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JCE
3,2
Chinese entrepreneurs
Motivations, success factors, problems,
and business-related stress
84
Received 9 September 2010
Reviewed 10 October 2010
Accepted 1 April 2011
Hung M. Chu
Department of Management, West Chester University, West Chester,
Pennsylvania, USA
Orhan Kara
Economics and Finance Department, West Chester University, West Chester,
Pennsylvania, USA
Xiaowei Zhu
Department of Management, West Chester University, West Chester,
Pennsylvania, USA, and
Kubilay Gok
Faculty of Management, University of Lethbridge, Lethbridge, Canada
Abstract
Journal of Chinese Entrepreneurship
Vol. 3 No. 2, 2011
pp. 84-111
q Emerald Group Publishing Limited
1756-1396
DOI 10.1108/17561391111144546
Purpose – This article aims to investigate motivations, success factors, problems, and
business-related stress of entrepreneurs in small- and medium-sized enterprises and relates them to
the success of the Chinese entrepreneurs.
Design/methodology/approach – A total of 196 entrepreneurs in Beijing, Shanghai, and
Guangzhou were randomly selected for a survey, which was analyzed to determine motivations,
success factors, problems, and business-related stress by gender. Ordered logit models were applied to
motivation and success factors.
Findings – Results showed that 68 percent were male and 32 percent female. The average age of the
entrepreneurs was about 32 years old and time devoted to their business was almost 45 hours per
week. Of the total respondents, 56 percent were married and 44 percent single. When asked to indicate
their motives for business ownership, these entrepreneurs suggested that increasing income, becoming
their own boss, and to prove that they can succeed were the most important reasons. Reputation
for honesty, providing good customer services, and having good management skills were reported
to be necessary conditions for business success. Friendliness to customers and hard work were also
critical for high-performance enterprises. Among the problems encountered by entrepreneurs,
unreliable/undependable employees were the most critical. Intense competition and lack of
management training also proved to be great challenges for Chinese entrepreneurs.
Practical implications – Policy makers can strengthen its small business entrepreneurs by
promoting the factors that lead to entrepreneurs’ success, such as the ability to manage personnel and
management skills through business outreach services provided by universities, government agencies,
and nonprofit organizations. In addition, the government has the ability to simplify the tax system,
and reduce payroll taxes. Technical assistance in areas such as market research, human resources
management, and technological support should be provided to small business owners.
Originality/value – This study applied to Chinese entrepreneurs in addition to an extensive
analysis of the factors that affect motivations, success, problems, and business stress.
Keywords Entrepreneurs, Small enterprises, Motivation (psychology), Business development, Stress,
China
Paper type Research paper

2. 1. Introduction
Entrepreneurship has long been regarded as the source of job creation and an engine of
economic growth. For example, Japan’s six million small- and medium-sized enterprises
(SMEs) employed 75 percent of the Japanese working population (Dana, 1998). Of the
total 935,000 business establishments in Taiwan, 96 percent of SMEs provided jobs to
78 percent of the island’s labor force (Lin, 1998). Lee (1998) pointed out that more than
70 percent of all South Koreans work in firms that have less than 100 people. Micro and
small enterprises (MSEs) are also the leading force transforming the economic landscape
of Africa. Ghanaian micro-enterprises which employed less than five people, accounted
for 70 percent of that country’s total workforce (Government of Ghana, 2003; The World
Bank, 2006). In 2003, Kenya’s private sector employed 3.2 million people and contributed
18 percent to the country’s gross domestic product (GDP) (OECD, 2005). Findings from
Ariyo (2005) showed that the Nigerian private sector provided employment to 50 percent
of the Nigerian labor force and 50 percent of the country’s industrial output.
Recognizing the importance of entrepreneurial-led SMEs in providing social
stability and economic prosperity, China in 1978 adopted a policy of economic reforms
that turned a centrally planned economy into a market-oriented economy. This change
of direction allowed the rebirth of the private sector, which was banned when the
Communists took control of the country in 1949. Results of the economic reform have
been startling (Anderson et al., 2003). For the last three decades, China enjoyed an
un-precedent economic growth of 9 percent annually (Fung et al., 2006a, b; Gordon and
Li, 1991). This astounding achievement is attributed to the re-emergence of the private
sector. In 1978, only 150,000 individual business households existed throughout China
(Liu, 2003), but at the end of the 1990s, it was estimated that more than 12 million
private enterprises were in operation (Quanyu et al., 1997). In 2006, this number
exploded into 31,518,000 units. It is predicted that the rate of SMEs’ market entry will
continue to be between 7 and 8 percent for the next five years, reaching a total of
50 million by 2012 (iResearch Consulting Group, 2007). Chinese non-state enterprises
provide 70 percent of tax revenue, and 90 percent of total employment for those who
enter the labor market for the first time and those who were laid off by state-owned
enterprises (Fung et al., 2006a, b). The China Daily (2008) reported that Chinese private
enterprises contribute 60 percent to the country’s GDP, and Garnaut et al. (2001)
indicated that private enterprises account for 50 percent of all economic activities in
China.
In order to meet an increasing job demand for 50 million people entering the
workforce annually and an estimated three million workers laid off by the state run
sector (Liao and Sohmen, 2001), China not only has to sustain the current level of
economic growth but also needs to find creative ways to further the development of its
private enterprises. Since entrepreneurs and small businesses are significant
contributors to economic growth and employment creation for nations, establishment
of small businesses and success of entrepreneurs are important. This study aims
at discovering the factors that motivate the Chinese to become small business
owners, the problems that they face, and the factors contributing to their success.
The fact that small business establishments and job creation are important factors for
the economic development in all countries, several researchers investigated factors such
as motivation, success factors, and problems small business entrepreneurs face in many
countries (Kara et al., 2010). However, the evidence is mixed and non-conclusive with
Chinese
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respect to the level of importance of those factors on the success of entrepreneurs
(Kara et al., 2010). This study aims at contributing further evidence on this discussion.
Therefore, this study tries to determine the level of importance of motivation and success
factors on entrepreneurs’ success by employing ordered logit model. In addition, this
study tests the significance of the motivation, success factors, and problems with respect
to gender. More specifically, this study addresses the following research questions in the
context of Chinese entrepreneurs:
RQ1. What are the motivation and success factors for Chinese entrepreneurs?
How do they differ by gender?
RQ2. What is the impact of motivation and success factors on Chinese
entrepreneurs’ perceived success?
RQ3. What are the problems faced by Chinese entrepreneurs? How do they differ by
gender?
RQ4. How does business-related stress affect Chinese entrepreneurs?
RQ5. What is the level of support Chinese entrepreneurs receive from family
and friends? Is there a significant difference among male and female
entrepreneurs?
The next section gives literature review, followed by research methodology section
which discusses model, survey questionnaire, and sample and data analysis method.
The section after that analyzes the data and provides results. The final section
concludes the study and offers recommendations.
2. The conceptual framework of the study
The conceptual framework of this study claims that motivation that entrepreneurs
exhibit during startup is correlated to sustaining behaviors they exhibit later
(Naffziger et al., 1994; Buttner and Moore, 1997). This implies that the stronger the level
of importance attributed to factors to start a business, the greater the determination to
attain the mastery of knowledge, skills and abilities and other attributes needed to
succeed. We argue that perceived importance attributed to motivational factors will
later determine the direction, intensity, and perseverance of the success-related
behaviors of Chinese entrepreneurs to sustain their business. Kuratko et al. (1997)
claimed that motivation leads to goal-directed behaviors and that existence of a set of
goals motivate entrepreneurs to sustain their business development efforts. They
identified extrinsic rewards, independence and autonomy, intrinsic rewards, and
family security as the important motivational factors for sustained ownership among
234 entrepreneurs. The conceptual framework of this study also claims that the
importance attributed to the motivational goals influences Chinese entrepreneurs’
resilience to overcome the problems they face while developing their business. We also
argue that attainment of motivational goals influences a Chinese entrepreneur’s
satisfaction with their success and small business ownership and hence leads to more
sustained entrepreneurial behaviors to develop and grow the business. The conceptual
framework of this study also claims that the more Chinese entrepreneurs perceive that
their effort lead to performance outcome they desire to achieve, the greater the level of
their effort and resilience to overcome the difficulties they face. The greater amount

