Advertisement

Small Business Economics

, Volume 53, Issue 3, pp 813–837 | Cite as

Regional differences in self-employment in China

  • Bei Luo
  • Terence Tai-Leung ChongEmail author
Article

Abstract

This paper investigates the impact of personal characteristics and institutional environment on the decision to be self-employed in China. It is shown that a difference in the likelihood of being self-employed exists between urban and rural areas. Our results show that institutional differences between rural and urban areas influence self-employment decisions. Factors that exert a consistent impact regardless of the local institutional environment are marriage, education, money spent on weddings and gifts, economic openness, and accessibility of information. The impact of other factors differs across rural and urban areas. These factors include family ownership of real estate, experience, gender, population density, the management capacity of local government, and the development of private economy in the local community.

Keywords

Self-employment Occupational choice Institutional environment Economic development 

JEL classifications

J24 L26 O12 

Notes

Acknowledgements

This research uses data from the China Health and Nutrition Survey (CHNS). We owe much to James Kung, Dennis Tao Yang, and the two anonymous reviewers for their very helpful comments. We are also very much indebted to Min Chen, Margaret Loo, Sophia Lok, Yingshi Chen, and Mandy Cheung for their assistance in the research. Any remaining errors are ours.

Funding information

We thank the National Institute of Nutrition and Food Safety, the Chinese Center for Disease Control and Prevention, the Carolina Population Center (5R24 HD050924), the University of North Carolina at Chapel Hill, the National Institutes of Health (NIH) (R01-HD30880, DK056350, R24 HD050924, and R01-HD38700), and the Fogarty International Center for financial support in collecting the CHNS data and the analysis files from 1989 to 2011 and future surveys.

