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Effect of land expropriation on land-lost farmers’ entrepreneurial action: A case study of Zhejiang Province
Habitat International 53 (2016) 342e349
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Effect of land expropriation on land-lost farmers’ entrepreneurial action: A case study of Zhejiang Province Haijun Bao, Yi Peng* School of Urban-rural Planning & Management, Zhejiang University of Finance & Economics, Hangzhou, PR China
a r t i c l e i n f o
a b s t r a c t
Article history: Received 21 September 2015 Received in revised form 11 December 2015 Accepted 12 December 2015 Available online 29 December 2015
With the rapid urbanization and industry development, China has witnessed substantial land acquisition. Monetary compensation is usually adopted to settle down land-lost farmers. However, in this manner of compensation, land-lost farmers find settling down in cities and achieving civilization difficult. Promoting entrepreneurship has been suggested to be a sustainable approach to settle down land-lost farmers. However, only a few studies have been conducted to investigate the effect of land expropriation on land-lost farmers' entrepreneurial action. Therefore, how to effectively promote entrepreneurship among land-lost farmers remains unknown. To mitigate this deficiency, this study examines the effect of land expropriation on land-lost farmers' entrepreneurial action through the case of Zhejiang Province in China. Regression is used to examine the effect of land location, amount of compensation, and entrepreneurship policy on land-lost farmers' entrepreneurial action. Land location has a significant positive role, whereas amount of compensation has a significant negative role in initiating land-lost farmers’ entrepreneurship. The results of this study can facilitate the local government to make appropriate policies to promote entrepreneurship among land-lost farmers. © 2015 Elsevier Ltd. All rights reserved.
Keywords: Land expropriation Entrepreneurial intention Entrepreneurial action Land location Amount of compensation Entrepreneurial policy China
1. Introduction China has witnessed rapid urbanization and economic development since the 1980s. According to the China Statistical Yearbook, the urban population increased from 191,400,000 in 1980 to 731,110,000 in 2013, and the urbanization rate increased from 19.4% to 53.73% during this period. The gross domestic product (GDP) also increased from 454.56 billion RMB in 1980e56884.52 billion RMB in 2013, with an average annual increase rate of 15.8%1 (NBSC, 2014). The rapid urbanization and economic development have led to the great demand for construction land for infrastructure and property developments. To obtain more land to meet such demand, a large portion of agricultural land of the farmers has been expropriated by the government (Chan, 2003; Hui & Bao, 2013; Lai, Peng, Li, & Lin, 2014; Shen, Peng, Zhang, & Wu, 2012; Wu, Peng, Zhang, Skitmore, & Song, 2012). When the urbanization rate increases by 1%, about 126.7 thousand hectares of farmland is estimated to be
* Corresponding author. E-mail addresses: [email protected] (H. Bao), [email protected] (Y. Peng). 1 Gross domestic product was measured in the current prices at the corresponding year. http://dx.doi.org/10.1016/j.habitatint.2015.12.008 0197-3975/© 2015 Elsevier Ltd. All rights reserved.
expropriated, which result in 2660 thousand land-lost farmers (Huang & Tang, 2011). According to the Annual Report on Urban Development of China issued in 2011, the estimated expropriated farmland will be 3633 thousand hectares between 2000 and 2030, and correspondingly, the number of land-lost farmers will increase by 3 million annually and will reach 110 million by the end of 2030 (Pan & Wei, 2011). Such a dramatic increase presents a great challenge to settle down land-lost farmers in urban areas. Employment is one of the critical bases for land-lost farmers to settle down in urban areas. Three settlement approaches are formulated in the Land Administration Law. The first approach is to be implemented by companies that need the expropriated land. In this approach, land-lost farmers will be provided with job opportunities in corresponding companies. This approach was adopted in the early 1980s and 1990s. However, with the market reform, this approach was kind of suspended as companies mainly relied on the market to obtain appropriate labors. The second is to be charged by rural collectives. Rural collectives provide job opportunities or stock share in collective companies. This approach was adopted in developed areas, such as Guangdong and Zhejiang Provinces. However, it maintains a small ratio at the national level. The third approach is to be charged by land-lost farmers themselves. One-off cash compensation is provided in this approach. This approach is
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widely adopted in China as it has comparatively low risk, high stability, and easy operation in the short term. It maintains or even improves land-lost farmers’ life in the short term, but it cannot provide successful re-employment in the long term (Zhai & Xiang, 2012). The survey in Zhejiang, Jiangsu, and Sichuan Provinces demonstrated that unemployment and low income were prevalent among land-lost farmers (Gan & Sun, 2015). Various reasons account for the limited job opportunities for land-lost farmers, including low education and lack of non-farm work skills (Chen, Chen, & Xie, 2013). Unemployment results not only in insufficient economic support but also in confusion about self-identify, which presents a potential high risk in the long term (Fang, 2015). The social insurance system can relieve some of the serious problems. However, social insurance, which only meets the basic living demands, cannot provide a good life if people merely rely on it. Therefore, the settlement policy should be converted from a survival guarantee to the promotion of development (Zheng & Sun, 2006). Entrepreneurship is suggested as one of the sustainable approaches to settle down land-lost farmers. International research considers entrepreneurship as a strategic approach to solve the problems of unemployment and employment discrimination (Hytti, 2003; Jayeoba, 2015). Some pilot studies have been conducted in China that link entrepreneurship to land-lost farmers. On the one hand, studies have investigated whether the environment supports entrepreneurship of land-lost farmers. Zheng and Sun (2006) presented a policy system to support the entrepreneurship of land-lost farmers from the perspectives of entrepreneurship guidance, financial support, entrepreneurship chance, and entrepreneurship service. Guo and Jiang (2010) claimed that only 7.2% of the 666 thousand land-lost farmers in Chengdu implemented entrepreneurship. The reasons for the low level of entrepreneurship included lack of capital, lack of policy guidance, blocking of market information, and lack of technological and management abilities. Bao (2012) developed a model to identify the potential of entrepreneurship for land-lost farmers, based on which the limited training resources could be appropriately allocated. On the other hand, several studies have investigated the impact factors of entrepreneurship intension. Chen et al. (2013) demonstrated that cash compensation is positively related to entrepreneurship. Zhang, Wen, and Li (2012) found that re-employment training and the portion of non-agricultural income have a positive relationship, whereas age and cash compensation have a negative relationship with the entrepreneurship of land-lost farmers. Zhou and Fu (2012) found that social capital and human capital greatly affect the entrepreneurship of land-lost farmers. She (2013) identified the influencing factors of the entrepreneurship of land-lost farmers based on theory of reasoned action. However, existing studies have overlooked the role of entrepreneurial action as a dependent variable. Existing studies have mainly investigated the influencing factors of entrepreneurial intention, with the assumption that entrepreneurial intention definitely results in entrepreneurial action. The assumption is not as reasonable as that we found in the interviews that entrepreneurial intention is diversified and dynamic for land-lost farmers. Therefore, the findings from existing studies are difficult to take effect. Land expropriation, as one of the most important environmental factors, also affects whether entrepreneurial action can be implemented. For example, with other factors controlled, if cash compensation is too low, converting the entrepreneurial intention to entrepreneurial action will be difficult for land-lost farmers. Moreover, if cash compensation is too high, land-lost farmers may directly give up entrepreneurship until their income becomes insufficient. Therefore, to make suitable policies, determining the effects of the land acquisition factors on entrepreneurial action is
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necessary. This study aims to investigate the effect of land expropriation on the entrepreneurial action of land-lost farmers with the case study of Zhejiang Province. This paper is organized as follows. Section 2 presents the theoretical framework and case context of this study. The Entrepreneurial Event Theory was used to develop the analysis framework of this study. In addition, the background information of Zhejiang Province was introduced for better interpreting the analysis results. Section 3 introduces the research methodology. The regression model involving entrepreneurial action, entrepreneurial intention, land expropriation, and other control factors is developed. The relevant variables are measured, and relevant data are collected through a survey. Section 4 presents the findings and an in-depth discussion. Section 5 concludes this study with future research directions. 2. Theoretical framework and case context 2.1. Theoretical framework Various theories have been developed to explain entrepreneurial intention and action including Entrepreneurial Event Theory and Theory of Planned Behavior (Khuong & An, 2016; Krueger, Reilly, & Carsrud, 2000). The Entrepreneurial Event Theory emphasizes that the human behavior is guided by “inertia” by which if the individual is doing something, he continues doing it unless it is interrupted by the force outside itself, which could be negative or positive (Shapero & Sokol, 1982). Whereas, the Theory of Planned Behavior assumes that many human behavior are planned and hence, are preceded by intention toward that behavior (Ajzen, 1991). Although there are some homologous points between the two models, Entrepreneurial Event Theory is considered more suitable in this research as many land-lost farmers are forced to conduct entrepreneurship rather than plan to do so. Based on the Entrepreneurial Event Theory, this study develops the theoretical framework as shown in Fig. 1. The main factors affect entrepreneurial action including entrepreneurial intention and land expropriation. According to Shapero and Sokol (1982), entrepreneurial action is triggered by some external change (or events). People's response to emergencies depends on their existing “alternative solution” cognitive. Perception of desirability and perception of feasibility are two basic cognitive way to determine the entrepreneurial intention. Perception of desirability refers to the prospect of entrepreneurial activity. This factor reflects whether entrepreneurial activity is in line with the will of the farmers, that is to say, how much value a business can make. The more value the business can make, the higher possibility that land-lost farmers will start a business. Those individual traits, e.g. achievement motivation and
Land Expropriation Land location Amount of compensation Entrepreneurship policy
Perception of desirability Entrepreneurial Action
Entrepreneurial Intention
Perception of feasibility Fig. 1. Theoretical framework of this study.
