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Abstract
A private sector that now dominates economic activity has emerged in China since 1978, even though many of the essential institutions for market competition have been lacking or are under-developed. We find that there is no evidence that this upsurge of entrepreneurship is a re-birth of an earlier tradition. Instead, the dynamics of entrepreneurial emergence can be attributed to reforms and institutional changes that have occurred since 1949, both before and after the introduction of economic reforms in late 1978. We find that these institutional changes have been evolutionary, adapting to, as well as shaping, emerging forms of economic activity, including entrepreneurship. Our conclusion is that these dynamics of adaptation and evolution produce ‘rule ambiguities’ within the institutional framework that create opportunities for entrepreneurs as well as making these opportunities vulnerable to further institutional change.
Notes
1. Rodrik, “Institutions for High Quality Growth.”
2. Arthur, “Competing Technologies” and Increasing Returns; David, “Why are Institutions the ‘Carriers of History’?”; North, Institutions, “Institutions,” “Economic Performance,” North, Understanding the Process. Williamson, “The New Institutional Economics”; Anderson et al., “The Increasing Role”; Chen and Feng, “Determinants”; Garnaut and Song, “Impact and Significance”; He, “The Development”; Hughes, China’s Economic Challenge; Tan and Tan, “Environment–Strategy”; Tenev, “Why China Grows from Below.”
3. Demsetz, “Toward a Theory”; Henisz, “The Institutional Environment”; North and Thomas, “An Economic Theory” and The Rise of the Western World; Przeworski and Limongi, “Political Regimes”; Rodrik, ‘Institutions for High-Quality Growth”; Ahlstrom and Bruton, “Venture Capital”; Khanna, Palepu and Sinha, “Strategies that Fit”; Khanna and Palepu, “Why Focused Strategies May be Wrong”; Ma, Yao and Xi, “Business Group”; Peng and Zhou, “How Network Strategies.”
4. Puffer, McCarthy and Boisot, “Entrepreneurship in Russia”; Whyte, “The Social Roots.”
5. Puffer et al., “Entrepreneurship in Russia.”
6. North, Institutions, Understanding the Process, “Institutions” and “Economic Performance.”
7. North, Institutions; Rodrik, “Institutions for High-Quality Growth”; Xu, “The Fundamental Institutions.”
8. Baumol, “Entrepreneurship.”
9. Smallbone and Welter, Entrepreneurship; Sautet, “The Role of Institutions.”
10. Atherton and Smallbone, “Promoting Private Sector.”
11. Guthrie “The development of social relations and the exchange of favours, gifts and obligations within the cultural context of mainland China’s recent social and economic development.”
12. Puffer et al., “Entrepreneurship in Russia.”
13. Schram, “Economics in Command,” 417–420.
14. Teiwes and Sun, “China’s New Economic Policy.”
15. Teiwes and Sun “China’s Economic Reorientation.”
16. Weatherall, Mao’s Forgotten Successor; Song, “A Dissonance.”
17. Dotson, “The Confucian Revival”; Wang, The End and “The Rise.”
18. Dikotter, The Tragedy.
19. Chow, Understanding China’s Economy.
20. ten Brink, “Perspectives”; The Economist, “Bamboo Capitalism”; He, “The Development.”
21. Eesley, Entrepreneurship and China.
22. Li and Rozelle, “Privatizing Rural China.”
23. Atherton and Smallbone, “Promoting Private Sector”; Eesley, “Entrepreneurship and China”; Polishchuck, “Missed Markets”; Tsai, Capitalism Without Democracy; Yang, “Double Entrepreneurship,” “Institutional Holes,” and Entrepreneurship in China.
24. North, “Institutions” and Understanding the Process.
25. Rodrik, “Institutions for High Quality Growth”; Sautet, “The Role of Institutions.”
26. Atherton and Smallbone, “Promoting Private Sector”; Smallbone and Welter, Entrepreneurship.
27. Polishchuck, “Missed Markets.”
28. North, “Epilogue” and Understanding the Process; Williamson, “The New Institutional Economics.”
29. North and Weingast, “The Evolution.”
30. Atherton and Smallbone, “Promoting Private Sector.”
31. Breznitz and Murphree, Run of the Red Queen; Chen and Feng, “Determinants”; Demurger, “Infrastructure Development and Economic growth”; Liu, Burridge and Sinclair, “Relationships.”