References

  1. Acs, Z. J., & Audretsch, D. B. (Eds.). (2003). Handbook of entrepreneurship research: an interdisciplinary survey and introduction. London: Kluwer Academic ISBN: 978-1402073588.Google Scholar
  2. Adelino, M., Schoar, A., & Severino, F. (2015). House prices, collateral, and self-employment. Journal of Financial Economics, 117(2), 288–306.  https://doi.org/10.1016/j.jfineco.2015.03.005.Google Scholar
  3. Ahlstrom, D., Bruton, G. D., & Lui, S. S. Y. (2000). Navigating China’s changing economy: strategies for private firms. Business Horizons, 43(1), 5–15.  https://doi.org/10.1016/S0007-6813(00)87382-6.Google Scholar
  4. Ahlstrom, D., & Bruton, G. D. (2002). An institutional perspective on the role of culture in shaping strategic actions by technology-focused entrepreneurial firms in China. Entrepreneurship: Theory and Practice, 26(4), 53–69.Google Scholar
  5. Ahlstrom, D., Bruton, G. D., & Yeh, K. S. (2008). Private firms in China: building legitimacy in an emerging economy. Journal of World Business, 43(4), 385–399.  https://doi.org/10.1016/j.jwb.2008.03.001.Google Scholar
  6. Ahlstrom, D., & Ding, Z. (2014). Entrepreneurship in China: an overview. International Small Business Journal, 32(6), 610–618.  https://doi.org/10.1177/0266242613517913.Google Scholar
  7. Alesina, A., Ardagna, S., Nicoletti, G., & Schiantarelli, F. (2005). Regulation and investment. Journal of the European Economic Association, 3(4), 791–825.  https://doi.org/10.1162/1542476054430834.Google Scholar
  8. Aldrich, H. E., & Fiol, C. M. (1994). Fools rush in? The institutional context of industry creation. The Academy of Management Review, 19(4), 645–670.  https://doi.org/10.2307/258740.Google Scholar
  9. Alvarez, S. A., & Barney, J. B. (2007). Discovery and creation: alternative theories of entrepreneurial action. Strategic Entrepreneurship Journal, 1(1–2), 11–26.  https://doi.org/10.1002/sej.4.Google Scholar
  10. Alvarez, S. A., & Barney, J. B. (2010). Entrepreneurship and epistemology: the philosophical underpinnings of the study of entrepreneurial opportunities. The Academy of Management Annals, 4(1), 557–583.  https://doi.org/10.1080/19416520.2010.495521.Google Scholar
  11. Alvarez, S. A., & Barney, J. B. (2013). Epistemology, opportunities, and entrepreneurship: comments on Venkataraman et al. (2012) and Shane (2012). Academy of Management Review, 38(1), 154–157.  https://doi.org/10.5465/amr.2012.0069.Google Scholar
  12. Baumol, W. J. (1990). Entrepreneurship: productive, unproductive, and destructive. Journal of Political Economy, 98(5), 893–921.  https://doi.org/10.1086/261712.Google Scholar
  13. Beladi, H., & Kar, S. (2015). Skilled and unskilled immigrants and entrepreneurship in a developed country. Review of Development Economics, 19(3), 666–682.  https://doi.org/10.1111/rode.12155.Google Scholar
  14. Berkowitz, D., & DeJong, D. N. (2005). Entrepreneurship and post-socialist growth. Oxford Bulletin of Economics and Statistics, 67(1), 25–46.  https://doi.org/10.1111/j.1468-0084.2005.00108.x.Google Scholar
  15. Beugelsdijk, S., & Noorderhaven, N. (2005). Personality characteristics of self-employed; an empirical study. Small Business Economics, 24(2), 159–167.  https://doi.org/10.1007/s11187-003-3806-3.Google Scholar
  16. Bruton, G. D., Ahlstrom, D., & Li, H. (2010). Institutional theory and entrepreneurship: where are we now and where do we need to move in the future? Entrepreneurship Theory and Practice, 34(3), 421–440.  https://doi.org/10.1111/j.1540-6520.2010.00390.x.Google Scholar
  17. Bygrave, W., & Minniti, M. (2000). The social dynamics of entrepreneurship. Entrepreneurship: Theory and Practice, 24(3), 25–36.Google Scholar
  18. Caliendo, M., Fossen, F., & Kritikos, A. S. (2014). Personality characteristics and the decisions to become and stay self-employed. Small Business Economics, 42(4), 787–814.  https://doi.org/10.1007/s11187-013-9514-8.Google Scholar
  19. Carree, M. A., & Thurik, A. R. (2008). The lag structure of the impact of business ownership on economic performance in OECD countries. Small Business Economics, 30(1), 101–110.  https://doi.org/10.1007/s11187-006-9007-0.Google Scholar
  20. Chen, Z., Sun, Y., Newman, A., & Xu, W. (2012). Entrepreneurs, organizational members, political participation and preferential treatment: evidence from China. International Small Business Journal, 30(8), 873–889.  https://doi.org/10.1177/0266242611407534.Google Scholar
  21. Chemin, M. (2009). The impact of the judiciary on entrepreneurship: evaluation of Pakistan’s “access to justice programme”. Journal of Public Economics, 93(1–2), 114–125.  https://doi.org/10.1016/j.jpubeco.2008.05.005.Google Scholar
