Topic: Appropriate Entrepreneurship? The Rise of Chinese Venture Capital and the Developing World
Speaker: Josh Lerner, Jacob H. Schiff Professor of Investment Banking, Harvard Business School
Time: 1:30pm-3:00pm, October 24 (Beijing Time)
Global high-potential entrepreneurship investment has traditionally been dominated by rich countries, especially the U.S., until the rise of China as the first developing country to become a venture capital powerhouse. We explore the international ramifications of China’s rise for emerging economies’ entrepreneurship using comprehensive data on global venture activities. We document three sets of findings. First, as the Chinese venture industry rose in importance, investment increased substantially in other emerging markets, particularly in sectors led by China. This effect was driven by country-sector pairs most economically similar to China. Second, the increase in venture investments in emerging economies was spurred by local investors and new firms whose business models more closely resembled those of their Chinese counterparts. Third, this growth in investment had positive cross-sector and geographic spillovers. Taken together, our findings suggest that developing countries benefited from the rise of China, which led to the development of business models more suited to their local context. A system where only rich countries lead in entrepreneurship could limit the appropriateness of capital allocation and entrepreneurial activity in developing countries.
Josh Lerner is the Jacob H. Schiff Professor at Harvard Business School and Co-Director of the HBS Private Capital Project. Much of his research focuses on venture capital and private equity organizations. (This research is summarized in his books The Money of Invention, Patent Capital, and The Venture Capital Cycle.) He also has extensively examined innovation and public policy. (That research is discussed in the books The Architecture of Innovation, The Boulevard of Broken Dreams, The Comingled Code, and Innovation and Its Discontents.)
He co-directs the National Bureau of Economic Research’s Productivity, Innovation, and Entrepreneurship Program and serves as co-editor of their publication, Entrepreneurship and Innovation Policy and the Economy. He founded and runs the Private Capital Research Institute, a nonprofit devoted to encouraging access to data and research, and has been a frequent leader of and participant in the World Economic Forum projects and events.
In the 1993-1994 academic year, he introduced an elective course for second-year MBAs. Over the past three decades, “Venture Capital and Private Equity” has consistently been one of the largest elective courses at Harvard Business School. (The course materials are collected in Venture Capital and Private Equity: A Casebook, now in its fifth edition, and the textbook Venture Capital, Private Equity, and the Financing of Entrepreneurship, whose second edition recently appeared.) He also established and teaches at Harvard undergraduate, executive, and doctoral courses on venture capital, private equity, and entrepreneurship.
He graduated from Yale College with a special divisional major. He worked for several years on issues concerning technological innovation and public policy at the Brookings Institution, for a public-private task force in Chicago, and on Capitol Hill. He then earned a Ph.D. from Harvard’s Economics Department. He was recently recognized as the 37th most influential economist worldwide by research.com.