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The transition from necessity-based start-up to subsequent opportunity entrepreneurship : a case study of China

Cai, R 2015 , 'The transition from necessity-based start-up to subsequent opportunity entrepreneurship : a case study of China', PhD thesis, University of Tasmania.

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Entrepreneurship can be categorised as necessity- and opportunity-driven based on the motivation of
the entrepreneurship (e.g., Reynold et al., 2001; Verheul et al., 2010). Extant studies have shown that
opportunity entrepreneurship is more desirable than necessity entrepreneurship (e.g., Harding, 2003;
Henrekson, 2004; Minniti et al., 2005) because opportunity entrepreneurship has a lower rate of
business failure (e.g., Harding, 2003; Minniti et al., 2005), more income (Block & Wagner, 2007) and
more positive effects on economic development (Acs &Varga, 2005; Acs, 2006). A shift of
entrepreneurship away from a necessity driver to opportunity driver has therefore been observed in
various contexts (Williams et al., 2006; Williams & Round, 2009; Williams &Williams, 2011).
However, little research has considered how necessity entrepreneurship has transitioned to subsequent
opportunity entrepreneurship, and what factors have determined this transition process. To overcome
the deficiency in research, this study aims to investigate the factors that drive the transition process
and the mechanism through which the transition process occurs.
This research was based in China, in which rapid economic growth has been gained and more than
100 million people have been involved in various entrepreneurial activities (Guthrie, 2009). In
addition, existing research tends to focus on developed countries while developing countries, such as
China in which the cultural values and institutional environment is significantly different from
developed countries, have been largely ignored (e.g., Chen & Francesco, 2000; Puffer et al., 2010).
This research is therefore expected to account for this unique research setting. A qualitative method
based on six case studies was adopted in the research. The data were collected through a triangular
method by using in-depth interviews with the entrepreneurs and other related parties, and on-site
observation. These data were thematic-analysed to generate propositions. The findings show that the entrepreneurs were forced to involve in necessity-based start-ups mainly
by the difficulties faced by them in career development, financing and family matters while selfmotivations,
business opportunities and available resources were the major factors that facilitated the
transition process from necessity-based start-up to the subsequent opportunity entrepreneurship. The
findings also suggested that the transition from necessity entrepreneurship to subsequent opportunity
entrepreneurship involved a four-stage process, including the pre-venture stage, the necessity
entrepreneurship stage, the transition stage and the opportunity entrepreneurship stage. By exploring
the cases based on a culturally and institutionally different setting in China, this study suggests that, in
addition to the economic environment and personal situations of the entrepreneurs, cultural and
institutional factors also matter to their entrepreneurial activities. A mixed perspective is needed to
take into account the complicated environment facing the entrepreneurs.
This study contributes to the literature by taking into account the complicated environment factors of
China and identifying the mechanism through which the transition process from necessity-based startup
to subsequent opportunity entrepreneurship has occurred. This study also generates practical
implications for both novice and veteran entrepreneurs in progressing to an advanced level of
entrepreneurship. It is also suggested that favourable regulatory environment and government policies
are needed in order to facilitate the development of entrepreneurship. However, this study was
conducted in a culturally and institutionally unique setting of China. Therefore, the implications of the
findings are limited to such a setting, and caution is needed when applying the findings to different
Opportunities for future research have been identified in this study. Given the limitations of a crosssectional
method, a longitudinal study would provide additional insights for explaining the dynamism
of the transition process. In addition, future research could include entrepreneurs failed in the
transition process to provide an alternative perspective on the transition process. Further, future research based in different research settings are also suggested, which would help provide additional
evidence to support the findings of this study.

Item Type: Thesis - PhD
Authors/Creators:Cai, R
Keywords: Entrepreneurship, transition, process, China
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Copyright 2015 the Author

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