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innovation orientation, can explain whether the farmers have a high perception of desirability. Perception of feasibility refers to the confidence degree that the individual thinks he/she can conduct entrepreneurship. This factor implies how much the land-lost farmers believe they have the ability e.g., knowledge, skills, and experience, to start a business. The stronger the feasibility of perception, the more likely they will start a business. Field investigation found that farmers with stronger perception of desirability and feasibility hold more positive attitudes towards entrepreneurship. They are more sensitive to detect the market information and good at mining connections resources. Land expropriation plays the role of triggering entrepreneurship converting the entrepreneurial intention to entrepreneurial action or restraining the conversion by contrast. The logic behind is that any action is usually jointly determined by the subjective intention and relevant environmental factors (Guagnano, Stern, & Dietz, 1995). The field study demonstrates that the process of land expropriation definitely affects entrepreneurship. For example, although some interviewees showed certain high perception of desirability, they gave up or delayed entrepreneurship as they had already obtained a lot of compensation. On the other way, if the expropriated land is close to tourism spots, the land-lost farmers even with low perception of feasibility also conducted entrepreneurship once the tourism had been developed and the government provided some guidance on entrepreneurship. Therefore, this study includes land expropriation as one of the most important issues to explain entrepreneurship action of land-lost farmers. As few studies have been conducted on this issue, this study takes location of expropriated land, amount of compensation, and entrepreneurial policy generated from the field study for analysis.
production resettlement, welfare resettlement to market dominant currency settlement, land usufruct returning, life guarantee and developmental resettlement (Hui, Bao, & Zhang, 2013; Bao, Fang, & Ceng, 2015). In parallel with market reform and economic development, the resettlement policy gradually shifts from protection ensuring basic life of land-lost farmers to support improving landlost farmers' living standards. Protection policies cover income protection, living subsidies, the lowest life guarantee, social insurance, and resettlement housing. Supportive policies involve promoting employment and self-employment, development of collective economic policy, community development, and social integration. With such policy shift, the compensation standard in Zhejiang Province is much higher than that of the developing areas. For example, the lowest land compensation standard in Hangzhou is 130,000 RMB for 1 mu2 of land in 2012 (The People's Government of Hangzhou, 2012) whereas the average land compensation standard in Chongqing is 18,000 RMB for 1 mu of land in 2013 (The People's Government of Chongqing, 2013). Entrepreneurship policy has been made to promote selfemployment of land-lost farmers in Zhejiang Province. For example, Taizhou city in Zhejiang Province provides easily accessed small loans to land-lost farmers, which helps reduce the financial difficulties of entrepreneurship. Hangzhou city establishes a entrepreneurship center, which provides policy consultancy, employment support, and free house for entrepreneurship for 3 years (Bao et al., 2015). In the field investigation, we found that land-lost farmers’ entrepreneurship is concentrated in the service industry. The involved businesses include logistics, fruit and vegetable wholesale, and catering. Such background information is useful to understand the analysis results in the following sections. 3. Research methods
2.2. Case context This research takes Zhejiang Province as the case study due to two main reasons. First, Zhejiang province experiences a lot of land expropriation due to rapid industrialization and urbanization in past years. Besides, private economy is popular in Zhejiang Province, which provides various alternatives for entrepreneurship. Therefore, Zhejiang Province is a good case to investigate the entrepreneurship action of land-lost farmers. Second, Zhejiang Province, especially the developed cities like Hangzhou and Ningbo, plays an important role in economic development of Yangtze River Delta. This study therefore provides an insight on understanding entrepreneurial action of land-lost farmers in Yangtze River Delta, which has similar conditions. Zhejiang Province locates in the south of Yangtze River Delta, the provincial capital of which is Hangzhou and close to Shanghai. The land area of Zhejiang Province is 101.8 thousand square kilometers, with only 20 thousand square kilometers of farmland. Lack of farmland forces the people to sustain life through developing private economy while it also implies high value of land and high compensation in land expropriation. Until the end of 2014, there are 55,080,000 permanent residents in Zhejiang Province with 64.87% living in urban areas. The GDP is 4015 billion RMB while the per capita annual disposable income of urban residents is 40393 RMB and that of rural residents is 19373 RMB. The registered unemployment rate of urban residents is only 2.96%, which implies certain sufficient employment (The People's Government of Zhejiang Province, 2015). Such rapid economic development and urbanization cause a lot of land expropriation in Zhejiang Province. During the rapid urbanization and economic development, Zhejiang Province takes various approaches to settle the land-lost farmers as farmland in Zhejiang is very precious. The resettlement policy in Zhejiang has experienced the government-led
Various methods such as structural equation model (SEM) and linear regression can be used to model the relationship among entrepreneurial action, entrepreneurial intention, and land expropriation. This study uses linear regression to model such a relationship due to various reasons. First, obtaining an effective sample to conduct SEM is difficult, as land-lost farmers are not easily approached. Second, as only a few studies have explored this relationship, finding a reliable non-linear regression model to conduct such an analysis is difficult. Finally, linear regression is a commonly used method producing results that can be easily interpreted. The conceptual model is expressed as Equation (1).
EA ¼ a þ
X
aEI þ
X
bLE þ
X
gControl þ ε
(1)
where EA is the dependent variable entrepreneurial action; EI is the independent variable entrepreneurial intention; LE is the independent variable land expropriation; Control is the control variable involved; a, b, and g are the relevant coefficients for the variables EI, LE, and Control, respectively; a is the constant value; and ε is the error term in the regression. The following sub-sections present the measurement of the relevant variables and the survey in this study. 3.1. Variables and measures 3.1.1. Entrepreneurial action Entrepreneurship is a complicated concept that has no indisputable standard definition. Entrepreneurship can be interpreted as
2
1 mu equals to 666.67 square meters.
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the growth process of a new company from the perspective of company. Alternatively, it can also be understood as the process of perceiving the opportunity, integrating resources, and establishing a new company from the perspective of an entrepreneur (Sexton and Bowman, 1985). In this study, land-lost farmers’ entrepreneurship is concentrated in the service industry, which serves to satisfy the needs of the family and improve the quality of life. The involved businesses include logistics, fruit and vegetable wholesale, and catering. To measure the status of entrepreneurial action, three questions are designed as shown in Table 1. 3.1.2. Entrepreneurial intention Existing studies have commonly used two dimensions, namely, perception of desirability and perception of feasibility, to explain entrepreneurial intention (Shapero & Sokol, 1982). Perception of desirability reflects the attractive degree of entrepreneurship to the individual. Perception of feasibility implies the confidence degree that the individual thinks he/she can conduct entrepreneurship. The questions used to measure the two variables are designed on the basis of the existing studies and interview with land-lost farmers (Table 1). 3.1.3. Land expropriation Land expropriation is a complicated process that may affect entrepreneurial action from different aspects. This study focuses on the influence of land location, the amount of compensation, and entrepreneurship policy, which were found important in affecting entrepreneurship in field study. The location of expropriated land affects entrepreneurship, as a better location provides a better entrepreneurship environment and market opportunities. The amount of compensation restrains entrepreneurship, as the economic rule indicates that the more income is, the more leisure and the less work are required. However, if the amount of compensation is comparatively low, land-lost farmers are forced to conduct entrepreneurship to provide for their families (Zhai & Xiang, 2012). Entrepreneurship policy provides an institutional environment that can reduce uncertainties and increase confidence in entrepreneurship. However, perceiving the three variables has certain subjectivity. Therefore, in this study, the respondents were asked if they considered the three factors to affect their entrepreneurship.
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3.2. Control variables To better measure the effect of entrepreneurial intention and land expropriation on entrepreneurial action, critical individual background factors are used as control variables. 3.2.1. Gender Existing studies have shown that males have a higher entrepreneurship interest than females. Moreover, the entrepreneurship interest of females decreases gradually with time (Sasu & Sasu, 2015; Zhao, Seibert, & Hills, 2005). Constrained by the tradition of “man earning the money and the woman staying at home” in rural China, gender does play a role in entrepreneurship. 3.2.2. Age Western studies have demonstrated that the ages between 25 and 44 years old are the most active period of entrepreneurship. Young people are considered to be more adventurous and to be more likely to implement entrepreneurship than older people, but the spirit of adventure decreases with time. Han (2009) found that the age of land-lost farmers who implemented entrepreneurship was mainly between 36 and 45 years old. A possible reason for this finding is that older land-lost farmers find looking for suitable jobs in the market more difficult than younger land-lost farmers. Therefore, older land-lost farmers have to implement entrepreneurship to provide for their families. 3.2.3. Education Existing studies have shown that education facilitates the building of human capital (Verheul et al., 2015), and that it further results in the differences in entrepreneurship. Although the education level of land-lost farmers is comparatively low, education still plays a role in entrepreneurial action (Jiang, 2008). 3.2.4. Income Income plays a role in initiating entrepreneurial action in two aspects. On the one hand, income partially determines whether a family has money to initiate entrepreneurship. On the other hand, income is a push factor to achieve more family wealth through entrepreneurship (Mcguire, 2006).
Table 1 Measurement of the independent and dependent variables. Category
Variable
Entrepreneurial action
Entrepreneurial action (EA)
Entrepreneurial intention
Land expropriation
Measurement
EA1: I have already started entrepreneurship EA2: I always worked for others and have never started entrepreneurship EA3: I also have other jobs while starting entrepreneurship Perception of desirability PD1: I am eager to start my own business (PD) PD2: I would be very passionate in an entrepreneurial activity PD3: Entrepreneurship is very attractive to me. PD4: The willingness to conduct entrepreneurship is very strong for me. PD5: I really want to achieve entrepreneurship. PD6: I will be satisfied if I find a way to continue entrepreneurship. Perception of feasibility (PF) PF1: I have prepared myself to conduct entrepreneurship. PF2: I think the feasibility of my entrepreneurship is high. PF3: I think my entrepreneurship will be very difficult. PF4: I can obtain entrepreneurship resources from my family or friends. PF5: I can establish close relationship with potential customers. PF6: I think the successful probability of my entrepreneurship is very high. Land location (LL) LL1: The distance of the expropriated land to the CBD (central business district) will affect entrepreneurship. LL2: The development approach of expropriated land will affect entrepreneurship. Amount of compensation AC1: The high amount of compensation will restrain entrepreneurship. (AC) AC2: An appropriate amount of compensation is necessary to reduce the financial burden of entrepreneurship. Entrepreneurship policy (EP) EP1: Implementing entrepreneurship guidance will promote entrepreneurship. EP2: Implementing entrepreneurship training will promote entrepreneurship.
Note: 1 stands for extremely disagree, 2: disagree, 3: neutral; 4: agree; 5: strongly agree.
Scale 1e5 1e5 1e5 1e5 1e5 1e5 1e5 1e5 1e5 1e5 1e5 1e5 1e5 1e5 1e5 1e5 1e5 1e5 1e5 1e5 1e5
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Therefore, the major control variables in this study are gender, age, education, and income. The measurement of these control variables is presented in Table 2. 3.3. Survey
Table 3 Background information of the interviewees (N ¼ 307). Variable
Choice
Sample
Percentage
Gender
Female Male 30 and below Between 31 and 40 Between 41 and 50 51 and above Primary school and below Middle school High school University and above below 20 thousand 20e30 thousand 30e50 thousand 50e100 thousand Above 100 thousand
156 151 57 107 101 42 31 109 119 48 21 57 94 113 22
50.8% 49.2% 18.6% 34.9% 32.9% 13.7% 10.1% 35.5% 38.8% 15.6% 6.8% 18.6% 30.6% 36.8% 7.2%
Age
Based on the aforementioned methods, a questionnaire was designed to collect the required data. The questionnaire was designed in Chinese because it was the dominant language in the targeted population. Attention was paid to minimizing the chance that information would be lost in the translation from Chinese to English. Pilot studies were conducted before the questionnaire survey. Interview with 23 land-lost farmers who carried out entrepreneurship was conducted in February 2013 in Zhejiang and Shandong Provinces. The pilot studies facilitated the checking and improvement of the designed questionnaire to obtain the required information. A formal questionnaire survey was conducted in Hangzhou City and Ningbo City in July 2014. As specified in the measurement of variables, a Likert scale was used in the questionnaire survey. The target respondents for the survey were land-lost farmers. Random sampling was used to determine land-lost farmers living in the urban villages and communities in the suburban areas. A total of 350 questionnaires were delivered, but only 307 effective questionnaires were collected. The response rate was 87.7%. Almost half of the respondents were male. Most of the respondents were under 50 years old. Their education level was generally not higher than high school; this finding implies the cruel fact that land-lost farmers do not receive enough education. The average annual family income was below 50 thousand RMB. Table 3 presents a summary of the interviewees’ background information. 3.4. Findings and discussions 3.4.1. Primary analysis Before the regression, reliability analysis was conducted to check whether the designed measures within a particular variable expressed the same concept (de Vaus, 2002). Reliability of internal consistency is usually measured by Cronbach's coefficienta. The rule of thumb suggests thatashould be at a minimum of 0.5 and greater than 0.7 if the data are considered reliable (e.g., Shen, Lu, Peng, & Jiang, 2011). This study used the Statistical Product and Service Solutions (SPSS) software to calculate the Cronbach's coefficient (SPSS Inc., 2006). The calculation results are 0.837 for the variable “entrepreneurial action,” 0.918 for the variable “perception of desirability,” 0.916 for the variable “perception of desirability,” 0.868 for the variable “land location,” 0.926 for the variable “amount of compensation,” and 0.901for the variable “entrepreneurship policy.” As the Cronbach's coefficients for all variables are greater than 0.7, the questionnaire survey is considered reliable. As several measures can be used to measure a particular variable, the specific value of the concerned variable should be integrated before conducting regression. The weight of relevant measures should be identified for integration. To reduce subjectivity, this study adopted principal component analysis to identify the weight of the measures under each variable rather than using
Education
Income
simple average. The core idea is that the more variance is explained by a specific measure, the higher weight the measure should be. By following the methods introduced by Adler and Golany (2002) and Zhang, Wu, and Shen (2011), the results of weight identification can be shown in Table 4. After obtaining the value of each sample for the concerned variables, regression was conducted. 3.5. Regression results Ordinary least squares method was used to estimate Equation (1). The summary of the estimation model is shown in Table 5. The coefficients of the involved variables are presented in Table 6. As shown in Table 6, the multi-collinearity is acceptable. Therefore, the variables involved are well selected in this model. The effects of individual background factors on entrepreneurial action are not significant in this empirical study. For the category of entrepreneurial intention, the effect of perception of desirability on entrepreneurial action is significant, whereas that of perception of feasibility is insignificant at the significant level of 0.05. For the category of land expropriation, the effects of land location and the amount of compensation on entrepreneurial action are significant, whereas that of entrepreneurship policy is insignificant at the significant level of 0.05. It should be noticed that amount of compensation and age have a negative role in entrepreneurial action, which are consistent with existing studies. The following section interprets the regression results within the context of land expropriation. 4. Discussions Perception of desirability has a significant positive role in initiating entrepreneurship. This finding is echoed by existing theories that entrepreneurial intention is a strong predicator of entrepreneurial action (e.g. Krueger & Carsrud, 1993; Krueger et al., 2000). Land expropriation may interrupt the daily work and life of landlost farmers, and it forces land-lost farmers to consider the desirability and feasibility of entrepreneurship (Shapero & Sokol, 1982). The stronger the desirability of entrepreneurship is, the higher the
