Introduction
The GEM study program is a yearly evaluation of the international level of entrepreneurial activities. The research offers information on the entrepreneurial landscape of nations in an international context. From the studies, the variations in entrepreneurial capacity between Sweden and China can be obtained. The differences are based on their institutions, infrastructure, macroeconomic environment, and higher educations (GEM 2014). The above factors have influenced the variations in the two countries’ business environments, legal systems, and procedures required in establishing an enterprise. Sweden is an industrialised nation with established market structures and legal systems. On the contrary, China is an emerging country. Its market environments and legal structures are relatively weak and progressively improving (Shane & Venkataraman, 2000). Correspondingly, the business setting and the system to begin a business are simple in Sweden. Thus, entrepreneurs should note that establishing companies in both countries have advantages and disadvantages. Subsequent to establishing a business in both countries, the most significant thing is to comprehend the local business setting and decide on an appropriate legal structure. Similarly, the entrepreneur should monitor the domestic processes required in establishing an enterprise (Davidsson 2003). The article below focuses on the reasons for the difference in entrepreneurial capacity between Sweden and China.
Sweden
Institutions
The legal and organisational structures within which entities, businesses, and governments interrelate to produce wealth define the institutional environment. Sweden is a statutory monarchy nation with King Carl XVI as the ruler (Friedrichs 2011). After the 2006 voting, the eleven years of social democratic administration ended. Presently, there are four coalition parties. They include the moderates, liberals, centre, and Christian egalitarians. In the country, elections are held after every four years. The country is politically stable and is renowned for its peace and harmony.
The country’s legal system is founded on Constitutional Law and complemented by case law. Sweden has been an active member of the European Union since the year 1995. In this respect, the European community law influences its entrepreneurial capacity (Sarasvathy 2011). Its legal structure is stable and has a noble balance among security, dependability, transparency, and cost-effectiveness. As such, a foreign entrepreneur will take 2 to 3 weeks to open his or her business in the country. The country’s homogeneous contracts and brochures make the process simple. The least capital to establish a limited liability business is 100,000 SEK (Reynolds 2014). Outsiders are permitted to own 100% of Swedish business. Concerning employment, employers may only terminate the treaties with staffs based on accurate reasons.
Infrastructure
Sweden has an up-to-date transportation network. Its network is considered as a vigorous constituent of unbiased wealth distribution. Its railroads cover 12,822 kilometres (Arbuthnott 2013). The country has 163,452 kilometres of tarmacked highways and 1,438 kilometres of expressways. It also has 2,053 kilometres of manoeuvrable waterways and 83 kilometres of natural gas pipelines. Its harbours are equipped with modern terminuses.
The country is among the top global bests in IT, computer hardware, software, and ICT services. As such, it is renowned for having the utmost number of phone users per capita. Similarly, the country has the highest percentage of Internet users globally. The country’s energy sector is robust. Its energy generation capacity and utilisation per capita are considered among the highest in the EU. Government-run Svenska Kraftnat oversees the national electricity grid. Sweden is abundant with water resources, and its 45% of energy is generated through hydropower stations. Nuclear power supplies 46% of the total energy, while thermal generation plants offer the rest (Reynolds 2014). Deregulation of the country’s energy market was initiated in the year 2000. The initiative provided consumers with the freedom to choose their service providers among the many energy suppliers.
Macroeconomic environment
The country’s economic freedom score is rated at 72.7. Sweden is considered the 23rd freest nation in the 2015 Global Index. In the EU region, the state is ranked 12th out of 43 countries. Its general score is higher than the world and regional averages. Based on the above illustrations, it is apparent that Sweden is a competitive and attractive country for entrepreneurs.
Sweden’s economic environment is categorised as a mixed economy (Hansson 2010). As such, private owners and the government equally share its lands, industrial units, and other commercial assets. Through this system, the government has been able to regulate the economic sectors, which are deemed vital to domestic security and lasting stability (Hofstede 2007). Such segments comprise of iron, steel, and automobile industries. In the country, the major industries are engineering, mining, media, manufacturing, and IT firms. As such, the government controls many of these industries. Globally, mixed economies uphold generous welfare structures to sustain the jobless and offer health care to the public. Sweden is renowned for its great welfare systems. Its legal and economic policies stress on steady central government finances (Doherty 2009). On the other hand, the national bank stresses on low inflation and price steadiness. The absence of corruption and being the seventh least corrupt nation globally makes the country attractive to both local and international entrepreneurs.
Higher education and training
With its emphasis on independent studies, Sweden is ranked among the world leaders in higher education. The country has 35 universities and colleges. All these institutions adhere to education standards set by the Swedish National Board of Universities and Colleges. Swedish universities value research (Reynolds, 2014). Through this, the colleges have been popular internationally. Similarly, universities have been able to produce competent graduates who are competitive internationally. As such, access to quality higher education and training is considered an encouraging feature for the improvement of entrepreneurship in the country.
China
Institutions
The Chinese Communist Party of China (CPC) is the reigning party in China (Su 2015). The party was founded in the early 1920s. In the mid-1950s, CPC established the People’s Republic of China. Its activities are undertaken within the structure of the Constitution of the People’s Republic of China and the law. As such, the CPC has no mandate over the Constitution and the law. The Chinese government’s influence on the economy has deteriorated in the last two decades because the country’s economy is headed towards a market economy. Despite this, entrepreneurs should note that Chinese government interference is still high compared to Sweden. In this regard, foreign investors should be wary of political risks in the country.
