Emerging Economies: Institutions and Entrepreneurship in the People’s Republic of China

Abstract

This study posits an important relationship between institutions and entrepreneurships: institutions have a significant impact on entrepreneurships, yet entrepreneurships have a limited impact on institutions. The first proposition of governance theory asserts that institutions are needed for running entrepreneurship effectively, and this study argues that governance is based on the interrelationships of actors and institutions. The second proposition asserts that both governments and institutions have responsibilities; likewise, this article argues that institutions and entrepreneurships have certain responsibilities for resolving societal and economic problems, although the primary responsibility lies with institutions. The third proposition asserts that collective action exists in conjunction with power struggles between governments and institutions, leading to the argument in this article that although some collective action between institutions is caused by institutional power struggles, entrepreneurships contribute to this power struggle through the requirement of reporting to varying institutions. The fourth proposition asserts that governance relies on self-government of certain actors (but not all), which is supported by the argument in this study that while some entrepreneurships are self-governing, others need more guidance by institutions. This suggests that some entrepreneurships have greater oversight by institutions, which may lead to additional benefits for those entrepreneurships. The final proposition asserts that institutions need to be able to act independently, and this study argues that although there is a high degree of dependence between institutions and entrepreneurships, it is expected that entrepreneurships can complete certain activities without institutional oversight.