Entrepreneurial Strategies During Institutional Changes: Evidence from China’s Economic Transition
46 Pages Posted: 17 Jun 2016 Last revised: 17 Aug 2020
Date Written: August 1, 2020
Abstract
Institutional changes create entrepreneurial opportunities and entrepreneurs strategically respond to institutional pressure. However, we lack an understanding of how institutional changes impact entrepreneurial strategies. By exploiting the regional disparities in China’s economic transition, we examine how institutional changes alter the effects of entrepreneurial strategies. Using data from an alumni survey in China, we find that relationship-based strategies are positively associated with firm size in the early stage, innovation-based strategies appear more effective in the late stage, and “cocoon-based” strategies are associated with larger firm size in the intermediate stage of institutional change. We propose that entrepreneurs may temporarily leverage “cocoon institutions” to buffer uncertainty in the broader institutional environment. Overall, we contribute to research at the intersection of institutional change and entrepreneurial strategies.
Keywords: Institutional Change, Entrepreneurial Strategy, Emerging Economy, Government Relationship, Science Park, Innovation
JEL Classification: L26
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