ENTREPRENEURSHIP IN CHINA AND RUSSIA COMPARED kov Ekaterina Zhuravskaya 1.Introduction The recent development and transition literatures have emphasized the impor sect nd rong and y small and me A vitt 1997 oach to dynamism is fundamental for inovation and growth stand the de in five large developingand sition countrie:Russ Nigeria.The include both entrepreneurs and non-entre in terms c Dut forwanppre personality traits:(2)sociological variables such as family background,socialori gins,social networks,values,and beliets;and (3)perceptions of @econ.Berkelev edu:roland 280y20642-33水5-365 zwu002060321" -2006/627-page352-#制
“zwu002060321” — 2006/6/27 — page 352 — #1 ENTREPRENEURSHIP IN CHINA AND RUSSIA COMPARED Simeon Djankov World Bank Yingyi Qian University of California Berkeley Gérard Roland University of California Berkeley Ekaterina Zhuravskaya CEFIR Abstract We compare results from a pilot study on entrepreneurship in China and Russia. Compared to non-entrepreneurs, Russian and Chinese entrepreneurs have more entrepreneurs in their family and among childhood friends, value work more relative to leisure and have higher wealth ambitions. Russian entrepreneurs have a better educational background and their parents were more likely to have been members of the Communist Party but Chinese entrepreneurs are more risk-taking and greedy and have more entrepreneurs among their childhood friends. (JEL: M13, 012, P12) 1. Introduction The recent development and transition literatures have emphasized the importance of a strong and healthy small and medium enterprise sector for economic growth and development. Endogenous growth theory (Aghion and Howitt 1997) has emphasized the Schumpeterian approach to growth which advances that entrepreneurial dynamism is fundamental for innovation and growth. We have launched a research project trying to better understand the determinants of entrepreneurship using surveys of individuals that are being conducted in five large developing and transition countries: Russia, Brazil, China, India, and Nigeria. The samples include both entrepreneurs and non-entrepreneurs in order to understand how these groups differ in terms of three broad sets of variables put forward in social sciences as factors that potentially affect entrepreneurship: (1) individual characteristics such as skills, education, and intellectual and personality traits; (2) sociological variables such as family background, social origins, social networks, values, and beliefs; and (3) perceptions of the institutional, Acknowledgments: We thank Irina Levina and Xiaolu Wang for excellent research assistance, and the International Finance Corporation for financial support. E-mail addresses: Djankov: sdjankov@worldbank.org; Qian: yqian@econ.Berkeley.edu; Roland: groland@econ.berkeley.edu; Zhuravskaya: EZhuravskaya@cefir.ru Journal of the European Economic Association April-May 2006 4(2–3):352–365 © 2006 by the European Economic Association
Djankovet al.Entrepreneurship inChina and Russia 353 social,and economicenvi that husinesses face wh esearch has very much emphasized the mole of credit institutions (Baneriee and Newman 1993)or of institutions securing property rights (Johnson,McMillan 2；B y1995 Che Glaeser,an 00.E to take a more c factors play in promoting entrepreneurship acrossa variety of settings. romapilot survey conducted 2.The Data In both russia and china.we surveved individuals in seven large cities in four dif. ferent regions.To capture some of the regional heterogeneity in these countries to maximize the cros: egions v ation in the bus and Dzershinsk in the Ni Oblast: Permskaya Oblast:and in Rostov on the Don and Taganrog in the Ros n China.the survey w as cor nd Zh in Xi'An and Baoji in Shaanxi Province. In each country, scow and Beijing and in the fall of 2004 in China.We define as an ow r-manager of a business with five or more employees because we wanted to make sure that indi viduals who we cal trepreneurs in our sample are ore than just self- mploye uve of about 550 non-er epreneurs in the same cities using a similar instrument.We defined non-entrepreneurs as individuals who are no ess.Non-en s to place during t出 ndents in the non-entrepreneur sample were chosen randoml conditional on matching the age,gender,and educational attainment of entrepreneurs from the respective e trepreneur surveys and 20% wer sen at a y.I uals(with the same breakdown across cities)asking nine questions about their For d entreprene s and 550 non-er was the targe of es fai The g “zwu002060321"-2006/6/27-page353-#2
