Time Allocation and Performance: The Case of Chinese Entrepreneurs

This paper analyses the effect of time allocation on the financial performance of entrepreneurial firms. We apply the Lewbel estimator to a pooled data set of Chinese private manufacturing firms that are managed by their owners. Time is allocated between management, networking, and study activities. After accounting for endogeneity, we find an inverted U-shaped relationship between management hours and firm performance and between networking and firm performance. However, no relationship between time spent studying and firm performance is observed. We also find that the managing hours–performance relationship is particularly strong for companies managed by entrepreneurs who own more than 75% of share, for companies that are managed by owners with previous experience, for male entrepreneurs, and for smaller-sized firms.