32. Chen and Feng, “Determinants.”
33. Yueh, “What Drives China’s Growth?”
34. Rodrik, Subramanian and Trebbi, “Institutions Rule”; Acemoglu, Johnson and Robinson “Institutions.”
35. Puffer et al., “Entrepreneurship in Russia,” 451.
36. Yeh, Shanghai Splendour.
37. Liu, “Revisiting Hanyeping Company.”
38. Wang, The End.
39. Feuerwerker, “Theory and Society.”
40. Maddison, Chinese Economic Performance.
41. Skinner, “Chinese Peasants.”
42. Lin, “The Needham Puzzle.”
43. Lehman, “Intellectual Property Rights”; Stone, “What Plagiarism Was Not.”
44. Lehman, “Intellectual Property Rights.”
45. Fairbank, China: A New History.
46. Bickers, The Scramble for China, 62.
47. Gardella, “Squaring Accounts.”
48. Chan, “Turning Point.”
49. Elvin, The Pattern.
50. Lewis, “Economic Development”; Myers, “How Did the Modern Chinese Economy Develop?”; Ranis and Fei, “A Theory.”
51. Li, “Politics.”
52. Lampton, “Performance.”
53. Dikotter, Mao’s Great Famine.
54. Gittings, The Changing Face.
55. Chow, China’s Economic Transformation.
56. Oi, “The Role of the State”; Siu, Agents and Victims.
57. Weatherall, Mao’s Forgotten Successor.
58. Gittings, The Changing Face, 100.
59. Weatherall, Mao’s Forgotten Successor.
60. Puffer et al., “Entrepreneurship in Russia”; Scott, Institutions and Organizations.
61. Atherton, “From ‘Fat Pigs’,”; Tsai, Capitalism Without Democracy.
62. Puffer et al., “Entrepreneurship in Russia,” 444.
63. Atherton, “From ‘Fat Pigs’.”
64. Puffer et al., “Entrepreneurship in Russia.”
65. Tsai, Capitalism Without Democracy.
66. Tsai, Back-Alley Banking.
67. Ding, Guariglia and Knight “Investment and Financial Constraints in China.”
68. Fagan and Zhao, “SME Financing in China.”
69. Allen et al., China’s Financial System.
70. Didier and Schmukler, The Financing.
71. Zhao, Prisoner of the State.
72. Heilman, “Policy Experimentation”; Li and Rozelle, “Privatizing Rural China”; Mertha, “Fragmented Authoritarianism”; Nolan and Dong, Market Forces; Oi, “The Role of the State”; Unger and Chan, “Inheritors of the Boom.”
73. Henisz, “The Institutional Environment”; North and Thomas, The Rise of the Western World; Scully, “The Institutional Framework.”
74. de Soto, The Mystery of Capital; de Soto, The Other Path.
75. Rodrik, “Goodbye Washington.”
76. Long, “Does the Rights Hypothesis Apply.”
77. Atherton, “From ‘Fat Pigs’”; Keefer, “Governance and Economic Growth”; Chen et al., “Entrepreneurs”; Kielsgard and Chen, “The Emergence.”
78. Oi, Rural China Takes Off.
79. Nolan and Paine, “Towards an Appraisal.”
80. Ash, “The Evolution.”
81. Weitzman and Xu, Chinese Township; Chen, “Does the Colour of the Cat Matter?”
82. Chen and Rozelle, “Leaders, Managers.”
83. Oi, Rural China Takes Off.
84. Jefferson and Siu, “Privatization.”
85. Atherton and Smallbone, “Promoting Private Sector.”
86. Puffer et al., “Entrepreneurship in Russia,” 453.
87. Mertha, “Fragmented Authoritarianism.”
88. Eesley, Entrepreneurship and China.
89. Blecher and Shue, Tethered Deer; Oi, “The Role of the State”; Unger and Chan, “Inheritors of the Boom.”
90. Ruf, Cadres and Kin.
91. Atherton, “From ‘Fat Pigs’.”
92. Dickson, Red Capitalists.
93. Dickson, Red Capitalists; Tsai, Back-Alley Banking; Yang, “Institutional Holes.”
94. Scott, Institutions and Organizations.
95. Pan, Out of Mao’s Shadow, 21–78; Dikotter, The Tragedy.
96. Vogel, “From Friendship.”
97. Dikotter, The Tragedy.
98. Chang, Wild Swans; Cheng, Life and Death.
99. Vogel, “From Friendship.”
100. Williamson, “The New Institutional Economics,” 597.
101. Dikotter, Mao’s Great Famine.
102. Dikotter, Mao’s Great Famine, 246–248.
103. Dikotter, Mao’s Great Famine, 264–265.
104. Dikotter, Mao’s Great Famine, 209–210.
105. Dikotter, Mao’s Great Famine, 197–199.
106. Vogel, “From Friendship.”
107. Liu, “Reform From Below.”
108. Yan, “The Flow of Gifts.”
109. Yang, “The Resilience.”
110. Guthrie, “The Declining Significance.”
111. He and Li, “Entrepreneurial Competence.”
112. Yang, “Institutional Holes” and Entrepreneurship in China.
113. Epstein and Schneider, “Ambiguity.”
114. Camerer and Weber, “Recent Developments.”
115. Kirzner, “Entrepreneurial Discovery.”
116. Atherton, “From ‘Fat Pigs’.”
117. Chen et al., “Entrepreneurs.”
118. Broughton and Walker, “Policies and Practices”; McMullin, “Comments.”