  22. China Society for Finance and Banking. (1987, 2002). Almanac of China’s Finance and Banking. Beijing: China Finance.Google Scholar
  23. Constant, A., & Zimmermann, K. F. (2006). The making of entrepreneurs in Germany: are native men and immigrants alike? Small Business Economics, 26(3), 279–300.  https://doi.org/10.1007/s11187-005-3004-6.Google Scholar
  24. Collerette, P., & Aubry, P. (1990). Socio-economic evolution of women business owners in Quebec (1987). Journal of Business Ethics, 9(4–5), 417–422.  https://doi.org/10.1007/BF00380340.Google Scholar
  25. Davidsson, P. (2015). Entrepreneurial opportunities and the entrepreneurship nexus: a re-conceptualization. Journal of Business Venturing, 30(5), 674–695.  https://doi.org/10.1016/j.jbusvent.2015.01.002.Google Scholar
  26. Deng, S., Wang, X., & Alon, I. (2010). Framework for female entrepreneurship in China. International Journal of Business and Emerging Markets, 3(1), 3–20.  https://doi.org/10.1504/IJBEM.2011.037682.Google Scholar
  27. Démurger, S., & Xu, H. (2011). Return migrants: the rise of new entrepreneurs in rural China. World Development, 39(10), 1847–1861.  https://doi.org/10.1016/j.worlddev.2011.04.027.Google Scholar
  28. Djankov, S., La Porta, R., Lopez-de-Silanes, F., & Shleifer, A. (2002). The regulation of entry. The Quarterly Journal of Economics, 117(1), 1–37.  https://doi.org/10.1162/003355302753399436.Google Scholar
  29. Dolton, P. J., & Makepeace, G. H. (1987). Marital status, child rearing and earnings differentials in the graduate labour market. The Economic Journal, 97(388), 897–922.  https://doi.org/10.2307/2233079.Google Scholar
  30. Dow, D., Cuypers, I. R. P., & Ertug, G. (2016). The effects of within-country linguistic and religious diversity on foreign acquisitions. Journal of International Business Studies, 47(3), 319–346.  https://doi.org/10.1057/jibs.2016.7.Google Scholar
  31. Evans, M. D. R. (1989). Immigrant entrepreneurship: effects of ethnic market size and isolated labor pool. American Sociological Review, 54(6), 950–962.  https://doi.org/10.2307/2095717.Google Scholar
  32. Evans, D. S., & Leighton, L. S. (1989). Some empirical aspects of entrepreneurship. The American Economic Review, 79(3), 519–535.  https://doi.org/10.1007/978-94-015-7854-7_6.Google Scholar
  33. Evans, D. S., & Jovanovic, B. (1989). An estimated model of entrepreneurial choice under liquidity constraints. Journal of Political Economy, 97(4), 808–827.  https://doi.org/10.1086/261629.Google Scholar
  34. Fadahunsi, A., & Rosa, P. (2002). Entrepreneurship and illegality: insights from the Nigerian cross-border trade. Journal of Business Venturing, 17(5), 397–429.  https://doi.org/10.1016/S0883-9026(01)00073-8.Google Scholar
  35. Gong, Y., Chow, I. H., & Ahlstrom, D. (2011). Cultural diversity in China: dialect, job embeddedness, and turnover. Asia Pacific Journal of Management, 28(2), 221–238.  https://doi.org/10.1007/s10490-010-9232-6.Google Scholar
  36. Grichnik, D., Smeja, A., & Welpe, I. (2010). The importance of being emotional: how do emotions affect entrepreneurial opportunity evaluation and exploitation? Journal of Economic Behavior & Organization, 76(1), 15–29.  https://doi.org/10.1016/j.jebo.2010.02.010.Google Scholar
  37. Gumus, G., & Regan, T. L. (2015). Self-employment and the role of health insurance in the U.S. Journal of Business Venturing, 30(3), 357–374.  https://doi.org/10.1016/j.jbusvent.2014.01.001.Google Scholar
  38. Hayton, J. C., George, G., & Zahra, S. A. (2002). National culture and entrepreneurship: a review of behavioral research. Entrepreneurship: Theory and Practice, 26(4), 33–52.Google Scholar
  39. He, G. (1999). Cong nongcun jumin zijin jiedai xingwei kan nongcun jinrong yizhi yu jinrong shenhua [Rural financial repression and financial deepening: from the perspective of rural residents’ lending and borrowing behavior]. Chinese Rural Economy, 1999(10), 42–48.Google Scholar
  40. Hisrich, R. D., & O’Brien, M. (1981). The woman entrepreneur from a business and sociological perspective. In K. H. Vesper (Ed.), Frontiers of entrepreneurship research (pp. 21–39). Wellesley: Babson College ISBN: 978-0910897013.Google Scholar
  41. Huang, Y. (2008). Capitalism with Chinese characteristics: entrepreneurship and the state. Cambridge: Cambridge University Press.  https://doi.org/10.1017/CBO9780511754210.Google Scholar
  42. Hurst, E., & Lusardi, A. (2004). Liquidity constraints, household wealth, and entrepreneurship. Journal of Political Economy, 112(2), 319–347.  https://doi.org/10.1086/381478.Google Scholar
