The Growth Paths and Mechanisms of Chinese Private Enterprise

Abstract

During the past forty years of reform and opening up, China’s private economy has made remarkable strides. This paper introduces start-up organizational processes into the study of elite mobility in emerging markets, exploring the relationship between the social origins of entrepreneurs and their entrepreneurial outcomes. Our research finds that the initial scale, growth rate and current size of enterprises established by elite entrepreneurs are larger than those of grassroots entrepreneurs. With the deepening of economic reform and the growth of the private economy, the social origins of large business owners generally tend to be elitist and the scale advantage of the enterprises set up by elite entrepreneurs, especially endogenous or inside-track entrepreneurs, is ever more striking. The expansion of such enterprises’ superior position is mainly due to their initial advantages of scale; after the start-up period, the advantage conferred by their pace of growth does not increase synchronously. In order to promote the further development of the private economy and release its innovative potential, it is necessary to give full play to the government’s function of regulating market operations and correcting market failure, and thus actively creating a good business environment.