32 research outputs found
The Emergence of a Private Business Sector in China
This paper is part of a broader research project that aims to analyse the emerging private business sector in China by focusing on three topics
Market design in Chinese market places
The market design (MD) approach to institutional analysis provides the analytical tools to evaluate endogenous institution building in local market places irrespective of the institutional setting of the national economy. Implicit in this analysis of endogenous institution building at the market place level is the recognition of institutional diversity, which none of the conventional forms of institutional analysis can provide. We extend the MD approach from its original game theory perspective to examine three market places in China: township and village enterprises, equity joint ventures, and public utilities. We conclude that the MD approach (1) provides the analytical tools and criteria to evaluate whether or not market places are robust and sustainable, (2) links market behavior at the market place level, which is characterized by size, coordination, and trust problems, with general level considerations based on transaction costs, and (3) suggests that functioning market places are achievable, even if the formal institutions of the general economy are weak or partially missing. Our research has policy implications and opens new avenues for research into the emergence of markets
Chinaâs Institutional Architecture: A New Institutional Economics and Organization Theory Perspective on the Links between Local Governance and Local Enterprises
We start our exploration of Chinaâs institutional change by asking what the China experience can tell us about institutional economics and organization theory. We point to under-researched areas such as the formation of firms and the interplay between firms and local politics. Our findings support the dynamic capability approach which concentrates on activities rather than on pre-defined groups and models institution building as a co-operative game between the local business community and local government agencies. We find that the analysis of firms has to set in before they are formed by entrepreneurs and networks and we identify political management as a core competence of these two groups. While this contradicts the conventional view of clientelism or principle agent relations as institutional building blocks, we donât propose competing models. Instead, we suggest focusing on a dynamic process in which the role of players can change. Faced with the spontaneous emergence of institutions, our concept of institutional architecture captures the fact that the two models can co-exist side by side and that, once the dichotomy between formal and informal institutions is given up, there can be a transition from local patron-client relations to local business-state coordination
Entrepreneurship in Transition: Searching for governance in Chinaâs new private sector
Entrepreneurial activities in transition economies go beyond (technical) entrepreneurship. In an environment of institutional and procedural uncertainty entrepreneurs need to select business partners, choose a mode of governance that stabilizes long term business relations, and settle for such property rights regime that best matches the entrepreneurial endeavour. Bases on fieldwork in China the paper shows how entrepreneurs combine their predisposition for social relations with economic reasoning when they embed firms in one location, in mixed forms of relational and contractual governance, and specific ownership structures. The empirical research points to alternative economic concepts which allow further analysing the interaction between individual entrepreneurship and the emergence of market conforming institutions
China Incorporated
The development of entrepreneurship and a private business sector in China pose various challenges to analysis. On the one hand, neo-classically based New Institutional Economics aims to find evidence that long-term investment and long-term commitment in and around firms can not be expected without deeply entrenched and state guaranteed private property rights. On the other hand, empirical studies within the China field concentrate on the political processes, in particular the interaction between the central state and local governments, at the danger of neglecting market forces, economic interests, and economic problems at stake. The empirical study on which the following is based took a different path by using a set of framing assumptions
Framing China: Transformation and Institutional Change
The paper offers a frame for investigating the extent to which decentralisation, and subsequent locally chosen institutions shape private organisational and institutional innovation. To include the numerous locally based âeconomic regimesâ matters as the resulting business system reflects political institution setting and private organisational innovation. Such a frame is a necessary first step for empirical studies attempting to explain the heterogeneity of Chinaâs business systems, the emergence of hybrid organisations, and last but none the least, the different growth rates that can be observed across China
Institution Building and Change in China
We advance a conceptual frame for explaining economic transformation in China that combines a dynamic and a comparative perspective by taking the analysis of Fiscal Federalism one step further. Using insights from the comparative business systems literature we show that devolution of power at the beginning of the reform process introduced local autonomy, which stimulated a diversity of local regulatory regimes. As the central political leadership is no longer the sole supplier of institutional change, local governments become equal contributors to the formation of local business systems. Yet, local governments only partially define emerging local business systems. Local governance at the enterprise level is defined by the interaction between political and economic entrepreneurship, or, phrased in institutional terms, local business systems emerge from the interplay between the formal architecture of local autonomy and the informal institution of networking. In a comparative perspective this interaction, and its underlying driving forces for co-operation, namely: procedural uncertainty, relational risk and institutional change, will lead to diversity in outcomes. In a dynamic perspective both market competition and networking will ensure further competition between business systems, while political unification, imitation or scale economies will ask for convergence of local business systems beyond the local nexus
Chinaâs emerging tax regime: Devolution, fiscal federalism, or tax farming?
China like other transition economies needs to establish a tax regime compatible with a market economy. The paper singles out the general and China-specific features by which national legislation attempts to accompany economic transformation. Based on an empirical study in two provinces this paper shows that without including local government agencies and their budgets, Chinaâs fiscal federalism cannot be analysed. This paper argues that Chinaâs emerging tax regime depends on the institutional design that shapes the interaction between firms (as major tax payers at the local level), local government agencies, and the national tax administration
Chinese Insolvency Law Lacks Teeth
The speed by which China has moved towards a market economy
has not been accompanied by a similar development of its judiciary
system. Since the early 1990s, foundational national legislation
with a direct effect on firms, such as laws dealing with contract,
investment, liability and insolvency have b
Local Resistance in Early Medieval Chinese Historiography and the Problem of Religious Overinterpretation
Official Chinese historiography is a treasure trove of information on local resistance to the centralised empire in early medieval China (third to sixth century). Sinologists specialised in the study of Chinese religions commonly reconstruct the religious history of the era by interpreting some of these data. In the process, however, the primary purpose of the historiography of local resistance is often overlooked, and historical interpretation easily becomes âoverinterpretationââthat is, âfabricating false intensityâ and âseeing intensity everywhereâ, as French historian Paul Veyne proposed to define the term. Focusing on a cluster of historical anecdotes collected in the standard histories of the four centuries under consideration, this study discusses the supposedly âreligiousâ nature of some of the data they contain