  43. Johasson, E. (2000). Self-employment and liquidity constraints: evidence from Finland. The Scandinavian Journal of Economics, 102(1), 123–134.  https://doi.org/10.1111/1467-9442.00187.Google Scholar
  44. Kidd, M. P. (1993). Immigrant wage differentials and the role of self-employment in Australia. Australian Economic Papers, 32(60), 92–115.  https://doi.org/10.1111/j.1467-8454.1993.tb00133.x.Google Scholar
  45. Kirzner, I. M. (1973). Competition and entrepreneurship. Chicago: University of Chicago Press ISBN: 978-0226437767.Google Scholar
  46. Lau, C., & Busenitz, L. W. (2001). Growth intentions of entrepreneurs in a transitional economy: the People’s Republic of China. Entrepreneurship: Theory and Practice, 26(1), 5–20.Google Scholar
  47. Lazear, E. P. (2004). Balanced skills and entrepreneurship. The American Economic Review, 94(2), 208–211.  https://doi.org/10.1257/0002828041301425.Google Scholar
  48. Leoni, T., & Falk, M. (2010). Gender and field of study as determinants of self-employment. Small Business Economics, 34(2), 167–185.  https://doi.org/10.1007/s11187-008-9114-1.Google Scholar
  49. Li, H., Yang, Z., Yao, X., Zhang, H., & Zhang, J. (2012). Entrepreneurship, private economy and growth: evidence from China. China Economic Review, 23(4), 948–961.  https://doi.org/10.1016/j.chieco.2012.04.015.Google Scholar
  50. Li, L., & Wu, X. (2014). Housing price and entrepreneurship in China. Journal of Comparative Economics, 42(2), 436–449.  https://doi.org/10.1016/j.jce.2013.09.001.Google Scholar
  51. Lindh, T., & Ohlsson, H. (1996). Self-employment and windfall gains: evidence from the Swedish lottery. The Economic Journal, 106(439), 1515–1526.  https://doi.org/10.2307/2235198.Google Scholar
  52. Liu, L., & Zhang, Y. (2017). Does non-employment based health insurance promote entrepreneurship? Evidence from a policy experiment in China. Journal of Comparative Economics.  https://doi.org/10.1016/j.jce.2017.04.003.
  53. Lu, J., & Tao, Z. (2010). Determinants of entrepreneurial activities in China. Journal of Business Venturing, 25(3), 261–273.  https://doi.org/10.1016/j.jbusvent.2008.10.005.Google Scholar
  54. Lucas Jr., R. E. (1978). On the size distribution of business firms. The Bell Journal of Economics, 9(2), 508–523.  https://doi.org/10.2307/3003596.Google Scholar
  55. Mair, J., & Marti, I. (2009). Entrepreneurship in and around institutional voids: a case study from Bangladesh. Journal of Business Venturing, 24(5), 419–435.  https://doi.org/10.1016/j.jbusvent.2008.04.006.Google Scholar
  56. Moore, R. L. (1983). Employer discrimination: evidence from self-employed workers. The Review of Economics and Statistics, 65(3), 496–501.  https://doi.org/10.2307/1924197.Google Scholar
  57. Naughton, B. (1996). Growing out of the plan: Chinese economic reform, 1978–1993. New York: Cambridge University Press ISBN: 978-0521574624.Google Scholar
  58. Reynolds, P. D., & White, S. B. (1997). The entrepreneurial process: economic growth, men, women, and minorities. Westport: Quorum Books ISBN: 978-1567200126.Google Scholar
  59. Rodrik, D. (2009). One economics, many recipes: globalization, institutions, and economic growth. Princeton: Princeton University Press ISBN: 978-0691141176.Google Scholar
  60. Romanelli, E., & Schoonhoven, C. B. (2001). The local origins of new firms. In C. B. Schoonhoven & E. Romanelli (Eds.), The entrepreneurship dynamic: origins of entrepreneurship and the evolution of industries (pp. 40–67). Stanford: Stanford University Press ISBN: 0804737894.Google Scholar
  61. Sarasvathy, S. D. (2001). Causation and effectuation: toward a theoretical shift from economic inevitability to entrepreneurial contingency. The Academy of Management Review, 26(2), 243–263.  https://doi.org/10.5465/AMR.2001.4378020.Google Scholar
  62. Sarasvathy, S. D. (2008). Effectuation: elements of entrepreneurial expertise. Cheltenham: Edward Elgar.  https://doi.org/10.4337/9781848440197.Google Scholar
  63. Schiller, B. R., & Crewson, P. E. (1997). Entrepreneurial origins: a longitudinal inquiry. Economic Inquiry, 35(3), 523–531.  https://doi.org/10.1111/j.1465-7295.1997.tb02029.x.Google Scholar
  64. Schumpeter, J. A. (1934). The theory of economic development: an inquiry into profits, capital, credit, interest, and the business cycle. Cambridge: Harvard University Press ISBN: 978-0674879904.Google Scholar
  65. Shane, S. (2000). Prior knowledge and the discovery of entrepreneurial opportunities. Organization Science, 11(4), 448–469.  https://doi.org/10.1287/orsc.11.4.448.14602.Google Scholar
