Entrepreneurship in Russia and China: The Impact of Formal Institutional Voids

27 Pages Posted: 21 Apr 2010

See all articles by Sheila M. Puffer

Sheila M. Puffer

Northeastern University - International Business & Strategy

Daniel J. McCarthy

Northeastern University - Entrepreneurship and Innovation

Max H. Boisot

affiliation not provided to SSRN

Abstract

Transition economies are often characterized by underdeveloped formal institutions, often resulting in an unstable environment and creating a void usually filled by informal ones. Entrepreneurs in transition environments thus face more uncertainty and risk than those in more developed economies. This article examines the relationship of institutions and entrepreneurship in Russia and China in the context of institutional theory by analyzing private property as a formal institution, as well as trust and blat/guanxi as informal institutions. This article thus contributes to the literature on entrepreneurship and institutional theory by focusing on these topics in transition economies, and by emphasizing how their relationship differs from that in developed economies. We conclude that full convergence toward entrepreneurs' reliance on formal institutions may not readily occur in countries like Russia and China due to the embeddedness of informal institutions. Instead, such countries and their entrepreneurs may develop unique balances between informal and formal institutions that better fit their circumstances. Implications for the theory and practice of entrepreneurship in such environments are also offered.

Suggested Citation

Puffer, Sheila M. and McCarthy, Daniel J. and Boisot, Max H., Entrepreneurship in Russia and China: The Impact of Formal Institutional Voids. Entrepreneurship Theory and Practice, Vol. 34, Issue 3, pp. 441-467, May 2010. Available at SSRN: https://ssrn.com/abstract=1593291 or http://dx.doi.org/10.1111/j.1540-6520.2009.00353.x

Sheila M. Puffer (Contact Author)

Northeastern University - International Business & Strategy ( email )

Boston, MA 02115
United States

Daniel J. McCarthy

Northeastern University - Entrepreneurship and Innovation ( email )

Boston, MA 02115
United States

Max H. Boisot

affiliation not provided to SSRN ( email )

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