Entrepreneurs and China’s private sector SMEs’ performance

Publication Name

Applied Economics


The Chinese government adopted the ‘Mass Entrepreneurship and Innovation’ (MEI) strategy in 2015 to increase the number of entrepreneurs, the number of private small-medium enterprises (SMEs) and firm innovation. Using China’s firm-level data, we find that different entrepreneurial factors such as startup motivation, personal characteristics (age, gender), human capital (education, experience) and guanxi (political and business connections) impact the technical efficiency scores of SMEs in Eastern and non-Eastern regions differently. Our results also show that regional economic development and entrepreneurial quality disparities in China’s economy warrant entrepreneurial policies tailored to address these differences if they are to be effective in improving the technical efficiency performance of firms. Based on our findings, one may argue that the MEI strategy will not be adequate by simply focusing upon increasing the number of entrepreneurs without considering regional differences in development and entrepreneur characteristics.

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