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Who are entrepreneurs in Russia, Brazil, and China? Simeon Djankov, World Bank Yingyi Qian, UC...
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Transcript of Who are entrepreneurs in Russia, Brazil, and China? Simeon Djankov, World Bank Yingyi Qian, UC...
Who are entrepreneurs in Russia, Brazil, and China?
Simeon Djankov, World BankYingyi Qian, UC Berkeley and CEPR
Gérard Roland, UC Berkeley and CEPREkaterina Zhuravskaya, CEFIR and CEPR
Motivation• Entry and SMEs growth is strongly emphasized as
a priority in policy agenda of most developing and transition countries
• Economic theory, i.e., endogenous growth, development and transition literatures, also stress the importance of entrepreneurship for economic growth and development– So far, however, there has been little evidence on factors
determining entrepreneurial activity– Its understanding is crucial for policy-making– Institutional reforms may be disappointing if roots of
entrepreneurship lie in culture or in personality traits
Three perspectives on entrepreneurship in social sciences
• Institutions: – Credit constraints– Security of property rights– Regulatory burden
• Sociological variables: – Culture, religion, values, trust– Social networks
• Personality traits: – Need for achievement, Belief in personal effort, Self-
confidence, and Attitudes towards risk
• Lots of research within disciplines; little work that looks at each of these factors controlling for the other ones
Large project• Provide empirical evidence on determinants of
entrepreneurship in BRINC (Brazil, Russia, India, Nigeria, China)– countries with sufficient regional variation; unequal length of
experience with entrepreneurship; that cover 44.8% of the Earth’s population
• Using similar instrument, survey entrepreneurs and non-entrepreneurs in order to inquire about:– individual characteristics; sociological variables and
perceptions of institutional environment
• Explore individual, regional, country-level variation• So far: results from pilot studies in Russia, China, and
Brazil
Structure of the pilotsIn each country, survey individuals in seven cities of four regions:
1. A random sample of 400 entrepreneurs (414 in China)• Defined as owner-manager of a business with 5 or more employees
2. An sample of 540 non-entrepreneurs (561 in China)• Partly matched by age, gender, and education
• Russia: Survey in seven cities in 2003-2004 academic year: – Moscow; Nizhny Novgorod and Dzershinsk in the Nizhegorodskaya oblast; Perm and Chaykovsky in
the Permskaya oblast; Rostov on the Don and Taganrog in the Rostovskaya oblast
• China: Survey in seven cities in 2004-2005 academic year: – Beijing; Wuhan and Huangshi in the Hubei province; Guangzhou and Zhongshan in the Guandong
province; Xi’an and Baoji in the Shanxi province
• Brazil: Survey in seven cities in 2005 year: – Sao Paulo; Curitiba and Londrina in the Sul region; Salvador and Feira de Santana in the Nordeste
region; Brazilia and Goiania in the Centro Oeste region
In China and Russia: An additional short survey among a random sample of 1200 respondents about their basic personal characteristics and whether they are entrepreneurs – to get information about the structure of the population. In India – this information came from the population census
There is vast within country variation in entrepreneurship; x-country - the most
widespread in Brazil, and the least in RussiaShare of entrepreneurs and self-employed by cities
18%16%
13%11% 11%
8%6%
25% 24% 24%
18% 18%
14%12%
31%28% 27% 27%
24% 23%
19%
0%
10%
20%
30%
1. Differences in Personality traits, Social environment, Trust, and Values
• Comparison of conditional means– condition on city-level dummies (institutional
environment), age, gender, education and education sqrd
• Standard errors are corrected for clusters in error terms at the city-level
Mobility and attitude towards risk E are more mobile geographically in all three countries;
E are mobile across jobs and industries in Russia and China, and less – in Brazil; E are more risk-loving in Russia and China
0.00 0.50 1.00 1.50 2.00 2.50
Number of localities lived(apart from current)
Number of distinctprofessional activities (apart
from current)
Number of different industries(proxy)
Accept a risk neutral gamble,%
Russian E Russian NE Chinese E Chinese NE Brazil E Brazil NE
(No data for Russia)
Different Scale here
Motivation and happiness: E more happy (in China insignificant); Preference for work over leisure – in three countries; In China and Russia entrepreneurs are greedy; and
in Brazil the relationship is reversed
0 0.5 1 1.5
Very happy or quitehappy in life, %
Retire if won 100 timesGDP pc (controlling for
wealth)
Reason: want moremoney
Russian E Russian NE Chinese E Chinese NE Brazil E Brazil NE
0,05
0,14
0,31
0,70
0,18
0,24
0,37
0,44
0,43
0,81
0,0 0,2 0,4 0,6 0,8 1,0
Retire if won 100 times GDP pc, %
Retire if won 500 times GDP pc
Retire if won 5000 times GDP pc
Why not retire: I like what I do
Why not retire: I want more money
Why not retire: social mission
Very successful or quite successful
Entrepreneurs Non-entrepreneurs
Example: China (in %)E – want to continue of won a lot of money and the reason is to earn even more money
Over-confidence: both “better then average” bias and “knowledge overconfidence” on trivia questions. In Brazil: the opposite effect to what physiologists predicted: entrepreneurs more adequately assess their abilities and knowledge than non-entrepreneurs.
