Access to the Future: Traffic Convenience and the Birth of Startup Companies

In the context of China's dynamic economic landscape, our research investigates the influence of traffic convenience (TC) on the proliferation of startup companies (SCs) across diverse geographic regions and industries. Utilizing panel data covering the period from 2000 to 2019 and encompassing 278 cities, we constructed a specialized data set for SCs in China using a text-based machine learning approach and employed highway density to measure TC. Our analysis reveals that a marginal increase of 1 m of highway per square kilometer is associated with an average increase of approximately 18 SCs, primarily concentrated in the tertiary sector. Further exploration into the channels underlying TC's impact on SC formation uncovers significant channel effects of foreign direct investment, regional product sales, and market potential. Moreover, the emergence of high-speed rail is also found to positively correlate with an increase in SC numbers. Our study identifies spatial and industrial disparities in the influence of TC, notably observing an insignificant effect on SCs in the northwestern and southern regions. Importantly, highway infrastructure improvements exert a lasting positive impact on startup formation, with effects remaining significant for up to 3 years. These findings contribute to the advancement of enterprise growth theory and shed light on the intricate relationship between transportation infrastructure and the enterprise ecosystem, providing valuable insights for policymakers and stakeholders engaged in urban planning and regional economic development initiatives.