Journal of Chinese Entrepreneurship

Emerald Article: Chinese entrepreneurs: Motivations, success factors, problems, and business-related stress Hung M. Chu, Orhan Kara, Xiaowei Zhu, Kubilay Gok

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To cite this document: Hung M. Chu, Orhan Kara, Xiaowei Zhu, Kubilay Gok, (2011),"Chinese entrepreneurs: Motivations, success factors, problems, and business-related stress", Journal of Chinese Entrepreneurship, Vol. 3 Iss: 2 pp. 84 - 111 Permanent link to this document: http://dx.doi.org/10.1108/17561391111144546 Downloaded on: 02-05-2012 References: This document contains references to 84 other documents To copy this document: permissions@emeraldinsight.com This document has been downloaded 1235 times.

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JCE 3,2

Chinese entrepreneurs
Motivations, success factors, problems, and business-related stress
Hung M. Chu
Department of Management, West Chester University, West Chester, Pennsylvania, USA

84
Received 9 September 2010 Reviewed 10 October 2010 Accepted 1 April 2011

Orhan Kara
Economics and Finance Department, West Chester University, West Chester, Pennsylvania, USA

Xiaowei Zhu
Department of Management, West Chester University, West Chester, Pennsylvania, USA, and

Kubilay Gok
Faculty of Management, University of Lethbridge, Lethbridge, Canada
Abstract
Purpose This article aims to investigate motivations, success factors, problems, and business-related stress of entrepreneurs in small- and medium-sized enterprises and relates them to the success of the Chinese entrepreneurs. Design/methodology/approach A total of 196 entrepreneurs in Beijing, Shanghai, and Guangzhou were randomly selected for a survey, which was analyzed to determine motivations, success factors, problems, and business-related stress by gender. Ordered logit models were applied to motivation and success factors. Findings Results showed that 68 percent were male and 32 percent female. The average age of the entrepreneurs was about 32 years old and time devoted to their business was almost 45 hours per week. Of the total respondents, 56 percent were married and 44 percent single. When asked to indicate their motives for business ownership, these entrepreneurs suggested that increasing income, becoming their own boss, and to prove that they can succeed were the most important reasons. Reputation for honesty, providing good customer services, and having good management skills were reported to be necessary conditions for business success. Friendliness to customers and hard work were also critical for high-performance enterprises. Among the problems encountered by entrepreneurs, unreliable/undependable employees were the most critical. Intense competition and lack of management training also proved to be great challenges for Chinese entrepreneurs. Practical implications Policy makers can strengthen its small business entrepreneurs by promoting the factors that lead to entrepreneurs success, such as the ability to manage personnel and management skills through business outreach services provided by universities, government agencies, and nonprot organizations. In addition, the government has the ability to simplify the tax system, and reduce payroll taxes. Technical assistance in areas such as market research, human resources management, and technological support should be provided to small business owners. Originality/value This study applied to Chinese entrepreneurs in addition to an extensive analysis of the factors that affect motivations, success, problems, and business stress. Keywords Entrepreneurs, Small enterprises, Motivation (psychology), Business development, Stress, China Paper type Research paper

Journal of Chinese Entrepreneurship Vol. 3 No. 2, 2011 pp. 84-111 q Emerald Group Publishing Limited 1756-1396 DOI 10.1108/17561391111144546

1. Introduction Entrepreneurship has long been regarded as the source of job creation and an engine of economic growth. For example, Japans six million small- and medium-sized enterprises (SMEs) employed 75 percent of the Japanese working population (Dana, 1998). Of the total 935,000 business establishments in Taiwan, 96 percent of SMEs provided jobs to 78 percent of the islands labor force (Lin, 1998). Lee (1998) pointed out that more than 70 percent of all South Koreans work in rms that have less than 100 people. Micro and small enterprises (MSEs) are also the leading force transforming the economic landscape of Africa. Ghanaian micro-enterprises which employed less than ve people, accounted for 70 percent of that countrys total workforce (Government of Ghana, 2003; The World Bank, 2006). In 2003, Kenyas private sector employed 3.2 million people and contributed 18 percent to the countrys gross domestic product (GDP) (OECD, 2005). Findings from Ariyo (2005) showed that the Nigerian private sector provided employment to 50 percent of the Nigerian labor force and 50 percent of the countrys industrial output. Recognizing the importance of entrepreneurial-led SMEs in providing social stability and economic prosperity, China in 1978 adopted a policy of economic reforms that turned a centrally planned economy into a market-oriented economy. This change of direction allowed the rebirth of the private sector, which was banned when the Communists took control of the country in 1949. Results of the economic reform have been startling (Anderson et al., 2003). For the last three decades, China enjoyed an un-precedent economic growth of 9 percent annually (Fung et al., 2006a, b; Gordon and Li, 1991). This astounding achievement is attributed to the re-emergence of the private sector. In 1978, only 150,000 individual business households existed throughout China (Liu, 2003), but at the end of the 1990s, it was estimated that more than 12 million private enterprises were in operation (Quanyu et al., 1997). In 2006, this number exploded into 31,518,000 units. It is predicted that the rate of SMEs market entry will continue to be between 7 and 8 percent for the next ve years, reaching a total of 50 million by 2012 (iResearch Consulting Group, 2007). Chinese non-state enterprises provide 70 percent of tax revenue, and 90 percent of total employment for those who enter the labor market for the rst time and those who were laid off by state-owned enterprises (Fung et al., 2006a, b). The China Daily (2008) reported that Chinese private enterprises contribute 60 percent to the countrys GDP, and Garnaut et al. (2001) indicated that private enterprises account for 50 percent of all economic activities in China. In order to meet an increasing job demand for 50 million people entering the workforce annually and an estimated three million workers laid off by the state run sector (Liao and Sohmen, 2001), China not only has to sustain the current level of economic growth but also needs to nd creative ways to further the development of its private enterprises. Since entrepreneurs and small businesses are signicant contributors to economic growth and employment creation for nations, establishment of small businesses and success of entrepreneurs are important. This study aims at discovering the factors that motivate the Chinese to become small business owners, the problems that they face, and the factors contributing to their success. The fact that small business establishments and job creation are important factors for the economic development in all countries, several researchers investigated factors such as motivation, success factors, and problems small business entrepreneurs face in many countries (Kara et al., 2010). However, the evidence is mixed and non-conclusive with

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respect to the level of importance of those factors on the success of entrepreneurs (Kara et al., 2010). This study aims at contributing further evidence on this discussion. Therefore, this study tries to determine the level of importance of motivation and success factors on entrepreneurs success by employing ordered logit model. In addition, this study tests the signicance of the motivation, success factors, and problems with respect to gender. More specically, this study addresses the following research questions in the context of Chinese entrepreneurs: RQ1. What are the motivation and success factors for Chinese entrepreneurs? How do they differ by gender? RQ2. What is the impact of motivation and success factors on Chinese entrepreneurs perceived success? RQ3. What are the problems faced by Chinese entrepreneurs? How do they differ by gender? RQ4. How does business-related stress affect Chinese entrepreneurs? RQ5. What is the level of support Chinese entrepreneurs receive from family and friends? Is there a signicant difference among male and female entrepreneurs? The next section gives literature review, followed by research methodology section which discusses model, survey questionnaire, and sample and data analysis method. The section after that analyzes the data and provides results. The nal section concludes the study and offers recommendations. 2. The conceptual framework of the study The conceptual framework of this study claims that motivation that entrepreneurs exhibit during startup is correlated to sustaining behaviors they exhibit later (Naffziger et al., 1994; Buttner and Moore, 1997). This implies that the stronger the level of importance attributed to factors to start a business, the greater the determination to attain the mastery of knowledge, skills and abilities and other attributes needed to succeed. We argue that perceived importance attributed to motivational factors will later determine the direction, intensity, and perseverance of the success-related behaviors of Chinese entrepreneurs to sustain their business. Kuratko et al. (1997) claimed that motivation leads to goal-directed behaviors and that existence of a set of goals motivate entrepreneurs to sustain their business development efforts. They identied extrinsic rewards, independence and autonomy, intrinsic rewards, and family security as the important motivational factors for sustained ownership among 234 entrepreneurs. The conceptual framework of this study also claims that the importance attributed to the motivational goals inuences Chinese entrepreneurs resilience to overcome the problems they face while developing their business. We also argue that attainment of motivational goals inuences a Chinese entrepreneurs satisfaction with their success and small business ownership and hence leads to more sustained entrepreneurial behaviors to develop and grow the business. The conceptual framework of this study also claims that the more Chinese entrepreneurs perceive that their effort lead to performance outcome they desire to achieve, the greater the level of their effort and resilience to overcome the difculties they face. The greater amount

