BUSINESS RISK, POLITICAL AFFILIATION AND FUTURE DEVELOPMENT PLANS OF SMALL BUSINESS OWNERS IN CHINA

Clement Wing Chow Kong and Michael Yiu Fung Ka
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Clement Wing Chow Kong: Department of Marketing and International Business, Lingnan University, Hong Kong, China
Michael Yiu Fung Ka: Department of Decision Sciences and Managerial Economics, Faculty of Business Administration, Chinese University of Hong Kong, Hong Kong, China

Journal of Enterprising Culture (JEC), 2002, vol. 10, issue 01, 1-22

Abstract: This paper studies the future development choices of small business owners,getihuwhich literally means an individual family household in the People's Republic of China (P.R.C.). We attempt to find out what the major factors are that determine thesegetihu'schoices of expanding, contracting or even closing down their businesses. By using a data set which includes 4,649getihucollected from a nation-wide survey in 1991, we conduct an ordered probit analysis to obtain the following results: (1) About three quarters of sampled getihu would like to maintain the status quo and do not plan for any change. (2) Being a member of the Chinese Communist Party does not exert any statistically significant effect on their choices. (3) The level of financial risk has no significant effect while the level of failure risk is negatively related to the likelihood of business expansion. However, diversifying into different lines of business has a positive effect on the likelihood of business expansion. (4) The annual wage income of households has a positive and significant effect on the business development plan while company profit does not have any statisccally significant effect at all. (5) Female, agedgetihuare less interested in expanding their business.

Date: 2002
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DOI: 10.1142/S0218495802000116

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