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Growing-by-Unleashing Grassroots Entrepreneurship and Alibaba Innovations

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Achieving Dynamism in an Anaemic Europe

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Abstract

Inspired by Phelps’ book (Mass flourishing: how grassroots innovation created jobs, challenge, and change. Princeton University Press, Princeton, 2013) and drawing upon Alibaba’s experience, this paper discusses a small-business-based and digital-technology-driven new growth model—growing by unleashing grassroots entrepreneurship. Small business is an important expression of individuals’ will, capacity, and aspiration to innovate. In the digital age, technology-driven platform can assist small business to thrive. From Alibaba’s experience, building credibility and trust, providing open, transparent, efficient, and accountable finance services and establishing rules of games are crucial in the digital age for unleashing grassroots entrepreneurship and innovation that can bring sustainable mass flourishing.

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Notes

  1. 1.

    Galbraith (1958, 1967, 1973).

  2. 2.

    For example, Krugman (1994).

  3. 3.

    The 2013 business number is from http://www.chinanews.com/gn/2014/01-14/5734631.shtml.

  4. 4.

    From Small Business Act as amended (1/13/13), http://www.sba.gov/sites/default/files/Small%20Business%20Act_0.pdf.

  5. 5.

    Professor Phelps defines “Dynamism” as “the will and the capacity and aspiration to innovate,” Phelps (2013, p. 19).

  6. 6.

    p. 24 in Phelps (2013). U.S. Small Business Administration, Office of Advocacy released a report (2010) is a good example of such dynamism in the US.

  7. 7.

    An employer firm is a business with employees while nonemployer firm without.

  8. 8.

    p. 14 Jin (2012).

  9. 9.

    Please see Chap. “Trade Margins and Exchange Rate Regimes: New Evidence from a Panel Varx Model” in Baumol (2002) for the idea of “routinized innovation.”

  10. 10.

    Parker and Van Alstyne (2013). This is a good paper on the platform ecology system.

  11. 11.

    http://www.aliresearch.com/?m-cms-q-view-id-74973.html.

  12. 12.

    Alibaba Research Institute 2013.

  13. 13.

    http://news.alibaba.com/specials/aboutalibaba/aligroup/index.html.

  14. 14.

    http://news.alibaba.com/specials/aboutalibaba/aligroup/culture_values.html.

  15. 15.

    Calum MacLeod, “Alibaba works magic for China’s Taobao ‘treasure hunters’,” April 25, 2014 USA Today http://www.usatoday.com/story/news/world/2014/04/24/alibaba-china/8102033/.

  16. 16.

    “‘I think greed is healthy,’ an apparent acolyte told the graduating class at Berkeley’s business school in 1986. ‘You can be greedy and still feel good about yourself.’ The speaker was Ivan Boesky, who shortly thereafter would be fined $100 million, and later go to prison, for insider trading. His address was adapted by Oliver Stone as the basis for Gordon Gekko’s ‘greed is good’ speech in Wall Street. An exhortation to shareholders of a sagging company, it reads like a corporate raider’s war cry, with Gekko the grinning avatar of Agency Theory.” See John Paul Rollert, “Greed is Good: A 300-Year History of a Dangerous Idea,” Atlantic, April 7, 2014, http://www.theatlantic.com/business/archive/2014/04/greed-is-good-a-300-year-history-of-a-dangerous-idea/360265/.

  17. 17.

    “Such is the system of Dr. Mandeville, which once made so much noise in the world, and which, though, perhaps, it never gave occasion to more vice than what would have been without it, at least taught that vice, which arose from other causes, to appear with more effrontery, and to avow the corruption of its motives with a profligate audaciousness which had never been heard of before.” Paragraph 13, Chap. “Rebalancing and the Euro” in Adam Smith, The Moral of Sentiments, Sixth Edition (1790).

  18. 18.

    p. 9 in Chinese version of The Theory of Moral Sentiments, SONG Deli translate, Yilin Publishing House, 2011.

  19. 19.

    The five banks are Northern Rock, the Royal Bank of Scotland, Barclays, Lloyds Banking Group and HSBC.

  20. 20.

    Lui (2014), http://www.palgrave-journals.com/jbr/journal/vaop/ncurrent/full/jbr20141a.html.

  21. 21.

