HUMAN CAPITAL, PERCEIVED DOMESTIC INSTITUTIONAL QUALITY AND ENTREPRENEURSHIP AMONG HIGHLY SKILLED CHINESE RETURNEES

Abstract

Over the past two decades, returnee entrepreneurs have emerged as major promoters of business startups and entrepreneurship in China. Recognizing their positive impact in promoting new and innovative companies, Chinese national and local governments have instituted a raft of preferential policies aimed at assisting returnee entrepreneurs. Based on a survey of Chinese returnees and returnee entrepreneurship from 2011 to 2012, this paper examines how human capital and perceptions of domestic institutional quality affect entrepreneurial activity among highly skilled returnees. We find their educational levels, overseas work experience, the degree to which they bring back new business models and their perception of domestic economic opportunities affects the likelihood of such individuals becoming entrepreneurs. Our work suggests regulatory transparency discourages returnees from entering entrepreneurship, suggesting the relationship between regulatory transparency and entrepreneurial behavior is more complex than is portrayed in previous research done on this matter. The results of our analysis are robust against a number of rigorous statistical specification checks.