Table 2 Measurement of the control variables. Variables Measurement
Scale
Gender Age Education Income
0 1 1 1
Male and female The age range The highest school attended Annual family income
¼ ¼ ¼ ¼
female; 1 ¼ male 30 and below; 2 ¼ 31 to 40; 3 ¼ 41 to 50; 4 ¼ 51 to 60 primary school; 2 ¼ middle school; 3 ¼ high school; 4 ¼ university 20 thousand and below; 2 ¼ 20 to 30 thousand; 3 ¼ 30 to 50 thousand; 4 ¼ 50 to 100 thousand; 5 ¼ above 100 thousand
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Table 4 Weight for each measure within the relevant variables. Variable
Weight for relevant measures
EA PD PF LL AC EP
EA1 ¼ 0.266,EA2 ¼ 0.326,EA3 ¼ 0.408 PD1 ¼ 0.191,PD2 ¼ 0.192; PD3 ¼ 0.196; PD4 ¼ 0.142; PD5 ¼ 0.141,PD6 ¼ 0.138 PF1 ¼ 0.137,PF2 ¼ 0.151; PF3 ¼ 0.144; PF4 ¼ 0.198; PF5 ¼ 0.192,PF6 ¼ 0.178 LL1 ¼ 0.434,LL2 ¼ 0.566 AC1 ¼ 0.463,AC2 ¼ 0.537 EP1 ¼ 0.451,EP2 ¼ 0.549
Table 5 Summary of the estimation model (N ¼ 307). R
R2
AdjR2
Standard error of estimate
Change of the statistics
DR 0.426
0.181
0.156
0.726547
2
0.181
DurbineWatson
DF
df1
df2
DSig.F
7.297
9
297
0.000
1.863
Table 6 Coefficients of involved variables (N ¼ 307). Un-standardized coefficients
(constant) PD PF LL AC EP Gender Age Education Income
B
Standard error
1.169 0.140 0.051 0.200 0.111 0.089 0.087 0.012 0.065 0.002
0.340 0.064 0.066 0.065 0.050 0.049 0.087 0.052 0.057 0.046
Standardized coefficients
t
Sig
Multi-collinearity VIF
0.165 0.060 0.202 0.123 0.103 0.055 0.014 0.071 0.002
possibility of initiating entrepreneurship. This significant positive relationship explains why some people would use all their resources to invest in entrepreneurship. We found some representative thoughts in the interview, such as the following: “I have to conduct entrepreneurship as it improves production efficiency and provides work opportunities for other villagers who are less educated and have to rely on work.” Land location also has a significant positive role in initiating entrepreneurship. Land location in this study concerns the physical distance from the expropriated land to the CBD, which can be classified as an urban village, a suburban area, and a remote rural area. Land location also implies the economic location according to the development approach of the expropriated land, and it includes tourism spots, ecological protection areas, and industry development parks. The closer the expropriated land is to the CBD, the lesser the cost required to enjoy various benefits such as industry accumulation, education, and market information. The better the economic location is, the higher the market potential and the lower the institutional cost. The advantages of land location increase the possibility of land-lost farmers’ entrepreneurship by providing more relevant resources. This finding is echoed by the phenomenon that business focuses on urban villages and tourism spots rather than on remote rural areas and ecological protection areas. Amount of compensation has a significant negative role in initiating entrepreneurship. The amount of compensation varies cross China. Although some studies have shown that the amount of compensation is small especially when compared with what the farmers lose, compensation is comparatively high in developed areas, such as in Zhejiang Province and Guangdong Province. Compensation is argued to provide the required capital for entrepreneurship. By contrast, high compensation lessens the worry of
3.432 2.191 0.776 3.072 2.228 1.807 1.001 0.224 1.147 0.035
0.001 0.029 0.438 0.002 0.027 0.072 0.318 0.823 0.252 0.972
2.057 2.162 1.564 1.108 1.182 1.108 1.388 1.403 1.328
raising a family and reduces the possibility of initiating entrepreneurship, as most land-lost farmers are less educated. This was validated by the survey in this study as nearly 80% interviewees agree that “The high amount of compensation will restrain entrepreneurship”. In addition, this relationship is echoed by many news reports that land-lost farmers in the developed areas who became rich overnight would do nothing but buy luxury goods and gamble whereas such reports in the developing areas are few. This result reminds us that some organizations e.g. non-governmental organizations (NGOs) could play a more positive role in leading the land-lost farmers reasonably utilizing the compensation besides realizing civilization. However, it should be noticed that this finding is based on the practices in Zhejiang Province, which is not generally applicable to other areas, especially the developing areas where compensation is still comparatively low. Similar empirical studies on land expropriation in developing areas should be conducted to compare the difference of such relationship. The comparisons can deepen the understanding of the effect of the amount of compensation on entrepreneurial action. Entrepreneurship policy has a positive role in initiating entrepreneurship, although it is not that significant compared with the other abovementioned factors. Systematic policy tools should be designed to promote entrepreneurship from various aspects including guidance and training, publicity and information delivery, and appropriate executive organizations. Entrepreneurship guidance and training are useful to provide relevant information and abilities required for entrepreneurship and to enhance the possibility of initiating entrepreneurship. In addition, specific policies should also be made to improve the effectiveness of entrepreneurship based on this study. For example, publicity is needed to help land-lost farmers understand how entrepreneurship can
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help them and other villagers. Consequently, it will enhance their perception of desirability and further increase the possibility of initiating entrepreneurship. For land-lost farmers who obtained high compensation, policies should be implemented to guide them in effectively investing their money rather than in simply engaging in luxury consumption. Most importantly, appropriate executive organizations should be specified to provide such guidance. We found in the interview that the farmers thought the training organized by the local government is useless and they were reluctant to attend such training. In keeping with the market reform, the local government can invite the social organizations, e.g., NGOs or business organizations, to provide such guidance on entrepreneurship and civilization. The professionals can pass the first-hand market information to the farmers to effectively affect their entrepreneurial intention and action. 5. Conclusion With the rapid urbanization and industry development, China has witnessed substantial land acquisition. Entrepreneurship is promoted as a sustainable approach to settle land-lost farmers and realize civilization. However, few studies have been conducted to investigate the effect of land expropriation on land-lost farmers' entrepreneurial action. Therefore, how to effectively promote entrepreneurship among land-lost farmers remains unknown. This study investigates the effect of land expropriation on land-lost farmers' entrepreneurial action through the case of Zhejiang Province in China. Regression was used to examine the effect of land location, amount of compensation, and entrepreneurship policy on land-lost farmers' entrepreneurial action, with entrepreneurial intention and other factors of individual background controlled. Perception of desirability and land location have a significant positive role, whereas amount of compensation has a significant negative role in initiating land-lost farmers’ entrepreneurship. This study clarifies the effect of land expropriation on land-lost farmers' entrepreneurial action. The findings can facilitate the local government to make appropriate policies to promote entrepreneurship among land-lost farmers. However, this study only considers three aspects of land expropriation. Other factors in land expropriation may also play a role in land-lost farmers' entrepreneurial action, which is a complicated process. Future studies should be conducted to investigate other relevant factors to make effective entrepreneurship policies. Moreover, the mediation role of land expropriation in entrepreneurial intention and entrepreneurial action should be examined. The survey was conducted only in Zhejiang Province. To understand the spatial difference, similar studies on other provinces should also be conducted. These comparisons will be useful to obtain a comprehensive understanding of land-lost farmers’ entrepreneurship at the national level. Acknowledgments The authors are grateful for the financial supports from the Key Project of Higher Education of Zhejiang Province (Project#2013GH007). References Adler, N., & Golany, B. (2002). Including principal component weights to improve discrimination in data envelopment analysis. Journal of the Operational Research Society, 53(9), 985e991. Ajzen, I. (1991). The theory of planned behavior. Organizational Behavior and Human Decision Processes, 50, 179e211. Bao, H. J. (2012). Priority assessment on entrepreneurship potential of land-lost farmers. Tong Ji Yu Jue Ce, 16, 44e46 (in Chinese).
