The Effect of Government Support on the Firm Performance in Rural Area

Returning home to start a business is an important way to realize the high quality development of rural economy and society. Based on the resource dependence theory, and using the survey data of 2035 enterprises in 29 provinces, this paper examines the impact of government support on the performance of returning home entrepreneurship. The results show that: (1) government support has a positive effect on the performance of returning home entrepreneurship, which is manifested in the increase of operating income and net profit. This conclusion still holds after dealing with the endogenous problem and after a series of robustness tests; (2) the mediating effect analysis shows that the new investment is the mechanism of government support to improve the performance of returning home entrepreneurship; (3) the positive impact of government support on the performance of returning home entrepreneurship is heterogeneous, that is, the enterprises lacking economic capital, human capital and political capital can get the support from the government. More performance benefits can be obtained in support. Therefore, full play should be given to the role of the government in the process of returning home to start a business, such as increasing financial support, expanding the scope of policy information dissemination, and improving the policy literacy of entrepreneurs.