4. of the rating they assign whether their business success meet their expectations,
the greater the level of propensity to continue the entrepreneurial behaviors. The
following sections present a review of the literature about variables in this study.
Chinese
entrepreneurs
2.1 Literature review
In order to understand small business creation and factors contributing to the success
and problems that hinder the success of entrepreneurs, several studies attempted to
identify motivation, success factors, and problems faced by the entrepreneurs.
An analysis of literature in those areas is given in the following sections.
87
2.2 Motivation for business ownership
Reasons for becoming a business owner differ from person to person, from one country
to another depending on economic, political, social, and cultural environment in which
entrepreneurs operate. Since understanding of entrepreneurial motives is crucial for
developing the measures helping them to grow, the following review of reasons
for business ownership is necessary.
In a study of new business startups in 11 countries, Scheinberg and Macmillan
(1988) revealed six motives leading people to become entrepreneurs. They include the
need for approval, the perceived wealth, the degree for communitarianism, the need for
personnel development, and the need for independence. The findings also revealed
motivations for business ownership differ from one part of the world to another.
American entrepreneurs rated the need for independence as the most important reason
for starting a business. Italian business owners ranked communitarinaism high on the
list of motivators. Entrepreneurs in Australia and Great Britain, however, cited money
as the reason for becoming business owners. The Scandinavians rated this same factor
the least significant. Findings from a study of Vietnamese entrepreneurs, Swierczek
and Ha (2003) indicated that challenge and achievement are more significant and more
important motivators than necessity and job security. Results from a study by Benzing
et al. (2005b) showed that the economic conditions and entrepreneurial orientation
existing in two parts of Vietnam affect entrepreneurs’ motivation for business
ownership. Entrepreneurs in Ho Chi Minh City were motivated by personal satisfaction
and growth, while business owners in Ha Noi indicated that creating job for themselves
and family were their prime motive. Compared with Ha Noi, Ho Chi Minh City not only
has a brighter economic landscape but its entrepreneurial tradition has also existed
longer, dating back before 1975. Mann and Thorpe (1988), however, suggested that
Asian entrepreneurs tend to think making more money is the most important force
leading to business ownership. On the other hand, White entrepreneurs are motivated
by a desire for independence associated with business ownership. In a study of
entrepreneurs in Kenya and Ghana, Chu et al. (2007a) found the two most important
motivators were to increase income and to provide themselves with jobs. Results from
a survey of Nigerian women entrepreneurs show that their main reason for engaging
in business is to reduce poverty and to reverse their deteriorating economic condition
(Woldie and Adersua, 2004). In congruence with the results of this study, Pingle (2005)
indicated that in countries with entrenched poverty, people have few choices other than
self-employment.
Regarding the motive for business ownership among the Chinese, it has been said
that every Chinese is a born businessman who desires to be his/her own boss.

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This consensus is reflected in a Chinese proverb supporting the entrepreneurial nature
of the Chinese people: “It is better to be chicken’s head than a phoenix’s tail” (Liao and
Sohmen, 2001). Results from a study of Chinese entrepreneurs by Pistrui et al. (2001)
revealed that the need for personal achievement, the desire to make a direct contribution
to the success of an enterprise, and the desire for higher earnings are the primary motives
for business ownership. Family security was also ranked high among motivating
factors. Yueh (2007) suggested that Chinese entrepreneurs are motivated to work and
driven to look for better economic opportunity. In other words, the desire to earn money
is a significant determinant found among Chinese entrepreneurs. Herberer (2003)
concluded that the prospect of attaining high income and the improvement of living
standards are the main reason for Chinese to become entrepreneurs. The 1949
revolution, led by Mao Zedong, was thought to turn upside down the foundation of
Chinese traditional society and elevated the role of women in the new society by making
them equal to men in every aspect of life, including business ownership. Supporting this
stream of thought, findings from Kitching and Woldies (2004) indicated that economic
freedom and role models encourage women to start their own business, especially with
enterprises that required little capital such as street vendors, tailoring or bicycle
mending.
Learning more about entrepreneurs’ motives could help policy makers develop
appropriate programs fostering the creation of new business and helping the existing
SMEs flourish.
2.3 Success factors
There is no consensus among researchers on the factors contributing to business
success, but a few variables are discussed more often in previous studies. They may be
grouped into the following categories: the first category deals with the psychological
and behavioral traits of entrepreneurs, the second concerns managerial skills and
training of entrepreneurs, and the third focuses on external environment in which
entrepreneurs operate. Since managerial skills, training, and external conditions are
the factors that can be affected by policy makers, this study focuses on these variables.
Relevant studies by other researchers also will be reviewed.
Studies conducted among entrepreneurs in developing countries (Benzing et al.,
2005a, b; Chu et al., 2007a, b; Yusuf, 1995; Gosh et al., 1993) indicated a strong
relationship between managerial skills and environmental conditions. According to
Huck and McEwen (1991), the three most critical success elements found among
Jamaican entrepreneurs consist of understanding customers’ needs, access to capital,
support of family, and networking with friends from former schools and colleges.
Hard work as evidenced by long working hours is also regarded as a success factor.
In another study of Kenyan small business owners, Pratt (2001) found that the
availability of capital, possession of business skills, previous experience, and family
support are essential for business success. Since family members serve as reliable
source of employment and provide capital to new, private Vietnamese SMEs, they are
contributing factors to business success (Masurel and Smit, 2000). In their study of
family support to entrepreneur success, Pisturi et al. (1997) pointed out that family
played an important role in business success by direct support of business and through
the development of social community, and economic networks. Kozan et al. (2006)
suggested that business management training and financing were positively related to

