Entrepreneurs' work experiences and the growth of Chinese private firms during the transition towards a market economy

This work sheds some light on the influence that entrepreneurs' previous work experiences exerted on the growth performance of Chinese private firms after the privatization reform in the early 2000s. Focusing on a representative and large sample of private firms, the analysis finds evidence of an inferior performance of the companies run by entrepreneurs with past top management experience in state-owned companies, while the superior performance of the companies run by entrepreneurs with prior technical experience. The study investigates specific theory-driven mechanisms through which different experiences impact firm performance, including time allocation and R&D management strategy. Upper echelon theory and imprinting effects appear relevant, and local institutions, political and economic uncertainty, and entrepreneurs' self-perception act as moderating factors. We deal with potential endogeneity issues with propensity score matching and two-stage least squares regression. These findings provide novel evidence on underexplored aspects of the ongoing privatization process in China and other economies in transition.