Legal social norms:In Russia and China entrepreneurs are more tolerant to corruption
and unlawful behavior than NE; in Brazil – the opposite
Respondent can justify to some degree:0.00 0.20 0.40 0.60 0.80 1.00
accepting a bribe, %
avoiding fare on transport, %
buying stolen, %
Russian E Russian NE Chinese E Chinese NE Brazil E Brazil NE
Work ethic and trust:Work ethic – everywhere; in China and Russia – E lower
general trust and in Brazil higher; E trust government more in China and Brazil
0.000 0.250 0.500 0.750 1.000
Work is very important
Have a lot or some of trustin colleagues, %
Have a lot or some trust inpeople in town, %
Have a lot or some trust ingovernment, %
Russian E Russian NE Chinese E Chinese NE Brazil E Brazil NE
Social environment:Entrepreneurs have more friends and family members –
entrepreneurs in all three countries0.00 0.50 1.00 1.50 2.00 2.50
Number of relatives -entrepreneurs
Number of school friends -entrepreneurs
Number of adolescent friends -entrepreneurs
Russian E Russian NE Chinese E Chinese NE Brazil E Brazil NE
Important to note that these may not be causal due to both omitted variable and reverse causality. In Brazil – were able to instrument with birth order and found causal effect
2. Physiological and Sociological determinants of entrepreneurship
(controlling for institutional variation with city-level dummies)
- So far, just summarized the differences b/w E and NE;
- But many of these differences are driven by careers of the respondents. I.e., values and perceptions of social norms and business climate are formed on the basis of people’s experiences
- Next step is to look at factors that arguably can be considered exogenous
1 2 3 4
Pooled Russia only China only Brazil only
Father has secondary or higher education 0.031 0.193 0.002 -0.068 [0.025] [0.057]*** [0.015] [0.027]** Father was a boss or director 0.094 0.01 0.053 0.064 [0.028]*** [0.052] [0.023]*** [0.030]** Mother was a boss or director 0.036 0.19 0.067 0.041 [0.053] [0.101]** [0.053]* [0.050] There are (current or former) entrepreneurs 0.102 0.052 0.049 0.106 among relatives [0.027]*** [0.043] [0.022]*** [0.025]*** There are (current or former) entrepreneurs 0.136 0.069 0.097 0.125 among friends (from last place of study) [0.025]*** [0.049] [0.024]*** [0.028]*** Cognitive test score 0.013 -0.005 0.005 0.018 [0.008]* [0.013] [0.005] [0.009]** Height 0.003 0 0.001 0.004 [0.002]** [0.003] [0.001] [0.002]** Risk-loving 0.058 0.067 0.103 -0.012 [0.021]*** [0.044] [0.014]*** [0.025] Top 10% in secondary school (self-reported) 0.002 0.125 -0.015 -0.009 [0.023] [0.055]*** [0.015] [0.026] Greed 0.008 0.096 0.032 -0.082 [0.021] [0.040]** [0.014]** [0.028]*** Observations 2351 709 870 772
• Probit regressions. Dependent variable: P(entrepreneur vs. non-entrepreneur)• Control for city fixed effects, gender, age, education, and education squared. • Report marginal effects.• Robust standard errors in brackets.
