VU Student Number: 2617714 MSc Program: Entrepreneurship
Thesis Supervisor: Prof. Tsvi Vinig & Prof. Roel C W van der Voort
Application date: 01/04/2018 Submission date: 28/06/2018
Measuring Entrepreneurial Ecosystem in China: The Effect of Government Programs and Policies on Mass Entrepreneurship and Innovation
Measuring Entrepreneurial Ecosystem in China: The Effect of Government Programs and Policies on Mass Entrepreneurship and Innovation
Hsin-Ai Shih (2018)
The copyright rests with the author. The author is mere responsible for the content of the thesis, including mistakes. The university cannot be held liable for the content of the author’s thesis.
Abstract
The entrepreneurial ecosystem theory has had many different discussions and
theoretical models in recent years, and each model has different elements proposed by the scholars to construct entrepreneurial ecosystems. However, in the past, few, or nearly no, scholars applied the theory proposed by Western scholars to the exploration of policy achievements in China's entrepreneurial ecosystem. In particular, after Chinese Premier Li Keqiang pointed out at the opening ceremony of the Davos Forum in summer 2014, China officially proposed the policy of Mass Entrepreneurship and Innovation. It has been through the power of the government and from the national point of view, so that the entrepreneurial ecosystem has been constructed from the top-down. This study refers to the model proposed by Erik Stam (2017), and takes all elements of the system as a criterion for reviewing Chinese policies by comparing the differences in the means of various indicators before and after the policy to examine the effect of Chinese government policies and programs in each element.
1 INTRODUCTION ... 4
2 THEORY AND MODEL SELECTION ... 5
2.1 THE ENTREPRENEURIAL ECOSYSTEM DEFINED ... 5
2.2 MODEL SELECTION ... 8
2.3 MODEL RATIONALITY... 10
3 UNDERSTANDING OF MASS ENTREPRENEURSHIP AND INNOVATION POLICY ... 12
4 RESEARCH METHODOLOGY ... 20
5 POLICY RELATED TO ELEMENTS OF ENTREPRENEURIAL ECOSYSTEMS AND HYPOTHESIS ... 22
5.1 FORMAL INSTITUTIONS ... 22 5.2 ENTREPRENEURIAL CULTURE ... 26 5.3 INFRASTRUCTURE ... 26 5.4 MARKET DEMAND ... 27 5.5 NETWORKS ... 29 5.6 LEADERSHIP ... 31 5.7 TALENT ... 33 5.8 FINANCE ... 36 5.9 NEW KNOWLEDGE ... 38 5.10 INTERMEDIATE SERVICE ... 40
6 RESULTS AND CONCLUSION ... 41
7 RESEARCH LIMITATION AND FUTURE WORK ... 47
APPENDIX ... 51
TABLE 1. EMPIRICAL MEASURES OF THE ENTREPRENEURIAL ECOSYSTEM ELEMENTS ... 51
TABLE 2. STATISTICAL FEATURES FOR INDICTORS OF FORMAL INSTITUTION ... 52
TABLE 3. STATISTICAL FEATURES FOR INDICTORS OF ENTREPRENEURSHIP CULTURE . 52 TABLE 4. STATISTICAL FEATURES FOR INDICTORS OF PHYSICAL INFRASTRUCTURE ... 53
TABLE 5. STATISTICAL FEATURES FOR INDICTORS OF MARKET DEMAND ... 53
TABLE 6. STATISTICAL FEATURES FOR INDICTORS OF NETWORKS ... 54
TABLE 8. STATISTICAL FEATURES FOR INDICTORS OF FINANCE ... 55
TABLE 10. STATISTICAL FEATURES FOR INDICTORS OF INTERMEDIATE SERVICE... 56
TABLE 11. ANOVA TABLE FOR ALL INDICATORS ... 57
1 Introduction
The entrepreneurial ecosystem approach has gained prominence amongst
entrepreneurs, entrepreneurship supporters (Feld 2012), and in public policy (Isenberg 2010). Entrepreneurship policies are directed to encouraging socially and
economically productive activities by individuals acting independently in business (Rigby & Ramlogan, 2013) Apart from entrepreneurs themselves, social group and cultural norm also influence to entrepreneurship, thus the difference in entrepreneurial spirit among different countries depends to some extent on the rewards that
entrepreneurship can obtain. From a government perspective, the principal objective is to increase a level of entrepreneurial activity, which is considered to have further outcome, to stimulate economic growth and job creation in all kinds of societies. Policies may be implemented directly to address entrepreneurs’ needs or indirectly provide a friendly market for nascent entrepreneurs.
The concept of “mass entrepreneurship” was first proposed by Chinese premier Li Keqiang in December of 2014, with the intention to create a better environment for enterprises and individuals through delegation of power to lower-level governments, simplification of administration, improvement of capital market and different types of crowdsourcing, and crowd-funding models. Latter on, the concept became a crucial policy to facilitate China's economic growth. By promoting “Mass Entrepreneurship and Innovation”, the Chinese government attempted to expand employment, increase residents’ incomes and help promote vertical social mobility, fairness and justice.
When discussing the “Mass Entrepreneurship and Innovation” on culture, it emphasize letting people better realizes spiritual and self-value in the process of creating wealth. After more than three years announced the police, it might be possible to trace the affect during this period of time. Especially there is a complete policy planning system that is implemented by the central government to the local government, with clear top-down instruction into society. This study will explore whether a western entrepreneurial ecosystem model is applicable in Eastern country, by investigating if Chinese policy of Mass entrepreneurship and Innovation has influenced the elements in the model, and examines publicly supported policies for entrepreneurship development.
2 Theory and Model Selection
2.1 The Entrepreneurial Ecosystem Defined
In recent years the fields of entrepreneurship studies are flourish, these developments have culminated in an emerging entrepreneurial ecosystem approach that explicitly focuses on how urban and regional contexts affect ambitious entrepreneurship, further more the national level, however most of them are from the western perspective, the democracy country, to develop a certain model.
Common usage of the term “ecosystem” in a social science rather than an ecological context became widespread only after the work of Moore (1993), which highlighted
the business ecosystem as the firm's external environment.. Entrepreneurial
ecosystems have similarities with industrial districts, clusters, and innovation systems; entrepreneurs and spin‐offs are present in these other frameworks but are not central as they are in entrepreneurial ecosystems (Stam & Spigel, 2017). Acs, Stam,
Audretsch, and O'Connor (2017) accordingly identify entrepreneurial ecosystems as having developed from literatures in both business strategy and regional development (Malecki, 2018).
