Chinese Entrepreneurship in a Cultural and Economic Perspective

With the transition from a centrally directed to an open market economy China has undergone dramatic changes since the early 1980s. In China, there is both the need and the opportunity for entrepreneurs to correct existing price distortions and to promote technological change. Thus, the purpose of this article is to evaluate how cultural, economic, and other environmental conditions influence the development and growth of entrepreneurial activities in China. Since cultural conditions are significant in either enhancing or retarding economic development, the concept of cultural entrepreneurship is introduced to argue that culture is a dynamic factor in regional development in the context of reforming the Chinese economy. Researchers have taken varied approaches to the study of entrepreneurship. Primary attention has been devoted to the concept of entrepreneurship as the phenomenon of individuals establishing and developing new firms, thus focusing upon a very important aspect of dynamism in economic development (Brockhaus 1980; McClelland 1961). Most of the research in entrepreneurship has been founded upon the premise that entrepreneurs embody distinctive personality characteristics that can be identified and used to indicate an individual's potential for successful entrepreneurship. As a result, in recent years a number of studies in different countries have focused on the relationship between demographic and economic/structural characteristics of regions on the one hand, and rates of new firm formation on the other. All those studies have found strong associations between a region's structural characteristics and its level of entrepreneurship, as indicated by rates of new firm formation (Davidsson, Linndmark, and Olofsson 1994; Fritsch 1992; Garofoli 1992; Gartner 1985; Gnyawali and Fogel 1994; Zapalska 1997, 1998; Zapalska and Mondal 1997; Zapalska and Fogel 1998; Scheinburg and MacMillan 1998). This article argues that although Chinese entrepreneurial activity has increased and its share in economic output has been substantial, there are many barriers to its development and growth. The article analyzes economic conditions, difficulties, and barriers to entrepreneurial activities in order to highlight areas where continued growth in enterprise development could be enhanced in China, Options for policymakers that may enhance entrepreneurial development in China may include giving preferences to nonstate businesses, opening new markets, simplifying laws and regulation, offering tax allowances, increasing the availability of low-cost credits, grants, project financing, and many others. China's Economic Reforms The Chinese economy has experienced a radical transformation over the past 45 years. China turned to state socialism after 1949 when the Communist party took power. In choosing socialism as a development strategy, the Chinese government was following its central ideological premises. This ideology emphasized collective ownership and identity and by claiming that the state and the party represented the interests of the working class as a general collective, it asserted that the hierarchical control of organization was legitimate. Instead of being motivated by profit, the people were to be motivated by moral and political rewards, and individuals were to render an adequate contribution to the collective effort. Unregulated markets were eliminated in order to curb the power of the "capitalist entrepreneurial class." The problems brought about by China's rigid, centrally-planned economy were recognized as early as the 1950s. The central government made its first attempt to solve these problems by decentralizing decision-making and handing it over to local governments, granting profit retention to enterprises, relaxing financial control over enterprise activities, and passing on responsibility for investment to local planners. In the late 1970s, with most political and economic institutions remaining intact, China's policymakers recognized the inefficiency of traditional methods of economic management, outdated technologies, and market distortions and began to promote market-oriented economic reforms. …