The Chinese economy has developed rapidly despite two major constraints: ill-functioning markets and a socialist past, both of which caused an environment of unenforceable contracts. In this situation the need to pool resources and to govern relational risk was paramount to the development of a private sector. While modern organisation (transaction cost-) theory can explain why and to which extent entrepreneurship in China is based on collective agents, an analysis of the (local) political market is needed to explain why China's villages provide the much needed (and valuable) public goods in form of property rights protection and contractual security. Decentralisation and jurisdictional competition facilitate the writing of a new "common law" as well as the "discovery" of new forms of collective action.

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Erasmus Research Institute of Management
hdl.handle.net/1765/59
ERIM Report Series Research in Management
Erasmus Research Institute of Management

Krug, B. (2000). The Interdependence Between Political and Economic Entrepreneurship (No. ERS-2000-43-ORG). ERIM Report Series Research in Management. Retrieved from http://hdl.handle.net/1765/59