Adaptive Informal Institutions and Endogenous Institutional Change in China

Abstract

Under certain circumstances, the etiology of endogenous institutional change lies in the informal coping strategies devised by local actors to evade the restrictions of formal institutions. With repetition and diffusion, these informal coping strategies may take on an institutional reality of their own. The author calls the resulting norms and practicesadaptiveinformal institutions because they represent creative responses to formal institutional environments that actors find too constraining. Adaptive informal institutions may then motivate elites to reform the original formal institutions. This contention is illustrated by three major institutional changes that have occurred in the course of China's private sector development since the late 1970s—the legalization of private enterprise, the admission of capitalists into the Chinese Communist Party, and the amendment of the state constitution to promote the private economy.