Abstract:  The entrepreneurship depends on the internal institutional structure of the enterprise and the external institutional environment of the enterprise. But in China, there are still some problems in this area. For example, the basic legal system is imperfect, in some disputes of property rights cases; China’s crackdown on infringements is not strong enough, so that the property and rights of entrepreneurs are not well protected. At the same time, bank lending has certain discrimination against private enterprises to a certain extent, and financing constraints have become the main obstacles on their development path (He Ren, Liu Bingyong, 2012), broken the confidence of entrepreneurs to start a business. In addition, the government's dominance of the economy directly affects the entire process of corporate activities, and is also prone to corruption and other issues.In this context, one natural question arises: does the institutional environment in China have an impact on the entrepreneurship? To answer this question, we will investigate the empirical relationship between institutional environment and entrepreneurship across China’s provinces during the period 2011–2015. We also want to uncover mechanisms involved running from mis-allocation of institutional environment to entrepreneurship.Based on the panel data of China's provincial level in 2011-2015, this paper will comprehensively analyze the influence of institutional environment on entrepreneurship from four aspects: rule of law level, financial development, government regulation and regional corruption.(1) We find that the institutional environment has a significant impact on entrepreneurial innovation and entrepreneurship. Among them, the rule of law and financial development have an coefficient of 0.86 and 0.57 for entrepreneurship, and the government control has an coefficient of -1.05 for entrepreneurship. Regional corruption plays a “lubricating” effect in the development of entrepreneurship. After controlling for endogenous problems, the results are more robust. (2) We find that the four indicators that measure the institutional environment have a stronger explanatory power for entrepreneurial innovation. (3) When considering the interaction between variables, the interaction between the level of the rule of law and financial development is positively related to entrepreneurship; the coefficient of interaction between government regulation and finance is negative. This shows that in the process of studying the role of the institution in the entrepreneurship, we must consider the relationship between various factors within the institutional environment. (4) Economic growth has an incentive effect on the promotion of entrepreneurship, and the level of education has a negative impact on it. In the case of considering endogeneity, the effect of opening up to the outside world and FDI on entrepreneurship is not significant.The conclusion of this paper shows that in order to lead the economic growth with high quality, we should create a good institutional environment for entrepreneurs.Our paper contributes to the existing literature in three different ways: First, this paper measures the institutional environment from the four perspectives: The rules of law, finance, government, and corruption, and studies its macro impact on entrepreneurship. Previous studies have generally focused on a single point of viewin law or finance, so this article enriches the literature to some extent. At the same time, this article uses entrepreneurial innovation and entrepreneurship as indicators to measure entrepreneurship, and enhances the robustness of the results.Secondly, this paper examines the interaction between finance and the rule of law and the interaction between government and finance, and describes the mechanism of influence within the institutional environment, which provides adirection for future research.The research provides empirical evidence on the relationship between institutional environment and entrepreneurship in the process of China's economic transition from high-speed growth to high-quality growth. The conclusions show that the institutional environment is an important factor driving the development of entrepreneurship.Our results have significant implications. Forpolicymakers,strengthen the building of a socialist rule of law system with Chinese characteristics, and formulate and implement a “good law and good policy” that will help the development of private enterprises. Different rules and regulations are needed within the enterprise to constrain the behavior of managers and employees. At the same time, in order to innovate and develop of the enterprise, it is necessary to gradually improve the system of property rights protection, effectively protect various forms of ownership economy according to law, and thus enhance the incentives for enterprises to innovate and start businesses. For researchers who studythe allocation of human capital, the message of the paper is that it is possible to adopt a method of establishing small commercial banks that can provide financial services, and fundamentally eliminate discrimination against private and private enterprises, in view of the existing obstacles such as financing loans to private enterprises.It also combines finance and the rule of law to promote financial development through the rule of law. Accelerate the pace of building a government under the rule of law. When the government introduces relevant policies, it must proceed from the level of the rule of law. Only reasonable intervention in the market will make the market economy become the leading force to lead the high-quality growth of the economy, and also create a good external institutional environment for entrepreneurship.It is important to admit two limitations to our study. First, the indicators for measuring entrepreneurship in this paper are not perfect. In recent years, the state has paid more attention to entrepreneurs. There are more and more standards for testing whether it is a good entrepreneur. Many of the connotations of entrepreneurship are not well quantified. Second, this paper only examines the mechanism of the influence of institutions on entrepreneurship from a macro perspective, and does not consider it from the micro perspective. And it is not accurate enough to choose indicators that measure government regulation.

Key words: entrepreneurial spirit, institutional environment, impact mechanism