| Regional culture, entrepreneurial talent, and institutional change: Evidence from private firm allocation in China |
Received:October 13, 2017 Revised:October 13, 2017 |
Key Words: entrepreneurship, entrepreneurial culture, long-term stability, private firms, China |
| Author Name | Affiliation | | Sonja Opper* | Lund University | | Fredrik N.G. Andersson | Lund University |
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Abstract: |
| Theories highlighting the role of institutional systems in explaining individual and organizational behavior dominate the literature on emerging and transition economies, suggesting pro-market reforms as the main driver of private firm creation. Institutional explanations alone, however, struggle to explain pronounced within-country variation of new firm location following post-socialist market reforms. This study shifts the attention to the importance of culture and explores the long-term stability of regional entrepreneurial cultures over extended periods of time. We employ provincial panel data from China documenting the regional distribution of entrepreneurial activities during the Ming Dynasty (1368–1644) and the Qing Dynasty (1644-1912) and private firm activities in 1992–2012. Our study finds a significant association between the regional distribution of historical and current measures of entrepreneurship, supporting: 1) the long-term stability of distinct cultures, even with disruptive political changes; and 2) the adaptability of entrepreneurial activities to changing institutional arrangements and relative payoff structures. These results are robust to numerous alternative explanations, including geography, agglomeration advantages, education, and technology. From a policy perspective our results show the importance of local culture and institutions jointly influencing regional responses to market liberalization. |
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