Entrepreneurial ecosystem emerged only in the 2000s but has become dominant since 2016. (Malecki, 2018) Due to mainstream business books such as Feld’s (2012)
Startup Communities and the appearance of How to Start an Entrepreneurial
Revolution in the Harvard Business Review in 2010 by Isenberg (2010), the use of the
term ‘‘entrepreneurship ecosystem” has become commonplace. It is true that the term of “entrepreneurial ecosystem” and “entrepreneurship ecosystem” are not yet unified. Though in Isenberg’s point of view, entrepreneurship ecosystem is preferred because the ecosystem is itself not “entrepreneurial’’, rather, it foster entrepreneurship, but he still noted that the terms are used interchangeably (2016). But despite its popularity, there is not yet a widely shared definition of entrepreneurial ecosystems amongst researchers or practitioners (Stam & Spigel, 2017). In part, this is because such ecosystems are defined in many ways, at different scopes, and with various research design methods and datasets. Consequently, many different definitions and elements in the ecosystem model have been proposed. Simply sum up the common features,
most of the definitions emphasize interaction of elements or highlight the combination of factors.
The entrepreneurial ecosystem approach often narrows this entrepreneurship down to ‘high-growth start-ups’ or ‘scale- ups’, claiming that this type of entrepreneurship is an important source of innovation, productivity growth, and employment (World Economic Forum, 2013; Mason & Brown, 2014) Stam has criticized that this claim seems to be too exclusive: networks of innovative start-ups or entrepreneurial employees can also be forms of productive entrepreneurship (Baumol, 1990) and in that way the source of earlier mentioned welfare outcomes (2015). But it is clear that the entrepreneurial ecosystem approach does not by definition include the traditional statistical indicators of entrepreneurship, such as 'self-employment' or 'small
businesses' into entrepreneurship (Stam & Spigel, 2017) Furthermore, the Global Entrepreneurship Monitor (GEM) model, first published in Reynolds et al.(1999), also proposes relationships between established and new business activity and economic growth at the national level. From a policy perspective, it mentioned the relationships between entrepreneurial framework conditions and high-expectation entrepreneurial activity, which is particularly salient, because previous studies have suggested that the link between high-potential entrepreneurship and subsequent economic growth may be stronger than between new business activity in general and economic growth
(Arzeni, 1998; Autio, 2005; Davidsson et al., 1994; Kirchhoff, 1994; Picot and Dupuy, 1998; Wong et al., 2005). This distinction between the traditional measures of
entrepreneurship and the conceptually more appropriate measures of entrepreneurship, such as innovative and growth-oriented entrepreneurship, is increasingly emphasized in the entrepreneurship literature (Shane, 2009; Stam et al., 2012; Mason & Brown, 2013; Henrekson & Sanandaji, 2014). The entrepreneurial ecosystem usually
presented as a list or diagram, an entrepreneurial ecosystem includes several players or stakeholders as well as a set of ingredients necessary to the ecosystem (Erina, Shatrevich, & Gaile‐Sarkane, 2017). Among the most influential on recent
geographical research are Isenberg (2011), Mason and Brown (2014), Spigel (2017a), and Stam (2015). Alternative visualizations include Beeche (2015), Custer (2013), Darden School of Business (2012), Nance (2013), and World Economic Forum (2013). Most diagrams of ecosystems show all components interconnected; Isenberg's (2011) diagram shows over 50 components in six “domains.” (Malecki, 2018)
2.2 Model Selection
To investigate the effect of Chinese government policy and programs in Mass Entrepreneurship and Innovation, first we need to apply a model into China, the whole country as a “region”, since the policy and programs were announced by the central government in the national level. As long as the research scope is defined in the national level, the Global Entrepreneurship Monitor (GEM) might be applicable, while other models, most of definitions are developed on the region level. GEM model maintains that established business activity at the national level varies with General National Framework Conditions (GNFCs), while entrepreneurial activity
varies with Entrepreneurial Framework Conditions (EFCs) (Reynolds et al., 2005). Even though the model has been used extensively by GEM teams, and used to verify and compare the entrepreneurial ecosystem in different countries, parts of it remain untested. Also, the model continues to lack firm theoretical grounding. The analyses of GEM model based on cross-sectional data and bivariate correlations and thus have not provided rigorous tests of the association between EFCs and entrepreneurial activity. Therefore, GEM’s conceptual model, while providing good guidance for data collection, may still fail to reach its full potential impact on entrepreneurship research and policy (Levie & Autio, 2007).
The prevalence of the entrepreneurial ecosystem approach does not mean that every model can be used to explore the effectiveness of Chinese government policies. One criticism is that the approach as yet provided only long laundry lists of relevant factors without a clear reasoning of cause and effect. These factors do provide some focus, but they offer no consistent explanation of their coherence or their
interdependent effects on entrepreneurship—and, ultimately, on aggregate welfare (Stam, 2015). To figure out how do entrepreneurial ecosystems perform with the different forms of entrepreneurship (as output) and in terms of aggregate welfare effects (as final outcome), Erik Stam proposed a provide a better framework for regional policy. He improved the causal depth with four ontological layers
(framework conditions, systemic conditions, outputs, and outcomes), including the upward and downward causation, and intra-layer causal relations (Stam & Spigel,
2017), and policy relevance of entrepreneurial ecosystem concept. At the same time left a possibility of different level the entrepreneurial ecosystem might be applicable, this would depend on the spatial scale on which the elements are achieved, on the one hand, and how they are limited, on the other hand. For most system elements it seems possible to demarcate them at a regional (sub-national) level (e.g. regional labour markets), while the conditions can be designed on both regional and national levels (e.g. national laws and regulations) (2015). Which can be interpreted as, as long as the policy was determined as the national level, despite the local nature and local
heterogeneity of entrepreneurship, entrepreneurial ecosystems could still be identified at the national scale, following research on national innovation systems.
2.3 Model rationality
After taking power in 1949, China’s communist government began to expropriate or nationalize private enterprises, and by the mid-1950s no private businesses remained. The government began to introduce economic reforms in 1978 and private
commercial transactions were once again tolerated on a small scale, but by the mid-1980s the private sector was still constrained by a number of factors, including a law limiting the number of employees in a private enterprise to seven people (Kirby, Donovan & Manty, 2012). China’s reform and opening up can be traced back to the first series of economic reforms, purely on the economic grounds, initiated by the People’s Republic of China in December 1978, promoted by the Communist Party of China under the leadership of Deng Xiaoping, since then, China has followed the
propaganda of "reformed inside the country, open up to outside the world". Indeed, the state, to be more precise, the party was central player in nearly all aspects of China’s economy, guiding a development trajectory as “Socialism with Chinese characteristics.” The 1990s was a watershed decade that consolidated China’s reform efforts and firmly set the course for a capitalist market economy, while with socialist characteristics. The early days of China's reforms, the focus was on
inter-governmental decentralization, adjustment of the relationship between the central government and local governments, to promote the economic development. The central government is the superior authority of province, while province has its certain autonomy. In practice, central government gives the provinces permanent or chartered benefits in exchange for provincial compliance with the central government, to make sure local government as proxies of central.