6. entrepreneurs’ ability to expand their business. Results from a study of Pakistani small
business owners pointed out hard work, good customer services, and product quality,
the three most important success ingredients (Coy et al., 2007).
It is widely believed that luck and fate are considered “keys” to success in China.
According to Liao and Sohmen (2001), many people believe in fate but Chinese
entrepreneurs give luck a greater role in their business success. Yueh (2007), on the
other hand, suggested that social networking is a leading factor to business success.
Although “guanxi” (relationship in English) or connections are normal in the Western
business world, to some Chinese entrepreneurs, it implies corruption, bribery, and
other “under the table” activities which ensure government help in achieving their goal.
Regardless of the exact meaning of “guanxi”, it is a well-accepted fact that knowing the
right people can bring success to Chinese entrepreneurs (Liao and Sohmen, 2001).
Regarding the role of the family, one cannot emphasize enough its importance to a
growing business in an extremely low availability of funds at the initial phases of
SMEs in China. Family members are not only the source of startup funds, but also the
employees of the company where entrepreneurs’ wife and siblings are often asked to
work when no reliable employees can be found. These kin are willing to accept minimal
compensation in exchange for future gain (Liao and Sohmen, 2001). Finally, the
business acumen which is considered to be a characteristic of successful entrepreneurs
seems to be more commonly observed among Chinese people. Given the low level of
business training found among Chinese entrepreneurs, their success has been
intriguing and might be credited to the Chinese business acumen (Liao and Sohmen,
2001). Whether or not Chinese entrepreneurs really have the business acumen or
natural “business instinct” is debatable but the results of an assessment of people in
31 countries suggested that China appeared to be more entrepreneurial than the
average (GEM, 2000).
2.4 Problems facing entrepreneurs
Compared to entrepreneurs in other developed countries, those in emerging nations
face more monumental challenges. First, they must deal with unstable and highly
bureaucratic business environments. Second, the laws governing private enterprise,
especially business registration and the taxation system are complicated and very
difficult to understand. Third, contract and property laws are often poorly designed
and/or enforced. Other problems facing entrepreneurs in transition economies include
inadequate infrastructure, poor macroeconomic policies, limited access to financial
capital, corruption, and a lack of managerial experiences.
In addition to the added expenses of corruption and bribery, Kiggundu (2002),
Pope (2001) and Stevenson (1998) found that unfavorable institutional and regulatory
environments are critical problems encountered by entrepreneurs. Findings from a
study of more than 360 small business owners in 69 countries (Kisunko et al., 1999)
indicated that the problems encountered by entrepreneurs were quite similar. High taxes
and tax regulations are the most critical problems in South and Southeast Asia.
Inadequate infrastructure, inflation, labor regulation, and laws governing the starting
and operating a business were also considered as obstacles preventing entrepreneurs in
the region from achieving their goals. Lack of infrastructure, corruption, high tax, tax
regulations, and financing were believed to be critical for MSEs in Middle East and
North Africa. Central and Eastern European entrepreneurs cited high taxes and tax
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laws, financing, corruption, and inflation, the most important obstacles inhibiting their
businesses. Small business owners in Latin America suggested corruption and
inadequate infrastructure, crime and theft, financing and tax regulations, the worst
problems encountered. The most critical challenges for SMEs in Sub-Saharan Africa
were corruption, complicated tax laws, inadequate infrastructure, inflation, theft, and
unavailable capital. Nigerian entrepreneurs reported that government officials often
harassed them and extorted money from their businesses. Bad roads, water shortages,
erratic electric supply, poor telecommunication systems were additional challenges that
entrepreneurs in Nigeria had to endure (Mambula, 2002). Difficulty in gaining access to
bank credits and other financial institutions seemed to be the major obstacles hindering
the process of Nigerian small business development. However, the most damaging
problem facing the state of Nigerian entrepreneurship may be the lack of government
interest in and support for MSEs (Ariyo, 2005). Results from a survey conducted in
Russia revealed that more than 90 percent of managers paid “extralegal” for government
service or business license (Simon et al., 2002). It takes over two months to obtain a
business license and paid up to 38 percent of per capita GDP in fees to set up a new
business in transition economies (Djankov and Murrell, 2002). In Vietnam, it requires
almost six months and cost an amount of 150 percent of per capita GDP for a license for a
new business (Djankov and Murrell, 2002). The absence of bank credits, courts, and
other market institutions created great impediments for entry of new firms in
transitional economies.
Despite efforts by the Chinese Government in fostering an environment conducive
to the development of the private sector, Chinese entrepreneurs still face considerable
barriers to opening and running their successful business (Liao and Sohmen, 2001).
The first among them is the volatility of property rights in the country. Not only are
Chinese businesses subject to unpublished regulations and the caprices of courts, they
also have to deal with different levels of bureaucracy from local, provincial to national
government with conflicting agendas. Access to resources such as funding, labor,
and technology is the second important obstacle faced by entrepreneurs. Funding for
businesses mostly comes from personal savings, family, and friends. Loans from banks
and other financial institutions rarely exist. Attracting skilled and reliable employees
remains to be an obstacle faced by business owners. Although China is known as home
of a great labor pool, many of the workers are less educated peasants from the
countryside. Those who are university graduates may have some expertise but they
lack experience. A few qualified individuals seem to be less loyal because the high
bidders can easily lure them to a greener pasture. Finally, the low social status
associated with merchants who are ranked at the bottom rung of society in the Chinese
traditional cultures, may still pose a challenge for entrepreneurship. Although peoples’
attitudes are changing, until recently, business ownership still carried unfavorable
social connotations. Given the multitude of problems faced, Chinese private
entrepreneurs still worry about their future survival and growth (Liu, 2003).
2.5 Business stress
Stress is perceived as part of business ownership, which is due to heavy workloads,
excessive risks involved (Palmer, 1971), and a higher need for achievement by
entrepreneurs (Brockhaus, 1982). A high level of stress may lead to absenteeism,
accidents, increase in health care cost or decreasing productivity (Roberts et al., 1997;

8. Crampton et al., 1995). Ivancevich and Matteson (1980) estimated the cost of stress-related
issues to business in the USA more than 10 percent of gross national product.
As stress may result in adverse consequences for entrepreneurs, stress management
and control may be needed. Some studies on stress reduction found social support as a
good medicine for alleviating stress (Rahim, 1996; Chay, 1993). However, Mack and
McGee (2001) concluded that social support mitigates work and non-work stress. Other
studies asserted that individuals with high internal locus of control is likely to use
support resources more effectively and therefore can reduce the level of anxiety coming
from stress (Sandler and Lakey, 1982). Latack et al. (1995) found that an ability to
control the situation may help a person better deal with stress. In addition, if tasks
performed are more complex and interesting, workers seem to have less stress
(Mack and McGee, 2001). Flexible rules and less rigid procedures reduce stress level
(Nasurdin et al., 2006), but an organizational climate filled with extreme competition
and lack of interaction tends to be more stressful (Wong and Wong, 2002).
3. Research methodology
In this study, we employed a cross-sectional research design to explore the relationships
between the motivations, success factors, problems, and business-related stress of SME
owners in China. Cross-sectional research design is used widely by international
entrepreneurship researchers all over the world (Coviello and Jones, 2004). Despite its
static nature to capture the underlying relationships between certain variables in a given
study (Coviello and Jones, 2004), nevertheless, this method allows researchers to measure
and collect data on certain observations as quickly as possible. Since our study
investigates the perceptions about the motivations, success factors, problems, and
business-related stress among segments of the population of Chinese entrepreneurs, we
deemed the cross-sectional design is the most suitable approach to present such
perceptions among the segments of the population of interest. Owing to these
abovementioned feasibilities of the cross-sectional design, our study reports the
measurement of observations on study variables at a single moment in time. Coviello and
Jones (2004) postulated that this method can provide credible findings if researchers take
the necessary precautions to ensure the reliability and validity of data collection
instruments by means of language adaptation and assurance of equivalence of meaning.
The following section of this paper addresses the procedures we used to ensure the
reliability and validity of our findings.
3.1 Instrumentation and data collection
The survey instrument used in this study was originally developed by Chu (Chu and
Katsioloudes, 2001) and has been used for small business surveys in a number of
countries since 2001. The questionnaire was originally designed and written in English.
It was translated into Chinese and checked for inter-translator consistency. The
motivation variables are similar to those suggested in the work of Robichaud et al. (2001)
and Kuratko et al. (1997). Many problems in the survey are common to entrepreneurs in
both transition and developing countries. The reliability of the survey instrument was
deemed satisfactory since the Cronbach’s a scores were found to range from 0.818 to
0.853. Moreover, Guttman split-half coefficients were relatively high for the motivation
items, perceived success variables, and the problem items. The alpha and the split-half
coefficient for the motivation items were 0.758 and 0.754, respectively. For the perceived
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success variables, the a was 0.850, and the split-half coefficient was 0.745. For the
problem items, the a was 0.837, and the split-half coefficient was 0.795. Hence, we
conclude that instrument is highly reliable. The Cronbach’s alpha referred to as “the
reliability coefficient”, is the most common estimate for the internal consistency of items
in a scale. As a result, the instrument is well suited for Likert scales such as those used in
this study (Gleim and Gleim, 2003). Although a popular accepted view is that Cronbach’s
a scores should be above 0.70 (Nunnally, 1978), some researchers indicate acceptable
scores between 0.60 and 0.80 (Simon, 2008). Some other researchers, however, believe
that an ideal score should attain a minimum of 0.70 and a maximum of 0.90 to ensure
against a high level of item redundancy (Streiner and Norman, 1989). The following
section presents a discussion of how we measured the variables in this study.
3.2 Measures
All of the study participants responded to a five page, self-report questionnaire,
including a cover page explaining the purpose of the study. We measured the variables
on different measurement scales. We measured the motivation variables, perceived
success variables, and problems on ordinal scale. For instance, motivations and
perceived success variables were measured on an ordinal scale ranging from 5 was
“extremely important”, 4 was “very important”, 3 was “mildly important”, 2 was “not
very important”, and 1 was “unimportant”. We also measured the perceived problems on
an ordinal scale using a Likert scale that ranges from 5 was a “very serious problem”, 4
was a “serious problem”, 3 was a “problem”, 2 was a “minor problem”, and 1 was “not a
problem”. Gender and education were measured on nominal scale. We measured the
number of hours worked, age, and the number of employees employed using interval
scale. A higher mean score on a variable would indicate greater importance. Next, we
present a description of all of the variables used in this study.
3.2.1 Demographics. Respondents were asked for their age, gender (coded 0 for
female, and 1 for male), education level (1 for no formal education, 2 for some grade
school, 3 for completed grade school, 4 for some high school, 5 for completed high
school, 6 for some college, 7 for completed college, 8 for some graduate work, and
9 for completed graduate degree) and the numbers of full time and part time employees
were employed, the number of hours worked per week, and marital status, and if
married, the number of hours spouse work per week, and type of business (1 for
retailing, 2 for wholesaling, 3 for service, 4 for manufacturing, 5 for agriculture, and
6 for others), and the number of years spent in the particular business entity, and the
number of years since as an independent businessperson.
3.2.2 Motivation to start a business. The motivation to start a business variable was
measured using a 12-item scale. The question asked the respondents to assess the
importance of the reasons for starting a business. Respondent rated the reasons for
starting a business on a five-point Likert scale as follows: 5 was “extremely important”,
4 was “very important”, 3 was “mildly important”, 2 was “not very important”,
and 1 was “unimportant”.
3.2.3 Perceived factors contributing to business success. Perceived factors
contributing to business success variable was measured using a 17-item Likert
scale. Similarly, respondents were asked to rate each factor in terms of the importance
in business success. This variable also was measured using a five-point Likert scale