Bao, H. J., Fang, Y., & Ceng, Y. Y. (2015). Explorative studies on entrepreneurship of land-lost farmers. DongJing Journal, 4, 95e100. Chan, N. (2003). Land acquisition compensation in China-problems & answers. International Real Estate Review, 6(1), 136e152. Chen, H., Chen, X. C., & Xie, Y. (2013). Occupational differentiation and influencing factors of land-lost farmers during urbanization. China Population, Resources and Environment, 23(6), 72e79 (in Chinese). Fang, Y. Q. (2015). Employment and urban adoption of land-lost farmers. Study and Practice, 4, 23e31 (in Chinese). Gan, X. C., & Sun, H. (2015). Review on social insurance of land-lost farmers. Rural Economy, 2, 87 (in Chinese). Guagnano, G. A., Stern, P. C., & T., Dietz. (1995). Influences on Attitude-Behavior Relationships. Environment & Behavior, 27, 699e718. Guo, J. Y., & Jiang, W. N. (2010). Measures to promote entrepreneurship among landlost farmers: an analysis based on the model of entrepreneurship process. 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Critical assessment indicators for measuring benefits of rural infrastructure investment in China. Journal of Infrastructure Systems ASCE, 17(4), 176e183. Shen, L. Y., Peng, Y., Zhang, X. L., & Wu, Y. Z. (2012). An alternative model for evaluating sustainable urbanization. Cities, 29(1), 32e39. Statistical Package for the Social Sciences (SPSS), Inc. (2006). SPSS 15.0 for windows brief guide. Englewood Cliffs, NJ: Prentice-Hall. The People’s Government of Chongqing. (2013). Further adjustment of compensation for land expropriation compensation standard by the People's Government of Chongqing. http://www.guotuzy.cn/html/1402/n-167889.html Accessed 08.11.15. The People’s Government of Hangzhou. (2012). Notice of Hangzhou land expropriation compensation standards by the People's Government of Hangzhou. http:// www.hangzhou.gov.cn/main/wjgg/ZFGB/201204/szfwj/T396941.shtml Accessed 08.11.15. The People’s Government of Zhejiang Province. (2015). Statistical bulletin of national economic and social development in Zhejiang Province in 2014. http://www.zj.gov. cn/art/2015/5/27/art_961_1798780.html Accessed 08.11.15. de Vaus, D. (2002). Analyzing social science data. London: SAGE Publications. Verheul, I., Block, J., Burmeister-Lamp, K., Thurik, R., Tiemeier, H., & Turturea, R. (2015). ADHD-like behavior and entrepreneurial intentions. Small Business Economics, 45(1), 85e101. Wu, Y. Z., Peng, Y., Zhang, X. L., Skitmore, M., & Song, Y. (2012). Development priority zoning (DPZ)-led scenario simulation for regional land use change: the case of Suichang County, China. Habitat International, 36(2), 268e277. Zhai, N. X., & Xiang, G. Q. (2012). Employment status, constraints and policy support of land-lost farmers in the process of urbanization. Chinese Public
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Effect of land expropriation on land-lost farmers’ entrepreneurial action: A case study of Zhejiang Province Haijun Bao, Yi Peng* School of Urban-rural Planning & Management, Zhejiang University of Finance & Economics, Hangzhou, PR China
a r t i c l e i n f o
a b s t r a c t
Article history: Received 21 September 2015 Received in revised form 11 December 2015 Accepted 12 December 2015 Available online 29 December 2015
With the rapid urbanization and industry development, China has witnessed substantial land acquisition. Monetary compensation is usually adopted to settle down land-lost farmers. However, in this manner of compensation, land-lost farmers find settling down in cities and achieving civilization difficult. Promoting entrepreneurship has been suggested to be a sustainable approach to settle down land-lost farmers. However, only a few studies have been conducted to investigate the effect of land expropriation on land-lost farmers' entrepreneurial action. Therefore, how to effectively promote entrepreneurship among land-lost farmers remains unknown. To mitigate this deficiency, this study examines the effect of land expropriation on land-lost farmers' entrepreneurial action through the case of Zhejiang Province in China. Regression is used to examine the effect of land location, amount of compensation, and entrepreneurship policy on land-lost farmers' entrepreneurial action. Land location has a significant positive role, whereas amount of compensation has a significant negative role in initiating land-lost farmers’ entrepreneurship. The results of this study can facilitate the local government to make appropriate policies to promote entrepreneurship among land-lost farmers. © 2015 Elsevier Ltd. All rights reserved.
Keywords: Land expropriation Entrepreneurial intention Entrepreneurial action Land location Amount of compensation Entrepreneurial policy China
1. Introduction China has witnessed rapid urbanization and economic development since the 1980s. According to the China Statistical Yearbook, the urban population increased from 191,400,000 in 1980 to 731,110,000 in 2013, and the urbanization rate increased from 19.4% to 53.73% during this period. The gross domestic product (GDP) also increased from 454.56 billion RMB in 1980e56884.52 billion RMB in 2013, with an average annual increase rate of 15.8%1 (NBSC, 2014). The rapid urbanization and economic development have led to the great demand for construction land for infrastructure and property developments. To obtain more land to meet such demand, a large portion of agricultural land of the farmers has been expropriated by the government (Chan, 2003; Hui & Bao, 2013; Lai, Peng, Li, & Lin, 2014; Shen, Peng, Zhang, & Wu, 2012; Wu, Peng, Zhang, Skitmore, & Song, 2012). When the urbanization rate increases by 1%, about 126.7 thousand hectares of farmland is estimated to be
* Corresponding author. E-mail addresses: [email protected] (H. Bao), [email protected] (Y. Peng). 1 Gross domestic product was measured in the current prices at the corresponding year. http://dx.doi.org/10.1016/j.habitatint.2015.12.008 0197-3975/© 2015 Elsevier Ltd. All rights reserved.
expropriated, which result in 2660 thousand land-lost farmers (Huang & Tang, 2011). According to the Annual Report on Urban Development of China issued in 2011, the estimated expropriated farmland will be 3633 thousand hectares between 2000 and 2030, and correspondingly, the number of land-lost farmers will increase by 3 million annually and will reach 110 million by the end of 2030 (Pan & Wei, 2011). Such a dramatic increase presents a great challenge to settle down land-lost farmers in urban areas. Employment is one of the critical bases for land-lost farmers to settle down in urban areas. Three settlement approaches are formulated in the Land Administration Law. The first approach is to be implemented by companies that need the expropriated land. In this approach, land-lost farmers will be provided with job opportunities in corresponding companies. This approach was adopted in the early 1980s and 1990s. However, with the market reform, this approach was kind of suspended as companies mainly relied on the market to obtain appropriate labors. The second is to be charged by rural collectives. Rural collectives provide job opportunities or stock share in collective companies. This approach was adopted in developed areas, such as Guangdong and Zhejiang Provinces. However, it maintains a small ratio at the national level. The third approach is to be charged by land-lost farmers themselves. One-off cash compensation is provided in this approach. This approach is
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widely adopted in China as it has comparatively low risk, high stability, and easy operation in the short term. It maintains or even improves land-lost farmers’ life in the short term, but it cannot provide successful re-employment in the long term (Zhai & Xiang, 2012). The survey in Zhejiang, Jiangsu, and Sichuan Provinces demonstrated that unemployment and low income were prevalent among land-lost farmers (Gan & Sun, 2015). Various reasons account for the limited job opportunities for land-lost farmers, including low education and lack of non-farm work skills (Chen, Chen, & Xie, 2013). Unemployment results not only in insufficient economic support but also in confusion about self-identify, which presents a potential high risk in the long term (Fang, 2015). The social insurance system can relieve some of the serious problems. However, social insurance, which only meets the basic living demands, cannot provide a good life if people merely rely on it. Therefore, the settlement policy should be converted from a survival guarantee to the promotion of development (Zheng & Sun, 2006). Entrepreneurship is suggested as one of the sustainable approaches to settle down land-lost farmers. International research considers entrepreneurship as a strategic approach to solve the problems of unemployment and employment discrimination (Hytti, 2003; Jayeoba, 2015). Some pilot studies have been conducted in China that link entrepreneurship to land-lost farmers. On the one hand, studies have investigated whether the environment supports entrepreneurship of land-lost farmers. Zheng and Sun (2006) presented a policy system to support the entrepreneurship of land-lost farmers from the perspectives of entrepreneurship guidance, financial support, entrepreneurship chance, and entrepreneurship service. Guo and Jiang (2010) claimed that only 7.2% of the 666 thousand land-lost farmers in Chengdu implemented entrepreneurship. The reasons for the low level of entrepreneurship included lack of capital, lack of policy guidance, blocking of market information, and lack of technological and management abilities. Bao (2012) developed a model to identify the potential of entrepreneurship for land-lost farmers, based on which the limited training resources could be appropriately allocated. On the other hand, several studies have investigated the impact factors of entrepreneurship intension. Chen et al. (2013) demonstrated that cash compensation is positively related to entrepreneurship. Zhang, Wen, and Li (2012) found that re-employment training and the portion of non-agricultural income have a positive relationship, whereas age and cash compensation have a negative relationship with the entrepreneurship of land-lost farmers. Zhou and Fu (2012) found that social capital and human capital greatly affect the entrepreneurship of land-lost farmers. She (2013) identified the influencing factors of the entrepreneurship of land-lost farmers based on theory of reasoned action. However, existing studies have overlooked the role of entrepreneurial action as a dependent variable. Existing studies have mainly investigated the influencing factors of entrepreneurial intention, with the assumption that entrepreneurial intention definitely results in entrepreneurial action. The assumption is not as reasonable as that we found in the interviews that entrepreneurial intention is diversified and dynamic for land-lost farmers. Therefore, the findings from existing studies are difficult to take effect. Land expropriation, as one of the most important environmental factors, also affects whether entrepreneurial action can be implemented. For example, with other factors controlled, if cash compensation is too low, converting the entrepreneurial intention to entrepreneurial action will be difficult for land-lost farmers. Moreover, if cash compensation is too high, land-lost farmers may directly give up entrepreneurship until their income becomes insufficient. Therefore, to make suitable policies, determining the effects of the land acquisition factors on entrepreneurial action is
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necessary. This study aims to investigate the effect of land expropriation on the entrepreneurial action of land-lost farmers with the case study of Zhejiang Province. This paper is organized as follows. Section 2 presents the theoretical framework and case context of this study. The Entrepreneurial Event Theory was used to develop the analysis framework of this study. In addition, the background information of Zhejiang Province was introduced for better interpreting the analysis results. Section 3 introduces the research methodology. The regression model involving entrepreneurial action, entrepreneurial intention, land expropriation, and other control factors is developed. The relevant variables are measured, and relevant data are collected through a survey. Section 4 presents the findings and an in-depth discussion. Section 5 concludes this study with future research directions. 2. Theoretical framework and case context 2.1. Theoretical framework Various theories have been developed to explain entrepreneurial intention and action including Entrepreneurial Event Theory and Theory of Planned Behavior (Khuong & An, 2016; Krueger, Reilly, & Carsrud, 2000). The Entrepreneurial Event Theory emphasizes that the human behavior is guided by “inertia” by which if the individual is doing something, he continues doing it unless it is interrupted by the force outside itself, which could be negative or positive (Shapero & Sokol, 1982). Whereas, the Theory of Planned Behavior assumes that many human behavior are planned and hence, are preceded by intention toward that behavior (Ajzen, 1991). Although there are some homologous points between the two models, Entrepreneurial Event Theory is considered more suitable in this research as many land-lost farmers are forced to conduct entrepreneurship rather than plan to do so. Based on the Entrepreneurial Event Theory, this study develops the theoretical framework as shown in Fig. 1. The main factors affect entrepreneurial action including entrepreneurial intention and land expropriation. According to Shapero and Sokol (1982), entrepreneurial action is triggered by some external change (or events). People's response to emergencies depends on their existing “alternative solution” cognitive. Perception of desirability and perception of feasibility are two basic cognitive way to determine the entrepreneurial intention. Perception of desirability refers to the prospect of entrepreneurial activity. This factor reflects whether entrepreneurial activity is in line with the will of the farmers, that is to say, how much value a business can make. The more value the business can make, the higher possibility that land-lost farmers will start a business. Those individual traits, e.g. achievement motivation and
Land Expropriation Land location Amount of compensation Entrepreneurship policy
Perception of desirability Entrepreneurial Action
Entrepreneurial Intention
Perception of feasibility Fig. 1. Theoretical framework of this study.
