How Policy Uncertainty Affects New Ventures

The deepening research on the new institutional economics tells us that the accumulation of elements and the advancement of technology are not the fundamental factors that affect the economic growth.The system,especially the political system,is the important factor affecting the economic growth.The new institutional economists emphasize the institutional environment importantly affects Economic growth and the behavior of enterprises.The system,especially the change in officials brought about frequent changes in policy,which will affect the business investment into new markets and potential entrepreneurs of innovation.While China has made great economic growth in reform and opening up,some scholars have explained how the Chinese economy can achieve such a big achievement in terms of "system bonus".While under the system of "political decentralization" and "fiscal decentralization",local government officials often has large "power" to develop their own economy and formulate economic development policies.While the Micro-enterprises can promote innovation-based economic growth,employment growth and income mobility,the rising mechanism will enable officials to focus on the region's economic growth.The formation of enterprises and the economic and political objectives of government officials have been a deeper degree of fit.Entrepreneurial vitality has been recognized as an important factor affecting economic development.It not only drives employment growth and improves the income mobility of society,but also promotes the development of new products,new markets and new technologies.Government leaders are clearly aware of the importance of entrepreneurial vitality.In the current literature research,at the micro and macro levels,a large number of literatures have confirmed the importance of innovation and vitality for economic and social development.However,the focus of existing literature on policy research is often focused on the impact on economic growth and the impact on corporate behavior.The impact of policy uncertainty on the generation of enterprises have been avoided,this paper will empirical study the policy uncertainty on the impact of enterprise generation.Based on a large number of concerned researches,this paper chooses the most important large enterprises for the regional and social economic growth as the goal,using the self-collected state-level city officials to measure the Policy Uncertainty.This paper analyzes the influence of Policy Uncertainty on the basis of the provincial panel data from 1999 to 2009.The study finds that the Policy Uncertainty represented by the change of officials has a significant negative effect on the generation of enterprises.Moreover,the impact of Policy Uncertainty on the impact of enterprises is heterogeneous.In particular,Firstly,the negative impact of Policy Uncertainty on the ownership of private enterprises is significant,while the impact on state-owned enterprises is not;Secondly,the Policy Uncertainty significantly negative impact on the type of registered capital of domestic enterprises,but not significantly affected foreign-funded enterprises(including Hong Kong,Macao and Taiwan capital),and Finally,the impact of Policy Uncertainty on small enterprises is significantly negative,while on medium and large enterprises is not significant.