Billions of Entrepreneurs: How China and India Are Reshaping Their Futures— and Yours. by Tarun Khanna. Publisher: Harvard Business Review Press. Billions of Entrepreneurs is a book by Harvard Business School professor, Tarun Khanna. It was published in by Harvard Business School Press. The book. In Billions of Entrepreneurs, Tarun Khanna examines the entrepreneurial forces driving China’s and India’s trajectories of development.

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Entrepreneurship in the world’s two most populous nations, China and India, has through modern times been somewhat asleep. But now, says HBS professor Tarun Khanna in a new book, both societies “have woken up,” and the results could reshape business, politics, and society worldwide.

So they are creating the rules as they go along.

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And entrepreneurship is, after all, doing things in new ways, ahead of social norms and customs, and establishing the rules and laws. In both countries, these processes are unfolding not just in the mainstream business sector but in society writ large and even in politics and civil society,” says Khanna.

Khanna’s book Billions of Entrepreneurs: Each chapter compares China and India on a broad range of factors in entrepreneurship, including access to capital, freedom and reliability of information, governmental involvement, and infrastructure.

Khanna examines the landscape of big, medium, and small entrepreneurship, including rural health-care initiatives and even Bollywood.

As Khanna explained to HBS Entreprenurs Knowledge”One can see China clearly when juxtaposed against India, a neighbor that, like China, is a large, populous, and ancient country that chose a different path. The difference is stark. The same is true when we look at India with China as a backdrop. That’s why I wrote a comparative book. In our interview Khanna outlines the business landscape in both countries. He also describes how indigenous and foreign entrepreneurs could get a entreprrneurs, how China and Billioons relate to their own diasporas, and how entrepreneurial activity is reshaping both countries for the better.

Why did you choose the title Billions of Entrepreneurs? The title captures the ferment that is ibllions place in both China and India. Entrepreneurship is not only about hotshots taking companies public. A lot of entrepreneurial activity in these countries is in the exercise of getting things done more efficiently and creatively in response to constraints that people find themselves immersed in. Some of these constraints are societal; some are political.

Excerpt: ‘Billions of Entrepreneurs’

And so this book is full of stories about social entrepreneurs, political entrepreneurs, and others whom we study in business schools—investors, capitalists, and so on.

The extent and type of government involvement and the nature of openness are two dimensions in which the countries are different.

These dimensions pervade all aspects of societal existence, whether that means raising capital to start a new business, the nature of markets, copyrights, the media, movies, and religion, as well as the ways in which both countries themselves project their power, the way they deal with each other, and the way the village economy works.

In China, the government is often the entrepreneur. It is in many instances a very efficient entrepreneur. Of course there are bankrupt state-owned enterprises, but there are equally dynamic companies starting out in villages, small towns, and major cities, often with a sizable amount of investment or involvement by local government authorities.

It is hard to find any reasonably sized Chinese company in which government authorities do not have input. In India, some islands of excellence notwithstanding, the government remains inefficient for the most part, and most pockets of entrepreneurship—interesting, vibrant new ways of doing things—are in the private sector or civil society, staying far away from government intervention.


So here the private sector leads many significant initiatives; in China, the lead is often provided in a top-down manner. The second difference is the nature and extent of openness to outside influence and foreigners.

Foreign direct investment pours into China. India has embraced foreign direct investment much less, for good and bad reasons. On the good side, India never had to endure a cultural revolution. China “wiped its slate clean” in the Cultural Revolution. Literally and metaphorically, it got rid of intellectuals, human capital, private enterprise, everything.

With a clean slate in those circumstances it came to rely on FDI, and help from the overseas Chinese was a big piece of that.

Because India did not follow a similar extreme path it didn’t need to embrace FDI quite as much.

Billions of Entrepreneurs: How China and India Are Reshaping Their Futures—and Yours [Book]

So that’s a reasonable reason to expect low FDI levels. On the negative side, however, India, with its indigenous entrepreneurs, still engages in some protectionist behavior and lobbies to keep foreign investment out.

There are other aspects to openness, of course, than just FDI. Traditionally, India has been more open to ideas than has China, for instance. How should a foreign entrepreneur size up the potential of each country?

First, does it make sense to try to enter either of these countries? How does entry fit into a broader business model?

