This study identifies very small businesses (VSBs) as survival-oriented entrepreneurs. Using a unique survey of 1450 VSB owners (with fewer than 50 employees) across China, combined with regional fiscal and institutional data, we provide the first micro-level evidence on how VSBs allocate entrepreneurial efforts to enhance survival in a rent-seeking society.
We classify VSBs along three dimensions: whether they are subject to governmental apportion, operate in new technological industries, or possess political connections. Our findings reveal that VSBs generally relinquish attempts to win rent-seeking contests or resist rent extraction. With the exception of those in new technological sectors, VSBs increase productive—but not unproductive—activities, benefiting from spillover effects generated by rent-seeking among larger firms. VSBs not subject to government apportion reduce rent- seeking efforts when rent-seeking opportunities expand. Finally, politically connected VSBs do not adjust their entrepreneurial efforts in response to institutional improvements but increase innovation after property rights are secured through government ties. In summary, a rent-seeking society presents both opportunities and obstacles for VSBs, including those without political connections.
扫码关注我们
求助内容:
应助结果提醒方式:
