Is digital business an enabler of enhanced entrepreneurship? An empirical investigation of European countries

The purpose of this study is to examine the impact of digital business on the ease of establishing new companies in 28 European countries from 2011 to 2019. A digital business can be described in terms of e-commerce, specifically e-commerce sales. Additionally, it encompasses e-business, with a focus on customer relationship management (CRM) usage. The study analyzes the digitalization-entrepreneurship nexus using the panel-corrected standard error (PCSE) model. Additionally, we employ the dynamic fixed-effects estimator (DFE) within the autoregressive distributed lag (ARDL) model to measure both short-run and long-run effects. Our findings suggest that digital business positively influences the density of entrepreneurship in a country. Our results remain robust when combining various econometric techniques with additional explanatory variables. However, the positive effects of digital business on the entrepreneurial sector become evident only in the long run. The use of digital business benefits the entrepreneurial sector by reducing the amount of time and money required to establish a new business.