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counterpart in China. If a sector closely mirrored
its Chinese counterpart, it was classified as better
“suited” to emulate China’s business models. Venture
capital investment growth in emerging markets
sectors,
A
one standard deviation increase in a sector’s China
in
sectors.
These findings suggest that China’s rise inspired new
venture activity in developing country sectors that
share similar business challenges to those in China.
Venture-backed firms that imitate business
models of Chinese firms (by country type)
Emerging market entrepreneurialism following
Chinese examples boosted firm growth and
serial entrepreneurialism even beyond China-led
sectors. Emerging market venture backed firms
scores
All
industry
also increased the number of serial entrepreneurs
Average sector similarity to China versus the U.S. in emerging markets, and their venture activity
later spilled over into sectors not led by China.
Emerging market entrepreneurialism driven by Researchers also observe that in cities with a higher
examples. Only preexisting share of firms in China-led sectors,
2.5% of emerging market deals outside China involve there was substantial growth in business formation
a Chinese investor, and just 0.5% are exclusively and patenting activity, including in sectors with
backed by Chinese investors. Instead, local investors few existing Chinese firms. Finally, the researchers
appear to be investing in local firms that learn from offer suggestive evidence that the China-driven rise
and adapt business ideas and models first developed in emerging market entrepreneurialism in sectors
in China. Using Natural Language Processing tools productivity
to measure similarity in business descriptions, the as
researchers show that the growth in emerging Indicators.
market entrepreneurship following China’s rise is
similarity New entrepreneurial hub, wider entrepreneurial
between the description of new emerging market diffusion. The unprecedented growth of
firms and Chinese firms founded in the same sectors entrepreneurship in China has spurred business
during the preceding five years. For example, the earlier
educational technology startup Byju in India shares emerging
80% textual similarity to China’s sector-leading emulated
Yuanfudao. This trend appears regardless of whether Chinese companies confronting similar problems
a sector was strategically prioritized by China’s of
government or whether a country was aligned with entrepreneurialism
China politically. VCs.
learn
China.
wide-ranging
increased
and
suggest
there could be large benefits if emerging innovation
hubs (whether in China or elsewhere) shift the focus
of technology toward applications overlooked by the
U.S.-led system.
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