of the rating they assign whether their business success meet their expectations, the greater the level of propensity to continue the entrepreneurial behaviors. The following sections present a review of the literature about variables in this study. 2.1 Literature review In order to understand small business creation and factors contributing to the success and problems that hinder the success of entrepreneurs, several studies attempted to identify motivation, success factors, and problems faced by the entrepreneurs. An analysis of literature in those areas is given in the following sections. 2.2 Motivation for business ownership Reasons for becoming a business owner differ from person to person, from one country to another depending on economic, political, social, and cultural environment in which entrepreneurs operate. Since understanding of entrepreneurial motives is crucial for developing the measures helping them to grow, the following review of reasons for business ownership is necessary. In a study of new business startups in 11 countries, Scheinberg and Macmillan (1988) revealed six motives leading people to become entrepreneurs. They include the need for approval, the perceived wealth, the degree for communitarianism, the need for personnel development, and the need for independence. The ndings also revealed motivations for business ownership differ from one part of the world to another. American entrepreneurs rated the need for independence as the most important reason for starting a business. Italian business owners ranked communitarinaism high on the list of motivators. Entrepreneurs in Australia and Great Britain, however, cited money as the reason for becoming business owners. The Scandinavians rated this same factor the least signicant. Findings from a study of Vietnamese entrepreneurs, Swierczek and Ha (2003) indicated that challenge and achievement are more signicant and more important motivators than necessity and job security. Results from a study by Benzing et al. (2005b) showed that the economic conditions and entrepreneurial orientation existing in two parts of Vietnam affect entrepreneurs motivation for business ownership. Entrepreneurs in Ho Chi Minh City were motivated by personal satisfaction and growth, while business owners in Ha Noi indicated that creating job for themselves and family were their prime motive. Compared with Ha Noi, Ho Chi Minh City not only has a brighter economic landscape but its entrepreneurial tradition has also existed longer, dating back before 1975. Mann and Thorpe (1988), however, suggested that Asian entrepreneurs tend to think making more money is the most important force leading to business ownership. On the other hand, White entrepreneurs are motivated by a desire for independence associated with business ownership. In a study of entrepreneurs in Kenya and Ghana, Chu et al. (2007a) found the two most important motivators were to increase income and to provide themselves with jobs. Results from a survey of Nigerian women entrepreneurs show that their main reason for engaging in business is to reduce poverty and to reverse their deteriorating economic condition (Woldie and Adersua, 2004). In congruence with the results of this study, Pingle (2005) indicated that in countries with entrenched poverty, people have few choices other than self-employment. Regarding the motive for business ownership among the Chinese, it has been said that every Chinese is a born businessman who desires to be his/her own boss.

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This consensus is reected in a Chinese proverb supporting the entrepreneurial nature of the Chinese people: It is better to be chickens head than a phoenixs tail (Liao and Sohmen, 2001). Results from a study of Chinese entrepreneurs by Pistrui et al. (2001) revealed that the need for personal achievement, the desire to make a direct contribution to the success of an enterprise, and the desire for higher earnings are the primary motives for business ownership. Family security was also ranked high among motivating factors. Yueh (2007) suggested that Chinese entrepreneurs are motivated to work and driven to look for better economic opportunity. In other words, the desire to earn money is a signicant determinant found among Chinese entrepreneurs. Herberer (2003) concluded that the prospect of attaining high income and the improvement of living standards are the main reason for Chinese to become entrepreneurs. The 1949 revolution, led by Mao Zedong, was thought to turn upside down the foundation of Chinese traditional society and elevated the role of women in the new society by making them equal to men in every aspect of life, including business ownership. Supporting this stream of thought, ndings from Kitching and Woldies (2004) indicated that economic freedom and role models encourage women to start their own business, especially with enterprises that required little capital such as street vendors, tailoring or bicycle mending. Learning more about entrepreneurs motives could help policy makers develop appropriate programs fostering the creation of new business and helping the existing SMEs ourish. 2.3 Success factors There is no consensus among researchers on the factors contributing to business success, but a few variables are discussed more often in previous studies. They may be grouped into the following categories: the rst category deals with the psychological and behavioral traits of entrepreneurs, the second concerns managerial skills and training of entrepreneurs, and the third focuses on external environment in which entrepreneurs operate. Since managerial skills, training, and external conditions are the factors that can be affected by policy makers, this study focuses on these variables. Relevant studies by other researchers also will be reviewed. Studies conducted among entrepreneurs in developing countries (Benzing et al., 2005a, b; Chu et al., 2007a, b; Yusuf, 1995; Gosh et al., 1993) indicated a strong relationship between managerial skills and environmental conditions. According to Huck and McEwen (1991), the three most critical success elements found among Jamaican entrepreneurs consist of understanding customers needs, access to capital, support of family, and networking with friends from former schools and colleges. Hard work as evidenced by long working hours is also regarded as a success factor. In another study of Kenyan small business owners, Pratt (2001) found that the availability of capital, possession of business skills, previous experience, and family support are essential for business success. Since family members serve as reliable source of employment and provide capital to new, private Vietnamese SMEs, they are contributing factors to business success (Masurel and Smit, 2000). In their study of family support to entrepreneur success, Pisturi et al. (1997) pointed out that family played an important role in business success by direct support of business and through the development of social community, and economic networks. Kozan et al. (2006) suggested that business management training and nancing were positively related to

entrepreneurs ability to expand their business. Results from a study of Pakistani small business owners pointed out hard work, good customer services, and product quality, the three most important success ingredients (Coy et al., 2007). It is widely believed that luck and fate are considered keys to success in China. According to Liao and Sohmen (2001), many people believe in fate but Chinese entrepreneurs give luck a greater role in their business success. Yueh (2007), on the other hand, suggested that social networking is a leading factor to business success. Although guanxi (relationship in English) or connections are normal in the Western business world, to some Chinese entrepreneurs, it implies corruption, bribery, and other under the table activities which ensure government help in achieving their goal. Regardless of the exact meaning of guanxi, it is a well-accepted fact that knowing the right people can bring success to Chinese entrepreneurs (Liao and Sohmen, 2001). Regarding the role of the family, one cannot emphasize enough its importance to a growing business in an extremely low availability of funds at the initial phases of SMEs in China. Family members are not only the source of startup funds, but also the employees of the company where entrepreneurs wife and siblings are often asked to work when no reliable employees can be found. These kin are willing to accept minimal compensation in exchange for future gain (Liao and Sohmen, 2001). Finally, the business acumen which is considered to be a characteristic of successful entrepreneurs seems to be more commonly observed among Chinese people. Given the low level of business training found among Chinese entrepreneurs, their success has been intriguing and might be credited to the Chinese business acumen (Liao and Sohmen, 2001). Whether or not Chinese entrepreneurs really have the business acumen or natural business instinct is debatable but the results of an assessment of people in 31 countries suggested that China appeared to be more entrepreneurial than the average (GEM, 2000). 2.4 Problems facing entrepreneurs Compared to entrepreneurs in other developed countries, those in emerging nations face more monumental challenges. First, they must deal with unstable and highly bureaucratic business environments. Second, the laws governing private enterprise, especially business registration and the taxation system are complicated and very difcult to understand. Third, contract and property laws are often poorly designed and/or enforced. Other problems facing entrepreneurs in transition economies include inadequate infrastructure, poor macroeconomic policies, limited access to nancial capital, corruption, and a lack of managerial experiences. In addition to the added expenses of corruption and bribery, Kiggundu (2002), Pope (2001) and Stevenson (1998) found that unfavorable institutional and regulatory environments are critical problems encountered by entrepreneurs. Findings from a study of more than 360 small business owners in 69 countries (Kisunko et al., 1999) indicated that the problems encountered by entrepreneurs were quite similar. High taxes and tax regulations are the most critical problems in South and Southeast Asia. Inadequate infrastructure, ination, labor regulation, and laws governing the starting and operating a business were also considered as obstacles preventing entrepreneurs in the region from achieving their goals. Lack of infrastructure, corruption, high tax, tax regulations, and nancing were believed to be critical for MSEs in Middle East and North Africa. Central and Eastern European entrepreneurs cited high taxes and tax

