Barbarians at the Gate of the Middle Kingdom: The International Mobility of Financing Contract and Governance
Entrepreneurship Theory and Practice, Forthcoming
52 Pages Posted: 18 Dec 2017
Date Written: December 10, 2017
Focusing on equity ratchet as a practice, we study how foreign private equity (PE) investors interacted with local agents in the process of legitimation and legalization of foreign financing contract and governance in the Chinese PE industry, while it was underdeveloped. Based on seven cases in China, we propose a three-stage micro-process model of international institutional entrepreneurship in an emerging field with high ambiguity: framing a motivational vision to promote a new practice; early adoption by local non-mainstream agents who gain legitimacy from diverse sources of institutional logic; and dominant mainstream adopters seeking legal protection to sustain their benefits. Our theory extends the emerging discussion on the transfer of corporate governance and institutional entrepreneurship across borders.
Keywords: international institutional entrepreneurship, financial contracting, governance, private equity, emerging markets
JEL Classification: K22, M16, M13, P34, P37
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