“zwu002060321” — 2006/6/27 — page 353 — #2 Djankov et al. Entrepreneurship in China and Russia 353 social, and economic environment that businesses face. Whereas recent economic research has very much emphasized the role of credit institutions (Banerjee and Newman 1993) or of institutions securing property rights (Johnson, McMillan, and Woodruff 2002; Besley 1995; Che and Qian 1998; Djankov, Glaeser, and Schleifer 2002; Frye and Zhuravskaya 2000; Roland and Verdier 2003), we want to take a more comprehensive approach and try to disentangle the role these factors play in promoting entrepreneurship across a variety of settings. This paper reports and compares some findings from a pilot survey conducted in Russia in 2003–2004 and in China in 2004–2005. 2. The Data In both Russia and China, we surveyed individuals in seven large cities in four different regions. To capture some of the regional heterogeneity in these countries, the regions were selected to maximize the cross-regions variation in the business climate. In Russia, the survey was done in Moscow; in Nizhny Novgorod and Dzershinsk in the Nizhegorodskaya Oblast; in Perm and Chaykovsky in the Permskaya Oblast; and in Rostov on the Don and Taganrog in the Rostovskaya Oblast. In China, the survey was conducted in Beijing; in Wuhan and Huangshi in Hubei Province; in Guangzhou and Zhongshan in Guangdong Province; and in Xi’An and Baoji in Shaanxi Province. In each country, we first surveyed a random sample of about 400 entrepreneurs—100 in Moscow and Beijing metropolitan areas and 50 in each of the other six cities. These surveys were conducted in the fall of 2003 in Russia and in the fall of 2004 in China. We define entrepreneur as an owner-manager of a business with five or more employees because we wanted to make sure that individuals who we call entrepreneurs in our sample are more than just self-employed. After completion of the surveys of entrepreneurs in the respective countries, we conducted a survey of about 550 non-entrepreneurs in the same cities using a similar instrument.1 We defined non-entrepreneurs as individuals who are not working for their own business. Non-entrepreneur surveys took place during the spring of 2004 and 2005 in Russia and China, respectively. In both countries 80% of respondents in the non-entrepreneur sample were chosen randomly conditional on matching the age, gender, and educational attainment of entrepreneurs from the respective entrepreneur surveys and 20% were chosen at random. Finally, in each country a short survey was run among a random sample of 1,200 individuals (with the same breakdown across cities) asking nine questions about their 1. For hundred entrepreneurs and 550 non-entrepreneurs was the target sample size given to the survey firms in both countries. In reality, these firms interviewed a slightly larger number of individuals to make sure that in the end we had the targeted number of valid questionnaires. The actual number of observations in the empirical analysis depends on the response rates for each particular question
Joumal of the European Economic Association onal charac or not the Cie.lhaofteaeghepsiheotbsepaioaisancwciehiedCtepeneu equal to t well as the city size. 3.Comparing Entrepreneurs to Non-entrepreneurs in China and Russia In this section.we su marize differences in individual characteristics.social environment,values,beliefs,and perceptions of institutionl nvironment for We report means 一n First,we summarize differencesin individual characteristics ofentrepre across jobs an reneurs and have had a her number of distinct iiesAlthough these differences have the same sig n Chin are statistically insignificant.In C ina,howeve r.entrepreneurs worked in a job te common perception that ntrepreneurship is associated with risk-taking.entrepreneurs report significantly lower risk aversion than non sked ents wer ng t 12 and lose $20 with proba -77%of entrepreneurs in Russia and90%of entrepreneurs in China ponded yes"(c ompared to 67%and 57%of non-entrepreneurs in Russia and eport higher levels of satisfaction with life compared to non- (preneurs.First.in Russia.a signifcantly higher share yes to the n Chi e happy compared 'zwu002060321 -2006/6/27-page354-#3
“zwu002060321” — 2006/6/27 — page 354 — #3 354 Journal of the European Economic Association personal characteristics, including a question about whether or not they are an entrepreneur or self-employed to get data on prevalence of entrepreneurship across cities. In all of the empirical analysis, the observations are weighted with weights equal to the inverse of the probability for a particular respondent (entrepreneur or non-entrepreneur) to get into our sample. The weights reflect differences in entrepreneurship, age, gender, and education across cities in the population, as well as the city size. 3. Comparing Entrepreneurs to Non-entrepreneurs in China and Russia In this section, we summarize differences in individual characteristics, social environment, values, beliefs, and perceptions of institutional environment for entrepreneurs and non-entrepreneurs in both countries. We report means for entrepreneurs and non-entrepreneurs in both countries on various questions from the survey. In