Regard to the initiative of Mass Entrepreneurship and Innovation, the policy stands at the starting point of the nation overall interest, public welfare. The central government issued "opinion" in official documents, which form the principle that higher
authorities shall deploy work to lower levels and guide the work activities of lower levels. By this style of steps and methods, the guidance of the "opinion" is very strong, could also be represent as the solutions for solving local problems or implements for expanding central policy in response to issues of generality or locality at that time. With this basic understanding of China’s central and local decentralization, we can assume that the political structure under such a system is vary from the western
federalism. Moreover, a related potential determinant of entrepreneurial motivations and actions is social legitimation (Etzioni, 1987) or national respect for
entrepreneurship. National respect for entrepreneurs, as evidenced by peoples’ attitudes toward those who have obtained personal wealth through entrepreneurial actions, as well as positive publicity and media on the topic, is likely to influence peoples’ perceptions of the social desirability of entrepreneurial actions, and hence, their entrepreneurial motivations and intent. (Reynolds et al, 2003, p.45; Levie & Hunt, 2005) Due to the consistency of China's national government and policy, as well as cultural perspective, this paper tried to extend the regional model to the national level to test how it works on different scope.
3 Understanding of Mass Entrepreneurship and Innovation Policy
China has entered a new era of comprehensively deepening reforms and improving the quality and efficiency of the economy. Mass entrepreneurship and innovation is not only a strategic policy to drive wealth and people to be innovative, but also as an important guarantee to promote fairness and maintain social order.
On September 10, Chinese Premier Li Keqiang pointed out at the opening ceremony of the Davos Forum in summer 2014.
“Just imagine how big a force it could be when the 800 or 900 million laborers among the 1.3 billion population are engaged in entrepreneurship,
innovation and creation...
... When reform and innovation fuels the massive wave of entrepreneurship by the people and at the grassroots level on the land of the 9.6 million square kilometers of China, the enormous power of the diligent and resourceful Chinese people will be fully unlocked and the engine driving China's sustained economic development will constantly regenerate itself and remain powerful.”
China's effort to comprehensively deepen reform is an ongoing process, so the government is taking the lead in conducting a "self-targeted revolution", the Chinese government had the expectation that as long as the various constraints on individual and corporate innovation are vigorously eliminated, and a new situation of "mass entrepreneurship and innovation" is created, China’s development will be able to further advance. Since then, the government’s policy documents have frequently expressed “Mass entrepreneurship and innovation”. In 2015, the Opinions of the State
Council on Several Policies and Measures for Vigorously Advancing the Mass Entrepreneurship and Innovation (国发〔2015〕32 号) was promulgated and
implemented. This shows that “Mass Entrepreneurship and Innovation” has officially become an important strategic decision for the government to promote economic and social transformation, also determined as a new engine of China’s economy.
From a macro perspective, the global economic environment has remained an
has remained bumpy. Growth in emerging market economies has slowed down, and the Chinese economy faces greater downward pressure.
After the concept of "Mass Entrepreneurship and Innovation" was proposed at the Summer Davos meeting in 2014, Chinese President Xi Jinping delivers a keynote speech at the Asia-Pacific Economic Cooperation (APEC) CEO Summit in the same year. The "New Normal" was systematically described for the first time. It put forward the development opportunities brought by the new normal to China in four aspects, first, although economic growth has slowed down, the actual increase is still substantial. Second, the economic growth has become more stable, the growth momentum has become more diverse. Third, the economic structure has been
optimized. With the upgrade, the prospects for development will be more stable. And the last, the most crucial related to the policy of "Mass entrepreneurship and
innovation", is that the government will vigorously simplify the decentralization of government power and further release market vitality.
Moreover, it was mentioned in the meeting that China’s comprehensive deepening of reforms is to stimulate the vitality of the market.
“Market vitality comes from people, especially from entrepreneurs, from entrepreneurship. Therefore, the government will broaden the path of innovation.
indispensable igniter." We must adopt more effective measures to start the innovation engine at full speed. We are committed to the role of
innovation-driven motive force, and more support for innovative companies, vibrant SMEs, and the transformation and upgrading of traditional
industries to form new growth points and driving forces as soon as possible.”
-said by Chinese President Xi Jinping.
What can be found is that the Chinese government has proposed the concept of “Mass entrepreneurship and innovation” in public occasions and international conferences time and again. It is further advocated that this concept will become a major reform direction and promotion policy for China in the future.
The Chinese government has issued a series of official documents to promote the "Mass Entrepreneurship and Innovation" policy, which includes both comprehensive policy planning for the general public and regulations for specific system, such as finance or education and particular regions, like demonstration areas. However, this study will specific focus on the first comprehensive official document, “Opinions of
the State Council on Several Policies and Measures for Vigorously Advancing the Mass Entrepreneurship and Innovation” (国发〔2015〕32 号), which is issued by
State Council on June 11, 2015, with the regard that this document as critical implementation of the policy of “popular entrepreneurial innovation” (hereinafter referred to as Opinions.) The “Opinions” is an official document, announced by
central, as a practice guideline for local government, in order to reform and improve the relevant institutional mechanisms, to build inclusive policy support system, and to establish a sound cycle of economic activities, by giving an impetus to the capital chain to guide entrepreneurship innovation chain, further support the industrial chain, then end up with promoting the employment. As a result, this paper took this as the main research object, and made it in this article, a more detailed introduction can be found in further content.
To be more precise, during the new normal period of China’s economy, innovation and entrepreneurship evolved from “elite groups”, mainly about high-level scientific and technical personnel and overseas professionals, to “popular groups”, especially indicates young people, corporate managers, scientific and technical personnel, and overseas students returning to China. The main object of "Mass Entrepreneurship and Innovation" further expand the scope, it is expressed as: "Based on the work of thousands of people, college students, scientific research institutions, and institutional staff are the main forces, including employees, overseas talents, and migrant workers. All people including the laid-off and unemployed vulnerable groups, etc." (Qu, 2016)
In fact, there are three major implications behind the Mass Entrepreneurship and Innovation policy. Promoting mass entrepreneurship and innovation is the source of the driving force for development, it is a way to enrich the people, make equity, and strengthen the country; moreover, facilitating economic restructuring and build new developments. And it is a major measure for stabilizing growth, expanding
employment, stimulating the wisdom and creativity of hundreds of millions of people, and promoting social vertical mobility, fairness and justice.
