Risk Awareness of Interpersonal Trust and Entrepreneurship in China: Evidence from Survey Data

Li Xiong, Biyan Tang, Ke Xu and Gang Wu

Emerging Markets Finance and Trade, 2018, vol. 54, issue 10, 2278-2295

Abstract: This paper aims to build a theoretical framework for the influence of risk awareness of interpersonal trust (RAIT) on entrepreneurship, and explores the influence of RAIT on entrepreneurship with the micro survey data from the Chinese General Social Survey (CGSS) 2010–2013. The study found that, individuals with higher level of RAIT, their probability of starting new business will increase significantly, and with every increase of RAIT level, the probability of business venturing increase almost 4.0%. No mediation effects of information screening and cooperative mechanism are found in the relationship between RAIT and entrepreneurship. Moreover, during the venturing process, risks accompanying interpersonal trust cannot be reduced by social input; the reduction occurs only in eastern China where the economic system and the industrial development standards are more comprehensive and mature. This paper contributes to the literatures in the following two areas: it provides new evidence on how to deal with risks in the entrepreneurship process that accompanying interpersonal trust; meanwhile, it provides an explanatory mechanism on how the risk awareness affects business venturing.

Date: 2018
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DOI: 10.1080/1540496X.2018.1471595

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