ABSTRACT
This chapter focuses on two issues: the path to family businesses that is, what characteristics/backgrounds determine a family's entry into private economic activities, and the performance of family businesses. It examines how the pattern of entry into family businesses varies between urban and rural areas and at different reform stages and demonstrates how the divergent patterns of entry affect the economic performance of the family businesses. The chapter explains how the rise of private business has changed the opportunity structures faced by different Chinese families and derives several testable hypotheses, based on family characteristics, predicting the likelihood of business involvement in both urban and rural areas. It analyzes 1996 cross-sectional data to test the hypotheses regarding rural-urban differences and uses event-history data from 1978 to 1996 to examine the temporal trend of private business involvement. Finally the chapter also examines how different paths of entry affect the performance of family businesses.