Chinese Government regards the policy as an inevitable choice for cultivating and spurring new forces for economic and social development, fundamental measures of expanding employment and enriching the people, and the effective ways to stimulate innovation potential and entrepreneurial vigor for the entire society. As one time Premier Li Keqiang answered in an interview with foreign media, "Mass
Entrepreneurship and Innovation" are actually reforms, rather than personal decision to start a business. This is also historical inspiration, over the past more than 30 years, it was the introduction of household contract responsibility system that has brought into full play the initiative of the vast number of Chinese farmers, allowing people move freely across provinces and cities that several hundred million farmers have migrated into cities to find jobs, thus had created the miracle of China’s economic development.
Therefore, from the perspective of policy implications, “Mass Entrepreneurship and Innovation” is not propaganda, but a government, party, policy of enriching the people. It is a new round of reform dividend released by the government through a series of institutional arrangements. Since China’s first reform and opening-up in 1978. For the past 40 years, several entrepreneurial waves have been guided by the party’s reform, opening-up, and enriching people’s policies. This boom is also due to the rise of new technologies and new economies such as the Internet and big data. On
the whole, Mass Entrepreneurship and Innovation policy adheres to the reform drive, accelerates the implementation of innovation-driven development strategies, gives full play to the decisive role of the market in the allocation of resources and the role of government. The spirit of the policy is increasing the power of simple administration, decentralization, liberalizes policies, and liberalizes the market to form a favorable atmosphere conducive to entrepreneurship and innovation. Thus, entrepreneurs will become active and converge into economic and social development.
From a realistic point of view, for mass entrepreneurship and innovation,
“professionals” are not born, but they are trained to grow in the market. For a large economy such as China, if only a few market players participate, it is obviously difficult to meet the needs of the national unified market. From the perspective of the government’s expectations, the policy and program can promote everyone’s whimsy to reality, and more “professionals” emerge from all aspects, transform human resources into human capital, and better utilize the strong advantages, human resources, in China. On the other hand, adopting various methods including “Mass Entrepreneurship and innovation” allows and encourages the whole society to be bold in creating, vigorously liberate and develop productive forces, and contribute to the ultimate realization of common prosperity in society.
Essentially, several wave of entrepreneurship in China are the government's liberalization of control, increasing the level of economic participation, allowing people to liberate themselves from the constraints of the planned economy, and
striving for the results of the reform of wealth. The difference is that the previous wave of entrepreneurship was in the era of shortage of goods and services, while the current “Mass Entrepreneurship and Innovation” wave occurs under China fully integrates into economic globalization, means that entrepreneurs face international and domestic markets at the same time; in addition, several configurations changed under this entrepreneurial activities, economic development shifts from quantity to quality, the majority type of industry for startup transformed from the former secondary production industry to tertiary industry, and the economic growth shifts from resource to innovation. In the era of a new round of entrepreneurship,
entrepreneurship is leading by the innovation of products, technologies and services, meanwhile, closely integrated with the policy of "Mass Entrepreneurship and
Innovation", relying on new technologies and government programs. After 40 years of rapid reform and opening-up, China has entered a "new normal" status.
Corresponding to this, China's population structure and employment structure are also entering to this status. Through mass entrepreneurship, adding more market players, enhancing market vitality and competitiveness, it is conducive to the once again emancipating social productivity. The expansion of the employment space by entrepreneurship and the promotion of employment through innovation will help increase in employment rate and income of residents, thus a fundamental measure for realizing the enrichment of the people.
More detail measures of Mass Entrepreneurship and Innovation policy will be discussed, bases on the elements of entrepreneurial ecosystem, and examine
accordingly, in the following paragraph.
4 Research Methodology
In this study, research method adopted were mainly secondary sources derived from National Bureau of Statics of China (NBS), Global Entrepreneurship Monitor (GEM), Worldwide Governance Indicators (WGI), World Economic Forum, and World Bank, online data base.
This study attempts to cite the Western entrepreneurial ecosystem model to examine the effectiveness and impact of China’s policy promotion. As Stam et al. (2016) said, the concept of entrepreneurial ecosystems is very attracting to regional policymakers and leaders. The idea that a certain mixture of public policy options, social attitudes, and financing can catalyze long-lasting entrepreneurial and innovation activity is a seductive promise to leaders looking to create a foundation for more sustainable growth. There are different levels of measurement for entrepreneurial ecosystems. This paper focus on the overall effect of the ecosystem in terms of all elements proposed in Stam's model (2017). In future work, more years later Chinese
implemented the policy of Mass Entrepreneurship and Innovation, we might explore the effectiveness between the policy and the outcome, which Chinese government had determined as economic growth and job creation. This study is focusing on only one or two even more indicators for each element, aiming to test the influence of whole set of entrepreneurial policy. Though, to date, the relationships between the variables
in the Global Entrepreneurship Monitor model have lacked explicit theoretical grounding, yet the initial idea of the model was to consider why some countries are more 'entrepreneurial' than others, thus the model implies that entrepreneurial activity at the individual and national levels may respond to a different set of environmental parameters than established business activity (Levie and Autio, 2008) So, in the following examination, the study will primarily regard the indicators of GEM as proxies of elements in entrepreneurial ecosystem, if available, plus more indicators from international organizations and National Bureau of Statics of China, to verify the effect of Mass Entrepreneurship and Innovation policy.
Due to the inconsistent statistical period and data sources of each indicator, and some indicators do not have yearly statistic, indicators other than the GEM database were only counted up to 2016, meaning the observations after policy announced are limited to two or three. However, in order to make the test results more reliable and increase the number of observations of each indicator, this study regards 2014 as a watershed, the government officially put forward the concept of “Mass Entrepreneurship and Innovation”, collecting all available data from 1997 to 2017 to have comparison of two period of time, from 1997 to 2014 (take all observations into account if there was) and from 2015 to 2017(or 2016, indicators other than GEM), whether or not there is an impact on elements of ecosystem before and after. By examining whether all the ecosystem elements in the model have significant differences before and after the reform, we will explore China. The so-called "Mass Entrepreneurship and Innovation" policy under a number of measures, whether it effects the constitutions, ten key
components, of the ecosystem, and further explore whether the Western model theory applies to China's innovation policy reform.
5 Policy Related to Elements of Entrepreneurial Ecosystems and
Hypothesis
In developed countries, entrepreneurship is considered as an engine or catalyst for growth potentials because it raises the living standard by creating small and medium sized enterprises that contribute positively to the welfare of the society (Cahna, 2008) Under the strong promotion of the Chinese government's vigorous reform by Mass Entrepreneurship and Innovation policy, policy makers in China have identified the importance of entrepreneurship in the quest for economic development and support instruments to increase levels of entrepreneurial activity, thus, various reforms and social improvement , either in a formal way or informal aspect, started at the end of 2014. China adopted a more comprehensive set of policies to stimulate
entrepreneurial activities, under the set, many implementation details are included, including the improvement of institutional mechanisms, the improvement of inclusive policies and measures, the strengthening of overall coordination. Attempt to establish a friendly policy and institutional environment conducive to mass entrepreneurship and innovation.
