Baseline regression.

Enterprise resilience captures enterprises’ ability to survive and develop under uncertainties and shocks. Taking the shock of COVID-19 as an example, this paper employs a unique firm-level national survey dataset collected from a sample of nearly 40,000 Chinese private enterprises in 2020 to systematically explore the relation between local business environment and enterprise resilience. Our estimation results using ordered probit model indicate that favorable business environment can significantly enhance enterprise resilience and mitigate the shock of COVID-19 on firm performance. Mechanism analysis further shows that enterprises under better business environment generally have greater resilience as the result of timely and effective government support, reliable supply of production factors and logistics service, and lower levels of financial constraints. Our study deepens the understanding of the economic consequences of business environment and also sheds a new light on enterprise resilience enhancement.