Entrepreneurship in China and India

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.