Farm Household's Entreprenuerial Choice In China

“San Nong” issues are very important in the China's first policy documents. They are not only tough problems, but also urgent issues which are expected to be solved. An increasing of income is the core of solving the “San Nong” issues; however the decreasing of farmers is the center of the income increase. Currently, entrepreneurship, a new engine of economic development, is not only an effective way to increase income and employment, but also a “key” to speed up the agricultural industrial structure adjustment and the construction of a new socialist countryside. In other words, entrepreneurship is a very important way to solve the “San Nong” issues. At present, more and more farmers are willing to take part in the entrepreneurial activities, while most of them are impeded cause the lack of initial capital. Capital is the indispensable key for farmers' entrepreneurship; however, for the majority of individuals, venture capital is inaccessible. Compared with the general entrepreneurs, farm households handle with a tougher environment because the limitations of their capabilities and the particularity of the external resources environment and heterogeneity stemming from its interaction. Capital, the primary factor of affecting farmer's entrepreneurship, was highlighted in the previous literatures. Most of them focus on participation of entrepreneurial activity; however, the specific industry, organization form and source are lack of attention. As the crucial part of entrepreneurial activity, the proper choices of industry, organization and capital channel are very important and practical for the better achievement of the performance.On the basis of this perspective, this study aims to analyze the factors of affecting the participation of entrepreneurial activity and the entrepreneurial choices of industry, organization and capital channel, based on the income quality and liquidity constraints as well as its interaction effect. Entropy method and analytic hierarchy process are applied to assess the weight of farm households' income quality, and credit constraint is classified accurately. Probit and IV-Probit model are employed to analyze the endogenous relationship between income qualities and entrepreneurial behavior as well as credit constraint and entrepreneurial behavior. Multi-Logistic approach is used to estimate the influence of the income quality and liquidity constraints impact on the entrepreneurial choices of industry, organization and capital channel. Moreover, farm household are divided into five different categories including never entrepreneur, planning entrepreneur, entrepreneur, terminated entrepreneur and restart entrepreneur. And, this study only emphasizes on three categories. Specifically, firstly for the planning entrepreneurs, this study focuses on the willing factors of affecting the participation of entrepreneurial activity and the entrepreneurial choices of industry, organization and capital channel. What is more, for the entrepreneur, this study highlights to the behavior factors of affecting the participation of entrepreneurial activity and the entrepreneurial choices of industry, organization and capital channel. Eventually, for the restart entrepreneur, this study pays attention to the consistence factors of affecting the participation of entrepreneurial activity and the entrepreneurial choices of industry, organization and capital channel for the past entrepreneurial activity and current performance. It is concluded as followed.First of all, farm households in China are activating to participate in entrepreneurial activity. Some of them have a strong willing to engage in the activity for a second time, even though they were failed to do it. Currently, most of the purpose of entrepreneurial activity is pursuing for the profit, and the proportion of self-development farmers is rising. The existing rural entrepreneurship business performance is good; most of them get a round achievement after several years' effort and increase some employments for local labors. But entrepreneurial environment is relatively difficult for farmers, and the lack of capital is still seriously.Secondly, there is an exogenous relationship between income quality and entrepreneurial choice. The farm households with a lower income quality show a lower entrepreneurial participation rate. Moreover, different level and different dimension of income quality has various impacts on the entrepreneurial choices of industry, organization and capital channel. Planning entrepreneur with a higher level of income quality show a decreasing willing to engage in the planting and breeding, agricultural production service, residents service, and catering, but a increasing willing to engage in the wholesale and retail, manufacturing, self-employment, and informal channel. Entrepreneur with a higher level of income quality is more likely to engage in the planting and breeding, resident's service, self-employment, and informal channel. Restart entrepreneur with a higher level of income quality tends to make a different decision about the entrepreneurial choices of industry, organization and capital channel for the past entrepreneurial activity and current performance.Thirdly, there is an endogenous relationship between liquidity constraints and entrepreneurial choice. Different types of credit constraints play various roles in farmers' entrepreneurial engagement. Specifically, the relief of credit constraints displays a significant positive impact on the willing of planning entrepreneur participating in the planting and breeding, and catering. Also, planning entrepreneur with credit constraints show a lower willing to participating in self-employment and informal channel. There is an endogenous relationship between liquidity constraints and farmer's entrepreneurial choice of industry and capital channel, but an exogenous relationship between liquidity constraints and farmer's entrepreneurial choice of organization. Restart entrepreneur with liquidity constraints tends to make a consistent decision about the entrepreneurial choices of industry, organization and capital channel for the past entrepreneurial activity and current performance.Fourthly, the income quality and credit constraints have an interaction effect on the participation of entrepreneurial activity, but it was not significant. Moreover, the interaction effect influences the willing of planning entrepreneur to take part in the agricultural production service, wholesale and retail, resident's service, catering, manufacturing, and the entrepreneurial choice of channel. For the entrepreneur, the interaction effect has impact on the entrepreneurial choices of industry, organization and capital channel. Additionally, for the restart entrepreneur, the interaction effect displays a role in the entrepreneurial choices of industry and organization for the past entrepreneurial activity and current performance.