Returnee Entrepreneurs, Science Park Location Choice and Performance: An Analysis of High-Technology SMEs in China

By Wright, Mike; Liu, Xiaohui et al. | Entrepreneurship: Theory and Practice, January 2008 | Go to article overview

Returnee Entrepreneurs, Science Park Location Choice and Performance: An Analysis of High-Technology SMEs in China


Wright, Mike, Liu, Xiaohui, Buck, Trevor, Filatotchev, Igor, Entrepreneurship: Theory and Practice


Building on an asset complementarity perspective, human capital and social capital measures are used to examine the science park location decisions of returnee entrepreneurs and the performance of their ventures. The study uses a unique, hand-collected data set of 349 SMEs from Zhongguancun Science Park in China, including 53 SMEs from locations administered by universities. The article considers the antecedents of university and nonuniversity science park location and firm growth with a view to drawing conclusions that go beyond the specific context of Beijing and China. Its findings include the tendency for returning entrepreneurs with academic knowledge in the form of patents transferred from abroad to locate in nonuniversity science parks, and for those with previous firm ownership abroad to choose university science parks. The firms of returnees with patents from abroad enjoyed stronger employment growth in nonuniversity science parks and those with commercial experience abroad with MNCs performed better in university science parks. This evidence is consistent with the view that returning entrepreneurs seek complementary (academic and commercial) assets in their location decisions, although some inconsistencies with this view are also discussed.

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Technology-based firms are important drivers of innovation and growth (Acs & Audretsch, 1990; Utterbach, Meyer, Roberts, & Reitberger, 1988). Yet, emerging economies often lack the entrepreneurial expertise to develop such ventures. China has become known as the manufacturing workshop of the world but is yet to establish itself as a center of technology-based companies. In part, this may be due to the lack of entrepreneurial expertise which returnee entrepreneurs have the potential to provide (Saxenian, 2006; Financial Times, 2007). Returnee entrepreneurs are the scientists and engineers trained in the United States or in other OECD countries, which return to their home countries to start up a new venture.

Science parks have been at the forefront of Chinese government's attempts to exploit returnee entrepreneurs, as part of its policy of stimulating a market economy. Returning entrepreneurs locating in these science parks, with their human and social capital accumulated in a market economy, are hoped will help stimulate the development of technology-based firms in China. The returnee entrepreneurs in China can choose to locate either in science parks linked to universities or those administered by municipalities, ministries, etc. (Westhead & Storey, 1995). From a resource-based perspective, different types of science parks may be associated with different resource configurations and externalities that, in turn, interact with the characteristics of entrepreneurs looking for a location for their ventures.

In particular, entrepreneurs locating in a science park may seek access to assets that are complementary to their human and social capital (Gans & Stern, 2003; Teece, 1987), which may thus be influential in determining the success of new ventures (Davidsson & Honig, 2003) in these locations. Therefore, using an asset complementarity perspective (Teece, 1987), this article examines the association between the human and social capital of returning entrepreneurs and science park location choice and the performance of their firms.

This article makes several contributions to understanding the development of entrepreneurship in emerging economies. A large literature has focused on entrepreneurs' attributes and behavior as key drivers of venture success. However, another stream of entrepreneurship research emphasizes the importance of the location-specific networks in creating agglomeration economies and providing external resources to new ventures. There is very little research that looks at the interaction of these internal and external factors and their effects on venture success. We provide an integrated framework that links entrepreneurial attributes and behavior with location decisions, and thus, the performance of a venture.

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