Reforming Business System: Impacts on Entrepreneurship, Innovation, and Economic Efficiency

Abstract

Business system reform is a crucial component of China’s "Delegation, Regulation, and Service" (DRS) reform, aimed at reducing institutional transaction costs and fostering high-quality economic development. This study explores the theoretical foundations of business system reform, emphasizing its role in lowering transaction costs and improving market efficiency. Through a comprehensive review of empirical research, the paper examines its macroeconomic effects on industrial structure, entrepreneurship, economic quality, innovation, and employment, as well as its microeconomic impacts on firm productivity, investment, and resource allocation. The findings highlight that these reforms significantly enhance economic dynamism by reducing regulatory burdens and promoting market competition. Future research should focus on digital governance, market entry and exit reforms, regional disparities, and international policy comparisons to further optimize China’s business environment.