Effect of individual characteristics and social environment controlling for institutional environment
5 6 7
China and Brazil compared to Russia
Effect for
Russia X-term with
China dummy X-term with
Brazil dummy
Father has secondary or higher education 0.195 -0.099 -0.116 [0.064]*** [0.019]*** [0.015]*** Father was a boss or director 0.008 0.072 0.048 [0.042] [0.068] [0.059] Mother was a boss or director 0.161 -0.032 -0.059 [0.090]** [0.047] [0.029] There are (current or former) entrepreneurs 0.042 0.024 0.063 among relatives [0.035] [0.048] [0.054] There are (current or former) entrepreneurs 0.056 0.073 0.055 among friends (from last place of study) [0.040] [0.060] [0.054] Cognitive test score -0.004 0.012 0.019 [0.011] [0.013] [0.013] Height 0 0.002 0.004 [0.003] [0.003] [0.003] Risk-loving 0.056 0.159 -0.056 [0.039] [0.080]** [0.031] Top 10% in secondary school (self-reported) 0.102 -0.082 -0.072 [0.044]*** [0.021]*** [0.021]** Greed 0.077 -0.027 -0.103 [0.031]** [0.039] [0.020]*** Observations 2351
• Probit regressions. Dependent variable: P(entrepreneur/non-entrepreneur)• Also control for gender, age, education, and education squared. • Report marginal effects.• Robust standard errors in brackets.
X-country comparisons of the individual and social effects
(1) (2) (3) (4)Probit OLS Probit Probit
Dependent variable: E Years as EE with
positive sales growth
NE who thought of
own business
Comparison group: All NE ---- The rest of ENE who never
thought
Report: dP(E)/dx dY/dx dp(.)/dx dp(.)/dxFather had higher education 0.005 0.564* -0.221*** -0.003Father was a boss or director 0.011 0.111 -0.011 0.006Mother was a boss or director 0.081 0.498 -0.167 0.191Mother was a party member -0.021* -0.467*** -0.109 0.093Family members - entrepreneurs 0.012* 0.566*** 0.088*** 0.065***Friends - entrepreneurs 0.031*** 0.564*** -0.004 0.078***Cognitive test score 0.004 0.031 -0.031 0.005Height 0.001** 0.016 0.008 0.003Risk-loving 0.078*** 0.661*** 0.157 -0.005Top 10% in secondary school -0.007 -0.012 0.118** -0.018Greed 0.141*** 1.329*** 0.134*** 0.032Favorable local population 0.009 0.144 -0.03 0.015Favorable government 0 -0.174*** 0.035* -0.014City dummies, age, gender, and education with a quadratic term
yes*** yes*** yes*** yes***
Employment and industry dummies yes***Observations 802 785 340 392R-sqrd (Pseudo R-sqrd) (0.38) 0.2 (0.12) (0.2)
Specification:
Standard errors corrected for clusters in the error terms at the city-level
Expl: China
Outcomes in dependent variable:
E Failed ENE who
never was E
Report:Father had higher education 0.005 0.015 -0.02Father was a boss or director 0.007 0.009 -0.016Mother was a boss or director 0.035 0.002 -0.037Mother was a party member -0.023 0.011 0.012Family members - entrepreneurs 0.011** 0.026 c -0.037Friends - entrepreneurs 0.028*** 0.036***c -0.064***Cognitive test score 0.003 -0.002 -0.001Height 0.001 -0.005***ac 0.005**Risk-loving 0.075*** 0.027 c -0.102**Top 10% in secondary school 0.001 0.092**ac -0.093**Greed 0.072*** 0.008 ac -0.08***Favorable local population 0.009 0.004 -0.013Favorable government -0.004* -0.042***ac 0.046***City dummies, age, gender, and education with a quadratic term