10. ranging from 5 was “extremely important”, 4 was “very important”, 3 was “mildly
important”, 2 was “not very important”, and 1 was “unimportant”.
3.2.4 Perceived problem factors. We measured the perceived problem factors using
17 items measured on a five-point Likert scale ranging from 5 was a “very serious
problem”, 4 was a “serious problem”, 3 was a “problem”, 2 was a “minor problem”, and
1 was “not a problem”.
3.2.5 Perceived business-related success. We measured the perceived business-related
success variable using one item measured on a scale of 1-4 as follows: 4 was “very
successful”, 3 was “successful”, 2 was “average”, and 1 was “below average”.
3.2.6 Perceived business-related stress. We measured the perceived business-related
stress variable using one item measured on a scale of 1-5 as follows: 5 was “very high”,
4 was “high”, 3 was “low”, 2 was “very low”, and 1 was “nonexistent”.
3.2.7 Perceived business-related satisfaction. We measured the perceived
business-related satisfaction variable using one item measured on a scale of 1-5 as
follows: 5 was “very satisfied”, 4 was “satisfied”, 3 was “somewhat satisfied”, 2 was
“dissatisfied”, and 1 was “very dissatisfied”.
3.2.8 Perceived family support. This variable was measured using one Likert scale
item ranging from 1 to 5 as: 5 was “very substantial”, 4 was “substantial”, 3 was
“medium”, 2 was “low”, and 1 was “very low”.
3.2.9 Success met expectations. Finally, Chinese entrepreneurs rated extent to which
their business success met their expectations according to the one item which was
measured on a scale of: (4 – more than I expected; 3 – met my expectations; 2 –
somewhat met my expectations; 1 – did not meet my expectations). We used this
instrument to collect the data from a random sample of respondents after verification
of reliability estimates. Next, we present a description of the procedures we used to
select the businesses for our study.
3.3 Sample and subjects
Data were collected with the assistance of two Chinese educational specialists from
September 2007 to May 2008. The educational specialists were instructed to familiarize
themselves with different interview techniques and random sampling procedures. About
90 percent of the data were obtained by face-to-face meeting with entrepreneurs,
10 percent of the data were obtained by using an online survey system, QuestionPro
Online Survey Software, with the assistance of a telemarketing expert. The potential
subjects of the study were identified and randomly selected through the use of commerce
telephone directories in the cities of Beijing, Shanghai, and Guangzhou. Nonprofit
organizations, government-owned enterprises, and any business that had its transactions
done on the street were disregarded. Beijing is the capital of China, which is the centre of
national politics, culture, transport, tourism, and international exchanges. Shanghai is
going into the fast developing period with solid financial base and human resources,
science and technology advantage. Guangzhou is the economic centre in Southern China.
Regionally, Guangzhou is close to the metropolitan links composed of Hong Kong,
Shenzhen, and Macau. Beijing, Shanghai, and Guangzhou geographically cover a big of
China, from north to south. Because of the better economic infrastructure environment of
Beijing, Shanghai, and Guangzhou, many people moved from their hometown to these
cities to establish their business. So the survey conducted in Beijing, Shanghai, and
Guangzhou would provide a better picture of SMEs situation in China today.
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3.4 Data analysis
We analyzed the data collected on the study variables using a variety of statistical
methods. The results section presents descriptive, as well as the inferential statistics.
We used SPSS and Limdep softwares for data analysis. We mainly used SPSS for
descriptive statistics and hypothesis testing involving gender differences about certain
variables, and significance of the correlations between study variables. We used
Limdep software mainly to estimate ordered logit models to investigate the impact and
importance of motivation variables and factors contributing to the success of
entrepreneurs. A means score for each item was calculated. A higher mean score on a
variable indicates greater importance.
4. Results
4.1 Sample characteristics
Table I shows that male entrepreneurs are approximately four years older than female,
and two years older than the average age of the sample at 32.50. Chinese entrepreneurs,
however, seem to be younger than those in Nigeria at 36.7 (Chu et al., 2008), Turkey at
41.2 (Chu et al., 2007a, b), and Romania at 41.5 (Benzing et al., 2005a). Results from
the survey also indicated that 7 percent of entrepreneurs obtained graduate degree,
3.95 percent had some graduate work, while 47 percent of respondents completed
college, 16 percent had some college level courses, and 21 percent finished high school.
In general, the level of education attained by Chinese entrepreneurs is higher than
those found in developing countries and comparable to small business owners in
Romania (Benzing et al., 2005a).
Frequency
Table I.
Sample characteristics
of SME entrepreneurs
in China
Entrepreneurial characteristics
Gender
Male
Female
Average age of entrepreneurs
Level of education
No formal education
Some grade school
Completed grade school
Some high school
Completed high school
Some college
Completed college
Some graduate work
A graduate degree
Enterprise characteristics
Average age of business
Type of business
Retailing
Wholesaling
Service
Manufacturing
Agriculture
%
130
62
32.49 year
67.7
32.3
2
1
3
1
38
28
84
7
13
1.13
0.56
1.69
0.56
21.47
15.82
47.46
3.95
7.34
5.61
36
35
119
14
4
17.31
16.83
57.21
6.73
1.92

12. Regarding the gender of the sample, 67.7 percent was male and 32.3, female. This is
two to one in favor of male entrepreneurs. Since the early days of the Communist
revolution, the role of women was elevated to be equal to men, and they were
encouraged to fully participate in all aspects of life including the economic activities.
This finding is consistent with previous study of Chinese entrepreneurs describing the
participation of modern women in business (Pisturi et al., 1997). Findings from this
survey somewhat implied the effect of the one-child policy enforced by the Chinese
Government. Since China is a country that has a strong cultural preference for boys,
this policy might have severely upset the gender balance and its effect may be reflected
by the skewed sex ratio between men and women Chinese entrepreneurs. On the other
hand, this finding may indicate the influence of the Chinese traditional cultural norm
that emphasizes the role of man as the breadwinner of the family (Liu, 2003). The time
devoted to business by Chinese entrepreneurs is 44.56 hours per week. This seems
to be much less than that found in countries like Vietnam, Romania, and Turkey
(Benzing et al., 2005a, b, 2009; Chu et al., 2007a, b, 2008). This time discrepancy spent in
business may be attributed to the fact that the number of employees working in a
Chinese enterprise is higher than those working for businesses in other countries.
Table I also yields some interesting information on Chinese enterprises. The
average age of business in existence is 5.61 years old. Of the total number of businesses
surveyed, 46.12 percent were established by the entrepreneurs themselves, 5.4 percent
bought from another, and only 3.49 percent were inherited. The dominant type of
business found in this survey is service with 58.16 percent as compared with 13.78 of
wholesaling business, the second highest rank of business types found in the sample.
The prominent position of the service industry is indicative of the emerging
entrepreneurial-led private sector which focuses on the consumer market (Davis, 2000).
Table II illustrates the type of advice that Chinese entrepreneurs seek before
starting their businesses. About 47.57 percent stated that they consulted other business
owners while 43.78 percent asked their friends. Although other business owners
and friends provided advice to Chinese entrepreneurs before starting their business,
many of them also said they asked legal advisor (36.22 percent) and friends
(35.68 percent). Even though it is the lowest percentage, a substantial amount of advice
(28.11 percent) also came from financial advisors, banks, and lending institutions.
Table III displays the source of funds for Chinese entrepreneurs. Because of the
confidential nature of the question, 45.5 percent of respondents chose not to respond
to the question regarding the sources of funds to start their business. However, out of
44.5 percent who responded, 23.5 percent indicated that their source of funds came
from their friends. Non-government organization (NGO) or international lending
Before starting your business, from whom did you
seek advice? (M circle more than one number)
Other business owners
Friends
Legal advisor
Family member
Financial advisor/bank/lending ins.
Other
Frequency
47.57
43.78
36.22
35.68
28.11
7.57
95
%
88
81
67
66
52
14
Chinese
entrepreneurs
Table II.
Advice

