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Entrepreneurial intention and regional internationalization in China

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Abstract

This study uses a novel approach to examine the link between regional internationalization and entrepreneurial intention in China. Robust findings suggest that higher degrees of internationalization in locations like Shenzhen and Hong Kong lead to lower levels of entrepreneurial intention, while lower degrees of internationalization in Mainland China lead to higher levels of entrepreneurial intention. This striking result underscores the significance of doing a regional-level analysis rather than countrywide studies for large diverse markets like China, where regional differences in internationalization policies, economic reforms, and institutions tend to vary significantly between locations compared to smaller or more developed economies. We conclude that the relatively higher levels of necessity-based entrepreneurship in China may help explain some of the regional differences observed in total entrepreneurial activity. Our findings also contribute to the literature by revealing significant complexity in the relationship between internationalization and entrepreneurship and support findings of previous studies regarding the importance of location for entrepreneurial intentions in emerging markets like China (as reported by Pan and Yang (Small Business Economics, 2018); Zhu, Lui, He, & Lu et al. (Small Business Economics, 2018b); and Liu et al. (Small Business Economics, 2018)).

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Notes

  1. Although Fernhaber et al. (2008) find significant impacts of location on entrepreneurship even in the USA. We suggest that the importance of location may be even more pronounced in emerging markets.

  2. It is somewhat ironic that most of our understanding of entrepreneurs is based on studies of the estimated 18 million entrepreneurs in Western countries (USA and EU), not the larger populations of India and China which alone have over 200 million owner/managers/entrepreneurs (Lingelbach et al. 2005).

  3. This study also addresses the call for further research to explore the distinct context of China in order to contribute to the global literature regional entrepreneurship (Su et al. 2015).

  4. McDougall and Oviatt (1994) provide a theoretical foundation for the study of international new ventures, defining them as those firms which “from inception seek to derive significant competitive advantage from the use of resources and sale of outputs in multiple countries.”

  5. Another important institutional reform is the recently established credit information registry for consumer loans. Three hundred forty million citizens now have credit histories, improving their access to credit (World Bank 2011). Amendments to the company law strengthened investor protections against insider dealings. And new online customs procedures reduced the time to import and export by 2 days, helping international competitiveness. (Hong Kong in particular has improved investor protections by increasing the availability of internal company documents for inspection, boosting transparency. The time to import and export dropped from 16 and 13 days to only 5 days, after three new boundary bridges opened and customs documents were simplified and put online (World Bank 2011).

  6. In a related study, Tang (2011) does not find that networking leads to more international activity within Chinese SMEs.

  7. Examining the data for only 2002–2002 when there was information on the Shenzhen region average rates of entrepreneurship were: Mainland China (18%), Shenzhen (9%), and Hong Kong (4%).

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Authors and Affiliations

  1. Oregon State University, Tykeson Hall, 1500 SW Chandler Avenue, Bend, OR, 97702, USA

    Julie Ann Elston

  2. American University of Afghanistan, Darulaman Road, Kabul, Afghanistan

    Alois Weidinger

Authors
  1. Julie Ann Elston
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  2. Alois Weidinger
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Correspondence to Julie Ann Elston.

Appendices

Appendix 1

Table 6 Descriptive statistics of variables across all regions
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Table 7 Correlation coefficients of variables across all regions
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Appendix 2

Table 8 Rankings of Chinese cities by intensity of internationalization
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Elston, J.A., Weidinger, A. Entrepreneurial intention and regional internationalization in China. Small Bus Econ 53, 1001–1015 (2019). https://doi.org/10.1007/s11187-018-0114-5

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