Serial Entrepreneurship in China

Loren Brandt (), Ruochen Dai, Gueorgui Kambourov, Kjetil Storesletten and Xiaobo Zhang

No 17131, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper studies entrepreneurship and the creation of new firms in China through the lens of serial entrepreneurs, i.e. entrepreneurs who establish more than one firm, and their differences with non-serial entrepreneurs. Drawing on data on the universe of all firms in China, we document key facts about serial entrepreneurship in China since the early 1990s and develop a theoretical framework to rationalize the role of endowments, ability, and capital market frictions in their behavior. We also examine the key determinants of the sectoral choice for serial entrepreneurs' second firms. Quantitatively, serial entrepreneurs are more productive, raise more capital, and operate larger firms than non-serial entrepreneurs. Moreover, serial entrepreneurs with greater liquidity and whose firms have relatively similar productivity are more likely to operate these firms concurrently rather than sequentially. We also find that less productive serial entrepreneurs are more likely to switch sectors when establishing new firms, with the choice of sector influenced by considerations of risk diversification, upstream and downstream linkages, and sectoral complementarities.

Keywords: Serial entrepreneurship; entrepreneurship; Capital distortions (search for similar items in EconPapers)
JEL-codes: D21 D22 D24 E22 E44 L25 L26 O11 O14 O16 O40 O53 P25 R12 (search for similar items in EconPapers)
Date: 2022-03
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