13. JCE
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agency was ranked second at 17 percent. It is interesting to note that private and state
banks were not considered as major source of funds for Chinese entrepreneurs, at only
3.5 and 2 percent, respectively. While only 1.5 percent used their personal saving to
start a business, 1 percent said they used a credit cooperative for their startup capital.
4.2 Motivation for business ownership
Entrepreneurs were asked to rank 11 reasons for business ownership. On a five-point
Likert scale with “5” being extremely important and “1”, the least important, it was found
that the two equally important motives for owning a business are to increase income and to
prove I can do it. This finding is in congruence with the results of a survey conducted
among 201 private entrepreneurs in Hunan province (Ran and Lang, 2000).
Almost 42 percent of the survey’s respondents indicated that their reason for
business ownership was to improve their living condition (Liu, 2003). In another study
of Chinese entrepreneurs, Pisturi et al. (1997) also found the desire for higher earning
and a drive to fulfill the need for personal achievement being their primary motives. As
shown in Table IV, “to be my own boss” is the second most important reason for
Chinese to become entrepreneurs. Since entrepreneurs who live in Beijing, Shanghai,
and Guangzhou are almost in daily contact with business people from Hong Kong,
Taiwan, Korea, and East Asian countries, they may begin to have some admiration for
these successful visitors and decided to set up their own business to improve their
standard of living (Liu, 2003). Entrepreneurs’ past experiences and training were also
mentioned as a strong drive for business ownership. This finding supports the
observation made by Pisturi et al. (1997) on their study of entrepreneurial motivation
that there was an eagerness among Chinese business owners to “make better use of
their training and skills” by becoming entrepreneurs.
4.3 Success factors
On a five-point Likert scale with “5” being extremely important and “1” being least
important, Chinese entrepreneurs ranked reputation for honesty the most important
variable. As shown in Table V, good customer service, good general management skills,
and friendliness to customers were also critical reasons for the success of a business.
The quality of honesty has long been regarded by Chinese as one of their traditional
core values, but the Chinese society is experiencing an honesty crisis. A survey
conducted among 700 middle school students in Southwest China’s Chongqing
Municipality found that 90 percent were willing to “bypass honesty“ for the sake of their
own interest (Shan, 2005). The dishonest tendency found among students perhaps
Sources
Table III.
Sources of funds
Friends
NGO or international lending agency
Family
State bank
Private bank
Personal saving
Credit cooperative
Did not respond
Number
Percentage
Percentage out of respondents
47
34
12
7
4
3
2
91
23.50
17.00
6.00
3.50
2.00
1.50
1.00
45.5
43.12
31.19
11.01
6.42
3.67
2.75
1.83

14. Motivational factors
To increase my income
To prove I can do it
To be my own boss
To be able to use my past
experience and training
For my own satisfaction and
growth
To gain public recognition
To maintain my personal freedom
So I will always have job security
To build a business to pass on
To provide job for family
members
To be closer to my family
Mean
(all)
SD
Mean
(male)
Mean
(female)
Gender mean
difference
Significance
4.28
4.23
4.14
0.82
0.80
0.95
4.21
4.22
4.21
4.35
4.24
4.06
20.14
20.02
0.14
0.332
0.899
0.368
3.88
1.14
3.83
3.94
0.14
0.567
3.82
3.74
3.18
2.84
2.65
0.96
1.16
1.29
1.18
1.20
3.78
3.67
3.12
2.84
2.476
3.87
3.81
3.25
2.85
2.84
20.09
20.13
20.13
20.01
20.36
0.561
0.449
0.513
0.938
0.058 *
2.55
2.17
1.25
1.25
2.60
2.03
2.50
2.30
0.09
20.27
0.643
0.166
Notes: Significance at: *95 per cent level (or a ¼ 0.05) and * *99 per cent level (or a ¼ 0.01);
5 – extremely important; 4 – very important; 3 – mildly important; 2 – not very important;
1 – unimportant
Success factors
Reputation for honesty
Good customer service
Good general management skills
Charisma, friendliness to
customers
Hard work
Access to capital
Good product at a competitive
price
Previous business experience
Ability to manage personnel
Marketing factors including sales
and promotion
Maintenance of accurate records
of sales/expenses
Appropriate training
Satisfactory government support
Good location
Support of family and friends
Community involvement
Political involvement
Chinese
entrepreneurs
Mean
(all)
SD
Mean
(male)
Mean
(female)
Gender mean
difference
4.43
4.42
4.37
0.63
0.63
0.74
4.47
4.45
4.41
4.39
4.39
4.33
0.08
0.06
0.07
4.39
4.065
4.10
0.74
0.78
0.82
4.28
4.10
4.24
4.49
4.03
3.96
2 0.21
0.08
0.28
0.87
0.88
0.97
3.30
4.00
3.83
3.41
3.77
3.60
2 0.11
0.22
0.23
0.691
0.149
0.259
3.83
1.00
3.89
3.76
0.10
3.64
3.72
3.51
3.37
3.50
2.95
2.68
1.05
0.95
1.07
1.07
1.19
1.19
1.29
3.77
3.75
3.56
3.37
3.35
2.84
2.73
3.51
3.69
3.46
3.36
3.65
3.06
2.63
0.27
0.06
0.10
0.01
2 0.14
2 0.22
0.10
Table IV.
Means score for
motivation of Chinese
entrepreneurs
0.122
0.678
0.049 * *
3.36
3.89
3.72
97
Significance
0.68
0.74
0.622
0.57
0.19
0.703
0.56
0.953
0.463
0.303
0.636
Notes: Significant at: *95 per cent level (or a ¼ 0.05) and * *99 per cent level (or a ¼ 0.01);
5 – extremely important; 4 – very important; 3 – mildly important; 2 – not very important;
1 – unimportant
Table V.
Mean score for variables
contributing to business
success

