http://repub.eur.nl/res/aut/5765/ List of Publications en http://repub.eur.nl/static-eur/img/logo.png http://repub.eur.nl http://repub.eur.nl/res/pub/37959/ 2012-11-28T00:00:00Z The Market Design (MD) approach to institutional analysis provides the analytical tools to evaluate endogenous institution building in local market places irrespective of the institutional setting of the national economy. Implicit in this analysis of endogenous institution building at the market place level is the recognition of institutional diversity, which none of the conventional forms of institutional analysis can provide. We extend the MD approach from its original game theory perspective to examine three market places in China: township and village enterprises, equity joint ventures and public utilities. We conclude that the MD approach (1) provides the analytical tools and criteria to evaluate whether or not market places are robust and sustainable, (2) links market behavior at the market place level, which is characterized by size, coordination and trust problems, with general level considerations based on transaction costs, and (3) suggests that functioning market places are achievable, even if the formal institutions of the general economy are weak or partially missing. Our research has policy implications and opens new avenues for research into the emergence of markets. http://repub.eur.nl/res/pub/23640/ 2012-09-01T00:00:00Z The market design (MD) approach to institutional analysis provides the analytical tools to evaluate endogenous institution building in local market places irrespective of the institutional setting of the national economy. Implicit in this analysis of endogenous institution building at the market place level is the recognition of institutional diversity, which none of the conventional forms of institutional analysis can provide. We extend the MD approach from its original game theory perspective to examine three market places in China: township and village enterprises, equity joint ventures, and public utilities. We conclude that the MD approach (1) provides the analytical tools and criteria to evaluate whether or not market places are robust and sustainable, (2) links market behavior at the market place level, which is characterized by size, coordination, and trust problems, with general level considerations based on transaction costs, and (3) suggests that functioning market places are achievable, even if the formal institutions of the general economy are weak or partially missing. Our research has policy implications and opens new avenues for research into the emergence of markets. http://repub.eur.nl/res/pub/40077/ 2011-05-01T00:00:00Z The speed by which China has moved towards a market economy has not been accompanied by a similar development of its judiciary system. Since the early 1990s, foundational national legislation with a direct effect on firms, such as laws dealing with contract, investment, liability and insolvency have been introduced, sometimes reluctantly. http://repub.eur.nl/res/pub/12191/ 2008-04-17T00:00:00Z We start our exploration of China’s institutional change by asking what the China experience can tell us about institutional economics and organization theory. We point to under-researched areas such as the formation of firms and the interplay between firms and local politics. Our findings support the dynamic capability approach which concentrates on activities rather than on pre-defined groups and models institution building as a co-operative game between the local business community and local government agencies. We find that the analysis of firms has to set in before they are formed by entrepreneurs and networks and we identify political management as a core competence of these two groups. While this contradicts the conventional view of clientelism or principle agent relations as institutional building blocks, we don’t propose competing models. Instead, we suggest focusing on a dynamic process in which the role of players can change. Faced with the spontaneous emergence of institutions, our concept of institutional architecture captures the fact that the two models can co-exist side by side and that, once the dichotomy between formal and informal institutions is given up, there can be a transition from local patron-client relations to local business-state coordination. http://repub.eur.nl/res/pub/7854/ 2006-06-30T00:00:00Z The paper offers a frame for investigating the extent to which decentralisation, and subsequent locally chosen institutions shape private organisational and institutional innovation. To include the numerous locally based “economic regimes” matters as the resulting business system reflects political institution setting and private organisational innovation. Such a frame is a necessary first step for empirical studies attempting to explain the heterogeneity of China’s business systems, the emergence of hybrid organisations, and last but none the least, the different growth rates that can be observed across China. http://repub.eur.nl/res/pub/7331/ 2006-02-06T00:00:00Z We advance a conceptual frame for explaining economic transformation in China that combines a dynamic and a comparative perspective by taking the analysis of Fiscal Federalism one step further. Using insights from the comparative business systems literature we show that devolution of power at the beginning of the reform process introduced local autonomy, which stimulated a diversity of local regulatory regimes. As the central political leadership is no longer the sole supplier of institutional change, local governments become equal contributors to the formation of local business systems. Yet, local governments only partially define emerging local business systems. Local governance at the enterprise level is defined by the interaction between political and economic entrepreneurship, or, phrased in institutional terms, local business systems emerge from the interplay between the formal architecture of local autonomy and the informal institution of networking. In a comparative perspective this interaction, and its underlying driving forces for co-operation, namely: procedural uncertainty, relational risk and institutional change, will lead to diversity in outcomes. In a dynamic perspective both market competition and networking will ensure further competition between business systems, while political unification, imitation or scale economies will ask for convergence of local business systems beyond the local nexus. http://repub.eur.nl/res/pub/1128/ 2004-01-21T00:00:00Z Entrepreneurial activities in transition economies go beyond (technical) entrepreneurship. In an environment of institutional and procedural uncertainty entrepreneurs need to select business partners, choose a mode of governance that stabilizes long term business relations, and settle for such property rights regime