yes*** yes*** yes***
ObservationsPseudo R-sqrd
dP(.)/dx; (ΣdP(.)/dx = 0)
(5)Multinomial Logit
0.35802
China: “Failed entrepreneurs”
Failed E: - Have the highest shares of E among family and friends- Shortest- Least smart- Best self-reported performance in school- Consider government as least favorable
Outcomes in dependent variable:Opportunity
ENecessity
E
NE who never was
E
Report:Father had higher education 0.005 -0.004*** -0.001Father was a boss or director 0.001 0.001 -0.002Mother was a boss or director 0.025* -0.007 a -0.019Mother was a party member -0.013 -0.003 0.015Family members - entrepreneurs 0.004 0.002***c -0.006Friends - entrepreneurs 0.016*** 0.004**ac -0.019***Cognitive test score 0.001 0.001*c -0.003Height 0 0 -0.001Risk-loving 0.046*** 0.012***ac -0.057***Top 10% in secondary school -0.004 -0.001 c 0.004Greed 0.043*** 0.015***ac -0.058***Favorable local population 0.005 0.002***c -0.007Favorable government 0 0 -0.001
City dummies, age, gender, and education with a quadratic term
yes*** yes*** yes***
ObservationsPseudo R-sqrd 0.35
782
dP(.)/dx; (ΣdP(.)/dx = 1)
(6)Multinomial Logit
China: “Necessity vs. opportunity”
E by necessity:
In the middle b/w NE and E by opportunity
- E among friends and family
- Risk attitude
- Greed
But they are closer to E than to NE
Personal saving is the main source of financing for start-ups in all three countries
ENTREPRENEURS: How were you able to raise money to set up your first enterprise?
0% 20% 40% 60% 80% 100%
Personal funds
Funds of relatives
Funds of friends
Bank credit
Russia (n=400) China (n=414) Brazil (n=265)
Retained earnings is the main source of financing of expansion
ENTREPRENEURS: From what source do you plan to finance the expansion of your business?
0% 20% 40% 60% 80% 100%
Retained earnings
Funds of relatives
Funds of friends
Bank credit
Government funding
Russia (n=247) China (n=198) Brazil (n=276)
Brazil stands out – much better access to outside finance; more government money
Lack of finance is the main reason
not to start a business in all three countries
RUSSIAN NON-ENTREPRENEURS (n=477): Why did not you become entrepreneur?
Cannot find a project
Do not know how to start
Cannot find moneyDo not want to break law
Too risky
Not capable
Other
CHINESE NON-ENTREPRENEURS, WHO THOUGHT OF BECOMING ENTREPRENEUR (n=84):
Why your thoughts and actions did not realize in actual business?
Did not find a project
Too risky
Other
Did not find money
Better job
Administrative
constraints
BRAZILIAN NON-ENTREPRENEURS, WHO THOUGHT OF BECOMING ENTREPRENEUR (n=123):
Why your thoughts and actions did not realize in actual business?
Not enough skills
Too risky
Did not find a project
Did not find money
Other
Better job
Financial constraints are important reason even not to think about entrepreneurship
Why you do not think about starting business?