15. JCE
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reflects a declining ethics among the Chinese, in general. The situation which creates
some concerns for the authority might become a competitive advantage for
entrepreneurs who can establish themselves as honest merchants in the public eyes.
In similar surveys conducted among entrepreneurs in Vietnam (Chu and Benzing, 2004),
and Romania (Benzing et al., 2005a), honesty, good management skills, and friendliness
to customers were also rated as the most critical success factors. The findings suggest
some degree of commonality among entrepreneurs across countries regardless of
differences in culture, religion, and political system.
Finally, good managerial skills as necessary ingredients for business success were
also rated very highly by Chinese entrepreneurs. This finding is in congruence with the
results from the studies of entrepreneurs in the Czech Republic (Papulova and Mokros,
2007) and in Vietnam (Chu and Benzing, 2004).
4.4 Problems facing Chinese entrepreneurs
As shown in Table VI, unreliable/undependable employees, the stiff competition, and a
lack of management training were the three critical variables preventing entrepreneurs
from achieving their success. The problem of not being able to recruit and retain good
employees appears to be the great challenge facing small business owners in many
countries. Vietnamese entrepreneurs indicated that their business ventures could be
more successful if they were able to hire enough good employees and have them remain
with the business (Benzing et al., 2005b). Given the fact that the unemployment rate in
China was at 23 percent of total labor force (Wolf, 2004), why were entrepreneurs unable
to hire and retain reliable workers? Part of the answer may be that SMEs do not have
Problem
Table VI.
Problems encountered
by Chinese entrepreneurs
Unreliable and undependable
employees
Too much competition
Lack of management training
Lack of marketing knowledge
Inability to maintain accounting
records
Unable to obtain short-term
financial capital
Too much government
regulation, bureaucracy
Complex and confusing tax
structure
Unable to obtain financial capital
Weak economy
Poor road transportation
Business registration process
Electricity problem
Limited parking
Foreign exchange limitations
Mean
(all)
SD
Mean
(male)
Mean
(female)
Gender mean
difference
Significance
3.71
3.54
3.4
3.33
1.06
1.05
1.18
1.11
3.67
3.64
3.31
3.25
3.75
3.44
3.49
3.41
2 0.07
0.19
2 0.17
2 0.15
0.680
0.287
0.389
0.422
3.41
2.46
3.52
3.30
0.22
0.560
2.965
1.14
3.12
2.81
0.29
0.130
2.965
1.11
3.03
2.90
0.12
0.526
2.96
2.965
2.975
2.995
2.76
2.61
2.47
2.36
1.04
1.14
1.26
1.79
1.17
1.21
1.18
1.22
3.02
3.03
2.87
2.91
2.68
2.45
2.41
2.28
2.90
2.90
3.08
3.08
2.84
2.77
2.53
2.44
0.11
0.12
2 0.21
2 0.17
2 0.15
2 0.32
2 0.12
2 0.15
0.568
0.526
0.309
0.548
0.427
0.105
0.502
0.422
Notes: 5 – very serious problem; 4 – serious problem; 3 – problem; 2 – minor problem; 1 – not a
problem

16. adequate resources to allow for good compensation, and opportunities for advancement
existing in MSEs are limited. As a result, good employees are reluctant to join small
enterprises and will be prone to leave when better jobs are available.
It has also been reported that many Chinese domestic firms considered the low cost
of labor one of their competitive advantages and focused on cost leadership for
survival. This strategy would result in cutthroat competition (Lau et al., 2004), and it is
the basis for the respondents of this survey to suggest competition as the second most
important problem facing them. In supporting the findings of a previous study of
Nigerian entrepreneurs (Chu et al., 2008), results of this study also show that lack of
management training is an important obstacle to the success of Chinese entrepreneurs.
The final report submitted by Middlesex University also cited the lack of management
skills as a major problem faced by entrepreneurs (CEEDR, 1998).
Chinese
entrepreneurs
99
4.5 Stress, business success, and social support
As shown in Table VII, Chinese entrepreneurs believed they were successful and
expressed great satisfaction with their success. They also indicated that their success
level met their expected success. When asked if the support of family and friends
Mean
(all)
1. How would you describe your
business success?
(4 – very successful;
3 – successful; 2 – average;
1 – below average)
2. To what extent are you satisfied
with your business success?
(5 – very satisfied; 4 – satisfied;
3 – somewhat satisfied;
2 – dissatisfied; 1 – very
dissatisfied)
3. How well has your success met
your expectations?
(4 – more than I expected;
3 – met my expectations;
2 – somewhat met my
expectations; 1 – did not meet
my expectations)
4. As a business owner, how would
you rate the level of businessrelated stress?
(5 – very high; 4 – high;
3 – low; 2 – very low;
1 – nonexistent)
5. How would you rate the support
from family and friends?
(5 – very substantial;
4 – substantial; 3 – medium;
2 – low; 1 – very low)
SD
Mean
(male)
Mean
(female)
Gender mean
difference
2.8
0.71
2.81
2.79
0.01
0.907
3.47
0.88
3.56
3.38
0.18
0.251
2.285
0.93
2.38
2.19
0.19
0.216
4.285
0.71
4.21
4.36
2 0.15
0.190
4.17
0.90
4.07
4.27
2 0.20
0.169
Significance
Table VII.
Mean score for success,
stress, and family
support of entrepreneurs
in China

17. JCE
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100
contributed to their business success, the answer was very positive. These findings
are in line with the theoretical view that job performance leads to job satisfaction
(McShane and Von Glinow, 2005). Empirical studies show that the support of family
and friends was significantly related to success and satisfaction (Chu et al., 2007a, b).
This study’s results support those of previous findings.
With respect to the correlations between success, satisfaction, family support, and
stress, some interesting results are emerged and are presented in Table VIII. Business
success and satisfaction are strongly correlated. Similar conclusions on the correlation
between entrepreneurs’ satisfaction and their perceived success are also found. The
more they feel their success is met, the more satisfied they become. The relationship
between business success and stress is also significant. However, there is no significant
relationship between family support and stress found in this study. Rahim (1996)
suggests that social support is negatively associated with stress.
Table IX illustrates the correlation between education level and success, stress, and
the level of family support for each gender. For males, the correlation coefficient, 0.137,
for education and success indicates a positive relationship although the relationship is
weak. The higher the number of years of schooling completed, the higher the success.
0.074 between education and stress shows small level of stress is associated with
education. Even though the relationship is very weak, higher level of schooling is also
associated with higher level of family support. Similarly, substantial family support
also leads to higher success, while higher success results in lower level of stress.
For females, pattern is very similar to male case for the relationship between education
and stress and family support. However, the direction of the relationship is completely
opposite for education and success in addition to female success and stress and family
support.
Q1 – business success
Table VIII.
Correlations of success,
stress, and family
support answers
Q2
Q3
Q4
Q5
–
–
–
–
satisfaction
expectation
stress
support
0.672
0.458
0.140
0.249
(0.000)
(0.000)
(0.051)
(0.000)
Q2 – satisfaction
Q3 – expectation
Q4 – stress
0.527 (0.000)
0.024 (0.745)
0.205 (0.004)
2 0.050 (0.493)
0.245 (0.001)
0.045 (0.535)
Note: Pearson correlation coefficients with p-values in parentheses
Educationa (male)
b
Male success
Female success
Stressc
Family supportd
Table IX.
Correlation between
education and success,
stress, and level of family
support by gender
Education (female)
Male success
Female success
0.137 (0.250)
–
0.074 (0.424)
0.085 (0.364)
–
2 0.301 (0.275)
0.056 (0.693)
0.221 (0.112)
2 0.096 (0.357)
0.120 (0.251)
0.178 (0.90)
20.034 (0.754)
Notes: The numbers in parentheses are significance level (two-tailed); aeducation is defined as the
number of years completed; bsuccess is defined on a scale 1-4 as: 4 – very successful, 3 – successful,
2 – average, and 1 – below average; cstress is defined on a scale 1-5 as: 5 – very high, 4 – high,
3 – low, 2 – very low, and 1 – nonexistent; dfamily support is defined on a scale as: 5 – very
substantial, 4 – substantial, 3 – medium, 2 – low, and 1 – very low

18. 4.6 t-tests for the gender differences for motivations, success, problems faced, stress, and
family support variables
We noted the descriptive differences in the perceived importance attributed to several
motivational, success and problems factors by Chinese entrepreneurs. We reported this
information in Tables IV-VII. In order to understand how our study variables differ
across male and female Chinese entrepreneurs, we also conducted independent
samples t-tests to explore the gender differences for the factors in several study
variables. In general, the statistical analysis of the gender differences did not yield
evidence suggesting significant differences between the mean ratings of male and
female entrepreneurs. Hence, findings of this study reveals that Chinese male and
female entrepreneurs do not significantly differ in terms of the motivation to start a
business, perceived factors that contribute to business success, and perceived
problems they face as a business person. However, this study found that there is a
gender difference only in one of the 12 items comprising the perceived importance
attributed to motivation to start a business variable. Female entrepreneurs tend to
perceive the opportunity “to build a business to pass on” more important source of
their motivation to start a business than those male entrepreneurs. Other than this
factor, there is no significant gender difference in terms of the factors perceived as
important to start a business. This finding implies that both men and women
entrepreneurs have similar attitudes as far as the importance attributed to having a
business to prosper and succeed in life.
The findings of this study also revealed that there is no gender difference in terms of
the importance attributed to factors related to business success, except the importance
attributed “to access to capital”. Chinese male and female entrepreneurs perceive the
factors related to their business success similarly. We found a significant gender
difference between male and female entrepreneurs in terms of the importance
attributed to “access to capital”. Male Chinese entrepreneurs attribute more importance
to access to capital than female Chinese entrepreneurs as a factor related to their
business success. Otherwise, both groups have similar attitudinal tendencies in terms
of the factors related to the business success. The statistical analysis also showed that
there is no gender difference in terms of perceived problems encountered between male
and female Chinese entrepreneurs. Both groups tend to perceive the problems
similarly, such as unreliable and undependable employees as the most serious problem
and foreign exchange limitations as the least serious problem in managing their
businesses. We also tested for the gender differences for those variables that measured
the perceived business success, satisfaction with business success, whether the success
met the expectations or not, perception of the business stress, and support from the
family. Table VII reports the findings for the significance testing of gender differences
for each variable. The study findings show that Chinese male and female entrepreneurs
do not significantly differ in terms of the perceived business success; satisfaction with
success, extent success met their expectations, perceived level of stress, and perceived
support from family and friends. These findings imply that perceptual variables
are significant universal factors influencing entrepreneurial behavior of Chinese
entrepreneurs (Langowitz and Minniti, 2007). Also, our research findings are consistent
with the finding that male and female entrepreneurs do not differ in terms of intrinsic
rewards, extrinsic rewards, and independence and autonomy enjoyed in having one’s
own business (Kuratko et al., 1997). Hence, this finding is consistent with our
Chinese
entrepreneurs
101

