Impact of Digital Innovation and E-Governance on Sustainable Entrepreneurship: The Role of Business Sophistication in Belt and Road Initiative Countries

Abstract

This study examines the role of digital innovation and e-governance on sustainable entrepreneurship, with the moderating effect of business sophistication. This research comprises strongly balanced panel data of 73 Belt and Road Initiative (BRI) participating nations from 2011 to 2022. Baseline analysis results suggest the long-term panel analysis such as two-step system GMM is best in this case. Moreover, number of groups are greater than time. While the results robustness is conducted through alternate variables as well with Seemingly Unrelated Regression (SUR), Dynamic Pooled Ordinary Least Squares (POLS), and Static POLS regression alternate methods. The results of the direct channels show that digital innovation connectivity and e-governance statistically have a significant and positive effect on sustainable entrepreneurship. However, the interaction between business sophistication, digital innovation, and e-governance shows mixed effects, which drive BRI-participating nations to focus more on business-enabling innovative technologies and better governance-driven technology innovation systems to boost sustainable entrepreneurship. Furthermore, globalization and policy shocks, such as China’s digital economy in 2015 and the BRI in 2013, have enhanced sustainable entrepreneurship. In addition, the consumer price index indicates that the inflation rate has a mixed negative effect on sustainable entrepreneurship