Entrepreneurship, technological progress and resource allocation efficiency: a case of China

Purpose - The purpose of this paper is to present an analysis of the role of entrepreneurship in promoting China's technological progress and efficiency improvement during the economic reform process of the past two decades. The paper contributes to our understanding of the drivers of economic growth in China during the economic reforms period through the study of technology development and efficiency of resource allocation.

Design/methodology/approach - The paper uses Malmquist productivity index and panel data cointegration covering 30 regions in China for the period 1992-2007, to test the effect of entrepreneurship on Chinese technological progress and resource allocation efficiency.

Findings - The analysis shows that the rate of entrepreneurship in China improves the level of technological progress and efficiency of resource allocation significantly. The increased level of entrepreneurship in Beijing, Shanghai, Jiangsu, Zhejiang, Shandong, Guangdong and other developed areas is positively related to the increased level of technological development and resource allocation, whereas this was not identified in areas that are less developed. Furthermore, the analysis suggests that business level has promoted the level of technological progress in these areas.

Originality/value - The paper provides valuable insight into the role and contribution of entrepreneurship's in China's economic growth.