Guest editorial

Citation

Li, J. (2006), "Guest editorial", Journal of Small Business and Enterprise Development, Vol. 13 No. 2. https://doi.org/10.1108/jsbed.2006.27113baa.001

Guest editorial

The second issue in volume 13 of JSBED is a special issue dedicated to the topic of “Entrepreneurship and small business development in China”. It is the second of a series of special issues that focus upon advances in entrepreneurship and small business development taking place within specific geographic areas. By most accounts, China’s economic growth over the past two decades has been impressive, and small and medium-sized enterprises (SMEs) played a vital role in the well known success story of the contemporary Chinese economy. It appears, however, that many myths still circulate in relation to the scope, extent and impact of entrepreneurship in China. Despite increasing interest in Chinese entrepreneurial practices, research in this important topic of study remains relatively underdeveloped, and there is a notable fragmentation of, and bias for, certain topics and related academic publications.

It is our belief that the time has come to reflect critically upon the Chinese model of entrepreneurship and small business development, in order to enhance our knowledge in, and broaden the scope of, specialist research on this topic. To the best of my knowledge, this is one of the first attempts, by a peer refereed academic journal in the field of entrepreneurship, to dedicate a special issue to this relatively new area of study. The aim, therefore, is to draw knowledge from the conceptual and empirical research on entrepreneurship and small business development in the Chinese context and to stimulate further academic debate. More specifically, this themed issue aims to:

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  provide an overview of entrepreneurship and small business development research in China;

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  demonstrate the significant impact that entrepreneurship and small business development can have on China’s economic growth;

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  highlight the diverse range of topical issues to which the Chinese experience of entrepreneurship and small business development could potentially contribute; and

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  explore the various aspects of entrepreneurship development policies and support mechanisms in the Chinese context.

Whether the Chinese experience of entrepreneurship and small business development is context-specific or contains some generic lessons for others to learn from is an important research question, in particular at a time when interest in entrepreneurship is surging in most developed and developing nations. We hope that the articles, policy notes, research notes and book reviews included in this issue will facilitate a better understanding of the rapid and successful economic changes in China, and stimulate academic debate on the Chinese experience of entrepreneurship and small business development.

In the first article, Jia Chen provides an overview of Chinese policies and regulations in relation to entrepreneurship and small business development. It is argued that a healthy and sustainable small business sector would only be feasible if the fundamental role of the market in allocating resources and the self-operation status of SMEs are respected. In this context, SMEs are encouraged to optimise industrial structures and to facilitate better government-enterprise relations. In the next article, Chen, Li and Matlay focus on the main characteristics of Chinese private entrepreneurs. Based on data from a nationwide survey of private entrepreneurs, the authors explore the key micro factors that are shaping Chinese entrepreneurship: socio-political origins, motivations, educational attainment, organizational forms and power structures. It is argued that, in the new round of social stratification taking place in China, private entrepreneurs have emerged as an increasingly powerful new social class. New venture creation is the focus of Zhang and Yang’s article. Using a customised Timmons “new venture creation” model, the authors selected opportunity recognition, entrepreneurial teams and resource acquirement as the essence of new venture creation in China. They argue that personality characteristics, cultural environments and prevailing economic circumstances are the main factors that influence new venture creation. In the fourth article, Yang and Xu examine the relationship between entrepreneurship and regional disparity. It appears that China’s economic growth has not been evenly spread across all its regions, and geographical disparities are well documented. This article examines the patterns of, and reasons for, regional differences in entrepreneurship among various Chinese provinces (excluding Hong Kong and Taiwan). It is argued that provincial differences in entrepreneurship were directly related to local business growth, but not to factors such as local business development, urbanisation rate, level of market economy, level of salary and unemployment.

In the next article Li, Qian and Ng identify and assess the strategies of township and village enterprises in China and their drives to achieve and maintain sustainable competitive advantage. Township and village enterprises were at the forefront entrepreneurship resurgence of in China. The authors argue that entrepreneurial success can be attributed to strategies that consist of three well-defined stages. In the founding stage, enterprises start up in labour-intensive industries and survive competition through low cost strategies. In the growth stage, they survive by engaging in collaborative partnerships with western multinational corporations. In the maturity stage, they position themselves as low-priced but innovative manufacturers and grow into dominant players in global markets. The relationship between social capital and small business performance is the focus of Zhang and Fung’s article. The authors investigate the effects of social capital (defined as networks) on the performance of Chinese private enterprises and fond that memberships of various organizations do not appear to significantly affect the performance of these type of enterprise. In contrast, entertainment expenses and the flow of social capital are significant determinants of private enterprise performance.

In the seventh article, Wang and Yang shift academic attention to state-owned small and medium-sized enterprises (SOSMEs). These used to be the main source of industrial output and job creation in China, but their lack of competitiveness has been of concern during recent economic reforms. The authors focus on an innovative “partial shock model” that was implemented in a number of Chinese cities. In contrast to the former gradual reform model, this strategy emphasises rapid and adaptive change. In the eighth article, Jenny Clegg documents the recent major changes in China’s cooperative economy, and identifies the reasons behind the limited success of cooperative reforms. She found that recent reforms in the cooperative sector have been gradual, uneven and erratic, favouring the more entrepreneurial or better-placed farmers who actively pursued new market opportunities. It is suggested that creating a sustainable mechanism that would protect and enhance the interests of the poorer farmers would prove to be much more difficult.

In the first of the two policy perspectives, Xue Liang provides an up-to-date overview of the contribution that township and village enterprises (TVEs) have made to rural employment and local economic growth. Following a discussion of the challenges facing rural enterprises, he argues that new policies have to be implemented in order to promote private enterprises, to help upgrade industrial structures and to develop the agri-food processing industry. These economic policies also facilitated better quality and branding as well as encouraged business concentration in towns. In the second policy note, Ding Xuedong examines innovation and technology transfers in the Chinese agricultural sector, with a particular focus on the Science and Technology Transformation Fund. Through a case study, he illustrates the approaches that the Chinese government has taken to accelerate the improvement of science and technology in agriculture, to foster the transformation of scientific and technological achievements and to increase the benefits of agriculture in general. Li and Matlay provide a research note on recent developments in Chinese entrepreneurship. They focus upon three main strands of research: the local entrepreneurial state, institutions and networked entrepreneurship, and adaptive entrepreneurship and legitimacy building. Issues for further research in this important area of study are also suggested.

In his seminal points-of-view article, Allan Gibb explores the design of effective support systems for micro, small and medium enterprise (MSME) development, at local and regional levels. It argues that the extensive international experience, particularly over the past 20 years, has not been massively successful. In recognition of this, international donor agencies and policy makers are proposing the application of a stricter market-led approach to the provision of MSME development services. The author argues that this will not be successful if it ignores the way that western “institutionalism” dictates the supply offer. He calls upon the experience of China to suggest a paradigm based upon the guanxi model of relationships. The model demands a fundamental repositioning of policy support and a major reorganisation of the way that knowledge is made explicit and disseminated to MSMEs.

Many individuals have contributed and made possible the publication of this special issue. I would like to extend my gratitude to all the contributors, referees, advisors and book reviewers for their valuable input, their patience and continuous support. Special thanks are due to the editor, Professor Harry Matlay, for suggesting the special issue and for his unfailing support thereafter. I sincerely hope that the readership will benefit from the knowledge and experience embodied in this issue of JSBED.

Jun Li