Factors leading to success for entrepreneurs in the Chinese online C2C market

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Li, Rui
Major Professor
Chung, Te-Lin
Fiore, Ann-Marie
Sherman, Peter J
Niehm, Linda S
Hurst, Jessica L
Wong, John KF
Committee Member
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Apparel, Events and Hospitality Management
The Chinese online market is growing rapidly and has become the world’s largest online market. The Consumer to Consumer (C2C) sector, an important component of the Chinese online market, has drawn the attention of researchers as a major platform for online entrepreneurship. The present study is the first to systematically explore factors affecting C2C business operations and perceived success according to Chinese online C2C sellers. Guided by a research framework consisting of the modified resource-based theory, institutional theory, and entrepreneurial marketing (EM) framework, the present study qualitatively (a) profiled Chinese online entrepreneurs according to their demographic traits, (b) defined “success” based on Chinese online entrepreneurs’ perceptions, and (c) depicted Chinese online C2C market dynamics according to Chinese online entrepreneurs’ experiences. Additionally, the present study also quantitatively investigated the effects of (a) personal motivations, (b) resources, (c) Chinese institutional environmental factors, and (d) operational strategies such as EM on perceived success. This study appears to be the first to empirically examine the modified resource-based theory, institutional theory, and the EM framework in a non-Western online market. The study adopted an exploratory sequential mixed-method by following guidelines outlined by Creswell (2014). The qualitative phase of data collection consisted of nine interviews and the quantitative phase consisted of an online survey. Three hundred ten useable responses from the online survey were utilized for the various subsequent statistical analyses. The results suggest that the majority of Chinese online entrepreneurs were relatively young, married, and highly educated. A considerable number had previous industry experience, and the majority sold apparel, accessories, and beauty products through C2C platforms such as Taobao and instant messaging tools such as Wechat. Measurement instruments consisted of items adapted from previously validated scales as well as items generated by the investigator. All but the customer-centric innovation dimension of the EM scale proved to be reliable and valid based on exploratory (EFA) and confirmatory (CFA) factor analyses. The following five scales were validated: the business resource, motivation, institutional environment, operational strategies, and factors leading to perceived success and perceived success. A cluster analysis of participants’ perceptions measured by variables in the aforementioned scales, along with demographic traits, revealed factors associated with perceived financial and nonfinancial forms of success. Skilled and experienced entrepreneurs who focused on customer service and risk management as well as ambitious and prepared entrepreneurs who focused on utilizing rich resources for marketing and expansion enjoyed a high level of perceived success. Conversely, entrepreneurs who had fewer resources and who were forced into the market through unemployment or dissatisfaction with a previous job were associated with considerably lower levels of perceived success. Chinese online entrepreneurs defined their success in terms of financial and nonfinancial dimensions. The financial dimension consisted of profitability and income, sales volume, and investment return. The nonfinancial dimension consisted of customer satisfaction, positive word-of-mouth, and a good reputation with positive social recognition. Additionally, multiple regression results revealed that self-fulfillment and situational motivations, rather than survival motivations, positively affected perceived success. Although all resource capitals positively affected perceived success, social capital played the most important role and explained the largest portion of variance in both financial and nonfinancial success. The Chinese institutional environment positively impacted perceived success, yet it did not affect entrepreneur’s actual choice of strategies for business operations. However, business operational strategies, such as branding and EM dimensions, influenced both financial and nonfinancial success. Hence, effectively applying one’s resources, especially one’s social networks, to business management, customer services, and marketing activities through innovative and entrepreneurial means is key to achieving success in the Chinese online C2C market. A detailed discussion of the impact of each of the aforementioned factors on success along with suggested theoretical and practical implications is presented. Thus, this study not only offers future research directions but also provides practical insight for those who would like to start their own business in the Chinese online C2C market. The study contributes to the emerging body of research findings on the Chinese online C2C market and online entrepreneurship. It also provides significant theoretical implications. The modified resource-based theory and the institutional theory, as well as the entrepreneurial marketing framework, are empirically proven to be effective in explaining business success in non-Western online markets, which demonstrates the applicability and robustness of these theories and framework. Hence, future comparative research studies based on these theories and framework, extending across various cultures and/or countries, may be more fully realized.