhang et al. [32]; Jiang et al. 2022 [33]). Within the European Union, the term “digital village” pertains to rural areas and communities that leverage their existing strengths and assets while concurrently exploring novel prospects. In a digital village, both traditional and modern networks and services undergo enhancement through the application of digital and telecommunication technologies, innovation, and improved knowledge utilization. This transformation ultimately yields benefits for residents and businesses alike (Zavratnik et al. [34]). In short, the implementation of digital villages must adapt to social, cultural, and environmental conditions.

3. The Mediating Role of Resource Acquisition and Opportunity Identification

Entrepreneurship is not only the process of identifying and exploiting entrepreneurial opportunities, but also the process of moving from opportunity identification to coordinating resources and thus forming market competitiveness, and this view has also been recognized by more scholars (Jenkins and McKelvie [35]; Shane and Venkataraman [36]). Thus, entrepreneurship is an activity involving opportunity identification and resource acquisition.
Firstly, DRC facilitates rural household entrepreneurship by simplifying opportunity identification. The digital economy facilitates knowledge spillover, bridging cognitive gaps for entrepreneurs to identify opportunities and mitigate risks from information asymmetry (Cutolo and Kenney [37]; Lodefalk and Tang [38]). When viewed through the lens of the entrepreneurial process, the identification of entrepreneurial opportunities marks the very inception of the entire entrepreneurial journey. It constitutes a critical juncture in the value creation process and serves as a pivotal determinant in an entrepreneur’s decision to embark on a business venture (Shepherd et al. [39]). Referring to the relevant literature, entrepreneurial opportunities exist within the entrepreneurial environment (Shane [40]; Alvarez et al. [41]). During the opportunity identification process, entrepreneurs should harness their proactive instincts to the fullest and continuously gather, assess, and creatively enhance valuable information (Eller et al. [42]). Research on opportunity identification in rural settings, particularly among rural household entrepreneurs, is limited compared to its focus on enterprises and start-ups. The existing literature has primarily concentrated on entrepreneurial alertness, experience, social networks, and human capital as key factors influencing opportunity identification (Kirzner [43]; Ardichvili and Cardozo [44]). In summary, the research contends that farmers’ entrepreneurship opportunity identification involves farmers discovering new goods, technologies, and market trends by perceiving essential entrepreneurial resources, leading to value creation through entrepreneurship.
Secondly, DRC promotes rural household entrepreneurship by enabling resource acquisition, which is crucial for their success. As the entrepreneurial process advances, resource requirements shift from basic to more advanced resources. Farmers often face significant resource risks in the early stages due to low income, limited savings, and outdated information (Madestam [45]). However, the adoption of innovative financing by farming households can be facilitated through formal credit, social capital, and organic fertilizers when traditional funding sources are inadequate for agricultural activities (Appiah et al. [46]). As a result, the lack of resources poses a significant obstacle for farmers to start and grow their entrepreneurial ventures. The foundation of entrepreneurial competence is entrepreneurial resources. Entrepreneurs’ entrepreneurial ability is primarily reflected by their ability to transform resources (Muller and Korsgaard [47]). DRC also plays a crucial role in the stages of business idea generation and entrepreneurial survival for farmer entrepreneurs. It enables them to efficiently acquire financial, technical, and other resources while continuously developing their entrepreneurial abilities to gain competitive advantages. The Timmons and Wycombe models emphasize resource acquisition and opportunity identification and align with this perspective. Based on the above entrepreneurship theory, the rapid expansion of the digital economy drives the digitalization of production elements, aligning with the transformation of entrepreneurial activities into digital entrepreneurship. Rural entrepreneurs can achieve entrepreneurial development by identifying opportunities, mitigating market risks, and acquiring entrepreneurial resources.

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Subjects: Development Studies
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Yunwen Zhou
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Zhijian Cai
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Update Date: 20 Oct 2023
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