Chinese entrepreneurship: innovation and growth

Citation

Li, J. (2008), "Chinese entrepreneurship: innovation and growth", Journal of Small Business and Enterprise Development, Vol. 15 No. 4. https://doi.org/10.1108/jsbed.2008.27115daa.001

Chinese entrepreneurship: innovation and growth

Article Type: Guest editorial From: Journal of Small Business and Enterprise Development, Volume 15, Issue 4

About the Guest Editor

Jun LiSenior Lecturer in Entrepreneurship and Innovation at the Essex Business School, University of Essex, UK. He previously held posts at University of Bedfordshire Business School, Birmingham City University Business School, and Chinese Academy of Sciences. He currently holds a Visiting Professorship at the Zhejiang University, Zhongnan University of Economics and Law, and Shantou University in China. He teaches and researches in the areas of entrepreneurship and policies, innovation management, and Chinese entrepreneurship. His recent publications include Financing China’s Rural Enterprises, and Internationalisation of SMEs, and he has edited special issues in entrepreneurship, innovation, and knowledge transfer in China for Journal of Small Business and Enterprise Development and Industry and Higher Education.

This special issue of the journal is dedicated to the topic of Chinese entrepreneurship and has a specific focus on innovation and growth. It is a follow-up of the first special issue on entrepreneurship and small business development in China, which was published in JSBED volume 13, issue 2. In 2006, we observed that despite the growing interest in Chinese entrepreneurial practices, research in this important topic of academic endeavour remained relatively neglected. Two years since the publication of the first special issue, we are pleased to note that the situation has changed and that the number of articles and books on Chinese entrepreneurship has grown considerably.

The international business community is taking notice of the emergence, growth and development of Chinese entrepreneurial firms. “Lenovo” is illustrative of the rapid rise of enterprises in contemporary China. Launched by academic entrepreneurs with £13,000 capital just over 20 years ago, Lenovo has grown to become the world’s third largest manufacturer of personal computers. In 2005 it acquired IBM’s PC division for US$1.25 billion. Other high profile, successful Chinese entrepreneurial firms include “Haier” (manufacturing), “Huawei” (telecommunications network provider) and “Geely” (car manufacturer). There are many other, less well-known Chinese firms that are equally entrepreneurial and fast growing. Nevertheless, we still know very little about how Chinese entrepreneurs manage growth, how they mobilise resources to support expansion and how they overcome various barriers to enterprise development. It would be in the interest of policy makers, practitioners, academics and researchers that we explore these important aspects of entrepreneurship to better understand the Chinese model of entrepreneurial innovation and growth.

Thus, the main aim of this special issue is to present, explore and reflect on the Chinese experience of entrepreneurship and to critically evaluate the application and implications of the Chinese entrepreneurial model. More specifically, we aim to:

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  examine enterprise growth factors in the Chinese context;

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  highlight the diverse range of topical issues to which the Chinese experience of small business growth and enterprise development can contribute;

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  explore various aspects of entrepreneurship development policies and support mechanisms in contemporary China.

There are 12 articles included in this special issue. The first two articles examine broad policy issues related to support for small business and enterprise development in China. In the first article, Andrew Atherton explores the development and implementation of enterprise policy in this country. The author documents the emergence of intermediaries and local strategies that were specifically designed to encourage SME development in contemporary China. In the second article, Smallbone, Xiao and Xu evaluate the business development service (BDS) market in Chengdu city, in order to identify demand and supply deficiencies that public policy could address. The authors suggest that the BDS market in Chengdu is underdeveloped and that this is an important policy issue to be addressed if small enterprises are to fulfil their potential contribution to local economic development.

The next four articles focus on the theme of entrepreneurial growth. Zhang, Yang and Ma examine the attributes of Chinese fast growth enterprises by employing an adapted Wiklund (1998) and Barringer (2005) framework. They found that major differences exist between rapid and slow growth firms in their availability and usage of relevant resources and capacities as well as their task environment and entrepreneurial strategies. Firms that intend to grow from conception are more likely to achieve rapid growth than low growth-oriented firms. Similarly, growth-oriented firms with relevant vision are more likely to achieve rapid growth than low growth businesses. More importantly, the authors conclude that growth-orientated firms are more entrepreneurial. In the fourth article, Zhang and Si explore the impact of key external factors on the performance of Chinese enterprises. It emerges that these comprise three types of organizations (government, university and R&D institutes as well as agencies and financial institutions) and three types of environmental factors (the legal and institutional environment, culture and geographic location). The authors suggest that good relationships with financial organisations can positively impact upon the growth of Chinese enterprises and that a close relationship with government could present disadvantages to their growth. Interestingly, entrepreneurial culture emerges as the most significant environmental factor to impact on the performance of Chinese enterprises.