  66. Shane, S., & Venkataraman, S. (2000). The promise of entrepreneurship as a field of research. The Academy of Management Review, 25(1), 217–226.  https://doi.org/10.5465/AMR.2000.2791611.Google Scholar
  67. Shane, S. (2003). A general theory of entrepreneurship: the individual-opportunity Nexus. Northampton: Edward Elgar.  https://doi.org/10.4337/9781781007990.Google Scholar
  68. Shane, S. (2012). Reflections on the 2010 AMR decade award: delivering on the promise of entrepreneurship as a field of research. The Academy of Management Review, 37(1), 10–20.  https://doi.org/10.5465/amr.2011.0078.Google Scholar
  69. Shane, S., Locke, E. A., & Collins, C. J. (2003). Entrepreneurial motivation. Human Resource Management Review, 13(2), 257–279.  https://doi.org/10.1016/S1053-4822(03)00017-2.Google Scholar
  70. Short, J. C., Ketchen, D. J., Shook, C. L., & Ireland, R. D. (2010). The concept of “opportunity” in entrepreneurship research: past accomplishments and future challenges. Journal of Management, 36(1), 40–65.  https://doi.org/10.1177/0149206309342746.Google Scholar
  71. Sowell, T. (1981). Markets and minorities. New York: Basic Books ISBN: 9780465043996.Google Scholar
  72. Storey, D. J., & Tether, B. S. (1998). New technology-based firms in the European Union: an introduction. Research Policy, 26(9), 933–946.  https://doi.org/10.1016/S0048-7333(97)00052-8.Google Scholar
  73. Stuetzer, M., Obschonka, M., & Schmitt-Rodermund, E. (2013). Balanced skills among nascent entrepreneurs. Small Business Economics, 41(1), 93–114.  https://doi.org/10.1007/s11187-012-9423-2.Google Scholar
  74. Tan, J. (2002). Culture, nation, and entrepreneurial strategic orientations: implications for an emerging economy. Entrepreneurship: Theory and Practice, 26(4), 95–111.  https://doi.org/10.2139/ssrn.1552182.Google Scholar
  75. Troilo, M., & Zhang, J. (2012). Guanxi and entrepreneurship in urban China. Journal of the Asia Pacific Economy, 17(2), 315–331.  https://doi.org/10.1080/13547860.2012.668280.Google Scholar
  76. Venkataraman, S. (1998). The distinctive domain of entrepreneurship research. In J. A. Katz (Ed.), Advances in entrepreneurship, firm emergence, and growth (Vol. 3, pp. 119–138). Bingley: JAI ISBN: 978-0762300037.Google Scholar
  77. Wang, S. (2012). Credit constraints, job mobility, and entrepreneurship: evidence from a property reform in China. The Review of Economics and Statistics, 94(2), 532–551.  https://doi.org/10.1162/REST_a_00160.Google Scholar
  78. Wei, S., & Zhang, X. (2011). Sex ratios, entrepreneurship, and economic growth in the People’s Republic of China (no. 16800). National Bureau of Economic: Research.  https://doi.org/10.3386/w16800.Google Scholar
  79. Weiss, Y. (1997). Chapter 3: The formation and dissolution of families: why marry? Who marries whom? And what happens upon divorce. In O. Stark & M. R. Rosenzweig (Eds.), Handbook of population and family economics (Vol. 1A, pp. 81–123). Amsterdam: Elsevier ISBN: 978-0444826459.Google Scholar
  80. Xiao, H. Y. (Ed.). (2006). Zhongguo quyu jingzhengli fazhan baogao 2005 [China regional competitiveness development report 2005]. Beijing: China Statistics ISBN: 978-7503748646.Google Scholar
  81. Xin, K. R., & Pearce, J. L. (1996). Guanxi: connections as substitutes for formal institutional support. The Academy of Management Journal, 39(6), 1641.  https://doi.org/10.2307/257072.Google Scholar
  82. Xu, Y., & Yao, Y. (2015). Informal institutions, collective action, and public investment in rural China. American Political Science Review, 109(2), 371–391.  https://doi.org/10.1017/S0003055415000155.Google Scholar
  83. Yueh, L. (2009). Self-employment in urban China: networking in a transition economy. China Economic Review, 20(3), 471–484.  https://doi.org/10.1016/j.chieco.2009.01.002.Google Scholar
  84. Zhao, Y. (1999). Leaving the countryside: rural-to-urban migration decisions in China. The American Economic Review, 89(2), 281–286.  https://doi.org/10.1257/aer.89.2.281.Google Scholar
  85. Zhao, Y. (2002). Causes and consequences of return migration: recent evidence from China. Journal of Comparative Economics, 30(2), 376–394.  https://doi.org/10.1006/jcec.2002.1781.Google Scholar

Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Division of Business and ManagementBeijing Normal University–Hong Kong Baptist University United International CollegeZhuhaiChina
  2. 2.Lau Chor Tak Institute of Global Economics and Finance and Department of EconomicsThe Chinese University of Hong KongSha TinHong Kong

Personalised recommendations