order to have comparability, the means are conditional on gender, age, and education (with a quadratic term) of respondents and on city dummies. The standard errors and p-values for the differences in means between entrepreneurs and non-entrepreneurs are adjusted to allow for clustering of the error terms at the level of cities (Table 1). First, we summarize differences in individual characteristics of entrepreneurs and non-entrepreneurs. Entrepreneurs on average are more mobile across jobs and geographically. In Russia, entrepreneurs have lived in significantly more localities than non-entrepreneurs and have had a significantly higher number of distinct professional activities. Although these differences have the same sign in China, they are statistically insignificant. In China, however, entrepreneurs worked in a significantly higher number of industries compared to non-entrepreneurs. This is in line with recent findings of Lazear (2002) who surveyed the population of former Stanford MBA students and found that those with a higher number of jobs and shorter job tenures before business school were most likely to become entrepreneurs afterwards. In line with a common perception that entrepreneurship is associated with risk-taking, entrepreneurs report significantly lower risk aversion than nonentrepreneurs. When asked whether respondents were willing to accept one of two risk-neutral gambles—(1) win $10 with probability 1/2 and lose $10 with probability 1/2 or (2) win $20 with probability 1/2 and lose $20 with probability 1/2—77% of entrepreneurs in Russia and 90% of entrepreneurs in China responded “yes” (compared to 67% and 57% of non-entrepreneurs in Russia and China, respectively). Entrepreneurs report higher levels of satisfaction with life compared to nonentrepreneurs. First, in Russia, a significantly higher share of entrepreneurs (92%) answered “yes” to the question whether they are happy compared to 73% of non-entrepreneurs. In China, this difference has the same sign but is
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“zwu002060321” — 2006/6/27 — page 355 — #4 Djankov et al. Entrepreneurship in China and Russia 355 Table 1. Entrepreneurs in Russia and China (comparison of means). Russia China p-value p-value for test of for test of Non- difference Non- difference Entrepreneurs entrepreneurs in means Entrepreneurs entrepreneurs in means Individual characteristics Number of localities lived 2.42 2.18 0.01 *** 1.85 1.55 0.15 Number of distinct professional activities 2.76 2.54 0.06 * 2.40 2.13 0.24 Number of industries respondent worked in 1.85 1.58 0.00 *** Accept a risk neutral gamble, % 77 67 0.00 *** 90 57 0.01 *** Very happy or quite happy in life, % 92 73 0.00 *** 92 91 0.76 Very successful or quite successful in life, % 74 37 0.00 *** 64 43 0.01 *** Good health, self described, % 12 07 0.00 *** 51 37 0.09 * Got ill last week, % 25 30 0.02 ** 04 08 0.00 *** Height, cm 172.58 172.38 0.43 169.04 168.22 0.02 *** Married, % 74 60 0.00 *** 84 80 0.53 Number of children 1.34 1.31 0.22 1.19 99 0.00 *** Religious believer, % 68 78 0.00 *** 12 08 0.09 * Cognitive text score 3.32 3.15 0.15 3.92 3.80 0.62 Top 10% in secondary school (self reported), % 44 34 0.00 *** 37 38 0.82 Top 10% in high school, college or university (self reported), % 41 38 0.13 36 38 0.10 Speak foreign language, % 38 58 0.01 ** 35 49 0.22 Motivation, greed Retire if won 100 times GDP per capita, % 08 27 0.00 *** 05 24 0.02 ** Retire if won 500 times GDP per capita, % 18 29 0.00 *** 14 37 0.00 *** (Continued)
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“zwu002060321” — 2006/6/27 — page 356 — #5 356 Journal of the European Economic Association Table 1. Continued Russia China p-value p-value for test of for test of Non- difference Non- difference Entrepreneurs entrepreneurs in means Entrepreneurs entrepreneurs in means Retire if won 5000 times GDP per capita, % . .. 31 44 0.05 * Not retire if won a large sum: I like what I do, % 82 69 0.00 *** 74 75 0.93 Not retire if won a large sum: I want more money, % 50 28 0.00 *** 70 43 0.01 *** Not retire if won a large sum: my work serves useful social purpose, % 70 37 0.00 *** 18 81 0.00 *** Sociological characteristics Father has secondary special or higher education, % 73 48 0.00 *** 29 27 0.57 Mother has secondary special or higher education, % 73 48 0.00 *** 14 18 0.46 Father was a boss or director, % 19 12 0.00 *** 30 13 0.02 ** Mother was a boss or director, % 08 00 0.00 *** 06 03 0.10 Father was a worker or employee without special education, % 43 44 0.43 56 72 0.01 ** Mother was a worker or employee without special education, % 30 53 0.00 *** 70 71 0.86 Father was a member of the communist party, % 48 37 0.00 *** 40 31 0.42 Mother was a member of the communist party, % 19 12 0.01 *** 10 15 0.01 *** Members of the family were running business, % 57 34 0.00 *** 49 24 0.00 ***