A Research On Entrepreneurs’ Capability Improvement And China’s Outward Foreign Direct Investment Development

With the reform of the market economy deepening, China’s group of entrepreneurs is constantly growing and getting larger throughhout the years. Entrepreneurs have different characteristics from other factors of production. The productivity attributes of entrepreneurs are heterogeneity and increase of marginal returns. Entrepreneurs usually accumulate human capital through "learning-by-doing", and by engaging in innovation activities according to the Schumpeterian theory. Under conditions of incomplete information, an important feature of the market is the deviation from balance, and therefore, business opportunities come to exist. Entrepreneurs are the initiative resources that efficiently discover and make use of business opportunities. By dynamicly creating and disseminating market information and knowledge, entrepreneurs can trigger more transactions and more effectively expand market size. Based on "Know-how" knowledge system, entrepreneurs efficiently optimize allocation of technology, physical capital, labor, and other factors of production to get more "surplus" in the competitive market. Corporate achievements are in fact the external manifestation of entrepreneurs seizing business opportunities and effectively allocating resources. At this stage, China is experiencing a critical period of economic restructuring. Since entrepreneurs is the main group promoting China’s deepening of labor division and upgrading elemental structure, they play an essential role in achieving economic growth and enhancing comparative advantage. Nowadays China’s new strategy for better economic growth has changed into OFD1. which is an effective way to enhance entrepreneur ship. On one hand, different from exporting products alone, OFDI can make technology, capital, talent and a package of elements "going out", which makes optimal resources allocation extends from the domestic to the foreign. Thus, OFDI provides a broader platform for the accumulation of human capital and expands "learning-by-doing" approaches:On the other hand. OFDI involves greenfield investments and cross-border mergers and acquisitions, and consequently entrepreneurs would face a more complex and volatile market environment caused by geography, culture, policy and other factors when dealing with international business. Only by developing abilities to overcome difficulties, entrepreneurs are able to smoothly contribute to the success of transactions and the growth of companies. In addition, building overseas sales network and participating in international competitions from OFDI can inspire entrepreneurs to be more active in learning foreign advanced technology and management styles, which, indeed, are powerful boosters to enhance entrepreneurs’ capabilities. Improving entrepreneurship can also contribute to raising the company’s status in the international division of labor, and could assist in gaining more comparative benefits in the global value chain, which, further motivates entrepreneurs to expand the scale of OFDI. Eventually, it forms a positive interaction, and this interaction has an endogenous positive feedback mechanism.Firstly, the study reveals from a theoretical perspective that the entrepreneur element has special and important effects on promoting China’s economic restructuring:China mainly exports labor-intensive products for the past few decades, so it is likely that we will be "low-endlocked" during the process of participation in the international division of labor. In order to avoid the formation of a passive situation and enhance the country’s comparative advantage, we will need to rely on a key element-the entrepreneur. Different from other production factors such as labor and capital, entrepreneurs are the body of finding, using and expanding world market opportunities. A new:and more efficient production function can be obtained by having entrepreneurs integrating a package of factors as well performing innovative trials.Secondly, by applying econometric models, the entrepreneur element is isolated from the human capital. The entrepreneur capability is estimated from two dimensions—quantity and performance—through using private home provinces density and per capita market value, which are integrated into the production function. Regression analysis shows that as the scarce element, entrepreneurs have a larger coefficient of elasticity on output, thereby verifying that entrepreneur elements are of great significance to promote China’s economic growth as well as the dynamic comparative advantage. Spearman rank correlation coefficient further demonstrates that China’s OFDI can positively enhance entrepreneurs capability and effectively expand the market size. Based on the analysis of many typical cases, the study attempts to reveal some laws of successful OFDI activities, and further pursues to provide useful suggestions for entrepreneurs in China to engage in OFDI more efficiently and smoothly. It should be emphasized that OFDI is not only good for China’s development, but also promotes social employment and economic growth in the target countries. Thus, it forms a win-win situation for both China and overseas countries, and gradually results in incentive compatibility, which in turns leads to developing a sustainable win-win situation. Based on the foregoing analysis, the study proposes countermeasures and suggestions to promote China’s OFDI from micro to macro.