Opportunity and necessity entrepreneurship: a comparative study of India and China

Abstract

Prior research on opportunity and necessity based entrepreneurship has largely been confined to contexts prevailing in either high or low-income countries. Our study examines individual level antecedents of entrepreneurial activity in two rapidly growing mid-income economies- India and China. Drawing on country level data from the Global Entrepreneurship Monitor adult population survey we find that in both nations, factors like gender, age, fear of failure, and an individual's human/financial/social capital impact both opportunity and necessity entrepreneurship. Results for the two countries however differ significantly. We further observe that contrary to theorization in the extant literature, in these contexts individuals who are currently employed are also inclined towards necessity entrepreneurship. This research identifies specific pull and push factors that facilitate both opportunity and necessity based entrepreneurship. Further, it offers a basis for comparing the institutional environment in these contexts with those prevailing in other nations where similar research has been undertaken. With many governments emphasizing entrepreneurship as a key element of state policy, this study has lessons for policy makers seeking to replicate the rapid growth rates in India and China. This study is especially relevant as factors responsible for furthering opportunity entrepreneurship do not necessarily facilitate necessity entrepreneurship. This research will hence help advance theory development in the entrepreneurship field.