5.1 Formal Institutions
Entrepreneurship and Innovation policy, which mainly include deepening the reform of the enterprise registration system and strengthening entrepreneurial intellectual property protection.
In order to make it easier for entrepreneurs to register with companies, on the one hand, China simplifies the procedures for registration of related certificates required by enterprises, and proposed the notion of "three licenses in one", integrated the business licenses, organization code certificates, and tax registration certificates required by enterprises, an unique code for license, and the use of electronic
registration. Entrepreneurs can engage in general production and business activities as long as they go to the industrial and commercial department to obtain a business license. If they want to engage in production and business activities that require permits, they can apply for permission to the competent authority. At the same time, entrepreneurs can start to carry out some preparatory work, such as fundraising. Under such a policy, a lot of time is reserved for startups, that is, the so-called "license first, operating permit second" reform; while issued an operating permit before a license, which was the practice in the past. Once the entrepreneur wants to start a business, first, he must have sufficient capital, and then the permit of the competent department must be obtained before applying for the business license from industrial and commercial department. On the other hand, all regions in China have relaxed the conditions for registration of newly registered business sites, supporting the local governments in continuing to deepen domicile (place of business) reform to facilitate entrepreneurship and innovation among all the people, thus allowed two or more
companies to register at the same address, providing a convenient business registration services for entrepreneurs. The concept of “one address for multiple business licenses”, the group registration, will be explored by region and by industry, so as to further release domicile resources.
The State Council has formulated and issued a unified plan to clearly list the industries, fields, and businesses that prohibit and restrict investment operations within the territory of the People's Republic of China, allowing entrepreneurs to better understand potential industries and to remove the past unreasonable industry entry restrictions. Governments at all levels adopt a series of institutional arrangements for corresponding management measures in accordance with the law, other than the list of cases, entrepreneurs can all enter fairly. Relative to entering the norms, China also established a convenient market exit mechanism. In solving the problem of
transparency of information among startups, relying on the corporate credit announcement system to establish a list of small and micro enterprises to avoid information asymmetry.
With respect to the protection of entrepreneurs, the Chinese government has strengthened the protection of intellectual property rights for entrepreneurial businesses, shortened the examination of infringements through intellective right protection and assistance mechanisms, and increased the punishment for infringers. In addition to legal procedures, it also provides administrative mediation and other non-litigation dispute resolution methods. Furthermore, actively promote intellectual
property transactions and accelerate the establishment of a national public service platform for intellectual property operations.
With regard to taxation measures, the Chinese government proposed various preferential tax policies for the development of small and micro enterprises. Furthermore, provide deduction of research and development expenses and
accelerated depreciation of fixed assets for scientific and technological incubators, university spin-off and science park. In January 2016, the revised Administrative
Measures for the Determination of High and New Technology Enterprises1 (国科发 火〔2016〕32 号) was released to coordinate the promotion of the Mass Entrepreneurial and Innovation policy.
Apart from regulations and law, for entrepreneurship, the quality and efficiency of institutions matter: the level of perceived corruption and the general regulatory framework within countries (Stam, 2017). Thus, in addition to three
governmental-related indicators from GEM, Governmental Support and Policies, Taxes and Bureaucracy, and Governmental Programs, we use data from Quality of Government Survey, adopted following four aspects: Voice and Accountability, Government Effectiveness, Regulator Quality, Rule of Law, and Control of Corruption. Thus,
H1: Government policies have a significant impact on formal institution.
1 Released on February 04, 2016, the main purpose is to increase policy support for
5.2 Entrepreneurial Culture
Entrepreneurship culture (as an informal institution) reflects the degree to which entrepreneurship is valued in society (Stam,2017). According to structuration theory emphasize the knowledge of individual is constructed under the social and cultural environment, therefore, one person cannot be unaffected by society, basically saying that all the human being in the world influence each other. Therefore, the objective knowledge in the world is not constructed arbitrarily by individual, but has some degree of "consensus" with others in the same social culture. Thus, under the circumstances the Chinese government has vigorously promoted policies, we can reasonably assume that it will have an impact on culture and people’s perception of entrepreneurship.
Three measurement can be adopted from GEM, Cultural and Social Norms score, and the percentage of 18-64 population who agree with the statement that, successful entrepreneurs receive high status, and the statement that most people consider starting a business as a desirable career choice. Thus,
H2: Government policies have a significant impact on entrepreneurship culture.
5.3 Infrastructure
Physical infrastructure such as transportation, land or operating space, and
communication facilities such as Internet, telephone and postal services are vital for the successful operation of entrepreneurial activities and venture start-up and growth (Hansen and Sebora, 2003). Access to physical infrastructure for entrepreneurs can
vary widely from different period of time, while it might be taken for granted in many highly developed countries. In this part, Physical and Services Infrastructure score from GEM and the indicator on Sum of Length of Transport Routes2 will be examined.
H3: Government policies have a significant impact on physical infrastructure.
5.4 Market Demand
Not to mention that how big is the domestic market size of China, under the Global Competiveness Index 2017-2018, China got the highest score and world top one ranking in market size respect. Even though, for the potential market for start-ups, the Chinese government plays a supporting role in procurement. Promote the
development of SMEs through government procurement policies and strengthen the policy guidance, supervision and inspection of the procurement units. Supervise the purchasing units to improve the procurement plan and project reservation
management, and to achieve the supporting effect of small and micro enterprise development in a policy manner. All in all, increase the procurement of innovative products and services, and closely integrate government procurement with support for entrepreneurial development.
China aims to establish a sound and fair market environment. As China is often held up as an object lesson in state-directed capitalism (The Economist, 2011), in spite of
2 The formula is: Sum of Length of Transport Route= length of railways in operation (10000 km)
the co-existence between the public and private sectors continued to be a fine balance, on one hand, and the status of private entrepreneurs was improved. Evidence that, in 2000, the government announced that private business was to be put on “an equal footing with SOEs,” and that policies discriminating against private enterprise, including those related to taxes, land use, business start- ups, and foreign trade, were to be eliminated (Pomfret, 2000). Between 2000 and 2009, the number of new enterprises increased by an average of 30 percent each year (The Economist, 2011), yet, there is still doubt in Chinese people that SOE executives might have monopoly resources, and the privilege of market.
So the functions of government are transforming, transformed to increase the supply of public goods and services, and to provide entrepreneurs with more opportunities. Gradually clean up and abolish the systems and regulations that impede the
development of entrepreneurship and break local protectionism. A fair competition review system was proposed, to establish a unified, transparent and orderly market environment. Anti-monopoly and anti-unfair competition in accordance with the law eliminated monopoly agreements that are not conducive to entrepreneurial innovation and development, abuse of market dominance, and other unfair competition practices. Cleaned up and standardize the enterprises' fees and charges, improve the charging management system, and formulate post-event supervision methods. In addition, Chinese government established and standardized the enterprise credit and information release system, and formulated management methods for the list of severely illegal enterprises. Link the credit of the entrepreneurial entity with market
access and preferential policies, aim to complete the entrepreneurial and innovative supervision model based on credit management.
