Guanxi and risk-taking propensity in Chinese immigrants’ businesses

Abstract

This paper studies the determinants of the risk-taking propensity in immigrant-owned businesses. The paper has a particular focus on first-generation Chinese immigrants and the effect of the so-called “guanxi”, a specific form of social capital for Chinese communities. The empirical research is based on a survey conducted in 2012 on Chinese immigrant entrepreneurs in Andalusia (Spain). An ordinal logistic regression specification was employed to test the hypotheses. The results show that the Chinese immigrant entrepreneurs with better “guanxi” run businesses with a higher risk-taking propensity. Furthermore, those Chinese immigrant entrepreneurs who have other business owners in their families and undertake business planning and control activities are more prompted to take risks in the management of their companies. The risk-taking propensity of immigrant-owned businesses increases over time starting from the immigrant entrepreneurs’ arrival to Spain. In contrast, the education levels of Chinese entrepreneurs’ bear no significant effect on the risk-taking propensity of their businesses.