Inside the Mind of a Risk Taker

A new poll finds key differences between Indian and Chinese entrepreneurs.

 

By RYAN STREETER

The past few years have seen no shortage of commentary about the comparative economic environments in China and India, where growth and the rise of enterprising classes have gone hand in hand. Yet we have very little data to help us understand how entrepreneurs in these countries think and what motivates their decisions and actions. A new survey of more than 4,000 entrepreneurs, business managers and aspiring entrepreneurs, conducted by YouGov and released today by the Legatum Institute, sheds light on the countries’ respective enterprising classes—and raises some questions for policy makers and investors.

Entrepreneurs in both countries share a high degree of bullishness. Nearly half of the respondents believe their societies are more welcoming of entrepreneurial activity than they were 10 years ago, and only one-quarter in India and one-third in China believe that the global financial crisis has seriously hampered the prospects for new businesses. The vast majority believe their lives will improve dramatically in the next five years.

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Indian entrepreneurs paint a more relational and organic picture. Twenty-one percent cite family expectations as the source of their entrepreneurship compared to 9% in China, and 27% of Indians cite the inspiration they glean from knowing another entrepreneur, compared to 18% in China.

This difference in inspiration and motivation manifests itself in many ways. The relational Indian model of business start-ups is evident in enterprise financing, where 49% of business owners rely on family resources to start their enterprise, compared to only 25% in China. Chinese entrepreneurs are much more dependent on banks, with 49% taking out loans compared to 27% in India.

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There are also significant differences in how entrepreneurs see themselves relating to their policy environments. In India, 81% of business owners say that jugaad, the ability to improvise and find ways around prohibitive rules and institutions, is important to business success. In China, 93% of business owners say guanxi, the networks and relationships (primarily with the state) necessary to succeed in business, are important to their own success. Generally, enterprising individuals in India believe they succeed in spite of the state, while in China they think they succeed through their connections to it.