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Regional institutional development, political connections, and entrepreneurial performance in China’s transition economy

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  • Wubiao Zhou

Abstract

While previous research emphasizes the role of political connections in facilitating entrepreneurial performance during China’s early reform period (1978–1999), this study argues that regional institutions were increasingly conducive to entrepreneurial activities and, thus, also played a key role in China’s entrepreneurial success during that period. The purpose of this study is twofold. First, it aims to demonstrate how regional institutional development facilitated entrepreneurial performance in China. Second, it aims to understand how formal institutional development among Chinese regions affected the role of political connections. Using a two-level hierarchical dataset on Chinese private enterprises, this study finds that not only legal protection of property rights but also the development of market systems mattered for entrepreneurial performance. In addition, it shows that political connections played a diminishing role during regional institutional development in China. Copyright Springer Science+Business Media New York 2014

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  • Wubiao Zhou, 2014. "Regional institutional development, political connections, and entrepreneurial performance in China’s transition economy," Small Business Economics, Springer, vol. 43(1), pages 161-181, June.
    • Handle: RePEc:kap:sbusec:v:43:y:2014:i:1:p:161-181
    DOI: 10.1007/s11187-013-9527-3
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    More about this item

    Keywords

    Entrepreneurial performance; Legal protection of property rights; Development of market systems; Political connections; China; O12; O17; O43; P26; R58; L26;
    All these keywords.

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • P26 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Property Rights
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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