Regional institutional development, political connections, and entrepreneurial performance in China’s transition economy

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While previous research emphasizes the role of political connections in facilitating entrepreneurial performance during China’s early reform period (1978–1999), this study argues that regional institutions were increasingly conducive to entrepreneurial activities and, thus, also played a key role in China’s entrepreneurial success during that period. The purpose of this study is twofold. First, it aims to demonstrate how regional institutional development facilitated entrepreneurial performance in China. Second, it aims to understand how formal institutional development among Chinese regions affected the role of political connections. Using a two-level hierarchical dataset on Chinese private enterprises, this study finds that not only legal protection of property rights but also the development of market systems mattered for entrepreneurial performance. In addition, it shows that political connections played a diminishing role during regional institutional development in China.


Original languageEnglish
Pages (from-to)161-181
JournalSmall Business Economics
Issue number1
Early online date7 Dec 2013
Publication statusPublished - Jun 2014


  • entrepreneurial performance, legal protection of property rights, development of market systems, political connections, China