    Financial capitalism is “an economic system that is increasingly guided by financial institutions and that, in the wake of the severe financial crisis that began in 2007, appears to many to be broken.” p. 67 in Shiller (2012).

  22. 22.

    p. 21 in Shiller (2012), in which, Shiller mentioned the term “resentment(s)” 20 times.

  23. 23.

    Ron Fournier and Sophie Quinton, “In Nothing We Trust: Americans are losing faith in the institutions that made this country great.” http://www.nationaljournal.com/features/restoration-calls/in-nothing-we-trust-20120419.

  24. 24.

    http://market.alipay.com/ospay/home.html.

  25. 25.

    http://www.forbes.com/2010/01/18/china-internet-commerce-markets-equities-alibaba.html.

  26. 26.

    Alibaba Microfinance Service Group Social Value Report (2014), p. 28–29.

  27. 27.

    http://www.reuters.com/article/2014/03/20/china-banks-idUSL2N0MG0BV20140320.

  28. 28.

    P. 6, Alibaba Microfinance Service Group Social Value Report (2014), “Internet Based Inclusive Finance Practice.”.

  29. 29.

    http://businessforecastblog.com/is-the-us-financial-sector-too-big/#.UkxKPcmS19A。.

  30. 30.

    At a meeting with Jack Ma, the Chairman of Alibaba Group Holding Ltd., former general manager of Aliloan.com was very excited about the success of online lending. He suggested raising the ceiling of loan amount from one million to 5 million. Jack Ma responded, “If you dare to increase the ceiling, I will fire you right away!” The former general manager told this story in many occasions.

  31. 31.

    See Chinese report:《阿里巴巴CEO卫哲引咎辞职事件》,http://baike.baidu.com/link?url=hcgKNOiJpX31VjtfYhHmcOIGvEBVDK_HoNgHWTRahVR7GRld2R97SUX8DKICthGEae_z2bcgFgYytiI2HdgQo_.

  32. 32.

    Source U.S. Census Bureau, 2011 Annual Survey of E-commerce.

  33. 33.

    David Wei, “E-commerce bigger in China than United States,” September 19, 2013, CNN, http://edition.cnn.com/2013/09/19/business/on-china-alibaba-e-commerce/index.html?iid=article_sidebar.

  34. 34.

    The new-four initiativesare the nation’s industrialization, informatization, urbanization, and modernization.

  35. 35.

    See 《县长必读: “电商百佳县哪些方面‘牛’”?》http://www.aliresearch.com/?m-cms-q-view-id-75924.html.

  36. 36.

    “Alibaba works magic for China’s Taobao ‘treasure hunters’,” this tells one of great stories in China.http://www.usatoday.com/story/news/world/2014/04/24/alibaba-china/8102033/.

  37. 37.

    Joe Wilcox, “Why former employees say Microsoft can't innovate?” http://betanews.com/2010/02/09/why-former-employees-say-microsoft-can-t-innovate/.

  38. 38.

    http://www.chinaz.com/news/2013/1206/330151.shtml.

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Ackowledgments

I want to thank Professor Luigi Paganetto who invited me to present this paper and who created the discussion on “Anaemic Europe: how to achieve dynamism and mass flourishing.” I owe a debt of deep gratitude to Professor Edmund Phelps, whose 2013 book inspired me to write this paper. Professor Phelps kindly read, edited, and provided detailed comments on an earlier version of the paper. I thank my students at Tsinghua University who participated in my research project on Alibaba, which resulted in a book, Alibaba’s Innovation: Growing by Unleashing Grassroots Entrepreneurship. Finally, my appreciation goes to Dr. Ernst Nilsson who has been a constant source of inspiration and encouragement, and who has been generous and patient in his willingness to read, to comment on, and to help improve the paper. All errors remain my own.

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  1. School of Social Sciences, Tsinghua University, Haidian, Beijing, 100084, China

    Ying Lowrey

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Correspondence to Ying Lowrey .

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  1. FUET, Economics Foundation, University of Rome Tor Vergata, Rome, Italy

    Luigi Paganetto

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Lowrey, Y. (2015). Growing-by-Unleashing Grassroots Entrepreneurship and Alibaba Innovations. In: Paganetto, L. (eds) Achieving Dynamism in an Anaemic Europe. Springer, Cham. https://doi.org/10.1007/978-3-319-14099-5_11

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