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innovation orientation, can explain whether the farmers have a high perception of desirability. Perception of feasibility refers to the confidence degree that the individual thinks he/she can conduct entrepreneurship. This factor implies how much the land-lost farmers believe they have the ability e.g., knowledge, skills, and experience, to start a business. The stronger the feasibility of perception, the more likely they will start a business. Field investigation found that farmers with stronger perception of desirability and feasibility hold more positive attitudes towards entrepreneurship. They are more sensitive to detect the market information and good at mining connections resources. Land expropriation plays the role of triggering entrepreneurship converting the entrepreneurial intention to entrepreneurial action or restraining the conversion by contrast. The logic behind is that any action is usually jointly determined by the subjective intention and relevant environmental factors (Guagnano, Stern, & Dietz, 1995). The field study demonstrates that the process of land expropriation definitely affects entrepreneurship. For example, although some interviewees showed certain high perception of desirability, they gave up or delayed entrepreneurship as they had already obtained a lot of compensation. On the other way, if the expropriated land is close to tourism spots, the land-lost farmers even with low perception of feasibility also conducted entrepreneurship once the tourism had been developed and the government provided some guidance on entrepreneurship. Therefore, this study includes land expropriation as one of the most important issues to explain entrepreneurship action of land-lost farmers. As few studies have been conducted on this issue, this study takes location of expropriated land, amount of compensation, and entrepreneurial policy generated from the field study for analysis.
production resettlement, welfare resettlement to market dominant currency settlement, land usufruct returning, life guarantee and developmental resettlement (Hui, Bao, & Zhang, 2013; Bao, Fang, & Ceng, 2015). In parallel with market reform and economic development, the resettlement policy gradually shifts from protection ensuring basic life of land-lost farmers to support improving landlost farmers' living standards. Protection policies cover income protection, living subsidies, the lowest life guarantee, social insurance, and resettlement housing. Supportive policies involve promoting employment and self-employment, development of collective economic policy, community development, and social integration. With such policy shift, the compensation standard in Zhejiang Province is much higher than that of the developing areas. For example, the lowest land compensation standard in Hangzhou is 130,000 RMB for 1 mu2 of land in 2012 (The People's Government of Hangzhou, 2012) whereas the average land compensation standard in Chongqing is 18,000 RMB for 1 mu of land in 2013 (The People's Government of Chongqing, 2013). Entrepreneurship policy has been made to promote selfemployment of land-lost farmers in Zhejiang Province. For example, Taizhou city in Zhejiang Province provides easily accessed small loans to land-lost farmers, which helps reduce the financial difficulties of entrepreneurship. Hangzhou city establishes a entrepreneurship center, which provides policy consultancy, employment support, and free house for entrepreneurship for 3 years (Bao et al., 2015). In the field investigation, we found that land-lost farmers’ entrepreneurship is concentrated in the service industry. The involved businesses include logistics, fruit and vegetable wholesale, and catering. Such background information is useful to understand the analysis results in the following sections. 3. Research methods
2.2. Case context This research takes Zhejiang Province as the case study due to two main reasons. First, Zhejiang province experiences a lot of land expropriation due to rapid industrialization and urbanization in past years. Besides, private economy is popular in Zhejiang Province, which provides various alternatives for entrepreneurship. Therefore, Zhejiang Province is a good case to investigate the entrepreneurship action of land-lost farmers. Second, Zhejiang Province, especially the developed cities like Hangzhou and Ningbo, plays an important role in economic development of Yangtze River Delta. This study therefore provides an insight on understanding entrepreneurial action of land-lost farmers in Yangtze River Delta, which has similar conditions. Zhejiang Province locates in the south of Yangtze River Delta, the provincial capital of which is Hangzhou and close to Shanghai. The land area of Zhejiang Province is 101.8 thousand square kilometers, with only 20 thousand square kilometers of farmland. Lack of farmland forces the people to sustain life through developing private economy while it also implies high value of land and high compensation in land expropriation. Until the end of 2014, there are 55,080,000 permanent residents in Zhejiang Province with 64.87% living in urban areas. The GDP is 4015 billion RMB while the per capita annual disposable income of urban residents is 40393 RMB and that of rural residents is 19373 RMB. The registered unemployment rate of urban residents is only 2.96%, which implies certain sufficient employment (The People's Government of Zhejiang Province, 2015). Such rapid economic development and urbanization cause a lot of land expropriation in Zhejiang Province. During the rapid urbanization and economic development, Zhejiang Province takes various approaches to settle the land-lost farmers as farmland in Zhejiang is very precious. The resettlement policy in Zhejiang has experienced the government-led
Various methods such as structural equation model (SEM) and linear regression can be used to model the relationship among entrepreneurial action, entrepreneurial intention, and land expropriation. This study uses linear regression to model such a relationship due to various reasons. First, obtaining an effective sample to conduct SEM is difficult, as land-lost farmers are not easily approached. Second, as only a few studies have explored this relationship, finding a reliable non-linear regression model to conduct such an analysis is difficult. Finally, linear regression is a commonly used method producing results that can be easily interpreted. The conceptual model is expressed as Equation (1).
EA ¼ a þ
X
aEI þ
X
bLE þ
X
gControl þ ε
(1)
where EA is the dependent variable entrepreneurial action; EI is the independent variable entrepreneurial intention; LE is the independent variable land expropriation; Control is the control variable involved; a, b, and g are the relevant coefficients for the variables EI, LE, and Control, respectively; a is the constant value; and ε is the error term in the regression. The following sub-sections present the measurement of the relevant variables and the survey in this study. 3.1. Variables and measures 3.1.1. Entrepreneurial action Entrepreneurship is a complicated concept that has no indisputable standard definition. Entrepreneurship can be interpreted as
2
1 mu equals to 666.67 square meters.
