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Entrepreneurship in China and India

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Abstract

Research to date has not explored that the role of entrepreneurship has a key driver of China’s economic growth and how the nature of entrepreneurship may differ between India and China in this context. This difference will have implications on the extent of entrepreneurship as a driver of Indian economic growth. The aim of this paper is to fill this research gap. Furthermore, one of the central premises of this paper is that the economic reforms in China have provided an incentive for the Chinese to embrace their uniquely cultural entrepreneurial skills. However, this has not happened in isolation because the reforms have targeted all sectors of the economy; the most important of these reforms for entrepreneurial facilitation has been associated with infrastructure, education, property rights, ownership restructuring and foreign direct investment. In this case, changes in infrastructure, knowledge creation and knowledge spillovers have led indirectly to China’s economic growth. This is because knowledge spillovers have been facilitated by entrepreneurship. Moreover, this process has been characterised by the dynamic nature of institutional change in China. Nevertheless, in India at state level, there is variation in the level of economic, institutional and infrastructural development. Furthermore, there is also a tendency for firms in India to remain small. This may be due to the country’s rigid labour laws. The findings of this paper indicate that entrepreneurship is stronger in China than in India from an economic, cultural and a historical perspective. Private entrepreneurship has been stimulated in China by the incrementally evolving economic reforms which resulted in the dynamic nature of institution formation. However, private entrepreneurship in India remains constrained by institutional factors and institutional rigidity. Nevertheless, social entrepreneurship is more prevalent in India than in China.

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Notes

  1. Gilley, B. (2008), Legitimacy and Institutional Change: The Case of China, Comparative Political Studies,

    Vol. 41, No.3, pp.259–284.

  2. Ibid.

  3. Ibid.

  4. Ibid.

  5. Altenburg, T., Schmitz, H., and Stamm, A. (2007), Breakthrough? China’s and India’s Transition from Production to

    Innovation, World Development, Vol.36, No.2, pp.325–344.

  6. Saith, A. (2008), China and India: The Institutional Roots of Differential Performance, Development and Change, 39 (5), pp. 723–757.

  7. Puffer et al. (2010), Entrepreneurship in Russia and China: The Impact of Formal Institutional Voids, Entrepreneurship Theory and Practice, May 2010.

  8. Ibid.

  9. Puffer et al. (2010), Entrepreneurship in Russia and China: The Impact of Formal Institutional Voids, Entrepreneurship Theory and Practice, May 2010.

  10. Ibid.

  11. Estrin, S., and Prevezer, M. (2011), The role of informal institutions in corporate governance: Brazil, Russia, India and China explained, Asia Pac J. Manag, 28, pp.41–67.

  12. Gupta, V., Guo, C., Canever, M., Yim, H., Sraw, G., and Liu, M. (2014), Institutional environment for entrepreneurship in rapidly emerging economies: the case of Brazil, China, India and Korea, Int Entrep Manag J, 10, pp.367–384.

  13. Mandey, M., and Dong, X. (2009), Manufacturing Productivity in China and India: The role of institutional

    changes, China Economic Review, 20, pp.754–766

  14. Puffer et al. (2010), Entrepreneurship in Russia and China: The Impact of Formal Institutional Voids, Entrepreneurship Theory and Practice, May 2010.

  15. Ibid.

  16. Pomfret, J. (2001). New deal For China’s capitalists: Businessmen join party but run their own show. The Washington Post, 3rd July 2001.

  17. Puffer et al. (2010), Entrepreneurship in Russia and China: The Impact of Formal Institutional Voids, Entrepreneurship Theory and Practice, May 2010.

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  1. Department for Continuing Education, University of Oxford, Rewley House, 1 Wellington Square, Oxford, Oxfordshire, OX1 2JA, UK

    Sangaralingam Ramesh

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Ramesh, S. Entrepreneurship in China and India. J Knowl Econ 11, 321–355 (2020). https://doi.org/10.1007/s13132-018-0544-y

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