(402 obs. of non entrepreneurs)
Too much risk
Satisfied with my job Lack of skills
Lack of money
OtherDo not likeentrep-
reneurship
NE who never thought of own business: why haven't you thought of own business? (n=227)
lack of skills
unfavorable environment
wouldn't find money
satisfied with what you do
too muck risk
dislike entrepreneurs
hip
bureaucratic constraints
other
BRAZIL CHINA
CHINA
0% 20% 40% 60%
small demanddifficult to find money
administrative pressure on larger firmsinsufficient managerial resources
difficult to find employeeshostility from gov't
health problemshigher taxes for larger firms
fear increase in racketshappy with current situation
fear hostility from family and friendsagreement with competitors
In China finance is relatively more important constraint to expand business compared to Brazil
BRAZIL
0% 10% 20% 30% 40% 50% 60% 70% 80%
macroeconomic conditionstaxes
not enough demandsatisfied with current
hard to find moneyhard to find workers
administrative barriersinsufficient managerial
fear of extortion from gov'tpersonal
fear of extortion from criminalsother
agreemant with competitorsfear of envy from people
4. Institutional environment and entrepreneurship
• Methodology: Take city fixed effects after controlling for social and individual characteristics and correlate with average city perceptions of institutions
• Here report correlations for the % of entrepreneurs across cities
• We get the same results with the growth of business
Share of entrepreneurs and petty corruption – significant negative correlation (even
controlling for country differences)
CH: Huangshi
CH: Zhongshan
RU: Taganrog
BR: Curitiba
BR: Brazilia
RU: Perm
BR: Salvador
BR: Feira de Santana
RU: Chaikovsky
RU: Nizhny Novgorod
RU: Dzerzhinsk
CH: Beijing
BR: Londrina
CH: Wuhan
CH: Guangzhou
RU: Moscow
BR: Goiania
RU: Rostov-on-Don
BR: Sao Paulo
CH: Baoji
CH: Xi'An
-.1
-.05
0.0
5S
hare
of e
ntre
pren
eurs
-.4 -.2 0 .2 .4Bribes not to comply with regulations
coef = -.09105739, (robust) se = .04788555, t = -1.9
Controlling for country differences
CH: Huangshi
CH: Zhongshan
BR: Curitiba
BR: Brazilia
BR: Salvador
BR: Feira de Santana
CH: Beijing
RU: Taganrog
CH: Wuhan
BR: Londrina
CH: Guangzhou
RU: Perm
BR: Goiania
CH: Baoji
BR: Sao Paulo
RU: Chaikovsky
RU: Nizhny Novgorod
RU: Dzerzhinsk
CH: Xi'An
RU: Moscow
RU: Rostov-on-Don-.
15-.
1-.
050
.05
.1S
hare
of e
ntre
pren
eurs
-.4 -.2 0 .2 .4Bribes not to comply with regulations
coef = -.20748034, (robust) se = .07016332, t = -2.96
No control for country differences
Share of entrepreneurs and state capture –significant negative correlation (even
controlling for country differences)
CH: Huangshi
CH: Zhongshan
RU: Taganrog
BR: Feira de Santana
RU: Chaikovsky
BR: Brazilia
BR: Curitiba
RU: Perm
BR: Salvador
BR: Londrina
CH: Beijing
CH: Wuhan
RU: Nizhny Novgorod
RU: Dzerzhinsk
BR: Goiania
RU: Moscow
CH: Guangzhou
BR: Sao Paulo
CH: Baoji
RU: Rostov-on-DonCH: Xi'An
-.1
-.05
0.0
5S
hare
of e
ntre
pren
eurs
-.4 -.2 0 .2 .4Bribes to change rules
coef = -.09620558, (robust) se = .04331472, t = -2.22
Controlling for country differences
CH: Huangshi
CH: ZhongshanRU: Taganrog
BR: Feira de Santana
BR: Brazilia
BR: Curitiba
RU: Chaikovsky
CH: BeijingCH: WuhanBR: Salvador
CH: Guangzhou
BR: Londrina
RU: Perm
CH: Baoji
BR: Goiania
BR: Sao Paulo
RU: Nizhny Novgorod
RU: Dzerzhinsk
RU: Moscow
CH: Xi'An
RU: Rostov-on-Don-.
15-.
1-.
