Psychological Predictors of Successful Entrepreneurship in China: An Empirical Study

Abstract

Recent economic reforms in China have brought on a wave of entrepreneurship in that country. Still, many entrepreneurs have been unsuccessful in their business endeavors, and the psychological aspects of successful entrepreneurship in China are still largely understudied. Following a comprehensive job analysis, we studied a sample of 193 Chinese new business owners and found entrepreneurs' age, business skills, prior work experience, cognitive ability, and relevant personality dimensions to be predictive of government appointed auditor appraisals as well as the entrepreneurs' own appraisals of their businesses. Culturally relevant Chinese norms are used to explain the findings. The Chinese economy is the fastest growing major economy in the world, with a steady growth rate of almost 1 0% a year, and a working population of close to one billion (Information Office of the State Council of the People's Republic of China, 2004; NBS of China, 2006). Approximately 70% of China's growth in recent years has been seen coming out of its private sector, which can be attributed to several dramatic economic reforms. Specifically, since the late 1970s, the Chinese government has directed a series of initiatives which have taken the country's economy from being centrally controlled to one that is more market oriented. In doing so, China opened itself up to an influx of foreign trade and investment, created a viable banking system, and systematically closed or privatized many of its nationally owned companies. However, these rapid developments also caused China to face a growing need for many more skilled and educated laborers (He, 2005). As a result, in the 1990s, the Chinese government began taking action to proactively increase the quality of its growing private enterprises by launching graduate recruitment programs, vocational training programs, and offering attractive financial incentives to new business starters (Information Office of the State Council of the People's Republic of China, 2004). One of the outcomes of these efforts has been the birth of a new generation of Chinese entrepreneurs, who have the unique opportunity to get vocationally trained as they start their own government sponsored enterprises. Unfortunately, while extremely popular, only a minority of these businesses end up being successful, with approximately 70% closing down within their first five years (Liang, 2004). As a result, government backed entrepreneurial training programs have become increasingly interested in developing assessment and selection methods to more closely control the quality of their new business starters, and to better understand the psychological aspects of successful entrepreneurship in their country. A number of researchers have attempted to map the psychological profile of successful entrepreneurs in Western societies (e.g., Carland, Hoy, Boulton, & Carland, 1984; Liu, 2004), but few have done so in China. And, due to the cultural and economic differences between China and its Western counterparts, there is reason to believe that the two may be different. Therefore, the objective of this research was to explore the psychological aspects of successful entrepreneurship in China. An entrepreneur can be defined as a person who organizes, manages, and assumes the risks of a business and enterprise (Merriam-Webster's Online Dictionary, 2006). More specifically, however, entrepreneurs are considered to be the founders, owners and managers of small to medium sized organizations and businesses, who aim to gain profit from their businesses (Allison, Cheli, & Hayes, 2000; Carland et al, 1984). Despite various research findings in both the Western and Chinese literature, one thing seems clear - for an entrepreneur to be successful, a complexity of psychological attributes are required. The following summary describes the major psychological dimensions discussed in the literature and those yielded by our job analysis. …

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