Strategic Choice And Institutional Ambiguity: A History Of Entrepreneurial Emergence In Rural China

Abstract

This conceptual research suggests that path dependence historically created a limited array of entrepreneurial choices in rural China including various forms of collective and private business ownership. However, collective ownership historically gave rural Chinese entrepreneurs increased sociopolitical legitimacy thereby increasing access to resources such as capital; however, during China’s reform era many rural entrepreneurs chose private rather than collective ownership, an economically illogical choice. This seemingly illogical choice resulted in changes in China’s institutional fabric such that the most historically illogical choice—private business ownership—became the most logical choice. This suggests that entrepreneurial choice extends beyond economic rationality to a more complex environment of options.