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laws, nancing, corruption, and ination, the most important obstacles inhibiting their businesses. Small business owners in Latin America suggested corruption and inadequate infrastructure, crime and theft, nancing and tax regulations, the worst problems encountered. The most critical challenges for SMEs in Sub-Saharan Africa were corruption, complicated tax laws, inadequate infrastructure, ination, theft, and unavailable capital. Nigerian entrepreneurs reported that government ofcials often harassed them and extorted money from their businesses. Bad roads, water shortages, erratic electric supply, poor telecommunication systems were additional challenges that entrepreneurs in Nigeria had to endure (Mambula, 2002). Difculty in gaining access to bank credits and other nancial institutions seemed to be the major obstacles hindering the process of Nigerian small business development. However, the most damaging problem facing the state of Nigerian entrepreneurship may be the lack of government interest in and support for MSEs (Ariyo, 2005). Results from a survey conducted in Russia revealed that more than 90 percent of managers paid extralegal for government service or business license (Simon et al., 2002). It takes over two months to obtain a business license and paid up to 38 percent of per capita GDP in fees to set up a new business in transition economies (Djankov and Murrell, 2002). In Vietnam, it requires almost six months and cost an amount of 150 percent of per capita GDP for a license for a new business (Djankov and Murrell, 2002). The absence of bank credits, courts, and other market institutions created great impediments for entry of new rms in transitional economies. Despite efforts by the Chinese Government in fostering an environment conducive to the development of the private sector, Chinese entrepreneurs still face considerable barriers to opening and running their successful business (Liao and Sohmen, 2001). The rst among them is the volatility of property rights in the country. Not only are Chinese businesses subject to unpublished regulations and the caprices of courts, they also have to deal with different levels of bureaucracy from local, provincial to national government with conicting agendas. Access to resources such as funding, labor, and technology is the second important obstacle faced by entrepreneurs. Funding for businesses mostly comes from personal savings, family, and friends. Loans from banks and other nancial institutions rarely exist. Attracting skilled and reliable employees remains to be an obstacle faced by business owners. Although China is known as home of a great labor pool, many of the workers are less educated peasants from the countryside. Those who are university graduates may have some expertise but they lack experience. A few qualied individuals seem to be less loyal because the high bidders can easily lure them to a greener pasture. Finally, the low social status associated with merchants who are ranked at the bottom rung of society in the Chinese traditional cultures, may still pose a challenge for entrepreneurship. Although peoples attitudes are changing, until recently, business ownership still carried unfavorable social connotations. Given the multitude of problems faced, Chinese private entrepreneurs still worry about their future survival and growth (Liu, 2003). 2.5 Business stress Stress is perceived as part of business ownership, which is due to heavy workloads, excessive risks involved (Palmer, 1971), and a higher need for achievement by entrepreneurs (Brockhaus, 1982). A high level of stress may lead to absenteeism, accidents, increase in health care cost or decreasing productivity (Roberts et al., 1997;

Crampton et al., 1995). Ivancevich and Matteson (1980) estimated the cost of stress-related issues to business in the USA more than 10 percent of gross national product. As stress may result in adverse consequences for entrepreneurs, stress management and control may be needed. Some studies on stress reduction found social support as a good medicine for alleviating stress (Rahim, 1996; Chay, 1993). However, Mack and McGee (2001) concluded that social support mitigates work and non-work stress. Other studies asserted that individuals with high internal locus of control is likely to use support resources more effectively and therefore can reduce the level of anxiety coming from stress (Sandler and Lakey, 1982). Latack et al. (1995) found that an ability to control the situation may help a person better deal with stress. In addition, if tasks performed are more complex and interesting, workers seem to have less stress (Mack and McGee, 2001). Flexible rules and less rigid procedures reduce stress level (Nasurdin et al., 2006), but an organizational climate lled with extreme competition and lack of interaction tends to be more stressful (Wong and Wong, 2002). 3. Research methodology In this study, we employed a cross-sectional research design to explore the relationships between the motivations, success factors, problems, and business-related stress of SME owners in China. Cross-sectional research design is used widely by international entrepreneurship researchers all over the world (Coviello and Jones, 2004). Despite its static nature to capture the underlying relationships between certain variables in a given study (Coviello and Jones, 2004), nevertheless, this method allows researchers to measure and collect data on certain observations as quickly as possible. Since our study investigates the perceptions about the motivations, success factors, problems, and business-related stress among segments of the population of Chinese entrepreneurs, we deemed the cross-sectional design is the most suitable approach to present such perceptions among the segments of the population of interest. Owing to these abovementioned feasibilities of the cross-sectional design, our study reports the measurement of observations on study variables at a single moment in time. Coviello and Jones (2004) postulated that this method can provide credible ndings if researchers take the necessary precautions to ensure the reliability and validity of data collection instruments by means of language adaptation and assurance of equivalence of meaning. The following section of this paper addresses the procedures we used to ensure the reliability and validity of our ndings. 3.1 Instrumentation and data collection The survey instrument used in this study was originally developed by Chu (Chu and Katsioloudes, 2001) and has been used for small business surveys in a number of countries since 2001. The questionnaire was originally designed and written in English. It was translated into Chinese and checked for inter-translator consistency. The motivation variables are similar to those suggested in the work of Robichaud et al. (2001) and Kuratko et al. (1997). Many problems in the survey are common to entrepreneurs in both transition and developing countries. The reliability of the survey instrument was deemed satisfactory since the Cronbachs a scores were found to range from 0.818 to 0.853. Moreover, Guttman split-half coefcients were relatively high for the motivation items, perceived success variables, and the problem items. The alpha and the split-half coefcient for the motivation items were 0.758 and 0.754, respectively. For the perceived