that best matches the entrepreneurial endeavour. Bases on fieldwork in China the paper shows how entrepreneurs combine their predisposition for social relations with economic reasoning when they embed firms in one location, in mixed forms of relational and contractual governance, and specific ownership structures. The empirical research points to alternative economic concepts which allow further analysing the interaction between individual entrepreneurship and the emergence of market conforming institutions. http://repub.eur.nl/res/pub/1841/ 2004-01-01T00:00:00Z China like other transition economies needs to establish a tax regime compatible with a market economy. The paper singles out the general and China-specific features by which national legislation attempts to accompany economic transformation. Based on an empirical study in two provinces this paper shows that without including local government agencies and their budgets, China’s fiscal federalism cannot be analysed. This paper argues that China’s emerging tax regime depends on the institutional design that shapes the interaction between firms (as major tax payers at the local level), local government agencies, and the national tax administration. http://repub.eur.nl/res/pub/160/ 2002-01-29T00:00:00Z The literature on transaction costs concentrates on established firms in established markets, while the literature on industrial ecology concentrates on new firms in given markets. It is contested in the following that the picture looks differently if the analysis concentrates on establishing new firms in new markets, such as e-commerce or the new private sector in the formerly socialist economies. A new market is defined by high uncertainty. First, the general knowledge of expertise in a society is low, so that young entrepreneurs find it hard, and costly, to acquire the necessary know-how. Second, institutions, might these be the law, business practices, or intermediaries, are poor and underdeveloped. It will be argued that in China therefore entrepreneurship depends crucially on the ability to establish firms, i.e. to find organisational forms for business ventures that facilitate long-term business relations within and around a firm, that is to say, individual entrepreneurship depends on mechanisms for co-ordinating individual or organisational behaviour of firms. These mechanisms were lacking under socialist planning. The legacy of the planned economy was an environment of weak economic institutions in which state-socialist institutions uneasily coexisted with market institutions, and newness of private exchange added to uncertainty. In this environment, economic actors depended on collective action to create their own institutions, driven by the need to agree on rules of conduct in business relations and on sanctions against violation of these rules. The study will concentrate on two essential components of (private) entrepreneurship. One is the search for organisational forms conforming to the situational constraints; the other is the formation of business practices that enable individual entrepreneurship to become a viable and sustainable course of action. In other words, we will attempt to show how the transaction cost advantage of organisational forms and co-ordination mechanisms can compensate entrepreneurs for the disadvantage they face with respect to the lack of clearly defined property rights. Based on extensive fieldwork in two provinces where 100 firms were interviewed the study can show that 1. as predicted by approaches in industrial ecology both experimentation and selection were crucial in shaping the new private business sector; 2. on the individual level the performance-orientation of Chinese culture allowed entrepreneurs to combine rational decision making with tradition. Both factors can explain why for example the family in China but not in Chinese overseas communities is no longer the natural base for private firms, why networks are assessed by their expected performance, or why Chinese firm do not care about building up a core business. 1 http://repub.eur.nl/res/pub/71/ 2001-02-09T00:00:00Z This paper is part of a broader research project that aims to analyse the emerging private business sector in China by focusing on three topics. http://repub.eur.nl/res/pub/152/ 2001-01-22T00:00:00Z Moral outrage was the response of the Chinese press, when Cheng Kejie, one of the country's highest officials, Vice-Chairman of the Standing Committee of the National People's Congress (NPC) and former Governor of the Guangxi Zhuang Autonomous Region, was arrested on grounds of corruption on 25 April 2000. Cheng's arrest came amidst a spate of serious corruption cases that reached into the top echelons of China's state leadership (China Aktuell 2000). His case attracted wide public attention in national and international Chinese media because of his high office, the number of officials implicated, and the involvement of his lover Li Ping (dubbed the 'Jiang Qing of Guangxi' by the Hong Kong and overseas Chinese press) (Ming Pao 2000), daughter-in-law of his predecessor in the position of Governor of Guangxi, and for years the most influential woman in Guangxi. This was not just a case of a local official embezzling public funds, but a story of love and greed of a popular political leader, who had achieved much for his province. This was also not the story of an anonymous mistress, but of an ambitious, intelligent and attractive woman using the position of first her father-in-law then her lover to systematically and on a long-term basis exploit the powers vested in the office of provincial governor. The accusation against them focused on three crimes: appropriation and sale of real estate development and construction rights, sale of publicly subsidized goods at market prices and promotion of trusted allies into official positions of power. While the personal details of his deeds and his final execution in September 2000 fascinated the Chinese and Hong Kong press, his case also demonstrates how corruption works in China today (Hendrischke 2001). http://repub.eur.nl/res/pub/142/ 2001-01-09T00:00:00Z The development of entrepreneurship and a private business sector in China pose various challenges to analysis. On the one hand, neo-classically based New Institutional Economics aims to find evidence that long-term investment and long-term commitment in and around firms can not be expected without deeply entrenched and state guaranteed private property rights. On the other hand, empirical studies within the China field concentrate on the political processes, in particular the interaction between the central state and local governments, at the danger of neglecting market forces, economic interests, and economic problems at stake. The empirical study on which the following is based took a different path by using a set of framing assumptions.