Theory, Evidence and Implications
Edited by Phillip H. Phan, Sankaran Venkataraman and S. Ramakrishna Velamuri
Chapter 8: The Founding Conditions of Entrepreneurial Firms as a Function of Emerging Institutional Arrangements in China
8. The founding conditions of entrepreneurial ﬁrms as a function of emerging institutional arrangements in China Atipol Bhanich Supapol, Eileen Fischer and Yigang Pan INTRODUCTION In developed markets institutional structures typically change relatively slowly and incrementally. As developing economies emerge, however, institutional change is pervasive and frequently profound: rapid reform in political philosophies, regulatory environments and laws and policies governing how business may operate are common (for example, Park et al., 2006; Tan, 2005). Clearly, these changes are likely to present both challenges and opportunities for the managers of entrepreneurial ventures in such economies as feasible and attractive means of doing business may shift from one era or period to the next. Equally, these kinds of evolving economies also represent a challenge for entrepreneurship scholars accustomed to studying how new and growing ﬁrms compete in relatively slowly evolving macro-institutional environments. In order to study entrepreneurship in emerging economies, we need theories that are appropriate to such dynamic environments. In this chapter we address this challenge by drawing on the evolutionary economic perspective. We conceptualize the evolving macro-institutional conditions in such economies as founding conditions that may interact with ﬁrm choices at the time of founding to aﬀect ﬁrm performance over time. There is a growing body of evidence that suggests there is a signiﬁcant impact on ﬁrm performance of both initial choices and industry speciﬁc founding conditions (for example, Bamford et al., 1999). We build on the various theoretical perspectives that explain such ﬁndings to consider how...
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