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success variables, the a was 0.850, and the split-half coefcient was 0.745. For the problem items, the a was 0.837, and the split-half coefcient was 0.795. Hence, we conclude that instrument is highly reliable. The Cronbachs alpha referred to as the reliability coefcient, is the most common estimate for the internal consistency of items in a scale. As a result, the instrument is well suited for Likert scales such as those used in this study (Gleim and Gleim, 2003). Although a popular accepted view is that Cronbachs a scores should be above 0.70 (Nunnally, 1978), some researchers indicate acceptable scores between 0.60 and 0.80 (Simon, 2008). Some other researchers, however, believe that an ideal score should attain a minimum of 0.70 and a maximum of 0.90 to ensure against a high level of item redundancy (Streiner and Norman, 1989). The following section presents a discussion of how we measured the variables in this study. 3.2 Measures All of the study participants responded to a ve page, self-report questionnaire, including a cover page explaining the purpose of the study. We measured the variables on different measurement scales. We measured the motivation variables, perceived success variables, and problems on ordinal scale. For instance, motivations and perceived success variables were measured on an ordinal scale ranging from 5 was extremely important, 4 was very important, 3 was mildly important, 2 was not very important, and 1 was unimportant. We also measured the perceived problems on an ordinal scale using a Likert scale that ranges from 5 was a very serious problem, 4 was a serious problem, 3 was a problem, 2 was a minor problem, and 1 was not a problem. Gender and education were measured on nominal scale. We measured the number of hours worked, age, and the number of employees employed using interval scale. A higher mean score on a variable would indicate greater importance. Next, we present a description of all of the variables used in this study. 3.2.1 Demographics. Respondents were asked for their age, gender (coded 0 for female, and 1 for male), education level (1 for no formal education, 2 for some grade school, 3 for completed grade school, 4 for some high school, 5 for completed high school, 6 for some college, 7 for completed college, 8 for some graduate work, and 9 for completed graduate degree) and the numbers of full time and part time employees were employed, the number of hours worked per week, and marital status, and if married, the number of hours spouse work per week, and type of business (1 for retailing, 2 for wholesaling, 3 for service, 4 for manufacturing, 5 for agriculture, and 6 for others), and the number of years spent in the particular business entity, and the number of years since as an independent businessperson. 3.2.2 Motivation to start a business. The motivation to start a business variable was measured using a 12-item scale. The question asked the respondents to assess the importance of the reasons for starting a business. Respondent rated the reasons for starting a business on a ve-point Likert scale as follows: 5 was extremely important, 4 was very important, 3 was mildly important, 2 was not very important, and 1 was unimportant. 3.2.3 Perceived factors contributing to business success. Perceived factors contributing to business success variable was measured using a 17-item Likert scale. Similarly, respondents were asked to rate each factor in terms of the importance in business success. This variable also was measured using a ve-point Likert scale

ranging from 5 was extremely important, 4 was very important, 3 was mildly important, 2 was not very important, and 1 was unimportant. 3.2.4 Perceived problem factors. We measured the perceived problem factors using 17 items measured on a ve-point Likert scale ranging from 5 was a very serious problem, 4 was a serious problem, 3 was a problem, 2 was a minor problem, and 1 was not a problem. 3.2.5 Perceived business-related success. We measured the perceived business-related success variable using one item measured on a scale of 1-4 as follows: 4 was very successful, 3 was successful, 2 was average, and 1 was below average. 3.2.6 Perceived business-related stress. We measured the perceived business-related stress variable using one item measured on a scale of 1-5 as follows: 5 was very high, 4 was high, 3 was low, 2 was very low, and 1 was nonexistent. 3.2.7 Perceived business-related satisfaction. We measured the perceived business-related satisfaction variable using one item measured on a scale of 1-5 as follows: 5 was very satised, 4 was satised, 3 was somewhat satised, 2 was dissatised, and 1 was very dissatised. 3.2.8 Perceived family support. This variable was measured using one Likert scale item ranging from 1 to 5 as: 5 was very substantial, 4 was substantial, 3 was medium, 2 was low, and 1 was very low. 3.2.9 Success met expectations. Finally, Chinese entrepreneurs rated extent to which their business success met their expectations according to the one item which was measured on a scale of: (4 more than I expected; 3 met my expectations; 2 somewhat met my expectations; 1 did not meet my expectations). We used this instrument to collect the data from a random sample of respondents after verication of reliability estimates. Next, we present a description of the procedures we used to select the businesses for our study. 3.3 Sample and subjects Data were collected with the assistance of two Chinese educational specialists from September 2007 to May 2008. The educational specialists were instructed to familiarize themselves with different interview techniques and random sampling procedures. About 90 percent of the data were obtained by face-to-face meeting with entrepreneurs, 10 percent of the data were obtained by using an online survey system, QuestionPro Online Survey Software, with the assistance of a telemarketing expert. The potential subjects of the study were identied and randomly selected through the use of commerce telephone directories in the cities of Beijing, Shanghai, and Guangzhou. Nonprot organizations, government-owned enterprises, and any business that had its transactions done on the street were disregarded. Beijing is the capital of China, which is the centre of national politics, culture, transport, tourism, and international exchanges. Shanghai is going into the fast developing period with solid nancial base and human resources, science and technology advantage. Guangzhou is the economic centre in Southern China. Regionally, Guangzhou is close to the metropolitan links composed of Hong Kong, Shenzhen, and Macau. Beijing, Shanghai, and Guangzhou geographically cover a big of China, from north to south. Because of the better economic infrastructure environment of Beijing, Shanghai, and Guangzhou, many people moved from their hometown to these cities to establish their business. So the survey conducted in Beijing, Shanghai, and Guangzhou would provide a better picture of SMEs situation in China today.

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3.4 Data analysis We analyzed the data collected on the study variables using a variety of statistical methods. The results section presents descriptive, as well as the inferential statistics. We used SPSS and Limdep softwares for data analysis. We mainly used SPSS for descriptive statistics and hypothesis testing involving gender differences about certain variables, and signicance of the correlations between study variables. We used Limdep software mainly to estimate ordered logit models to investigate the impact and importance of motivation variables and factors contributing to the success of entrepreneurs. A means score for each item was calculated. A higher mean score on a variable indicates greater importance. 4. Results 4.1 Sample characteristics Table I shows that male entrepreneurs are approximately four years older than female, and two years older than the average age of the sample at 32.50. Chinese entrepreneurs, however, seem to be younger than those in Nigeria at 36.7 (Chu et al., 2008), Turkey at 41.2 (Chu et al., 2007a, b), and Romania at 41.5 (Benzing et al., 2005a). Results from the survey also indicated that 7 percent of entrepreneurs obtained graduate degree, 3.95 percent had some graduate work, while 47 percent of respondents completed college, 16 percent had some college level courses, and 21 percent nished high school. In general, the level of education attained by Chinese entrepreneurs is higher than those found in developing countries and comparable to small business owners in Romania (Benzing et al., 2005a).
Frequency Entrepreneurial characteristics Gender Male Female Average age of entrepreneurs Level of education No formal education Some grade school Completed grade school Some high school Completed high school Some college Completed college Some graduate work A graduate degree Enterprise characteristics Average age of business Type of business Retailing Wholesaling Service Manufacturing Agriculture %

130 62 32.49 year 2 1 3 1 38 28 84 7 13 5.61 36 35 119 14 4

67.7 32.3 1.13 0.56 1.69 0.56 21.47 15.82 47.46 3.95 7.34

Table I. Sample characteristics of SME entrepreneurs in China

17.31 16.83 57.21 6.73 1.92

Regarding the gender of the sample, 67.7 percent was male and 32.3, female. This is two to one in favor of male entrepreneurs. Since the early days of the Communist revolution, the role of women was elevated to be equal to men, and they were encouraged to fully participate in all aspects of life including the economic activities. This nding is consistent with previous study of Chinese entrepreneurs describing the participation of modern women in business (Pisturi et al., 1997). Findings from this survey somewhat implied the effect of the one-child policy enforced by the Chinese Government. Since China is a country that has a strong cultural preference for boys, this policy might have severely upset the gender balance and its effect may be reected by the skewed sex ratio between men and women Chinese entrepreneurs. On the other hand, this nding may indicate the inuence of the Chinese traditional cultural norm that emphasizes the role of man as the breadwinner of the family (Liu, 2003). The time devoted to business by Chinese entrepreneurs is 44.56 hours per week. This seems to be much less than that found in countries like Vietnam, Romania, and Turkey (Benzing et al., 2005a, b, 2009; Chu et al., 2007a, b, 2008). This time discrepancy spent in business may be attributed to the fact that the number of employees working in a Chinese enterprise is higher than those working for businesses in other countries. Table I also yields some interesting information on Chinese enterprises. The average age of business in existence is 5.61 years old. Of the total number of businesses surveyed, 46.12 percent were established by the entrepreneurs themselves, 5.4 percent bought from another, and only 3.49 percent were inherited. The dominant type of business found in this survey is service with 58.16 percent as compared with 13.78 of wholesaling business, the second highest rank of business types found in the sample. The prominent position of the service industry is indicative of the emerging entrepreneurial-led private sector which focuses on the consumer market (Davis, 2000). Table II illustrates the type of advice that Chinese entrepreneurs seek before starting their businesses. About 47.57 percent stated that they consulted other business owners while 43.78 percent asked their friends. Although other business owners and friends provided advice to Chinese entrepreneurs before starting their business, many of them also said they asked legal advisor (36.22 percent) and friends (35.68 percent). Even though it is the lowest percentage, a substantial amount of advice (28.11 percent) also came from nancial advisors, banks, and lending institutions. Table III displays the source of funds for Chinese entrepreneurs. Because of the condential nature of the question, 45.5 percent of respondents chose not to respond to the question regarding the sources of funds to start their business. However, out of 44.5 percent who responded, 23.5 percent indicated that their source of funds came from their friends. Non-government organization (NGO) or international lending

