This paper studies whether, how, and for whom generative artificial intelligence (GenAI) facilitates firm creation. Their identification strategy exploits the November 2022 release of Chat-GPT as a global shock that lowered start-up costs and leverages variations across geo-coded grids with differential pre-existing AI-specific human capital. Using high-resolution and universal data on Chinese firm registrations by the end of 2024, they find that grids with stronger AI-specific human capital experienced a sharp surge in new firm formation—driven entirely by small firms, contributing to 6.0% of overall national firm entry. Large-firm entry declines, consistent with a shift toward leaner ventures. New firms are smaller in capital, shareholder number, and founding team size, especially among small firms. The effects are strongest among firms with potential AI applications, weaker financing needs, and among first-time entrepreneurs. Overall, their results highlight that GenAI serves as a pro-competitive force by disproportionately boosting small-firm entry.
Session Chair:
Bohui ZHANG
Executive Dean of the School of Management and Economics, Professor, Director of the Center for FinTech and Social Finance at Shenzhen Finance Institute, SFI Chair Professor, Associate Director of Shenzhen Institute of Data Economy and ABFER
Updated 6 Feb 2026
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