The Strawberry Growth Underneath the Nettle: The Emergence of Entrepreneurs in China

Abstract

Chinese entrepreneurs innovatively manage organisations in the absence of strong economic institutions, under conditions of high environmental and technological uncertainty. This paper presents the findings of an empirical study designed to investigate how Chinese entrepreneurs can be successful in such an environment. We found that Chinese entrepreneurial activity relies on social institutions rather than on economic institutions. We offer a sociological theory which explains why the reliance on social institutions leads to such an unprecedented success. We conclude that the strong rule-enforcement mechanisms generate reliable behavioral patterns, and that these in turn efficiently reduce uncertainty to tolerable levels.

Keywords: Comparative business systems, evolutionary economics, private sector in China, social capital, networks

JEL Classification: M, M10, L2, M13, O17, O50, L22, L33, P51