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https://ssrn.com/abstract=1131026
 
 

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China’S Institutional Architecture: A New Institutional Economics and Organization Theory Perspective on the Links between Local Governance and Local Enterprises


Barbara Krug


Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM); Erasmus Research Institute of Management (ERIM)

H. Hendrischke


University of New South Wales (UNSW) - Faculty of Arts and Social Sciences

April 17, 2008

ERIM Report Series Reference No. ERS-2008-018-ORG

Abstract:     
We start our exploration of China’s institutional change by asking what the China experience can tell us about institutional economics and organization theory. We point to under-researched areas such as the formation of firms and the interplay between firms and local politics. Our findings support the dynamic capability approach which concentrates on activities rather than on pre-defined groups and models institution building as a co-operative game between the local business community and local government agencies. We find that the analysis of firms has to set in before they are formed by entrepreneurs and networks and we identify political management as a core competence of these two groups. While this contradicts the conventional view of clientelism or principle agent relations as institutional building blocks, we don’t propose competing models. Instead, we suggest focusing on a dynamic process in which the role of players can change. Faced with the spontaneous emergence of institutions, our concept of institutional architecture captures the fact that the two models can co-exist side by side and that, once the dichotomy between formal and informal institutions is given up, there can be a transition from local patron-client relations to local business-state coordination.

Number of Pages in PDF File: 42

Keywords: institutional change, entrepreneurship, networks, dynamic capabilities, diversity and convergence of institutions

JEL Classification: M13, O32, M, P31


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Date posted: May 15, 2008  

Suggested Citation

Krug, Barbara and Hendrischke, H., China’S Institutional Architecture: A New Institutional Economics and Organization Theory Perspective on the Links between Local Governance and Local Enterprises (April 17, 2008). ERIM Report Series Reference No. ERS-2008-018-ORG. Available at SSRN: https://ssrn.com/abstract=1131026

Contact Information

Barbara Krug (Contact Author)
Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM) ( email )
P.O. Box 1738
Room T08-21
3000 DR Rotterdam, 3000 DR
Netherlands
Erasmus Research Institute of Management (ERIM) ( email )
P.O. Box 1738
3000 DR Rotterdam
Netherlands

Hans Hendrischke
University of New South Wales (UNSW) - Faculty of Arts and Social Sciences ( email )
Sydney
Australia
+61 2 9385 2187 (Phone)
+61 2 9385 1190 (Fax)
HOME PAGE: http://languages.arts.unsw.edu.au/staff/staff.php?first=Hans&last=Hendrischke
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