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Before starting your business, from whom did you seek advice? (M circle more than one number) Other business owners Friends Legal advisor Family member Financial advisor/bank/lending ins. Other

Frequency 88 81 67 66 52 14

% 47.57 43.78 36.22 35.68 28.11 7.57

Table II. Advice

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agency was ranked second at 17 percent. It is interesting to note that private and state banks were not considered as major source of funds for Chinese entrepreneurs, at only 3.5 and 2 percent, respectively. While only 1.5 percent used their personal saving to start a business, 1 percent said they used a credit cooperative for their startup capital. 4.2 Motivation for business ownership Entrepreneurs were asked to rank 11 reasons for business ownership. On a ve-point Likert scale with 5 being extremely important and 1, the least important, it was found that the two equally important motives for owning a business are to increase income and to prove I can do it. This nding is in congruence with the results of a survey conducted among 201 private entrepreneurs in Hunan province (Ran and Lang, 2000). Almost 42 percent of the surveys respondents indicated that their reason for business ownership was to improve their living condition (Liu, 2003). In another study of Chinese entrepreneurs, Pisturi et al. (1997) also found the desire for higher earning and a drive to fulll the need for personal achievement being their primary motives. As shown in Table IV, to be my own boss is the second most important reason for Chinese to become entrepreneurs. Since entrepreneurs who live in Beijing, Shanghai, and Guangzhou are almost in daily contact with business people from Hong Kong, Taiwan, Korea, and East Asian countries, they may begin to have some admiration for these successful visitors and decided to set up their own business to improve their standard of living (Liu, 2003). Entrepreneurs past experiences and training were also mentioned as a strong drive for business ownership. This nding supports the observation made by Pisturi et al. (1997) on their study of entrepreneurial motivation that there was an eagerness among Chinese business owners to make better use of their training and skills by becoming entrepreneurs. 4.3 Success factors On a ve-point Likert scale with 5 being extremely important and 1 being least important, Chinese entrepreneurs ranked reputation for honesty the most important variable. As shown in Table V, good customer service, good general management skills, and friendliness to customers were also critical reasons for the success of a business. The quality of honesty has long been regarded by Chinese as one of their traditional core values, but the Chinese society is experiencing an honesty crisis. A survey conducted among 700 middle school students in Southwest Chinas Chongqing Municipality found that 90 percent were willing to bypass honesty for the sake of their own interest (Shan, 2005). The dishonest tendency found among students perhaps
Sources Friends NGO or international lending agency Family State bank Private bank Personal saving Credit cooperative Did not respond Number 47 34 12 7 4 3 2 91 Percentage 23.50 17.00 6.00 3.50 2.00 1.50 1.00 45.5 Percentage out of respondents 43.12 31.19 11.01 6.42 3.67 2.75 1.83

96

Table III. Sources of funds

Motivational factors To increase my income To prove I can do it To be my own boss To be able to use my past experience and training For my own satisfaction and growth To gain public recognition To maintain my personal freedom So I will always have job security To build a business to pass on To provide job for family members To be closer to my family

Mean (all) 4.28 4.23 4.14 3.88 3.82 3.74 3.18 2.84 2.65 2.55 2.17

SD 0.82 0.80 0.95 1.14 0.96 1.16 1.29 1.18 1.20 1.25 1.25

Mean (male) 4.21 4.22 4.21 3.83 3.78 3.67 3.12 2.84 2.476 2.60 2.03

Mean (female) 4.35 4.24 4.06 3.94 3.87 3.81 3.25 2.85 2.84 2.50 2.30

Gender mean difference 2 0.14 2 0.02 0.14 0.14 2 0.09 2 0.13 2 0.13 2 0.01 2 0.36 0.09 2 0.27

Signicance 0.332 0.899 0.368 0.567 0.561 0.449 0.513 0.938 0.058 * 0.643 0.166

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Notes: Signicance at: *95 per cent level (or a 0.05) and * *99 per cent level (or a 0.01); 5 extremely important; 4 very important; 3 mildly important; 2 not very important; 1 unimportant

Table IV. Means score for motivation of Chinese entrepreneurs

Success factors Reputation for honesty Good customer service Good general management skills Charisma, friendliness to customers Hard work Access to capital Good product at a competitive price Previous business experience Ability to manage personnel Marketing factors including sales and promotion Maintenance of accurate records of sales/expenses Appropriate training Satisfactory government support Good location Support of family and friends Community involvement Political involvement

Mean (all) 4.43 4.42 4.37 4.39 4.065 4.10 3.36 3.89 3.72 3.83 3.64 3.72 3.51 3.37 3.50 2.95 2.68

SD 0.63 0.63 0.74 0.74 0.78 0.82 0.87 0.88 0.97 1.00 1.05 0.95 1.07 1.07 1.19 1.19 1.29

Mean (male) 4.47 4.45 4.41 4.28 4.10 4.24 3.30 4.00 3.83 3.89 3.77 3.75 3.56 3.37 3.35 2.84 2.73

Mean (female) 4.39 4.39 4.33 4.49 4.03 3.96 3.41 3.77 3.60 3.76 3.51 3.69 3.46 3.36 3.65 3.06 2.63

Gender mean difference 0.08 0.06 0.07 2 0.21 0.08 0.28 2 0.11 0.22 0.23 0.10 0.27 0.06 0.10 0.01 2 0.14 2 0.22 0.10

Signicance 0.68 0.74 0.622 0.122 0.678 0.049 * * 0.691 0.149 0.259 0.57 0.19 0.703 0.56 0.953 0.463 0.303 0.636

Notes: Signicant at: *95 per cent level (or a 0.05) and * *99 per cent level (or a 0.01); 5 extremely important; 4 very important; 3 mildly important; 2 not very important; 1 unimportant

