Who Should Be Running Ahead? The Roles of Two Types of Entrepreneurship in China’s Regional Economies

One of the most important transitions of China from a centrally planned economy to a market-based economy was the emergence of entrepreneurship in two different forms of private enterprise, viz., getihu and siyingqiye. Getihu firms are legally restricted to a household ownership structure and a firm size upper limit. Siyingqiye firms do not face these restrictions but are more costly to set up. Using a unique database for 31 Chinese regions over the period 1997–2009, we investigate the economic antecedents of regional rates of getihu and siyingqiye, and to what extent these antecedents are in line with the “entrepreneurial” or the “managed” economy as per Audretsch and Thurik (Audretsch and Thurik, Journal of Evolutionary Economics 10:17–34, 2000, Audretsch and Thurik, Industrial and Corporate Change 10:267–315, 2001). We find that particularly the antecedents of regional siyingqiye rates are in line with the “entrepreneurial” economy in the sense that regional economies that are more conducive to knowledge production and knowledge spillovers have higher rates of siyingqiye firms. Overall, our analysis suggests that both types of entrepreneurship play important but distinct roles in stimulating China’s economic development.