Abstract
Institutional development entails two elements: the creation of market supporting institutions, such as property rights protection, and the regulation of industry to prevent market failures due to, for example, information asymmetries. We examine the interaction of the two aspects of institutional development by studying product diversification strategies of financial intermediaries in China. Our results show that market supporting institutions facilitate entries into new product lines, but tightening of industry regulation reduces this effect. However, firms vary in their capability to exploit opportunities of institutional development, and hence both the direct and the moderated effect are influenced by the firms own human capital. These results sharpen our theoretical explanations of how institutional reform shapes business strategies.
Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