In some cases it would be more sensible to enter China, in some cases more sensible to enter India. What China is good at, India may not be, and vice versa.

Some companies—GE Healthcare is just one example—are finding that they can leverage both countries symbiotically. Second, conduct a series of experiments. An entrepreneur has to make many decisions: And several of these contextual factors that matter, which I illustrate through examples in the book, matter taru in China and India, so you might make different decisions in the two countries.

It often takes a lot of time to experiment, but that doesn’t have to mean losing money. They have to be clever experiments, not expensive ones. How does each country treat its diaspora in terms of stoking entrepreneurship at “home”? To put it bluntly, China has embraced its diaspora, and India has shunned it. While the numbers should always be taken with a billios of salt, it is said that about plus million Chinese and plus million Indians live outside their home countries.

India’s tendency to shun its diaspora must rank as among the most disastrous decisions made by a nation in modern times: Fortunately, this situation has been changing in India in the last 4 to 5 years. In China, by and large, the diaspora has played a much bigger role. InChina didn’t have the internal markets to rely on, so it turned to the overseas Chinese because they were the only people who could understand China well.

To other people China seemed too difficult, too alien, too foreign. In the case of both countries, there is a broad spectrum of people in the diaspora, so we should be careful about not lumping them all together. That said, the success of the Silicon Valley community and the massive wealth that some people have accumulated have caught the eye of India. And as in most things in life, timing is everything: In some sense the combination of India having its back to the wall in the early s and rejuvenating its reform process, and the wealth accumulating among the diaspora, were the supply and demand side for getting the diaspora together with its home country.

We’re at the point where half the world’s population lives in cities. There is an ongoing debate about whether the overall quality of life is better in cities compared with rural areas. But certainly if you look at the migratory patterns of entreprsneurs beings in recent decades, there’s no question that people by and large move from rural to urban areas in search of better economic conditions.


In India, most social and economic indicators show that life is better in the cities than in rural areas, on average, even given the fact that there is wide disparity within the cities. Is it easier to be an entrepreneur in a city? The answer depends on the meaning one assigns to the term “entrepreneur. But since entrepreneurship means doing things in new and clever ways, there are lots of stories in my book of rural entrepreneurs—people in India who khann in civil bi,lions, and people in China who act as entrepreneurs in rural settings.

In both China and India I don’t think there is any reason fo think there is less entrepreneurship in rural settings. Caste in India is both less important and more important than it used to be. In some sense business is a great leveler. In the cities a low-caste person may earn entrepreneurx lot more than a high-caste person. Business cares about the bottom line.

It doesn’t care whether you are in caste A or caste B if you can produce a product, manage a sales force, or produce the capital. On the negative side, politicians have whipped up caste frenzy. A lot of voting in India happens along caste lines in so-called vote banks. And so politics has become fragmented with some politicians highlighting caste differences in the electoral process. That has been pretty much a disaster for the system of governing.

China and India have had tense relations in the past. I think there are lots of ongoing sources of concern, as you know. There are unresolved border issues, and people point to both countries flexing their military muscle increasingly: Billins blue water navy, India’s nuclearization.

But I think to focus exclusively on this, even primarily, is a complete mistake. The on-the-ground productive ferment, and the possible complementarity between the China and India story, are far more interesting and promising to me. Building economic relations between the countries, not just through arms-length trade, but investments by individual companies in each other’s countries, will cement ties.

These will counterbalance the political tensions. So I see the glass as much closer to half full than half empty going forward. This is a happy story, a story of hope. I’ve garun interested in China since I was tarjn child.

It was the big neighbor to the north that was Communist, had defeated the Indian Army in in a border conflict, and was not generally portrayed positively. China was quite mysterious. In the course of writing this book I spent time with all sorts of people in better and the less well-traversed parts of China—entrepreneurs, of course, but also policymakers, politicians, and South Asia specialists in Beijing.

I discovered that the versions of events that I had been told were different from the versions of events that theythe Chinese, had been told. I found that very revealing. I also have a lot of Chinese students who were extremely gracious with their time as I traveled across China.

I began to learn Mandarin, and the process of learning the language itself has been extremely revealing. For this book I went pretty deep into China as into India.