050
.05
.1S
hare
of e
ntre
pren
eurs
-.4 -.2 0 .2 .4Bribes to change rules
coef = -.15017679, (robust) se = .06734293, t = -2.23
No control for country differences
Share of entrepreneurs and crime –significant negative correlation (even
controlling for country differences)
RU: Taganrog
BR: Feira de Santana
RU: Dzerzhinsk
CH: Huangshi
BR: Salvador
CH: Beijing
CH: Baoji
CH: Zhongshan
CH: Wuhan
BR: Curitiba
BR: Brazilia
RU: Moscow
BR: Londrina
RU: Nizhny Novgorod
RU: Rostov-on-Don
RU: Perm
RU: Chaikovsky
BR: Sao PauloCH: Xi'An
BR: Goiania
CH: Guangzhou
-.1
-.05
0.0
5S
hare
of e
ntre
pren
eurs
-.2 -.1 0 .1 .2Probability of theft
coef = -.2480609, (robust) se = .07602441, t = -3.26
Controlling for country differences
CH: HuangshiCH: Beijing
CH: Baoji
BR: Feira de Santana
CH: ZhongshanRU: Taganrog
CH: WuhanBR: Salvador
RU: Dzerzhinsk
CH: Xi'An
BR: Curitiba
BR: Brazilia
BR: Londrina
CH: Guangzhou
BR: Sao Paulo
RU: Moscow
BR: Goiania
RU: Nizhny Novgorod
RU: Rostov-on-Don
RU: Perm
RU: Chaikovsky-.
15-.
1-.
050
.05
.1S
hare
of e
ntre
pren
eurs
-.2 -.1 0 .1 .2Probability of theft
coef = -.27976281, (robust) se = .12013597, t = -2.33
No control for country differences
Share of entrepreneurs and quality of courts – positive (insignificant) correlation controlling for country differences
RU: Rostov-on-Don
RU: Moscow
CH: Xi'AnBR: Sao Paulo
BR: Goiania
CH: Wuhan
RU: Chaikovsky
BR: Brazilia
CH: Guangzhou
BR: Curitiba
RU: Taganrog
CH: Baoji
CH: Beijing
BR: Salvador
CH: Zhongshan
RU: DzerzhinskBR: Londrina
BR: Feira de Santana
RU: Nizhny Novgorod
CH: HuangshiRU: Perm
-.1
-.05
0.0
5S
hare
of e
ntre
pren
eurs
-.1 -.05 0 .05 .1Effectiveness of courts
coef = .19405452, (robust) se = .12718354, t = 1.53
Controlling for country differences
RU: Rostov-on-Don
BR: Sao Paulo
RU: Moscow
BR: Goiania
BR: Brazilia
BR: Curitiba
RU: Chaikovsky
RU: Taganrog
BR: Salvador
BR: Londrina
BR: Feira de Santana
CH: Xi'An
RU: Dzerzhinsk
CH: Wuhan
CH: Guangzhou
RU: Nizhny Novgorod
RU: Perm
CH: Baoji
CH: Beijing
CH: Zhongshan
CH: Huangshi
-.15
-.1
-.05
0.0
5.1
Sha
re o
f ent
repr
eneu
rs
-.2 -.1 0 .1 .2Effectiveness of courts
coef = .02618685, (robust) se = .1521357, t = .17
No control for country differences
Share of entrepreneurs and rackets –insignificant correlation
RU: Taganrog
BR: Feira de Santana
CH: Zhongshan
CH: Guangzhou
CH: Huangshi
BR: Londrina
BR: Salvador
RU: Moscow
CH: Wuhan
CH: Beijing
RU: Dzerzhinsk
RU: Chaikovsky
CH: Baoji
BR: Curitiba
RU: Rostov-on-Don
RU: Nizhny Novgorod
BR: Sao Paulo
BR: Brazilia
BR: Goiania
RU: Perm
CH: Xi'An
-.1
-.05
0.0
5S
hare
of e
ntre
pren
eurs
-.2 -.1 0 .1 .2Rackets
coef = -.10339224, (robust) se = .09762329, t = -1.06
Controlling for country differences
CH: Zhongshan
CH: Guangzhou
CH: HuangshiCH: WuhanCH: Beijing
CH: Baoji
BR: Feira de Santana
RU: TaganrogCH: Xi'An
BR: Londrina
BR: Salvador
RU: Moscow
BR: Curitiba
BR: Sao Paulo
RU: Dzerzhinsk
RU: Chaikovsky
BR: Brazilia
RU: Rostov-on-Don
RU: Nizhny Novgorod
BR: Goiania
RU: Perm
-.15
-.1
-.05
0.0
5.1
Sha
re o
f ent
repr
eneu
rs
-.3 -.2 -.1 0 .1 .2Rackets
coef = -.07358125, (robust) se = .08384264, t = -.88
No control for country differences
Share of entrepreneurs and attitude of population towards entrepreneurs – no correlation
BR: Brazilia
CH: Xi'AnBR: Sao Paulo
RU: TaganrogCH: Beijing
BR: Londrina
CH: Wuhan
RU: Nizhny Novgorod
RU: Chaikovsky
RU: Moscow
CH: Baoji
BR: Goiania
BR: Salvador
RU: Rostov-on-Don
