Entrepreneurship and strategy in China: why “Porter's five forces” may not be

Challenging the suitability of “Porter's five forces” as a guide to strategy and entrepreneurship in China and in the global age at large, this paper aims to present a new “five forces” model based on Sun Tzu's timeless strategic wisdom, with entrepreneurship and “collaborative innovation” right at its heart.

The arguments and the new model are developed, drawing on results from a survey among entrepreneurs and executives operating in China, the direct experience of top entrepreneurs, authoritative information from publishers like the Financial Times and Business Week, the consensus at the 2008 Annual Conference of the World Economic Forum, and Sun Tzu's timeless strategic insights.

The survey among entrepreneurs and executives operating in China shows that “Porter's five forces” has had little impact on business practice in China. One author, a serial entrepreneur, has considered ren shi qian or three Ps (people, project and penny) as the strategic forces driving his ventures in China. Going beyond the narrow, extremely competitive focus of Porter's model, the new “five forces” model, consisting of business purpose, business location, business climate, business organisation and business leader, is shown to determine business success. And, as the central strategic force, business leaders have to embrace entrepreneurship and “collaborative innovation” with their hearts to navigate any challenging economic waters.

Freeing business practitioners and teachers/students from the dogma of “Porter's five forces” established 30 years ago, this paper will help them identify what really determines business success in the new age.