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Abstract
In the US, The Tobacco Transition Payment Program, also called the "tobacco
buy-out," helps tobacco quota holders and producers transition to the free market. In
China, the transaction of Land Use Rights providing farmers’ ability to buy or sell
Land Use Rights has been seriously considered by the Chinese government. The
uncertainty in household income and changes in economic environment during the US
Tobacco Transition Payment Program and the Chinese Land Use Rights Regime lead
many individuals into entrepreneurial activities. Entrepreneurship often means making changes in livelihood activities that involve substantial risks to income. While the rewards may be substantial, transactions costs may make decisions irreversible. This
paper draws a comparison between entrepreneurship and technology adoption.
Adopting a new production technology also involves substantial risks. The economics
of technology adoption is a well developed literature with many accepted and testable
models. Most prominent are the theories of learning by using and learning by doing.
We review the technology adoption literature, drawing out lessons for
entrepreneurship research. We then apply an ‘entrepreneurship as technology
adoption’ model to a unique dataset collected in Kentucky, US and in Shaanxi
province, China. Using a sample of 702 Kentucky farmers at the time of the buyout
and 730 Chinese farmers, we test several of the implications of this model and compare significant results between Kentucky and Shaanxi farmers. This study finds that both farmers in Kentucky and Shaanxi with a strong
social network are more likely to become entrepreneurs. Kentucky farmers with low
income are more likely to start new businesses. The finding supports the “push”
hypothesis as farmers with low income are pushed into starting a new business. The
human capital factor is strongly associated with Shaanxi farmer’s entrepreneurial
decision.