Pop-up English-Chinese

Social interaction and family entrepreneurship

HU Hao1 WANG Haiyan1 ZHANG Peiying

(1.School of Economics, Shanghai University, Shanghai, China 200444)
【Knowledge Link】substitution effect

【Abstract】Since the call of Premier Li Keqiang for the “mass entrepreneurship and innovation,” the society has set off a wave of entrepreneurship for all. Among them, college students, overseas students and returning migrant workers are particularly prominent. Inspiring the “double innovation” vitality has also become one of the important governance goals of the government at all levels, and the effective path to seek to stimulate entrepreneurial vitality has become a hot topic of concern for policy makers and theorists. By using the latest 2016 micro-data from the China Family Tracking Survey (CFPS), and the discrete selection model and the OLS model, this paper analyzes the impact of social interaction on family entrepreneurial decision-making, and explores its mechanism. The results show that the three proxy variables of social interaction: relationship consumption, communication expenditures and non-family members’ meal expenses have a positive impact on family entrepreneurial decision-making at a level of 1%. Specifically, in the case where other variables are fixed, each increase in one unit of human welfare payments, communication expenditures and non-family members’ meal expenses will increase the chances of family entrepreneurship by 1.7%, 3.7% and 3.5%. As far as the impact mechanism is concerned, (1) Social interaction information acquisition and social learning mechanism indicate that in areas with high entrepreneurial participation rates in districts and counties, whether it is human welfare payments, communication expenditures or non-family members’ meal expenses, entrepreneurial decision-making has had a positive impact; in areas with low entrepreneurial participation rates in districts and counties, in addition to personal spending, communication expenditures and nonfamily members’ meal expenses will also have a positive impact on entrepreneurial decision-making. However, their coefficients show that the social interaction coefficient of the districts with high entrepreneurial participation rates is far greater than the social interaction coefficient of the districts with low entrepreneurial participation rates, which indicates that the social interaction effect of districts and counties with high entrepreneurial participation rates is greater than that of districts and counties with low entrepreneurial participation rates, that is, the social interaction effect of districts with high participation rates in districts and counties is more obvious. (2) The relative wealth concern mechanism shows that in the regions with low income Gini coefficient, the three proxy variables of social interaction have a positive impact on family entrepreneurial decision-making; in the regions with high income Gini coefficient, except for the impact of human welfare payments on family entrepreneurial decision-making, the coefficients of the other two proxy variables are insignificant. This shows that in areas with small income gaps, the effect of social interaction on the participation of family entrepreneurs is more obvious. (3) The financing constraint mechanism shows that social interaction helps to alleviate the financing constraints of family entrepreneurship through informal lending channels, thus effectively increasing the probability of family entrepreneurship. The expansive discussion shows that social interaction and network information are also channels for family entrepreneurs to obtain relevant information, and there is a mutual substitution relationship between them. We use the cross-coefficient coefficient of the two to measure this substitution relationship. The results show that the coefficient of social interaction and network information cross-term is negative. Although it is statistically insignificant, the economic significance indicates the existence of this alternative relationship. The policy implication of this paper is that it provides a new policy perspective for stimulating the “double innovation” vitality. Relevant departments should fully consider the role of social interaction when formulating policies involving individual family entrepreneurship.

【Keywords】 social interaction; family entrepreneurial decision-making; mechanism test; discrete choice model;

【DOI】

Download this article

    Footnote

    [1]. ① Communication expenditures include mobile phone fees and network charges. [^Back]

    [2]. ① Thanks to reviewers for their suggestions. [^Back]

    [3]. ① Demarzo et al. (2004) endogenously obtained the optimal model: in the case of incomplete market, the competition of local products makes a decision-making subject focus on the wealth of other decision-making subjects, and the decision-making subject is influenced by other decision-making subjects, that is, the effect of relative wealth concerns. [^Back]

    [4]. ① Test results are not reported due to space limitation. [^Back]

    [5]. ① Test results are not reported due to space limitation. [^Back]

    References

    [1] Guo, S. & Liang, P. Economic Research Journal (经济研究), (S1): 116–131 (2014).