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the growth process of a new company from the perspective of company. Alternatively, it can also be understood as the process of perceiving the opportunity, integrating resources, and establishing a new company from the perspective of an entrepreneur (Sexton and Bowman, 1985). In this study, land-lost farmers’ entrepreneurship is concentrated in the service industry, which serves to satisfy the needs of the family and improve the quality of life. The involved businesses include logistics, fruit and vegetable wholesale, and catering. To measure the status of entrepreneurial action, three questions are designed as shown in Table 1. 3.1.2. Entrepreneurial intention Existing studies have commonly used two dimensions, namely, perception of desirability and perception of feasibility, to explain entrepreneurial intention (Shapero & Sokol, 1982). Perception of desirability reflects the attractive degree of entrepreneurship to the individual. Perception of feasibility implies the confidence degree that the individual thinks he/she can conduct entrepreneurship. The questions used to measure the two variables are designed on the basis of the existing studies and interview with land-lost farmers (Table 1). 3.1.3. Land expropriation Land expropriation is a complicated process that may affect entrepreneurial action from different aspects. This study focuses on the influence of land location, the amount of compensation, and entrepreneurship policy, which were found important in affecting entrepreneurship in field study. The location of expropriated land affects entrepreneurship, as a better location provides a better entrepreneurship environment and market opportunities. The amount of compensation restrains entrepreneurship, as the economic rule indicates that the more income is, the more leisure and the less work are required. However, if the amount of compensation is comparatively low, land-lost farmers are forced to conduct entrepreneurship to provide for their families (Zhai & Xiang, 2012). Entrepreneurship policy provides an institutional environment that can reduce uncertainties and increase confidence in entrepreneurship. However, perceiving the three variables has certain subjectivity. Therefore, in this study, the respondents were asked if they considered the three factors to affect their entrepreneurship.
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3.2. Control variables To better measure the effect of entrepreneurial intention and land expropriation on entrepreneurial action, critical individual background factors are used as control variables. 3.2.1. Gender Existing studies have shown that males have a higher entrepreneurship interest than females. Moreover, the entrepreneurship interest of females decreases gradually with time (Sasu & Sasu, 2015; Zhao, Seibert, & Hills, 2005). Constrained by the tradition of “man earning the money and the woman staying at home” in rural China, gender does play a role in entrepreneurship. 3.2.2. Age Western studies have demonstrated that the ages between 25 and 44 years old are the most active period of entrepreneurship. Young people are considered to be more adventurous and to be more likely to implement entrepreneurship than older people, but the spirit of adventure decreases with time. Han (2009) found that the age of land-lost farmers who implemented entrepreneurship was mainly between 36 and 45 years old. A possible reason for this finding is that older land-lost farmers find looking for suitable jobs in the market more difficult than younger land-lost farmers. Therefore, older land-lost farmers have to implement entrepreneurship to provide for their families. 3.2.3. Education Existing studies have shown that education facilitates the building of human capital (Verheul et al., 2015), and that it further results in the differences in entrepreneurship. Although the education level of land-lost farmers is comparatively low, education still plays a role in entrepreneurial action (Jiang, 2008). 3.2.4. Income Income plays a role in initiating entrepreneurial action in two aspects. On the one hand, income partially determines whether a family has money to initiate entrepreneurship. On the other hand, income is a push factor to achieve more family wealth through entrepreneurship (Mcguire, 2006).
Table 1 Measurement of the independent and dependent variables. Category
Variable
Entrepreneurial action
Entrepreneurial action (EA)
Entrepreneurial intention
Land expropriation
Measurement
EA1: I have already started entrepreneurship EA2: I always worked for others and have never started entrepreneurship EA3: I also have other jobs while starting entrepreneurship Perception of desirability PD1: I am eager to start my own business (PD) PD2: I would be very passionate in an entrepreneurial activity PD3: Entrepreneurship is very attractive to me. PD4: The willingness to conduct entrepreneurship is very strong for me. PD5: I really want to achieve entrepreneurship. PD6: I will be satisfied if I find a way to continue entrepreneurship. Perception of feasibility (PF) PF1: I have prepared myself to conduct entrepreneurship. PF2: I think the feasibility of my entrepreneurship is high. PF3: I think my entrepreneurship will be very difficult. PF4: I can obtain entrepreneurship resources from my family or friends. PF5: I can establish close relationship with potential customers. PF6: I think the successful probability of my entrepreneurship is very high. Land location (LL) LL1: The distance of the expropriated land to the CBD (central business district) will affect entrepreneurship. LL2: The development approach of expropriated land will affect entrepreneurship. Amount of compensation AC1: The high amount of compensation will restrain entrepreneurship. (AC) AC2: An appropriate amount of compensation is necessary to reduce the financial burden of entrepreneurship. Entrepreneurship policy (EP) EP1: Implementing entrepreneurship guidance will promote entrepreneurship. EP2: Implementing entrepreneurship training will promote entrepreneurship.
Note: 1 stands for extremely disagree, 2: disagree, 3: neutral; 4: agree; 5: strongly agree.
Scale 1e5 1e5 1e5 1e5 1e5 1e5 1e5 1e5 1e5 1e5 1e5 1e5 1e5 1e5 1e5 1e5 1e5 1e5 1e5 1e5 1e5
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Therefore, the major control variables in this study are gender, age, education, and income. The measurement of these control variables is presented in Table 2. 3.3. Survey
Table 3 Background information of the interviewees (N ¼ 307). Variable
Choice
Sample
Percentage
Gender
Female Male 30 and below Between 31 and 40 Between 41 and 50 51 and above Primary school and below Middle school High school University and above below 20 thousand 20e30 thousand 30e50 thousand 50e100 thousand Above 100 thousand
156 151 57 107 101 42 31 109 119 48 21 57 94 113 22
50.8% 49.2% 18.6% 34.9% 32.9% 13.7% 10.1% 35.5% 38.8% 15.6% 6.8% 18.6% 30.6% 36.8% 7.2%
Age
Based on the aforementioned methods, a questionnaire was designed to collect the required data. The questionnaire was designed in Chinese because it was the dominant language in the targeted population. Attention was paid to minimizing the chance that information would be lost in the translation from Chinese to English. Pilot studies were conducted before the questionnaire survey. Interview with 23 land-lost farmers who carried out entrepreneurship was conducted in February 2013 in Zhejiang and Shandong Provinces. The pilot studies facilitated the checking and improvement of the designed questionnaire to obtain the required information. A formal questionnaire survey was conducted in Hangzhou City and Ningbo City in July 2014. As specified in the measurement of variables, a Likert scale was used in the questionnaire survey. The target respondents for the survey were land-lost farmers. Random sampling was used to determine land-lost farmers living in the urban villages and communities in the suburban areas. A total of 350 questionnaires were delivered, but only 307 effective questionnaires were collected. The response rate was 87.7%. Almost half of the respondents were male. Most of the respondents were under 50 years old. Their education level was generally not higher than high school; this finding implies the cruel fact that land-lost farmers do not receive enough education. The average annual family income was below 50 thousand RMB. Table 3 presents a summary of the interviewees’ background information. 3.4. Findings and discussions 3.4.1. Primary analysis Before the regression, reliability analysis was conducted to check whether the designed measures within a particular variable expressed the same concept (de Vaus, 2002). Reliability of internal consistency is usually measured by Cronbach's coefficienta. The rule of thumb suggests thatashould be at a minimum of 0.5 and greater than 0.7 if the data are considered reliable (e.g., Shen, Lu, Peng, & Jiang, 2011). This study used the Statistical Product and Service Solutions (SPSS) software to calculate the Cronbach's coefficient (SPSS Inc., 2006). The calculation results are 0.837 for the variable “entrepreneurial action,” 0.918 for the variable “perception of desirability,” 0.916 for the variable “perception of desirability,” 0.868 for the variable “land location,” 0.926 for the variable “amount of compensation,” and 0.901for the variable “entrepreneurship policy.” As the Cronbach's coefficients for all variables are greater than 0.7, the questionnaire survey is considered reliable. As several measures can be used to measure a particular variable, the specific value of the concerned variable should be integrated before conducting regression. The weight of relevant measures should be identified for integration. To reduce subjectivity, this study adopted principal component analysis to identify the weight of the measures under each variable rather than using
Education
Income
