Facing Constraints to Growth? Overseas Chinese Entrepreneurs and Traditional Business Practices in East Asia

Overseas Chinese entrepreneurs in East Asia have achieved notable success in a number of traditional, slow growth industries. This success has been ascribed to distinctive aspects of Chinese business culture that favor alacrity, adaptability, networking, and close control of firm operations. Recently, some have suggested that the same characteristics that have promoted these firms' success in slower growth sectors may hinder firm success in faster growth sectors of the economy. To explore this proposition, we conducted in-depth interviews with forty-one entrepreneurs, venture capitalists, and government officials all working with fast growth entrepreneurial firms in East Asia. The results suggest that, in general, Overseas Chinese entrepreneurial firms also follow many of the traditional business practices associated with Overseas Chinese firms. Most venture capitalists and government officials in the sample expressed concern that these practices are hindering the building of firms that can be taken public and experience the high growth consistent with vibrant entrepreneurial firms. The results also showed that the Overseas Chinese entrepreneurs sampled are aware that some of these characteristics may be creating constraints to faster growth and, at the behest of venture capitalists and government officials, are sometimes making the changes thought necessary to create faster growth firms.

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