Access to Finance in Beijing

Abstract

This dissertation examines the accessing of finance by entrepreneurs in the Beijing area of China using a bespoke survey of 452 entrepreneurs which was gathered by the researcher. Human capital theory along with theories of finance such as the pecking order theory, and agency theory provide the theoretical contextualisation of the research. Within human capital theory, innovation is the key variable which is investigated. Innovations in: (i) products, (ii) processes, (iii) work practices or workforce organisation, (iv) supply and supplier relations, (v) markets and marketing, (vi) administration and office systems, and (vii) product distribution are investigated which allows a comprehensive study which is more faithful to Schumpeter’s earlier writings.

Chapter 1 provides an overview of the research. Chapters 2 will provide the theories of entrepreneurship. The companion chapter 3 will provide a review of the theories of finance and empirical studies of access to finance by small businesses. Chapter 4 completes the triumvirate and overviews credit rationing and constraints. Chapter 5 details the methodology used in the rest of the dissertation and the data set which was gathered by the researcher.

The empirical contribution of the dissertation is presented in chapters 6 to 8. In each of the three empirical chapters the key focus of attention is upon seeing whether innovators fair worse, and are disadvantaged in comparison to their non-innovating counterparts. This analysis includes bivariate analysis and then multivariate regression techniques which allow innovation to be investigated in models which simultaneously controls for the characteristics of the businesses and the entrepreneurs.

Chapter 6 investigates the use of sources of finance at the start-up stage of the businesses. Chapter 7 investigates the applications for external finance, whether or not the finance was successfully accessed, and also the levels of awareness of sources of finance. Chapter 8 investigates the amount of external finance sought, the amount of external finance received and the ratio of sought to received external finance.

Chapter 9 concludes the dissertation on the access to finance in Beijing. In this chapter a summary of the dissertation findings will be presented. Additionally, the chapter will provide a series of discussions on the implications of the empirical results for theory, practitioners, government, policy and the entrepreneurial and small business community in Beijing, China, and beyond.