An entrepreneur is the spiritual leader and nuclear soul of an enterprise, and his capabilities are highly correlated with the development of the enterprise, so national economic development depends on the capabilities of our entrepreneurs.
According to our research, many entrepreneurs have been found to seldom stay in their companies and spend most time socializing outside. The reasons lies in the following two aspects. On one hand, our government may intervene too much in the management of the enterprises in an inappropriate way; on the other hand, our government treated and even spoiled the enterprises with excessive caring. As for such relationship between the government and the enterprises, Janos Kornai proposed the concept of “soft budget constraints” and named such relationship as “paternalism”. He assumed, the protection from the government and the reliance of the enterprises are essential to the formation of soft budget constraints.
So what impacts does the government’s paternal caring have on the entrepreneurs? Based on our research, it is found that the paternal caring of the government has negative effects on the entrepreneurs. Due to their strong reliance on institutions, the private enterprises are poor in innovation.
Therefore, a fundamental conclusion can be summarized that the government should eliminate their paternal caring for the enterprises, such as innovation subsidies and other policies. However, it doesn’t mean that the government should be isolated from the enterprises without any connection. It is suggested that our entrepreneurs should revert their attention to the enterprises’ internal operation, focusing on improving their self-motivated innovation, not just relying on institution-oriented innovation.
As for the governance, the entrepreneurs should not be constrained or spoiled too much. The government should provide favorable environments and policies to encourage fair competition and motivate entrepreneurship, instead of discriminatory treatment with “One Enterprise, One Policy” which only provides preferential policies for some enterprises.