Academic journal article Academy of Entrepreneurship Journal

Opportunity and Necessity Entrepreneurship: A Comparative Study of India and China

Academic journal article Academy of Entrepreneurship Journal

Opportunity and Necessity Entrepreneurship: A Comparative Study of India and China

Article excerpt


Entrepreneurship has been widely recognized as an engine of economic growth (van Stel, Carree, & Thurik, 2005; Wong, Ho, & Autio, 2005). Widely cited definitions of entrepreneurship include the discovery, evaluation and exploitation of opportunities (Venkataraman, 1997) and as the process by which individuals pursue opportunities without regard to resources currently under control (Stevenson & Jarillo, 1990). It is only more recently that another variation of entrepreneurship has emerged- that of individuals who seek entrepreneurship due to a paucity of other options to earn a living. This facet of entrepreneurial behaviour emerged from the Global Entrepreneurship Monitor (GEM) investigation that revealed high entrepreneurship rates in low-income countries. Since then, multiple studies have explored the characteristics of necessity and opportunity entrepreneurship in both high and low-income countries (Bergmann & Sternberg, 2007; Block, Sandner, & Spiegel, 2015; Block & Wagner, 2010; Brünjes & Diez, 2013; Naudé, Gries, Wood, & Meintjies, 2008). However, the characteristics of these forms of entrepreneurship in middle-income countries, specifically in terms of individual-level antecedents, is noticeably absent in the extant literature.

In an attempt to explore and fill this research gap, we have investigated the individual level antecedents of necessity and opportunity entrepreneurship in India and China. These middle-income nations are two of the most rapidly growing large economies worldwide (World Bank, 2015a, 2015b). Hence the role of entrepreneurship in these contexts needs to be understood across each nation's phase of development. This, in tum, will enable both more nuanced theory development as well as enhanced policy making. A brief overview of the institutional context in these nations, and how entrepreneurship has evolved, is elaborated in the next section.


The post-independence phase (1947-1990) in India has been described as the 'license-raj' (Majumdar, 2004). It was marked by strict government controls on all aspects of manufacturing. During this period the industrial development paradigm envisaged the government as the prime force behind setting up and running core capital-intensive infrastructure industries while encouraging the private sector into relatively smaller scale labor intensive manufacturing (Majumdar, 2004). In the 1980's the government, in a significant departure from the earlier socialistic orientation, began introducing key economic reforms. For the first time the need for competition was realized, there was acceptance of the key role that market forces could play accompanied by an underlying emphasis on entrepreneurship both at the corporate and individual level. This was an era of the 'hidden hand', wherein profit generation, using firm capabilities, was the dominant paradigm (Marathe, 1989). In 1991 an acute foreign exchange crisis led to the opening of markets and the growth of the private sector, which in turn contributed to the national economy. Over the past two and a half decades this liberalized policy direction has continued with some modifications and course corrections. This has in part been a result of the country's decentralized system of governance where in states and the center are often ruled by parties with vastly differing political orientation.

During this period small scale industry (SSI) has continued to play a vital role in the Indian economy. By 2004, SSI's accounted for 40% of gross value (as measured by manufacturing sector output) and 34% of total exports while continuing to provide the highest employment after agriculture (De & Nagaraj, 2014). The post-1991 phase also witnessed the emergence of a new class of information technology (IT) entrepreneurs. This included firms like Infosys, Tata Consultancy Services (TCS), Wipro and Cognizant Technology Solutions (CTS). Over the past decade, observing the success of the IT sector, progressive policies have been implemented with government confining itself to a facilitating role. …

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