With respect to the country’s legal institutions, China is a communistic nation. Its legal foundation is instituted on a constitution. The present Constitution was approved in 1982 (Su, 2015). The Constitution is perceived as the highest basis of law in the country. Compared to Sweden, Chinese legal structures are relatively weak. As such, partisan, communal, historical and cultural factors still influence the execution and enforcement laws unlike in Sweden. Therefore, entrepreneurs looking forward to investing in the country should consider the above challenges.
Infrastructure
Just like Sweden, China has good infrastructure network. The country has the highest number of active mobile phones. By the year 2014, the country had over 1 billion phones users (Yu & Si 2013). Similarly, it has the highest number of internet users. In the year 2013, they had over 600 million internet users.
From the late 1990s, the country’s road network has been significantly extended. By the year 2013, its road network had extended to a total length of 86,000 km. During the year 2014, the country had a total of 83 bridges and tunnels (Yu & Si 2013). Its railway network, which is government-owned, is considered the busiest internationally. It serves over a quarter of the global world’s rail traffic. By the year 2014, it had a total of 103,145 km of railroads. Most of its provinces are interconnected with railway roads.
Macroeconomic environment
Unlike Sweden, the country has a centrally planned economy (Yu & Si 2013). Through this structure, the government possesses land, industrial units, and other economic properties. Compared with Sweden’s government, the Chinese administration plays a significant part in the economy. In this respect, it comes up with resolutions associated with almost all features of the economy.
Starting from the early 1990s, China has experienced a mass economic growth (Yu & Si 2013). The growth has attracted the attention of both local and international policymakers and academicians. The drastic growth of China’s economy is attributed to the township and village enterprises. The key role played by the businesses in the country’s economic development and continuous reorganisation progression has now been extensively recognised. It has been established that economic development progress has benefited the most from the local government policies. The country’s local governments play a significant part in the economy. In recent years, their revenue was estimated at 8% of the country’s GDP.
With respect to tax sharing, the national government does not necessarily share the additional budgetary local returns. Through this, the local governments can come up with a robust incentive to promote local industries. In a bid to attract foreign investors, local governments have set up distinct industrial zones. The areas are located in rural regions of China.
Higher education and training
Like Sweden, in China, it is accepted that higher education and training is vital for the country’s economy to move up the value chain. Its higher education is unceasingly developing and transforming. The country has over 2,000 institutions of higher learning. As such, it registers over six million enrolments in these institutions. They offer degree diplomas, bachelors, masters, and doctoral degrees. The colleges are open to international students. The Chinese ministry of education asserts that higher education and training has played a significant role in economic development, scientific advancement, and social growth (Su 2015). Higher education has brought up large numbers of forward-thinking capacities and specialists for the construction of communal modernisation. The country has become a major destination for foreign students in the region owing to this progress.
Compared to Sweden, the country’s higher education system still faces challenges. In the recent past, several questions have been asked about the effectiveness and relevance of higher learning in China (Su 2015). The issue has been on whether tertiary education equips graduates with the necessary skills needed to operate in a competitive environment. As such, many graduates exhibit the cognitive skills required for high-level executive roles. However, they do not display all the required skills needed in tackling various tasks in the workplace. For instance, graduates have cognitive schemas but lack behavioural skills required in a changing environment.
Recommendations
For China to enhance its entrepreneurial capacity like Sweden, it must adopt appropriate economic development incentives and improve its higher education system (Mockler 2001). The incentives should range from many of policy forms. Notably, the forms should centre on tax inducements and infrastructure developments (Andersson 2000). Likewise, the Chinese government should come up with many measures to boost incentives aimed at enhancing foreign investment in its remote areas. Through this, the governments will improve the infrastructure and uplift the economic conditions of its poverty-stricken regions. Similarly, the Chinese government should stop interfering with its economy (Shah 2008). The government should encourage a free market economy. Through this, the country’s entrepreneurial capacity will be improved.
Equally, China should improve on their education system. All the tertiary institutions in the country should emphasise on the importance of the whole person development programmes. They should develop a curriculum that encourages broad and balanced learning for graduates. The essence of these platforms is to allow graduates to achieve broad and fair experiences during their training programmes. The systems should give emphasis to physical wellness and fitness, emotional intelligence, and interpersonal relations among students (Gray 2006). Besides, the programmes should allow students to enhance their mental prowess, creativity, competence, and continuous personal development.
On the other hand, entrepreneurial capacity in Sweden has improved over the last few years. Despite this, it should be noted that fluctuating cultural and social values concerning entrepreneurship and weak policy and public actions to encourage entrepreneurship are the biggest test for enhancing entrepreneurial capacity in the country. The state should enact and execute effective strategy measures to improve its entrepreneurial capacity in the future. The policies should promote optimistic environments for entrepreneurship and permit businesses to develop. Through this, the country will boost its economic development and employment. Equally, the country should address perceived obstacles to development, globalisation, and innovation.
Based on the above, it is apparent that the biggest differences in entrepreneurial capacity between Sweden and China can be compared in terms of their institutions, infrastructure, macroeconomic environment, and higher education. The above factors have influenced the variations in the two countries’ business environments, legal systems, and procedures required in establishing an enterprise. Sweden is an industrialised nation with established market structures and legal systems. Contrastingly, China is an emerging country. Its market environments and legal structures are relatively weak and progressively improving. Similarly, the business setting and the system to begin a business are simple in Sweden. Therefore, entrepreneurs should note that establishing businesses in both countries have advantages and disadvantages. Prior to starting a business in both countries, the most significant thing is to comprehend the domestic business setting and decide on an appropriate legal structure. Similarly, the entrepreneur should monitor the domestic processes required in establishing an enterprise.
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