A Natural Experiment on Institutionalized Choice and Individual Entrepreneurial Behavior

36 Pages Posted: 13 Jul 2011 Last revised: 8 Apr 2017

See all articles by Delin Yang

Delin Yang

Tsinghua University

Charles E. Eesley

Stanford University - Management Science & Engineering

Xiaocong Tian

The Chinese University of Hong Kong (CUHK)

Xinyi Yang

Stanford University

Date Written: April 6, 2017

Abstract

Institutional change generates new opportunities, yet theory remains unclear on how durable, stable institutions, which are thought to constrain individuals, may also foster variation in individual behavior. We argue that institutions might enable variation in behavior by allowing, rather than constraining, individual choice, something we refer to as “institutionalized choice.” This paper explores a natural experiment at a University, in which the institutional change eliminated a constraint, the academic year system, resulting in greater institutionalized choice among students. Using a difference-in-differences approach, we find that institutionalized choice fostered greater variation in students’ choices in selecting courses and in turn, generated greater entrepreneurial behavior. Furthermore, we find that the effect of institutionalized choice on entrepreneurship is stronger for students from less wealthy families, pointing to an important mechanism that may take a step towards addressing inequality and economic mobility.

Keywords: credit system reform, alumni entrepreneurship, entrepreneurial intentions, entrepreneurial activities, institutions

Suggested Citation

Yang, Delin and Eesley, Charles E. and Tian, Xiaocong and Yang, Xinyi, A Natural Experiment on Institutionalized Choice and Individual Entrepreneurial Behavior (April 6, 2017). Available at SSRN: https://ssrn.com/abstract=1884493 or http://dx.doi.org/10.2139/ssrn.1884493

Delin Yang

Tsinghua University ( email )

Beijing, 100084
China

Charles E. Eesley (Contact Author)

Stanford University - Management Science & Engineering ( email )

473 Via Ortega
Stanford, CA 94305-9025
United States

HOME PAGE: http://chuckeesley.com

Xiaocong Tian

The Chinese University of Hong Kong (CUHK) ( email )

Shatin, N.T.
Hong Kong
Hong Kong

Xinyi Yang

Stanford University ( email )

Stanford, CA 94305
United States

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