Apart from the market size, the disposable income per capital also needs to be taken into consider, thus in this part, three indicators will be test, besides two indicators from GEM, Internal Market Dynamics score and Openness score, Per Capita Disposable Income of Urban Households3 (yuan) will be tested as well. Thus,
H4: Government policies have a significant impact on demand.
5.5 Networks
At the beginning of the first Chinese incubator construction in 1987, within 20 years, Chinese incubators are generally supported by the government in providing financial support, policy support, guiding and regulating incubators, and promoting networking. As well as provide preferential taxation, import and export rights for incubating
enterprises, provide innovative funds, and provide policy support to small and
medium-sized enterprises through China Torch Program, and mainly governed by the Ministry of science and technology the torch high technology industry development center, regional science and technology departments or China National High-Tech Industrial Development Zone. However, with the gradual introduction of incubator related preferential policy, such as the government subsidizes the use of office space,
3 Disposable Income refers to the sum of final consumption expenditures and other
non-compulsory expenditure that is the freely disposable household income. It is that the total income minus personal income tax paid by the individual contribution to social security spending and subsidies investigations households accounting income. The formula is: Disposable income = total household income - pay personal income tax - personal contribution to social security
water, energy, and network hardware and software facilities, to give appropriate preferential treatment to reduce the burden on entrepreneurs, the incubator's
investment and operation are increasingly diversified. Under this ethos, in terms of incubators, a similar concept came out, the Chinese government proposed policies and measures to support the development of "mass maker space", which is, a new term distilled by the Ministry of Science and Technology of the People's Republic of China, refer to new entrepreneurial service agencies represented by the maker space,
incubators, etc. (Wu, Zhan &Zhou, 2016), open to public groups, some adopt membership and collect some fees, while others do not charge fees, and they are not private spaces but open spaces, under the context of the Mass Entrepreneurship and Innovation policy, so as networking space for potential entrepreneurs. China has vigorously developed no matters either incubators or so-called mass innovation space, new type of incubators, such as Sinavation Ventures, 3W Coffee or 36Kr, and strive to expand and strengthen the public space and improve incubation services.
Apart from the above mentioned, China also has a so-called innovative industrial cluster. According to the China Torch Statistical Yearbook data, there are 71 clusters from 2014 to 2016. The average annual total number of companies is about 13,0004. In addition, in December 2017, to cooperated with the Mass Entrepreneurship and Innovation policy. The Ministry of Science and Technology issued 29 new pilots for innovative industrial clusters to provide more exchange opportunities for
entrepreneurs who have similar industrial backgrounds.
Networking interactions by the business incubators can be described as the extent to which the incubators management provides its incubatees with access to the networks, in order to gain knowledge and resources not possessed by the business incubators management (Rice, 2002). The networking mechanism is meant to foster partnerships among incubatees and outside organizations, and also to create mutual partnerships among incubatees (Hansen et al., 2000). So under this context, the number of incubators can be a reasonable indicator of evaluating the degree of network.
Considering the function and definition of incubators in China and others institutions that provide similar services, the national university science parks, maker spaces and innovative industrial clusters defined in China are incorporated into the incubator’s calculations. Thus,
H5: Government policies have a significant impact on networks.
5.6 Leadership
Leadership provides guidance and role models within the entrepreneurial ecosystem. This leadership is crucial in building up and sustaining a healthy ecosystem: a set of visible entrepreneurial leaders who are committed to the region (Stam, 2014). With the whole background understanding of Mass Entrepreneurship and Innovation, the case of Chinese, the entrepreneurial ecosystem could be considered as a
government-centered environment. Since the policy of "mass entrepreneurship and innovation," the government has adopted the top-down promotion mode, can also be consider as top-down steering and leadership. Therefore, the Chinese government has
also emphasized the coordination of all policies and implemented policy planning. To achieve that, the National Development and Reform Commission has established "Promoting the Mass Entrepreneurship and Innovation Joint Conference", which, in principle, holds one or two plenary meetings per year, to strengthen the central government’s leadership and coordination of local entrepreneurship, innovation and related employment, further other policies, basically included all respects. After policy guideline was released of the State Council, for the different field of policy, the various departments will announce to local government, correspondingly, and ensure that the entrepreneurial support policy can be implemented in practice. And through the policy implementation evaluation system and notification system regularly review the effectiveness of the policy, at the same time make sure that all departments and local government stand in line central and have the same understanding of policies.
Another measure to support this argument, the government established the first batch of 28 national innovation demonstration zones in 2016, with three different type of goal. Seventeen regional demonstration bases, regard as miniature of China, are focusing on the specific areas where entrepreneurship and innovation resources are concentrated, promoting the construction of service-oriented government and improving Mass Entrepreneurship and Innovation policy. And another four universities and scientific research institutes aim to fully tap human and technical resources, promote the transformation of human resources and scientific and technological advantages into industrial and economic benefits, focus on perfecting the entrepreneurial personnel training and flow mechanism, further accelerate the
transformation of scientific and technological achievements to build entrepreneurial support for college students. The last seven enterprise demonstration bases play a central role in leading enterprises with outstanding innovation ability and strong entrepreneurial atmosphere, focusing on building a business management system suitable for entrepreneurial innovation, inspiring employees' creativity, expanding investment and financing channels for entrepreneurial innovation, and the most crucial attribute is opening up corporate entrepreneurial innovation resources. Under such a structure, the government announced a second list of demonstration bases in a total number of 92 in September 2017.
The idea behind the government is, firstly, they have selected a number of national innovation demonstration zone to concentrate efforts and attempted to use these bases to play a leading role in order to promote the policy, further to replicate the successful experiences of demonstration bases and gradually expand the entrepreneurial ecology to all parts of the country, to achieve the goal of the national entrepreneurial
ecosystem. Since the concept of the demonstration base is a construction accompanied by the Mass Entrepreneurship and Innovation policy, lacking of
available data to compare the differences before and after the policy. This part can be left for future scholars to find suitable indicators for measurement.
5.7 Talent
In terms of related talent policy, it can be divided into internal training and external recruitment. The Chinese government has incorporated entrepreneurship education
and entrepreneurial quality education into the national education system, and has institutionalized and systemized entrepreneurship education and training in the entire society. Aiming at the group of college students, China set up a perfect
entrepreneurship program and established a business training system. To broaden the scope, China has as well focus on the popularization of entrepreneurial innovation knowledge so that the idea of Mass Entrepreneurship and Innovation will be deeply rooted in the hearts of the people. Last but not least, the establishment of a team of entrepreneurial mentors to improve the level of entrepreneurial services.
