Krug, B. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
Abstract
The Chinese economy has developed rapidly despite two major constraints: ill-functioning markets and a socialist past, both of which caused an environment of unenforceable contracts. In this situation the need to pool resources and to govern relational risk was paramount to the development of a private sector. While modern organisation (transaction cost-) theory can explain why and to which extent entrepreneurship in China is based on collective agents, an analysis of the (local) political market is needed to explain why China's villages provide the much needed (and valuable) public goods in form of property rights protection and contractual security. Decentralisation and jurisdictional competition facilitate the writing of a new "common law" as well as the "discovery" of new forms of collective action.
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Paper provided by Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam. in its series Research Paper with number
ERS-2000-43-ORG Revision_Date: 2009-07-29.
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