EXPLORING INNOVATIVE NEW VENTURES IN CHINA AND THE UNITED STATES

Data and general observations would indicate that Chinese new ventures are not as innovative as U.S. new ventures. This paper utilizes the Institution- Based View of Entrepreneurship to argue that the varying institutions within the subnational regions influence the innovativeness of new ventures. More specifically, this variation in innovativeness of new ventures is more salient in the Chinese setting than the United States setting because of the unevenness of institutional transitions within Chinese subnational regions. Using a sample of 488 Chinese new ventures and 317 U.S. new ventures, this paper not only shows that region matters beyond individual and industry characteristics, but also shows that China suffers from a weighted averages issue, with Central and West subnational regions of China bringing down its overall innovativeness of new ventures. This provides implications on the appropriateness of making comparisons at a country level.