Yiyi Su, Shaker A. Zahra, Di Fan

Entrepreneurship Theory and Practice. 2022, 46 (6), 1597-1625

Recommend Reason

This study documents the effects of income stratification (class) on the choice of entrepreneurship as a career. It contributes to the literature in three ways. First, this study examines how subnational marketization moderates the effects of income stratification on the choice of entrepreneurship as a career and its subsequent implications for income growth. Second, the study explores the contingent value of income stratification. Third, in studying these relationships, it conducts empirical tests in the largest emerging economy context—China.

About the Author

Yiyi Su, School of Economics and Management, Tongji University, Shanghai, China

Shaker A. Zahra, Carlson School of Management, University of Minnesota, MN, USA

Di Fan, Department of Management & Marketing, Swinburne Business School, Swinburne University of Technology, Hawthorn, Australia

Keywords

income stratification, class, entrepreneurship, income growth, subnational marketization, China

Brief Introduction

In this study, we examine the moderating role of subnational institutions (marketization) in the relationship between social stratification, on the one hand, and entrepreneurial choice and income growth, on the other. Our analyses, using data from 5,581 individual-wave observations from nine provincial regions in rural China, across six data collection waves, show that: (1) lower-class status is conducive to self-employment, while being from the upper class encourages individuals to become employers; (2) compared to their middle-class counterparts, both upper- and lower-class entrepreneurs enjoy higher levels of income growth; and (3) when subnational marketization is high, the positive effect of being upper class on selecting entrepreneurship as a career is weakened, but the effect on income growth among entrepreneurs is strengthened. It finds that these choices vary significantly by income class, reflecting differences across upper, middle and lower classes in motivation and capability for entrepreneurship. Further, income growth as a result of choosing entrepreneurship as a career varies by class. Such an effect is also based on the extent of subnational marketization. We discuss the implications of our findings for theory and future research.