In order to motivate domestic researchers and college students to start their own businesses, the Chinese government proposed “regularization policies for professional and technical personnel resigning for entrepreneurship from colleges or any other research institutes." Any technician who has agreed to leave will retain relations within three years, in order to build a sound two-way flow mechanism for scientific research personnel. In addition, the implementation of the “Students Entrepreneurship Leading Plan” is, in simple terms, providing comprehensive support and services for every college student who has entrepreneurial aspirations and training needs,
including universal entrepreneurship education, entrepreneurship training, business registration and bank account opening information, multi-channel funding support, business establishments, and entrepreneurial public services. At the same time, implement the flexible schooling management methods, so that college students can retain their academic status to start business.
Moreover, attracting returned overseas talents as well as foreign talents to start businesses in China is also an important issue. The Chinese government has relaxed the conditions for entry visas and permanent residence permits for high-end talents, and simplified the process of starting an enterprise's approval. Furthermore, a one-time start-up initial capital has been provided for high-tech entrepreneurs returning to China and overseas high-end talents to establish high-tech enterprises in China, further provide comprehensive welfare measures in the areas of spouse
employment, children's education, medical care, housing, and social security. Besides attracting overseas talents to China, on the other hand, China has set up an offshore business entrepreneurship base for overseas scientific and technological talents to introduce more foreign venture capital innovation resources into the country.
The Chinese government adopts a comprehensive measure to educate domestic talents, whether it is for school-age youth or post-graduation social workers, they all provide corresponding entrepreneurial courses to encourage more people to start businesses and achieve the goal of “mass” entrepreneurship. Therefore, apart from two indicators from GEM, Basic and Post School Entrepreneurial Education and Training score, the Number of High Educated5 (10000 persons) will also be examined. Thus,
H7: Government policies have a significant impact on talent.
5 High Educated refers to the sum of graduates and total enrollment of students of regular
undergraduates and college student, and postgraduates. Regular Institutions of Higher Education refer to educational establishments set up according to the government evaluation and approval procedures, recruiting graduates from senior secondary schools as the main target by National Matriculation TEST. Postgraduates refer to students whose the highest level of education is
5.8 Finance
To support entrepreneurs getting the financial resource, the Chinese government has following implementations. First, established a guidance mechanism for venture capital. To expand the scale of social capital in participating venture capital projects, China launched National Venture Capital Guide Fund for Emerging Industries6 and Small and Medium Enterprise Development Fund7, as well as developed new models
such as joint investment. In addition, it targeted venture capital legislation, such as angel investment policies and regulations, and set up a venture capital industry association to strengthen industry self-regulation.
Second, broaden the supply channels for venture capital. Facilitate social funds to support mass entrepreneurship and promote commercial banks to create a long-term market-oriented cooperation with venture capital institutions. Further reduce the threshold for entry of business insurance funds into venture capital. To promote the development of investment and loan linkage, insurance linkage, investment debt linkage and other new models, and constantly increase financing support for entrepreneurial and innovative companies.
6 Established in January 2015, Premier Li Keqiang chaired a State Council executive meeting and
decided to establish National Venture Capital Guide Fund for Emerging Industries. The
government is one of the important entities in the field of venture capital, and it is also involved in the operation of the capital market. In addition to setting up a special project through the central government, it also attracts powerful companies, large financial institutions and other social and private capitals participate in the formation of this guide fund with a total amount of 40 billion yuan.
7 The fund is from central budget arrangements, mainly used to support mainly used to support
specialized development of small and medium-sized enterprises, cooperation with large enterprises, technical progress, and improvement of the environment (excluding the
Third, develop state-owned venture investment, by enhancing the enthusiasm of central enterprises and other state-owned enterprises joining National Venture Capital Guide Fund for Emerging Industries and establish more state-owned venture capital guidance funds, so as to give full play to the role of state-owned capital in
entrepreneurial innovation.
Forth, increase the entrepreneurial financing model. Develop of financing platform through Internet technology to raise public, and small equity crowdfundings. In order to reduce the difficulty of entrepreneurs' loans, the Chinese government strongly supports intellectual property finance, thus enables entrepreneurs to use intellectual property rights to pledge financing or securitization of intellectual property, and proposed a Entrepreneurial Guarantee Loans policy, which provides the uniformly maximum loan amount, 100,000 yuan, with preferential interest rates for those who have entrepreneurial requirements and have certain entrepreneurial conditions but lack capital.
Fifth, innovate bank support methods. Banks are encouraged to increase the specialization of financial services for startup companies, and to have intensive cooperation with other financial institutions and provide targeted equity and debt financing support for entrepreneurial activities. Further, achieve that bank financial institutions can provide one-stop systematic services including settlement, financing, wealth management, consulting, etc.
In addition to the above measures, to stimulate the company growth, the Chinese government keeps working on the dynamic of financial market, and actively
optimizes the capital market. Support eligible start-ups to list or issue notes financing, and encourage startup companies to raise funds through the bond market. Provide different stock markets for different stages and conditions of the company, for instance, the creation of a strategic emerging industries board on the Shanghai Stock Exchange, which is intended to bring back overseas-listed Chinese high-growth and innovative companies.
And lastly, Chinese government relaxes restrictions on foreign investment and simplifies the management process in accordance with the consistent management principle of domestic and foreign investment to attract foreign venture capital and to promote the development of Chinese-foreign joint venture investment institutions.
In this section, in addition to Financing for Entrepreneurs score from GEM, the Ease of Access to Loan rank8 from World Economic Forum Global Competitiveness Index as a reference. Thus,
H8: Government policies have a significant impact on finance.
5.9 New Knowledge
Since the announcement in 2014 Government Work Report, one can see the Chinese government's ambitions of reform of the science and technology management system,
with the content that innovation is the motive force for adjusting and upgrading the economic structure, the state will make innovation the core of China's development endeavors, promote the full integration of science and technology with economic and social development, and elevate China's industries to the high range of the global value chain. Thus the increase in government spending on basic research and research on cutting-edge technologies, technologies for the public good and key standard technologies, and the improvement of public science and technology service platforms and mechanism for launching major science and technology programs. State-owned key laboratory and other national scientific research bases are open to entrepreneurs, providing strong support for popular entrepreneurship and innovation. Besides Chinese government itself, it encourages enterprises to establish a number of professional and market-oriented technology transfer platform.
Besides R&D Transfer score from GEM, more possible indicators can be examined, which are Gross Domestic Spending on R&D (% of GDP), Number of Domestic Patents Application Accepted and Granted9 (item) and Full-time Equivalent of R&D Personnel10 (10000 man-year) in China. Thus,
H9: Government policies have a significant impact on new knowledge.