simple average. The core idea is that the more variance is explained by a specific measure, the higher weight the measure should be. By following the methods introduced by Adler and Golany (2002) and Zhang, Wu, and Shen (2011), the results of weight identification can be shown in Table 4. After obtaining the value of each sample for the concerned variables, regression was conducted. 3.5. Regression results Ordinary least squares method was used to estimate Equation (1). The summary of the estimation model is shown in Table 5. The coefficients of the involved variables are presented in Table 6. As shown in Table 6, the multi-collinearity is acceptable. Therefore, the variables involved are well selected in this model. The effects of individual background factors on entrepreneurial action are not significant in this empirical study. For the category of entrepreneurial intention, the effect of perception of desirability on entrepreneurial action is significant, whereas that of perception of feasibility is insignificant at the significant level of 0.05. For the category of land expropriation, the effects of land location and the amount of compensation on entrepreneurial action are significant, whereas that of entrepreneurship policy is insignificant at the significant level of 0.05. It should be noticed that amount of compensation and age have a negative role in entrepreneurial action, which are consistent with existing studies. The following section interprets the regression results within the context of land expropriation. 4. Discussions Perception of desirability has a significant positive role in initiating entrepreneurship. This finding is echoed by existing theories that entrepreneurial intention is a strong predicator of entrepreneurial action (e.g. Krueger & Carsrud, 1993; Krueger et al., 2000). Land expropriation may interrupt the daily work and life of landlost farmers, and it forces land-lost farmers to consider the desirability and feasibility of entrepreneurship (Shapero & Sokol, 1982). The stronger the desirability of entrepreneurship is, the higher the
Table 2 Measurement of the control variables. Variables Measurement
Scale
Gender Age Education Income
0 1 1 1
Male and female The age range The highest school attended Annual family income
¼ ¼ ¼ ¼
female; 1 ¼ male 30 and below; 2 ¼ 31 to 40; 3 ¼ 41 to 50; 4 ¼ 51 to 60 primary school; 2 ¼ middle school; 3 ¼ high school; 4 ¼ university 20 thousand and below; 2 ¼ 20 to 30 thousand; 3 ¼ 30 to 50 thousand; 4 ¼ 50 to 100 thousand; 5 ¼ above 100 thousand
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Table 4 Weight for each measure within the relevant variables. Variable
Weight for relevant measures
EA PD PF LL AC EP
EA1 ¼ 0.266,EA2 ¼ 0.326,EA3 ¼ 0.408 PD1 ¼ 0.191,PD2 ¼ 0.192; PD3 ¼ 0.196; PD4 ¼ 0.142; PD5 ¼ 0.141,PD6 ¼ 0.138 PF1 ¼ 0.137,PF2 ¼ 0.151; PF3 ¼ 0.144; PF4 ¼ 0.198; PF5 ¼ 0.192,PF6 ¼ 0.178 LL1 ¼ 0.434,LL2 ¼ 0.566 AC1 ¼ 0.463,AC2 ¼ 0.537 EP1 ¼ 0.451,EP2 ¼ 0.549
Table 5 Summary of the estimation model (N ¼ 307). R
R2
AdjR2
Standard error of estimate
Change of the statistics
DR 0.426
0.181
0.156
0.726547
2
0.181
DurbineWatson
DF
df1
df2
DSig.F
7.297
9
297
0.000
1.863
Table 6 Coefficients of involved variables (N ¼ 307). Un-standardized coefficients
(constant) PD PF LL AC EP Gender Age Education Income
B
Standard error
1.169 0.140 0.051 0.200 0.111 0.089 0.087 0.012 0.065 0.002
0.340 0.064 0.066 0.065 0.050 0.049 0.087 0.052 0.057 0.046
Standardized coefficients
t
Sig
Multi-collinearity VIF
0.165 0.060 0.202 0.123 0.103 0.055 0.014 0.071 0.002
possibility of initiating entrepreneurship. This significant positive relationship explains why some people would use all their resources to invest in entrepreneurship. We found some representative thoughts in the interview, such as the following: “I have to conduct entrepreneurship as it improves production efficiency and provides work opportunities for other villagers who are less educated and have to rely on work.” Land location also has a significant positive role in initiating entrepreneurship. Land location in this study concerns the physical distance from the expropriated land to the CBD, which can be classified as an urban village, a suburban area, and a remote rural area. Land location also implies the economic location according to the development approach of the expropriated land, and it includes tourism spots, ecological protection areas, and industry development parks. The closer the expropriated land is to the CBD, the lesser the cost required to enjoy various benefits such as industry accumulation, education, and market information. The better the economic location is, the higher the market potential and the lower the institutional cost. The advantages of land location increase the possibility of land-lost farmers’ entrepreneurship by providing more relevant resources. This finding is echoed by the phenomenon that business focuses on urban villages and tourism spots rather than on remote rural areas and ecological protection areas. Amount of compensation has a significant negative role in initiating entrepreneurship. The amount of compensation varies cross China. Although some studies have shown that the amount of compensation is small especially when compared with what the farmers lose, compensation is comparatively high in developed areas, such as in Zhejiang Province and Guangdong Province. Compensation is argued to provide the required capital for entrepreneurship. By contrast, high compensation lessens the worry of
3.432 2.191 0.776 3.072 2.228 1.807 1.001 0.224 1.147 0.035
0.001 0.029 0.438 0.002 0.027 0.072 0.318 0.823 0.252 0.972
2.057 2.162 1.564 1.108 1.182 1.108 1.388 1.403 1.328
raising a family and reduces the possibility of initiating entrepreneurship, as most land-lost farmers are less educated. This was validated by the survey in this study as nearly 80% interviewees agree that “The high amount of compensation will restrain entrepreneurship”. In addition, this relationship is echoed by many news reports that land-lost farmers in the developed areas who became rich overnight would do nothing but buy luxury goods and gamble whereas such reports in the developing areas are few. This result reminds us that some organizations e.g. non-governmental organizations (NGOs) could play a more positive role in leading the land-lost farmers reasonably utilizing the compensation besides realizing civilization. However, it should be noticed that this finding is based on the practices in Zhejiang Province, which is not generally applicable to other areas, especially the developing areas where compensation is still comparatively low. Similar empirical studies on land expropriation in developing areas should be conducted to compare the difference of such relationship. The comparisons can deepen the understanding of the effect of the amount of compensation on entrepreneurial action. Entrepreneurship policy has a positive role in initiating entrepreneurship, although it is not that significant compared with the other abovementioned factors. Systematic policy tools should be designed to promote entrepreneurship from various aspects including guidance and training, publicity and information delivery, and appropriate executive organizations. Entrepreneurship guidance and training are useful to provide relevant information and abilities required for entrepreneurship and to enhance the possibility of initiating entrepreneurship. In addition, specific policies should also be made to improve the effectiveness of entrepreneurship based on this study. For example, publicity is needed to help land-lost farmers understand how entrepreneurship can
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help them and other villagers. Consequently, it will enhance their perception of desirability and further increase the possibility of initiating entrepreneurship. For land-lost farmers who obtained high compensation, policies should be implemented to guide them in effectively investing their money rather than in simply engaging in luxury consumption. Most importantly, appropriate executive organizations should be specified to provide such guidance. We found in the interview that the farmers thought the training organized by the local government is useless and they were reluctant to attend such training. In keeping with the market reform, the local government can invite the social organizations, e.g., NGOs or business organizations, to provide such guidance on entrepreneurship and civilization. The professionals can pass the first-hand market information to the farmers to effectively affect their entrepreneurial intention and action. 5. Conclusion With the rapid urbanization and industry development, China has witnessed substantial land acquisition. Entrepreneurship is promoted as a sustainable approach to settle land-lost farmers and realize civilization. However, few studies have been conducted to investigate the effect of land expropriation on land-lost farmers' entrepreneurial action. Therefore, how to effectively promote entrepreneurship among land-lost farmers remains unknown. This study investigates the effect of land expropriation on land-lost farmers' entrepreneurial action through the case of Zhejiang Province in China. Regression was used to examine the effect of land location, amount of compensation, and entrepreneurship policy on land-lost farmers' entrepreneurial action, with entrepreneurial intention and other factors of individual background controlled. Perception of desirability and land location have a significant positive role, whereas amount of compensation has a significant negative role in initiating land-lost farmers’ entrepreneurship. This study clarifies the effect of land expropriation on land-lost farmers' entrepreneurial action. The findings can facilitate the local government to make appropriate policies to promote entrepreneurship among land-lost farmers. However, this study only considers three aspects of land expropriation. Other factors in land expropriation may also play a role in land-lost farmers' entrepreneurial action, which is a complicated process. Future studies should be conducted to investigate other relevant factors to make effective entrepreneurship policies. Moreover, the mediation role of land expropriation in entrepreneurial intention and entrepreneurial action should be examined. The survey was conducted only in Zhejiang Province. To understand the spatial difference, similar studies on other provinces should also be conducted. These comparisons will be useful to obtain a comprehensive understanding of land-lost farmers’ entrepreneurship at the national level. Acknowledgments The authors are grateful for the financial supports from the Key Project of Higher Education of Zhejiang Province (Project#2013GH007). References Adler, N., & Golany, B. (2002). Including principal component weights to improve discrimination in data envelopment analysis. Journal of the Operational Research Society, 53(9), 985e991. Ajzen, I. (1991). The theory of planned behavior. Organizational Behavior and Human Decision Processes, 50, 179e211. Bao, H. J. (2012). Priority assessment on entrepreneurship potential of land-lost farmers. Tong Ji Yu Jue Ce, 16, 44e46 (in Chinese).
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