Innovation and Risk-Taking in a Transitional Economy: A Comparative Study of Chinese Managers and Entrepreneurs

Journal of Business Venturing, Vol. 16, No. 4, pp. 359-376, 2001

18 Pages Posted: 16 Feb 2010 Last revised: 20 Dec 2013

See all articles by Justin Tan

Justin Tan

York University - Schulich School of Business

Date Written: 2001

Abstract

This research was set in the People’s Republic of China. As former socialist China moves from central planning toward a more market-driven economy, improved knowledge about the new environment and firm decisions within such an environment has significant implications. For organizational researchers, such a transition represents a genuine shift of paradigm, and thus offers a unique opportunity to test existing organizational theories and develop new ones. For multinational businesses seeking business opportunities, they have to compete or cooperate with these Chinese firms, whether state-owned or privately owned.

Motivated by a deep curiosity in, using the language of Williamson (1996), “What is going on there” behind the “bamboo curtain,” and underpinned by a strong conviction that organizational researchers have much to gain as well as to offer by focusing on transitional economies, I undertook this study to examine characteristics of a regulatory environment and the impact on innovation and risk-taking among Chinese managers and entrepreneurs. I collected original primary data that represents managers from large state-owned enterprises (SOEs) and entrepreneurs from small privately-owned enterprises (POEs) through personal interviews and a survey. Significant differences were found between managers and entrepreneurs in their reported environmental characteristics, strategic orientations, size, and firm performance, indicating that managers are not as innovative and are less willing to make risky decisions than entrepreneurs.

Being smaller and faster than SOEs, entrepreneurial firms have adopted some strategies that distinguish them from their larger and more established competitors. Speed, stealth, and sound execution allow entrepreneurs to harvest first-mover advantages and thus increase their chances for survival in a turbulent environment.

Suggested Citation

Tan, Justin, Innovation and Risk-Taking in a Transitional Economy: A Comparative Study of Chinese Managers and Entrepreneurs (2001). Journal of Business Venturing, Vol. 16, No. 4, pp. 359-376, 2001. Available at SSRN: https://ssrn.com/abstract=1552169

Justin Tan (Contact Author)

York University - Schulich School of Business ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada

HOME PAGE: http://www.schulich.yorku.ca/SSB-Extra/Faculty.nsf/faculty/Tan%20Justin

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