9 Patent is an abbreviation for the patent right and refers to the exclusive right of ownership by
the inventors or designers for the creation or inventions, given from the national patent offices after due process of assessment and approval in accordance with the Patent Law. Patents are granted for inventions, utility models and designs.
10 Full-time Equivalent of R&D Personnel refers to the sum of the full-time persons and the
full-time equivalent of part-time persons converted by workload. For instance, if there are 2 full-time persons and 3 part-time workers (20%, 30% and 70% of working hours respectively on R&D activities), the full-time equivalent is 2+0.2+0.3+0.7=3.2 person-years. This is an
5.10 Intermediate service
Under the set of Mass Entrepreneurship and Innovation policy, Chinese government has vigorously developed third-party professional services, such as encourage colleges, associations and research institutions provide a consultation service for startups. Accelerate the development of business management, financial consulting, marketing, human resources, legal consulting, intellectual property rights, inspection and inspection, modern logistics, and other third-party professional services, and constantly enrich and improve entrepreneurial services. For example, public platforms for entrepreneurship innovation was established to create a support role for mass entrepreneurship, like Shuangchuang Online, to integrate entrepreneurial and innovative resources, to centralize the launch of entrepreneurial policies, and to enhance the transparency of information through a specialized and networked service system. And the government strongly supports various types of public forums,
entrepreneurial forums, entrepreneurship training and other activities to enrich the form and content of entrepreneurial platforms; besides, hold various types of entrepreneurial innovation contests, such as the China Innovation and
Entrepreneurship Competition and Innovation Challenge Competition. In order to make startup failures willing to try again, the government establishes necessary guidance and assistance mechanisms to enhance entrepreneurial confidence and entrepreneurial ability. Through the statistical index system of startup companies, angel investment, and venture capital, the statistical standards and survey methods are standardized to strengthen monitoring and analysis.
this element. Thus,
H10: Government policies have a significant impact on intermediate services.
6 Results and Conclusion
To estimate the hypothesized impact, the statistical technique relied on comparing the sample means of two period of time, which is earlier defined as before and after policy announcement, all indicators are presented in Table 1.
Through the mean test, we calculated the average number of points scored in indicators for each element of entrepreneurial ecosystem during the two different periods of Mass Entrepreneurship and Innovation policy, with and without policy, and compared the differences between means. The principle of mean-number variation analysis is based on the ratio of the average number of variations (between groups variation) divided by the random variation (F-value), which can simultaneously verify the difference of three (or more) means. When the value of F is larger, it indicates that the dispersion of the mean between the “policy” and “no policy” periods we care about is greater than the error variation, if the difference is large enough, larger than the statistical random variation, then we get tangible results and accept our
assumptions. The study grouped in two, with or without policies (0, without policy; 1, with policy), and the Table 2 to 10 demonstrate that three statistical features for all indicators, mean, number of samples, and standard deviations, in two groups accordingly. The following paragraphs will analyze the results of the testing of
various entrepreneurial elements under the different periods.
Surprisingly, among the elements of our examinations, besides the “leadership” we left for test, apart from intermediate services, we can all have at least one indicator, even more, that has significant differences before and after the policy (Table 11). Once the Kauffman Center for Entrepreneurial Leadership once conduct a research of a survey of entrepreneurial policies and activities in various states in the United States in order to better understand the state policy environment in which entrepreneurs operate. And had a result that, while states reported that entrepreneurs are an integral part of state economic development strategies, there is little evidence in governors’ policy statements that entrepreneurship is part of the chief executive’s larger policy agenda (Kayne, 1999). This is hardly imaginable, since China announced its policy at the end of 2014, less than three years of observation time allowed us to draw
conclusions that have an impact on nearly all elements. According to Kayne (1999), advocates of an entrepreneurial economy cannot expect major changes in public events until state officials develop a more succinct view of the link between entrepreneurship and economic prosperity and the contribution that entrepreneurs make to society in general. We can assume that the Chinese state officials have a clear consensus on the promotion of entrepreneurship to the economy and society,
especially the concept of the mass proposed by the central government, in contrast of the dominant approach to development in the latter part of the 20th century, basically was based on the assumption that a small number of large, established firms were the major source of economic growth and the belief that this would produce a
‘trickle-down’ effect on the economy, creating economic opportunity for small and medium-sized firms. So that governments focused on efforts to ensure that ‘national firm champions’ were as efficient and productive as possible (Reynolds et al., 1999). Judging from China’s political system and the characteristics of local officials appointed by the Party, it is not difficult to have a conclusion that Chinese officials had a unified understanding with central government of Mass Entrepreneurial and Innovation policies.
In the test of various indicators, this element of the network that deserves special attention, with the number of incubators. “Maker space” only began to appear in 2014, but it quickly attracted social attention in China. Under the guidance of the State Council in 2015, the Ministry of Science and Technology issued the “Guidelines for the Development of Maker Space” and vigorously resigned from the crowd. Although the development history of maker space is very short, there are many types of
professional services, training and counseling, media extension, investment promotion, comprehensive ecology, and joint office and other types (Mao, 2016). At the same time, based on such featured towns and high-tech zones is spreading nationwide. According to the "2017 China Torch Statistical Yearbook" compiled by the Torch High-tech Industry Development Center of the Ministry of Science and Technology, the number of maker space has reached 4,298, with amount of them are listed as a national technology enterprise incubator and a considerable amount of maker spaces are supported by all levels of government.
Looking at the number of Chinese incubators to explore the network element of the entrepreneurial ecosystem, we can reasonably think of Chinese people’s emphasis on the culture of “relationship”, which is so-called "Guanxi" in Chinese. One proverb is widely prevalence in China, "What really matters doesn't matter, while what really doesn't matter matters". In 2014, The Economist constructed an index of crony capitalism. It was designed to test whether the world was experiencing a new era of “robber barons”—a global re-run of America’s gilded age in the late 19th century. The crony capitalism index is calculated by the “Economist” statistics on the proportion of the wealthy countries in the dependent government-related industries. In simple terms, it is whether or not the measure of commercial success depends on the closeness of the relationship between the business, the business community and the government. That is, whom you know and who you have special relationship with are the key to run the business. In the latest results in 2016, China ranked 10th. An important reason why entrepreneurs and start-ups comply with the unspoken rules of relationships is that the incomplete formal system strengthens the role of relational culture and thus constrains the space for entrepreneurs to choose their actions. In the absence of a formal system, entrepreneurs have to act more as "diplomats" and comply with the prevailing relationship rules to overcome the startup's weaknesses (Li, Ye and Zhu, 2016). It is precisely because the relationship plays a pivotal role in the development of the enterprise. So, in this study, it can be found that the Chinese government has significant influence on the network before and after the policy when discussing the mass entrepreneurship.