RU: PermCH: Huangshi
RU: Dzerzhinsk
CH: Guangzhou
CH: Zhongshan
BR: Feira de Santana
BR: Curitiba
-.1
-.05
0.0
5S
hare
of e
ntre
pren
eurs
-.1 -.05 0 .05 .1 .15Attitude of population towards entrepreneurs
coef = .0227087, (robust) se = .13747114, t = .17
Controlling for country differences
BR: Brazilia
BR: Sao Paulo
CH: Xi'An
BR: Londrina
RU: Taganrog
CH: BeijingCH: Wuhan
RU: Nizhny Novgorod
RU: Chaikovsky
BR: Goiania
BR: Salvador
RU: Moscow
CH: Baoji
RU: Rostov-on-Don
RU: Perm
CH: Huangshi
RU: Dzerzhinsk
BR: Feira de Santana
CH: Guangzhou
CH: Zhongshan
BR: Curitiba
-.15
-.1
-.05
0.0
5.1
Sha
re o
f ent
repr
eneu
rs
-.15 -.1 -.05 0 .05 .1Attitude of population towards entrepreneurs
coef = -.08823711, (robust) se = .17920342, t = -.49
No control for country differences
Paternalistic governments are negatively associated with plans to
expand businessLocal gov’t tries to create a favorable -1.677 business environment, % of city population [0.273]***
Local gov't hampers -0.825 business environment, % of city population [0.293]***
Regional gov’t tries to create a favorable -1.208 business environment, % of city population [0.277]***
Regional gov't hampers -0.761 business environment, % of city population [0.376]**
Central gov’t tries to create a favorable 0.749 business environment, % of city population [0.292]***
Central gov't hampers -0.603 business environment, % of city population [0.316]*
• Probit regressions. Dependent variable: P(plans to expand)• Control for city fixed effects, gender, age, education, and industry. • Report marginal effects.• Robust standard errors in brackets.
0.04
0.06
0.09
0.17
0.08
0.25
0.15
0.12
0.10
0.10
0.10
0.48
0.45
0.26
0.26
0.28
0.42
0.38
0.28
0.36
0.43
0.39
0.00 0.15 0.30 0.45 0.60
High taxes
Complicated tax rules and forms
Competition
Rackets
Inflation and macroeconomic instability
Poor functioning of courts
Diff iculty of raising outside finance
Government administrative regulations
Bureaucratic constraints
Corruption
Crime
Bad public infrastructure
Poor public goods provision
Non-transparent "rules of game"
Entrepreneurs Non-entrepreneurs
CHINA: Perceptions of institutional environmentE perceive business climate as more friendly than non-entrepreneurs
Conclusions: (1) similarities…What is similar in all three countries: • Entrepreneurs is a special group of people with distinct
values and personality traits compared to non-entrepreneurs– particularly, work ethics and value of power common to all three
countries
• Social environment is extremely important for entrepreneurship and robust in all three countries: 1. Presence of entrepreneurs among family and childhood friends
increases the probability of a person to become an entrepreneur (subject to possible endogeneity problem)
2. Social class: boss or director in the family and having richer families
• Effect of institutions (corruption, courts, credit constraints)
Conclusions: (2) differences…What is different:• Effects of some personality traits differ across
countries:– Greed, risk-loving, mobility across jobs and industries
is higher for E than for NE in China and Russia, but the sign is reversed in Brazil
• Attitude towards legal norms (China - Russia vs. Brazil)
• Why?– One possibility is the absence of history of entrepreneurship in China
and Russia (all entrepreneurs are “start-up” entrepreneurs) while in Brazil – long-surviving family firms and established norms and traditions