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How informal institutions influence entrepreneurs' cross-border location and industry choices: Empirical evidence from Macao's associations

Author

Listed:
  • Wang, Qisong
  • Tu, Xiongling
  • Liu, Chengkun
  • Han, Yajie

Abstract

Cross-border informal institutional bonds rooted in ancestral culture constitute a quintessential social-capital network that enables entrepreneurs to overcome resource and information barriers. Leveraging data from Macao’s associations, this paper builds a new index of the territory’s embeddedness in these networks. Panel estimates show that more prosperous ancestry-based informal institutions in the home region boost inbound investment from places of shared ancestral culture and steer entrants into industries that align with local comparative advantage. To address endogeneity, we combine Qing-dynasty prefectural genealogy counts with Macao’s GDP to create a novel instrumental variable.

Suggested Citation

  • Wang, Qisong & Tu, Xiongling & Liu, Chengkun & Han, Yajie, 2025. "How informal institutions influence entrepreneurs' cross-border location and industry choices: Empirical evidence from Macao's associations," Finance Research Letters, Elsevier, vol. 86(PC).
    • Handle: RePEc:eee:finlet:v:86:y:2025:i:pc:s1544612325017817
    DOI: 10.1016/j.frl.2025.108527
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    Keywords

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    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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