19. JCE
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observation that Chinese male and female entrepreneurs are driven by similar goals in
starting up a small business.
4.7 The ordered logit analysis of motivational factors to start a business and factors
contributing to business success
In order to further investigate the impact and importance of motivation variables and
factors contributing to the success of entrepreneurs, two ordered logit models are
applied to a sample of Chinese entrepreneurs participated in the study. Because
entrepreneurs ranked the success factors in order (5 – extremely important, 4 – very
important, 3 – mildly important, 2 – not very important, 1 – unimportant), an ordered
logit model is the most appropriate model to use (Greene, 2008). To that end, for the
motivation variables, we formulated the following model:
Successi ¼ b0 þ b1 Educi þ b1 Hworki þ b3 EmpNumi þ b1 Gend i þ b5 Expi
þ b6 MStai þ b7 Stresi þ b8 Fsupi þ b9 Agei
þ bjMotivVar i þ 1i ;
ð1Þ
i ¼ 1; . . . ; 196; j ¼ 10; . . . ; 20:
where Educ is education level completed, Hwork is number of hours worked, EmpNum
is the number of full-time employees, Gend is gender, Exp is experience measured as
the number of years in that business, MSta is marital status, Stres is stress level, Fsup
is the level of family support, Age is the age of the entrepreneur, and Motivvar is the
following motivation factors: to be my own boss, to be able to use my past experience
and training, to prove I can do it, to increase my income, to gain public recognition, to
provide jobs for family members, for my own satisfaction and growth, so I will always
have job security, to build a business to pass on, to maintain my personal freedom, and
to be closer to my family. Finally, 1 is error term, assumed to follow logistic
distribution, and bs are coefficients to be estimated. The dependent variable called
“Success” in the model is based on the responses measured on a four-point Likert scale
using (4) very successful, (3) successful, (2) average, and (1) below average.
Similarly, we also formulated a second-ordered logit model to estimate the factors
contributing to the success of the Chinese entrepreneurs. The equation is given as:
Successi ¼ b0 þ b1 Educi þ b1 Hworki þ b3 EmpNumi þ b1 Gend i þ b5 Expi
þ b6 MStai þ b7 Stresi þ b8 Fsupi þ b9 Agei
þ bjSucFaci þ 1i ; i ¼ 1; . . . ; 196; j ¼ 10; . . . ; 26:
ð2Þ
where Educ is education level completed, Hwork is number of hours worked, EmpNum is
the number of full-time employees, Gend is gender, Exp is experience measured as the
number of years in that business, MSta is marital status, Stres is stress level, Fsup is the
level of family support, Age is the age of the entrepreneur, and SucFac is the following
success factors: good general management skills, charisma, friendliness to customers,
satisfactory government support, appropriate training, access to capital, previous
business experience, support of family and friends, marketing factors, good product at
a competitive price, good customer service, hard work, location, maintenance of accurate
records of sales/expenses, ability to manage personnel, community involvement, political
involvement, and reputation for honesty. 1 is error term, assumed to follow logistic
distribution, and bs are coefficients to be estimated. The dependent variable called

20. “Success” in the model is based on the responses measured on a four-point Likert scale
using (4) very successful, (3) successful, (2) average, and (1) below average.
By employing Limdep software package, the ordered logit equations are estimated
by maximum likelihood method for the Chinese entrepreneurs. The estimates are given
in Tables X and XI. According to the tables, the models are satisfactory as x 2 and
log-likelihood diagnostics are acceptable in both cases. The ordered logit method does
not produce familiar F-test and in the absence of a standard F-test, a likelihood ratio
test is conducted to examine the overall explanatory power of the model. The values of
x 2 test statistics with 20 degrees of freedom, 38.239 for the motivation factors and with
26 degrees of freedom, 48.538 for the success factors, imply that the models fit well and
the independent variables are jointly significant. Similar to the F-statistic case,
dividing the estimated coefficient by the standard error does not give the usual
t-statistics. For that reason, we used the term z in tables to avoid any confusion.
In Table X, four variables are statistically significant at 10 percent level, namely
number of hours worked, stress, family support, and to gain public recognition.
Moreover, the level of family support is found highly statistically significant factor
contributing to the success of entrepreneurs. As in the case of Table X, Table XI also
shows estimated variables, four of which are statistically significant. In addition to
number of hours worked, stress level, and family support, a success factor, good
product at a competitive price, is significant factor. Since interpretation of the
Variable
Constant
Education
Number of hours worked
Number of employees
Gender
Experience
Married or single
Perceived business stress
Perceived level of family support
Age
To be my own boss
To be able to use my past experience and training
To prove I can do it
To increase my income
To gain public recognition
To provide jobs for family members
For my own satisfaction and growth
So I will always have job security
To build a business to pass on
To maintain my personal freedom
To be closer to my family
Mu(1) – threshold parameter
Mu(2) – threshold parameter
Mu(3) – threshold parameter
Coefficient
SE
1.413
0.069
0.008
0.001
0.341
0.031
0.304
0.217
0.169
0.018
0.164
0.152
0.203
0.217
0.147
0.139
0.160
0.157
0.136
0.145
0.151
0.324
0.221
0.258
0.458
0.323
0.089
0.382
0.402
0.558
0.271
0.004
0.002
0.929
0.782
0.806
0.258
0.427
0.035
0.183
0.921
0.876
0.835
0.960
0.998
0.002
0.000
0.000
103
P[jZj . z]
1.050
0.068
2 0.013
2 0.001
2 0.286
0.018
2 0.335
0.625
0.522
0.002
2 0.045
2 0.037
2 0.229
2 0.172
0.311
0.185
0.016
0.024
0.028
2 0.007
0.000
0.989
3.743
6.655
Chinese
entrepreneurs
Notes: Dependent variable: perceived business success; log-likelihood function ¼ 2 196.5137;
x 2 ¼ 38.239; restricted log likelihood ¼ 2215.6333; degrees of freedom ¼ 20
Table X.
Ordered logit model
estimates for motivation
variables