Table V. Mean score for variables contributing to business success

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reects a declining ethics among the Chinese, in general. The situation which creates some concerns for the authority might become a competitive advantage for entrepreneurs who can establish themselves as honest merchants in the public eyes. In similar surveys conducted among entrepreneurs in Vietnam (Chu and Benzing, 2004), and Romania (Benzing et al., 2005a), honesty, good management skills, and friendliness to customers were also rated as the most critical success factors. The ndings suggest some degree of commonality among entrepreneurs across countries regardless of differences in culture, religion, and political system. Finally, good managerial skills as necessary ingredients for business success were also rated very highly by Chinese entrepreneurs. This nding is in congruence with the results from the studies of entrepreneurs in the Czech Republic (Papulova and Mokros, 2007) and in Vietnam (Chu and Benzing, 2004). 4.4 Problems facing Chinese entrepreneurs As shown in Table VI, unreliable/undependable employees, the stiff competition, and a lack of management training were the three critical variables preventing entrepreneurs from achieving their success. The problem of not being able to recruit and retain good employees appears to be the great challenge facing small business owners in many countries. Vietnamese entrepreneurs indicated that their business ventures could be more successful if they were able to hire enough good employees and have them remain with the business (Benzing et al., 2005b). Given the fact that the unemployment rate in China was at 23 percent of total labor force (Wolf, 2004), why were entrepreneurs unable to hire and retain reliable workers? Part of the answer may be that SMEs do not have
Mean (all) 3.71 3.54 3.4 3.33 3.41 2.965 2.965 2.96 2.965 2.975 2.995 2.76 2.61 2.47 2.36 Mean (male) 3.67 3.64 3.31 3.25 3.52 3.12 3.03 3.02 3.03 2.87 2.91 2.68 2.45 2.41 2.28 Mean (female) 3.75 3.44 3.49 3.41 3.30 2.81 2.90 2.90 2.90 3.08 3.08 2.84 2.77 2.53 2.44 Gender mean difference 2 0.07 0.19 2 0.17 2 0.15 0.22 0.29 0.12 0.11 0.12 2 0.21 2 0.17 2 0.15 2 0.32 2 0.12 2 0.15

Problem Unreliable and undependable employees Too much competition Lack of management training Lack of marketing knowledge Inability to maintain accounting records Unable to obtain short-term nancial capital Too much government regulation, bureaucracy Complex and confusing tax structure Unable to obtain nancial capital Weak economy Poor road transportation Business registration process Electricity problem Limited parking Foreign exchange limitations

SD 1.06 1.05 1.18 1.11 2.46 1.14 1.11 1.04 1.14 1.26 1.79 1.17 1.21 1.18 1.22

Signicance 0.680 0.287 0.389 0.422 0.560 0.130 0.526 0.568 0.526 0.309 0.548 0.427 0.105 0.502 0.422

Table VI. Problems encountered by Chinese entrepreneurs

Notes: 5 very serious problem; 4 serious problem; 3 problem; 2 minor problem; 1 not a problem

adequate resources to allow for good compensation, and opportunities for advancement existing in MSEs are limited. As a result, good employees are reluctant to join small enterprises and will be prone to leave when better jobs are available. It has also been reported that many Chinese domestic rms considered the low cost of labor one of their competitive advantages and focused on cost leadership for survival. This strategy would result in cutthroat competition (Lau et al., 2004), and it is the basis for the respondents of this survey to suggest competition as the second most important problem facing them. In supporting the ndings of a previous study of Nigerian entrepreneurs (Chu et al., 2008), results of this study also show that lack of management training is an important obstacle to the success of Chinese entrepreneurs. The nal report submitted by Middlesex University also cited the lack of management skills as a major problem faced by entrepreneurs (CEEDR, 1998). 4.5 Stress, business success, and social support As shown in Table VII, Chinese entrepreneurs believed they were successful and expressed great satisfaction with their success. They also indicated that their success level met their expected success. When asked if the support of family and friends
Mean (all) 1. How would you describe your business success? (4 very successful; 3 successful; 2 average; 1 below average) 2. To what extent are you satised with your business success? (5 very satised; 4 satised; 3 somewhat satised; 2 dissatised; 1 very dissatised) 3. How well has your success met your expectations? (4 more than I expected; 3 met my expectations; 2 somewhat met my expectations; 1 did not meet my expectations) 4. As a business owner, how would you rate the level of businessrelated stress? (5 very high; 4 high; 3 low; 2 very low; 1 nonexistent) 5. How would you rate the support from family and friends? (5 very substantial; 4 substantial; 3 medium; 2 low; 1 very low) 2.8 Mean (male) 2.81 Mean (female) 2.79 Gender mean difference 0.01

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SD 0.71

Signicance 0.907

3.47

0.88

3.56

3.38

0.18

0.251

2.285

0.93

2.38

2.19

0.19

0.216

4.285

0.71

4.21

4.36

2 0.15

0.190

4.17

0.90

4.07

4.27

2 0.20

0.169

Table VII. Mean score for success, stress, and family support of entrepreneurs in China

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contributed to their business success, the answer was very positive. These ndings are in line with the theoretical view that job performance leads to job satisfaction (McShane and Von Glinow, 2005). Empirical studies show that the support of family and friends was signicantly related to success and satisfaction (Chu et al., 2007a, b). This studys results support those of previous ndings. With respect to the correlations between success, satisfaction, family support, and stress, some interesting results are emerged and are presented in Table VIII. Business success and satisfaction are strongly correlated. Similar conclusions on the correlation between entrepreneurs satisfaction and their perceived success are also found. The more they feel their success is met, the more satised they become. The relationship between business success and stress is also signicant. However, there is no signicant relationship between family support and stress found in this study. Rahim (1996) suggests that social support is negatively associated with stress. Table IX illustrates the correlation between education level and success, stress, and the level of family support for each gender. For males, the correlation coefcient, 0.137, for education and success indicates a positive relationship although the relationship is weak. The higher the number of years of schooling completed, the higher the success. 0.074 between education and stress shows small level of stress is associated with education. Even though the relationship is very weak, higher level of schooling is also associated with higher level of family support. Similarly, substantial family support also leads to higher success, while higher success results in lower level of stress. For females, pattern is very similar to male case for the relationship between education and stress and family support. However, the direction of the relationship is completely opposite for education and success in addition to female success and stress and family support.
Q1 business success Q2 Q3 Q4 Q5 satisfaction expectation stress support 0.672 0.458 0.140 0.249 (0.000) (0.000) (0.051) (0.000) Q2 satisfaction 0.527 (0.000) 0.024 (0.745) 0.205 (0.004) Q3 expectation Q4 stress

Table VIII. Correlations of success, stress, and family support answers

2 0.050 (0.493) 0.245 (0.001)

0.045 (0.535)

Note: Pearson correlation coefcients with p-values in parentheses

Educationa (male) Male success Female success Stressc Family supportd Table IX. Correlation between education and success, stress, and level of family support by gender
b

Education (female) 2 0.301 (0.275) 0.056 (0.693) 0.221 (0.112)

Male success

Female success

0.137 (0.250) 0.074 (0.424) 0.085 (0.364)

2 0.096 (0.357) 0.120 (0.251)

0.178 (0.90) 2 0.034 (0.754)

Notes: The numbers in parentheses are signicance level (two-tailed); aeducation is dened as the number of years completed; bsuccess is dened on a scale 1-4 as: 4 very successful, 3 successful, 2 average, and 1 below average; cstress is dened on a scale 1-5 as: 5 very high, 4 high, 3 low, 2 very low, and 1 nonexistent; dfamily support is dened on a scale as: 5 very substantial, 4 substantial, 3 medium, 2 low, and 1 very low