    [2] Hu, J. & Zhang, B. Journal of Financial Research (金融研究), (10): 148–163 (2014).

    [3] Huo, P., Zhang, J., Peng, C. et al. Journal of Agrotechnical Economics (农业技术经济), (6): 68–76 (2016).

    [4] Li, T. Economic Research Journal (经济研究), (1): 34–45 (2006a).

    [5] Li, T. Economic Research Journal (经济研究), (8): 45–57 (2006b).

    [6] Li, T. & Zhang, W. Economic Research Journal (经济研究), (6): 103–116 (2015).

    [7] Liu, H. & Ma, W. International Finance Research (国际金融研究), (3): 55–66 (2017).

    [8] Ma, G. & Yang, E. Economic Research Journal (经济研究), (3): 83–94 (2011).

    [9] Pan, J. & Chen, G. Economic Review (经济评论), (3): 40–50 (2014).

    [10] Shi, J. & Wang, W. Journal of Zhejiang University (Humanities and Social Sciences) (浙江大学学报(人文社会科学版)), (4): 159–175 (2017).

    [11] Wang, W. & Zhao, Y. Chinese Journal of Sociology (社会), (3): 78–97 (2012).

    [12] Zhang, B., Hu, J. & Fan, C. Economic Review (经济评论), (2): 52–67 (2015).

    [13] Zhou, G., Xie, X. & Li, L. Management World (管理世界), (12): 121–129 (2015).

    [14] Zhou, M., Sun, L. & Liu, Y. Journal of Financial Research (金融研究), (2): 172–184 (2011).

    [15] Zhou, Y. & Hua, Y. Journal of Agrotechnical Economics (农业技术经济), (5): 111–119 (2017).

    [16] Zhou, Y. & Liu, X. Economic Perspectives (经济学动态), (2): 66–75 (2017).

    [17] Ai C R, Chen X H. Efficient estimation of models with conditional moment restrictions containing unknown functions. Econometrica, 2003, 71 (6): 1795–1843.

    [18] Black S E, Strahan P E. Entrepreneurship and bank credit availability. Journal of Finance, 2002, 57 (6): 2807–2833.

    [19] Brown J R, IvkovićZ, Smith P A, et al. Neighbors matter: Causal community effects and stock market participation. Journal of Finance, 2008, 63 (3): 1509–1531.

    [20] Cumming D, Johan S. Phasing out an inefficient venture capital tax credit. Journal of Industry, Competition and Trade, 2010, 10 (3–4): 227–252.

    [21] De Marzo A M, DeWeese T L, Platz E A, et al. Pathological and molecular mechanisms of prostate carcinogenesis: Implications for diagnosis, detection, prevention, and treatment. Journal of Cellular Biochemistry, 2004, 91 (3): 459–477.

    [22] Durlauf S N, Fafchamps M. Social capital. Aghion P, Durlauf S N. Handbook of economic growth. Amsterdam: Elsevier, 2005.

    [23] Hong H, Kubik J D, Stein J C. Social interaction and stock-Market participation. Journal of Finance, 2004, 59 (1): 137–163.

    [24] Mailath G J, Postlewaite A. The social context of economic decisions. Journal of the European Economic Association, 2003, 1 (2–3): 354–362.

    [25] Manski C F. Economic analysis of social interactions. Journal of Economic Perspectives, 2000, 14 (3): 115–136.

This Article

ISSN:1001-9952

CN: 31-1012/F

Vol 44, No. 12, Pages 31-43

December 2018

Downloads:0

Share
Article Outline

Knowledge

Abstract

  • 1 Introduction
  • 2 Research design
  • 3 Empirical analysis of social interaction influencing family entrepreneurial decision-making
  • 4 Discussion on the mechanism of social interaction influencing family entrepreneurial behavior
  • 5 Further discussion
  • 6 Conclusion
  • Footnote

    References