21. JCE
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104
Table XI.
Ordered logit model
estimates for success
factors
Variable
Constant
Education
Number of hours worked
Number of employees
Gender
Experience
Married or single
Perceived business stress
Age
Perceived level of family support
Good general management skills
Charisma; friendliness to customers
Satisfactory government support
Appropriate training
Access to capital
Previous business experience
Support of family and friends
Marketing factors such as sales promotion
Good product at a competitive price
Good customer service
Hard work
Location
Maintenance of accurate records of sales/expenses
Ability to manage personnel
Community involvement
Political involvement
Reputation for honesty
Mu(1) – threshold parameter
Mu(2) – threshold parameter
Mu(3) – threshold parameter
Coefficient
SE
P[jZj . z]
0.824
0.087
20.014
20.001
20.401
0.005
20.132
0.711
20.003
0.431
0.014
0.314
20.218
0.129
0.132
20.243
0.101
0.150
20.193
20.273
20.251
20.074
0.154
20.019
0.213
0.016
0.109
1.019
3.869
6.916
1.453
0.071
0.008
0.001
0.345
0.031
0.292
0.217
0.019
0.194
0.186
0.248
0.174
0.199
0.211
0.192
0.169
0.174
0.093
0.267
0.247
0.153
0.172
0.189
0.172
0.152
0.194
0.334
0.232
0.276
0.5707
0.224
0.059
0.507
0.246
0.866
0.651
0.001
0.885
0.026
0.939
0.205
0.211
0.516
0.532
0.206
0.548
0.388
0.039
0.306
0.309
0.629
0.373
0.920
0.216
0.914
0.576
0.002
0.000
0.000
Notes: Dependent variable: perceived business success; log-likelihood function ¼ 2 191.364;
x 2 ¼ 48.538; restricted log likelihood ¼ 2215.633; degrees of freedom ¼ 26
estimated coefficients of ordered logit model is not straightforward as in the case of
regular regression (OLS), a coefficient indicates a change in the log of the odds ratio.
Therefore, first we have to transform the coefficient by using the exponential function
to find antilog (eb), and then, we can employ the value computed from transformation
to predict the odds ratio. Since we estimated the coefficient for family support as 0.522,
which gives 1.69 as the odds ratio. This, in turn, implies that an increase in the family
support from low to medium increases success level by 4,41,691 times, illustrating the
importance of the family support for Chinese entrepreneurs. Likewise, the odds for
number of hours worked, stress, and to gain public recognition are 0.99, 1.87, and 1.39,
respectively, in Table X. Therefore, to gain public recognition is a significant motivator
in success, which increases the success rate 1.39 times. Although it is not statistical
significant, the motivation factor of “to provide jobs for family member” rises the
success by 1.2 times. In Table XI, number of hours worked take the same value as in
the motivation case, while stress, family support, and good product at a competitive
price have the odds ratios of 2.04, 1.54, and 0.82. Furthermore, charisma and

22. friendliness to customers increases the success by 1.37 times. Other factors, such as
community involvement, maintenance of good records, marketing factors, appropriate
training, access to capital and reputation for honesty, lead to an increase in success.
5. Conclusion and recommendations
This study investigated the motivation, success, problem, and business-related stress
and their importance on the success of Chinese entrepreneurs. Its findings reveal
interesting information. Bulgarian entrepreneurs indicated that increasing income,
proving that they can do it, a desire to be their own boss are the main motivation
factors for becoming business owners. Although male entrepreneurs rated proving
that they can do it as the highest motivation, female entrepreneurs ranked the
increasing income as the highest motivation factor. The study findings also show that
family business concerns such as expectations of earning more money in
self-employment and the opportunity to pass the business on to children were other
important motivational goals in starting up small business ownership. Chinese
entrepreneurs regarded a reputation for honesty as the crucial factor contributing to
their success. They also perceived good customer service, good general management
skills, charisma, friendliness to customers, and an access to capital as the leading
factors to a higher level of business achievement. Female entrepreneurs indicated that
charisma, friendliness to customers was the most important success factor while a
reputation for honesty was the most important for male entrepreneurs.
With respect to problems Chinese entrepreneurs face, undependable/unreliable
employees, competition, lack of management training, lack of marketing knowledge,
and inability to maintain accounting records were cited as the most important
problems. Again female and male entrepreneurs differ in the most important problem:
lack of management training for female and undependable/unreliable employees for
male entrepreneurs. Although Chinese entrepreneurs indicated that the level of their
success met their expectations, they experienced high level of business-related stress,
which was stronger for female entrepreneurs. In addition, they reported that the
support of family and friends was very high, especially for female entrepreneurs.
Even though we observed descriptive differences in perceived importance
attributed to several motivational, success and problems factors, statistical analysis
of the gender differences did not yield evidence suggesting significant differences
between the mean ratings of male and female entrepreneurs. Hence, findings of this
study reveals that Chinese male and female entrepreneurs do not significantly differ in
terms of the motivation to start a business, perceived factors that contribute to
business success, and perceived problems they face as a business person. However,
this study found that there is a gender difference in only one of the 12 items comprising
the perceived importance attributed to motivation to start a business variable. Female
entrepreneurs tend to perceive the opportunity “to build a business to pass on” more
important source of their motivation to start a business than those male entrepreneurs.
The lack of significant gender differences implies that both men and women
entrepreneurs have similar attitudes as far as the importance attributed to having a
business to prosper and succeed in life.
These finding imply that policy makers can design similar training and development
opportunities for Chinese entrepreneurs to successfully manage and develop and sustain
their business. It is important that Chinese female entrepreneurs perceive factors in
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entrepreneurs
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23. JCE
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106
the social, economic, and business environment as important as the male counterparts.
Hence, this also implies that opportunities for women to participate in economic activity
are as accessible as male entrepreneurs in China.
Results of this study suggest that Chinese entrepreneurs are eager to establish their
own businesses for higher earnings and to prove their capabilities, if the right
condition exists. Evidence also shows that there is a strong link between economic
prosperity and entrepreneurship which requires a favorable environment to develop.
Chinese policy makers have taken measures to provide microeconomic reforms, and
introduce macroeconomic stability, but more should be done, especially the
re-establishment of land ownership rights which allow collateral for entrepreneurs
to secure needed resources for opening and expanding their business. From the human
resources standpoint, Chinese entrepreneurs continue to face the issues of finding and
retaining skilled workers. Perhaps more education and training might help alleviate
the problem.
While accelerating reforms and adopting the Western way of life is an important
avenue leading to the integration into the league of developed economies, an increased
exposure to the West may result in declining some of the Chinese traditional values.
Chinese ethical norms which place a high value in honesty and mutual trust is eroding
due to the obsession of material possession, but the low status of merchants seen in the
traditional society has been changed. Successful entrepreneurs are respected and
hailed as role models in the modern China. Business owners persistently pursued their
ambition to become the “chicken’s head”, a dream that most Chinese strives to achieve.
The effects of globalization, downsizing, and economic instability have created
uncertainty and reduced opportunities for career advancement in many private
organizations, as well as those of state-owned enterprises. As a result, business
ownership turns out to be a very attractive alternative. By creating jobs, increasing
income and providing economic security, private enterprises not only benefit
entrepreneurs but continue to advance China’s economic prosperity, as well.
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28. Further reading
Djankov, S. and Nenova, T. (2001), Constraints to Entrepreneurship in Kazakhstan, The World
Bank, Washington, DC, March.
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About the authors
Hung M. Chu is a Professor of Strategic Management and International Business at West Chester
University of Pennsylvania. Dr Hung M. Chu has published his research results in such journals
as the Journal of Small Business Management, Journal of Developmental Entrepreneurship,
Journal of Small Business and Enterprise Development, Journal of African Development among
others. He has conducted research on entrepreneurs in many countries.
Orhan Kara is an Associate Professor of Economics at West Chester University of
Pennsylvania and earned his PhD degrees at the University of Wisconsin-Madison and the
University of Wisconsin-Milwaukee. Dr Orhan Kara has published articles in economics, finance,
and entrepreneurship in various journals and his research interests include entrepreneurship,
trade flows, and human capital. Orhan Kara is the corresponding author and can be contacted
at: okara@wcupa.edu
Xiaowei Zhu is an Assistant Professor of Management at West Chester University of
Pennsylvania. She received her PhD in Production Operations Management from the University
of Wisconsin-Milwaukee and MA in Management Information Systems from the University of
Iowa. Her research interests include supply chain management, outsourcing, mixed channel,
and quality management. She has several papers published in leading journals, including
Journal of Business Research, Production and Operations Management, and International Journal
of Production Economics. She is a member of the Institute for Operations Research and
Management Science, Decision Science Institute.
Kubilay Gok is a Faculty of Organizational Behavior and Human Resources Management in
the Faculty of Management at the University of Lethbridge of Alberta, Canada and earned his
PhD degree at the University of Wisconsin-Madison. Dr Kubilay Gok studies attribution theory
applied to performance management and organizational failure, organizational citizenship,
and leader-member exchange and leader reinforcement styles.
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