The Impact of Streamlining Administration and Delegating Powers on Urban Entrepreneurial Activity: Evidence from a Quasi-Natural Experiment of Administrative Approval System Reform

Administrative approval reform, a cornerstone initiative for redefining the government-market nexus, is pivotal to empowering the market's decisive role. Drawing on firm-level registration data from the State Administration for Industry and Commerce and exploiting the quasi-natural experiment created by incremental administrative streamlining, this study systematically examines how such reform—and the resultant delegation of authority—affects urban entrepreneurial activity. Our empirical analysis demonstrates that administrative approval reform significantly enhances urban entrepreneurship, operating through three principal channels: reduction of institutional transaction costs, stimulation of technological innovation, and facilitation of talent agglomeration. Furthermore, the reform's entrepreneurial uplift is markedly stronger in higher-tier cities and those east of the Hu Huanyong Line, whereas no statistically significant heterogeneity emerges across cities with differing market potential. Finally, we provide new evidence that administrative approval reform also promotes high-quality entrepreneurship. Theoretically, these findings offer a novel vantage for understanding the institutional underpinnings of urban entrepreneurial vitality; practically, they furnish policymakers with robust empirical support for the design and refinement of administrative approval mechanisms.