4.6 t-tests for the gender differences for motivations, success, problems faced, stress, and family support variables We noted the descriptive differences in the perceived importance attributed to several motivational, success and problems factors by Chinese entrepreneurs. We reported this information in Tables IV-VII. In order to understand how our study variables differ across male and female Chinese entrepreneurs, we also conducted independent samples t-tests to explore the gender differences for the factors in several study variables. In general, the statistical analysis of the gender differences did not yield evidence suggesting signicant differences between the mean ratings of male and female entrepreneurs. Hence, ndings of this study reveals that Chinese male and female entrepreneurs do not signicantly differ in terms of the motivation to start a business, perceived factors that contribute to business success, and perceived problems they face as a business person. However, this study found that there is a gender difference only in one of the 12 items comprising the perceived importance attributed to motivation to start a business variable. Female entrepreneurs tend to perceive the opportunity to build a business to pass on more important source of their motivation to start a business than those male entrepreneurs. Other than this factor, there is no signicant gender difference in terms of the factors perceived as important to start a business. This nding implies that both men and women entrepreneurs have similar attitudes as far as the importance attributed to having a business to prosper and succeed in life. The ndings of this study also revealed that there is no gender difference in terms of the importance attributed to factors related to business success, except the importance attributed to access to capital. Chinese male and female entrepreneurs perceive the factors related to their business success similarly. We found a signicant gender difference between male and female entrepreneurs in terms of the importance attributed to access to capital. Male Chinese entrepreneurs attribute more importance to access to capital than female Chinese entrepreneurs as a factor related to their business success. Otherwise, both groups have similar attitudinal tendencies in terms of the factors related to the business success. The statistical analysis also showed that there is no gender difference in terms of perceived problems encountered between male and female Chinese entrepreneurs. Both groups tend to perceive the problems similarly, such as unreliable and undependable employees as the most serious problem and foreign exchange limitations as the least serious problem in managing their businesses. We also tested for the gender differences for those variables that measured the perceived business success, satisfaction with business success, whether the success met the expectations or not, perception of the business stress, and support from the family. Table VII reports the ndings for the signicance testing of gender differences for each variable. The study ndings show that Chinese male and female entrepreneurs do not signicantly differ in terms of the perceived business success; satisfaction with success, extent success met their expectations, perceived level of stress, and perceived support from family and friends. These ndings imply that perceptual variables are signicant universal factors inuencing entrepreneurial behavior of Chinese entrepreneurs (Langowitz and Minniti, 2007). Also, our research ndings are consistent with the nding that male and female entrepreneurs do not differ in terms of intrinsic rewards, extrinsic rewards, and independence and autonomy enjoyed in having ones own business (Kuratko et al., 1997). Hence, this nding is consistent with our

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observation that Chinese male and female entrepreneurs are driven by similar goals in starting up a small business. 4.7 The ordered logit analysis of motivational factors to start a business and factors contributing to business success In order to further investigate the impact and importance of motivation variables and factors contributing to the success of entrepreneurs, two ordered logit models are applied to a sample of Chinese entrepreneurs participated in the study. Because entrepreneurs ranked the success factors in order (5 extremely important, 4 very important, 3 mildly important, 2 not very important, 1 unimportant), an ordered logit model is the most appropriate model to use (Greene, 2008). To that end, for the motivation variables, we formulated the following model: Successi b0 b1 Educi b1 Hworki b3 EmpNumi b1 Gend i b5 Expi b6 MStai b7 Stresi b8 F supi b9 Agei bjMotivVar i 1i ; i 1; . . . ; 196; j 10; . . . ; 20:

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where Educ is education level completed, Hwork is number of hours worked, EmpNum is the number of full-time employees, Gend is gender, Exp is experience measured as the number of years in that business, MSta is marital status, Stres is stress level, Fsup is the level of family support, Age is the age of the entrepreneur, and Motivvar is the following motivation factors: to be my own boss, to be able to use my past experience and training, to prove I can do it, to increase my income, to gain public recognition, to provide jobs for family members, for my own satisfaction and growth, so I will always have job security, to build a business to pass on, to maintain my personal freedom, and to be closer to my family. Finally, 1 is error term, assumed to follow logistic distribution, and bs are coefcients to be estimated. The dependent variable called Success in the model is based on the responses measured on a four-point Likert scale using (4) very successful, (3) successful, (2) average, and (1) below average. Similarly, we also formulated a second-ordered logit model to estimate the factors contributing to the success of the Chinese entrepreneurs. The equation is given as: Successi b0 b1 Educi b1 Hworki b3 EmpNumi b1 Gend i b5 Expi b6 MStai b7 Stresi b8 F supi b9 Agei bjSucFaci 1i ; i 1; . . . ; 196; j 10; . . . ; 26: 2

where Educ is education level completed, Hwork is number of hours worked, EmpNum is the number of full-time employees, Gend is gender, Exp is experience measured as the number of years in that business, MSta is marital status, Stres is stress level, Fsup is the level of family support, Age is the age of the entrepreneur, and SucFac is the following success factors: good general management skills, charisma, friendliness to customers, satisfactory government support, appropriate training, access to capital, previous business experience, support of family and friends, marketing factors, good product at a competitive price, good customer service, hard work, location, maintenance of accurate records of sales/expenses, ability to manage personnel, community involvement, political involvement, and reputation for honesty. 1 is error term, assumed to follow logistic distribution, and bs are coefcients to be estimated. The dependent variable called

Success in the model is based on the responses measured on a four-point Likert scale using (4) very successful, (3) successful, (2) average, and (1) below average. By employing Limdep software package, the ordered logit equations are estimated by maximum likelihood method for the Chinese entrepreneurs. The estimates are given in Tables X and XI. According to the tables, the models are satisfactory as x 2 and log-likelihood diagnostics are acceptable in both cases. The ordered logit method does not produce familiar F-test and in the absence of a standard F-test, a likelihood ratio test is conducted to examine the overall explanatory power of the model. The values of x 2 test statistics with 20 degrees of freedom, 38.239 for the motivation factors and with 26 degrees of freedom, 48.538 for the success factors, imply that the models t well and the independent variables are jointly signicant. Similar to the F-statistic case, dividing the estimated coefcient by the standard error does not give the usual t-statistics. For that reason, we used the term z in tables to avoid any confusion. In Table X, four variables are statistically signicant at 10 percent level, namely number of hours worked, stress, family support, and to gain public recognition. Moreover, the level of family support is found highly statistically signicant factor contributing to the success of entrepreneurs. As in the case of Table X, Table XI also shows estimated variables, four of which are statistically signicant. In addition to number of hours worked, stress level, and family support, a success factor, good product at a competitive price, is signicant factor. Since interpretation of the
Variable Constant Education Number of hours worked Number of employees Gender Experience Married or single Perceived business stress Perceived level of family support Age To be my own boss To be able to use my past experience and training To prove I can do it To increase my income To gain public recognition To provide jobs for family members For my own satisfaction and growth So I will always have job security To build a business to pass on To maintain my personal freedom To be closer to my family Mu(1) threshold parameter Mu(2) threshold parameter Mu(3) threshold parameter Coefcient 1.050 0.068 2 0.013 2 0.001 2 0.286 0.018 2 0.335 0.625 0.522 0.002 2 0.045 2 0.037 2 0.229 2 0.172 0.311 0.185 0.016 0.024 0.028 2 0.007 0.000 0.989 3.743 6.655 SE 1.413 0.069 0.008 0.001 0.341 0.031 0.304 0.217 0.169 0.018 0.164 0.152 0.203 0.217 0.147 0.139 0.160 0.157 0.136 0.145 0.151 0.324 0.221 0.258 P[jZj . z] 0.458 0.323 0.089 0.382 0.402 0.558 0.271 0.004 0.002 0.929 0.782 0.806 0.258 0.427 0.035 0.183 0.921 0.876 0.835 0.960 0.998 0.002 0.000 0.000

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Notes: Dependent variable: perceived business success; log-likelihood function 2 196.5137; x 2 38.239; restricted log likelihood 2 215.6333; degrees of freedom 20

Table X. Ordered logit model estimates for motivation variables

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Variable Constant Education Number of hours worked Number of employees Gender Experience Married or single Perceived business stress Age Perceived level of family support Good general management skills Charisma; friendliness to customers Satisfactory government support Appropriate training Access to capital Previous business experience Support of family and friends Marketing factors such as sales promotion Good product at a competitive price Good customer service Hard work Location Maintenance of accurate records of sales/expenses Ability to manage personnel Community involvement Political involvement Reputation for honesty Mu(1) threshold parameter Mu(2) threshold parameter Mu(3) threshold parameter

Coefcient 0.824 0.087 2 0.014 2 0.001 2 0.401 0.005 2 0.132 0.711 2 0.003 0.431 0.014 0.314 2 0.218 0.129 0.132 2 0.243 0.101 0.150 2 0.193 2 0.273 2 0.251 2 0.074 0.154 2 0.019 0.213 0.016 0.109 1.019 3.869 6.916