In the fifth article, Yang and Xu use recent industrial census data from Beijing to test the relationship between city industrial diversity and enterprise development in an urban region. The authors found that industrial differences in entrepreneurial activity are correlated to intra- and inter-industrial diversities. In the next article, Wang and Han focus on trans-ownership mergers and acquisitions in small and medium-sized private enterprises in China. The authors examine the reasons why trans-ownership offers better growth prospects, yet many of these business relationships end up in failure. It emerges that short-termism, local government self benefit maximisation and the pursuit of individual economic and political gains are the main reasons for such failures.

The next five articles focus on issues related to the entrepreneurship environment. Zhang, Peng and Li investigate the impact that entrepreneurship policy can have on technological entrepreneurship at regional level. The authors found that there are considerable regional variations in the level of technological entrepreneurship in China. Furthermore, technological entrepreneurship and enterprise policy are significantly correlated and the integration of policy, technology, intelligence, funds and markets will improve the level of regional technological entrepreneurship activity. In the eighth article, Wu and Wu focus on the supply-side of the entrepreneurship environment. They investigate the relationship between Chinese university students’ higher educational background and their entrepreneurial intentions. The authors suggest that diversity of educational background offers a plausible explanation for variations in the entrepreneurial intentions of Chinese university students and that higher educational institutions have to integrate the change of mindset, skills and abilities in their general academic education in order to nurture university students’ entrepreneurial intentions.

In the ninth article, Anderson and Lee set out to examine the Guanxi, “special relationships” aspect that has long been employed to facilitate entrepreneurship in China. Their research suggests that Guanxi persists and may remain essential to entrepreneurship in China. Importantly, however, the authors predict that Guanxi will work in conjunction with markets and regulations rather than as a replacement. In the next article Xu, Lin and Lin investigate structural characteristics of business networks comprising small and medium-sized enterprises and explore the relationships between network characteristics and the innovative capabilities of participating firms. They found that density, reciprocity and multiplicity of business networks have a positive association with the participating firms’ innovative capabilities. In the eleventh article, Millman, Matlay and Liu provide a critical overview of entrepreneurship education in the wider context of the Chinese educational system and raise pertinent questions regarding its direction and future development. The authors focus their in-depth analysis on the challenges and outcomes of a “Know about your business” programme initiated by the International Labour Organisation and piloted at the China Youth University for Political Sciences in Beijing. It emerges that the KAB pilot programme proved largely successful and it could be used to further improve and develop entrepreneurship education in China.

In a policy perspective article, Ding, Li and Wang provide a comprehensive overview of changing fiscal policies over the last three decades in support of technological innovation in China. The initiation of economic reforms in China in 1978 has driven the dramatic change in China’s science and technology policy and its incentive mechanisms. The authors claim that enterprises have gradually become key actors in the national innovation system in China and that new mechanism for incentivizing innovation in terms of financial and tax incentives are being created.

In the preparation of this special issue a number of individuals have kindly offered their support. I would like to thank all contributors, referees and advisors for their valuable input and expert advice. In particular, I would like to thank Geoffrey Whittam, Sarah Jack, Bill Gleave, and Michael Zhang for their excellent support with this issue. I would also like to thank Professor Harry Matlay, the Editor of JSBED, for sharing my enthusiasm for a second special issue on Chinese entrepreneurship and small business development. He has been very supportive and patient throughout the two years that it has taken to move this issue from conception into publication. As Guest Editor of this unique and visionary journal I have taken pride and pleasure in collaborating with all these people and in presenting these articles to our readership.

Jun LiSchool of Entrepreneurship and Business, University of Essex, Southend-on-Sea, UK