SE 1.453 0.071 0.008 0.001 0.345 0.031 0.292 0.217 0.019 0.194 0.186 0.248 0.174 0.199 0.211 0.192 0.169 0.174 0.093 0.267 0.247 0.153 0.172 0.189 0.172 0.152 0.194 0.334 0.232 0.276

P[jZj . z] 0.5707 0.224 0.059 0.507 0.246 0.866 0.651 0.001 0.885 0.026 0.939 0.205 0.211 0.516 0.532 0.206 0.548 0.388 0.039 0.306 0.309 0.629 0.373 0.920 0.216 0.914 0.576 0.002 0.000 0.000

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Table XI. Ordered logit model estimates for success factors

Notes: Dependent variable: perceived business success; log-likelihood function 2 191.364; x 2 48.538; restricted log likelihood 2 215.633; degrees of freedom 26

estimated coefcients of ordered logit model is not straightforward as in the case of regular regression (OLS), a coefcient indicates a change in the log of the odds ratio. Therefore, rst we have to transform the coefcient by using the exponential function to nd antilog (eb), and then, we can employ the value computed from transformation to predict the odds ratio. Since we estimated the coefcient for family support as 0.522, which gives 1.69 as the odds ratio. This, in turn, implies that an increase in the family support from low to medium increases success level by 4,41,691 times, illustrating the importance of the family support for Chinese entrepreneurs. Likewise, the odds for number of hours worked, stress, and to gain public recognition are 0.99, 1.87, and 1.39, respectively, in Table X. Therefore, to gain public recognition is a signicant motivator in success, which increases the success rate 1.39 times. Although it is not statistical signicant, the motivation factor of to provide jobs for family member rises the success by 1.2 times. In Table XI, number of hours worked take the same value as in the motivation case, while stress, family support, and good product at a competitive price have the odds ratios of 2.04, 1.54, and 0.82. Furthermore, charisma and

friendliness to customers increases the success by 1.37 times. Other factors, such as community involvement, maintenance of good records, marketing factors, appropriate training, access to capital and reputation for honesty, lead to an increase in success. 5. Conclusion and recommendations This study investigated the motivation, success, problem, and business-related stress and their importance on the success of Chinese entrepreneurs. Its ndings reveal interesting information. Bulgarian entrepreneurs indicated that increasing income, proving that they can do it, a desire to be their own boss are the main motivation factors for becoming business owners. Although male entrepreneurs rated proving that they can do it as the highest motivation, female entrepreneurs ranked the increasing income as the highest motivation factor. The study ndings also show that family business concerns such as expectations of earning more money in self-employment and the opportunity to pass the business on to children were other important motivational goals in starting up small business ownership. Chinese entrepreneurs regarded a reputation for honesty as the crucial factor contributing to their success. They also perceived good customer service, good general management skills, charisma, friendliness to customers, and an access to capital as the leading factors to a higher level of business achievement. Female entrepreneurs indicated that charisma, friendliness to customers was the most important success factor while a reputation for honesty was the most important for male entrepreneurs. With respect to problems Chinese entrepreneurs face, undependable/unreliable employees, competition, lack of management training, lack of marketing knowledge, and inability to maintain accounting records were cited as the most important problems. Again female and male entrepreneurs differ in the most important problem: lack of management training for female and undependable/unreliable employees for male entrepreneurs. Although Chinese entrepreneurs indicated that the level of their success met their expectations, they experienced high level of business-related stress, which was stronger for female entrepreneurs. In addition, they reported that the support of family and friends was very high, especially for female entrepreneurs. Even though we observed descriptive differences in perceived importance attributed to several motivational, success and problems factors, statistical analysis of the gender differences did not yield evidence suggesting signicant differences between the mean ratings of male and female entrepreneurs. Hence, ndings of this study reveals that Chinese male and female entrepreneurs do not signicantly differ in terms of the motivation to start a business, perceived factors that contribute to business success, and perceived problems they face as a business person. However, this study found that there is a gender difference in only one of the 12 items comprising the perceived importance attributed to motivation to start a business variable. Female entrepreneurs tend to perceive the opportunity to build a business to pass on more important source of their motivation to start a business than those male entrepreneurs. The lack of signicant gender differences implies that both men and women entrepreneurs have similar attitudes as far as the importance attributed to having a business to prosper and succeed in life. These nding imply that policy makers can design similar training and development opportunities for Chinese entrepreneurs to successfully manage and develop and sustain their business. It is important that Chinese female entrepreneurs perceive factors in

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the social, economic, and business environment as important as the male counterparts. Hence, this also implies that opportunities for women to participate in economic activity are as accessible as male entrepreneurs in China. Results of this study suggest that Chinese entrepreneurs are eager to establish their own businesses for higher earnings and to prove their capabilities, if the right condition exists. Evidence also shows that there is a strong link between economic prosperity and entrepreneurship which requires a favorable environment to develop. Chinese policy makers have taken measures to provide microeconomic reforms, and introduce macroeconomic stability, but more should be done, especially the re-establishment of land ownership rights which allow collateral for entrepreneurs to secure needed resources for opening and expanding their business. From the human resources standpoint, Chinese entrepreneurs continue to face the issues of nding and retaining skilled workers. Perhaps more education and training might help alleviate the problem. While accelerating reforms and adopting the Western way of life is an important avenue leading to the integration into the league of developed economies, an increased exposure to the West may result in declining some of the Chinese traditional values. Chinese ethical norms which place a high value in honesty and mutual trust is eroding due to the obsession of material possession, but the low status of merchants seen in the traditional society has been changed. Successful entrepreneurs are respected and hailed as role models in the modern China. Business owners persistently pursued their ambition to become the chickens head, a dream that most Chinese strives to achieve. The effects of globalization, downsizing, and economic instability have created uncertainty and reduced opportunities for career advancement in many private organizations, as well as those of state-owned enterprises. As a result, business ownership turns out to be a very attractive alternative. By creating jobs, increasing income and providing economic security, private enterprises not only benet entrepreneurs but continue to advance Chinas economic prosperity, as well.
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Further reading Djankov, S. and Nenova, T. (2001), Constraints to Entrepreneurship in Kazakhstan, The World Bank, Washington, DC, March. McMillan, J. and Woodruff, C. (2000), Private order under dysfunctional public order, Michigan Law Review, Vol. 98 No. 8, pp. 2421-58. About the authors Hung M. Chu is a Professor of Strategic Management and International Business at West Chester University of Pennsylvania. Dr Hung M. Chu has published his research results in such journals as the Journal of Small Business Management, Journal of Developmental Entrepreneurship, Journal of Small Business and Enterprise Development, Journal of African Development among others. He has conducted research on entrepreneurs in many countries. Orhan Kara is an Associate Professor of Economics at West Chester University of Pennsylvania and earned his PhD degrees at the University of Wisconsin-Madison and the University of Wisconsin-Milwaukee. Dr Orhan Kara has published articles in economics, nance, and entrepreneurship in various journals and his research interests include entrepreneurship, trade ows, and human capital. Orhan Kara is the corresponding author and can be contacted at: okara@wcupa.edu Xiaowei Zhu is an Assistant Professor of Management at West Chester University of Pennsylvania. She received her PhD in Production Operations Management from the University of Wisconsin-Milwaukee and MA in Management Information Systems from the University of Iowa. Her research interests include supply chain management, outsourcing, mixed channel, and quality management. She has several papers published in leading journals, including Journal of Business Research, Production and Operations Management, and International Journal of Production Economics. She is a member of the Institute for Operations Research and Management Science, Decision Science Institute. Kubilay Gok is a Faculty of Organizational Behavior and Human Resources Management in the Faculty of Management at the University of Lethbridge of Alberta, Canada and earned his PhD degree at the University of Wisconsin-Madison. Dr Kubilay Gok studies attribution theory applied to performance management and organizational failure, organizational citizenship, and leader-member exchange and leader reinforcement styles.

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