The paper describes the emergence of entrepreneurship in Shanxi province based on fieldwork in the last 6 years. Employing institutional and evolutionary economics shows that both the kind of firms that emerge and the individual behaviour of entrepreneurs reflect a systematic response to the situational constraint all would-be entrepreneurs face, namely a high level of uncertainty and weak institutions. In this situation to establish firms with a weak organisational identity allows to flexibly respond to new opportunities, while a strong reputation for accountability of the owners and managers is needed to get long term business relations started. As the Shanxi sample shows accountability can be achieved by a mix of reviving old economic institutions, hijacking social organisations, and building new business practices. To the extent that old institutions, social organisations and business practices do not spread equally across China, different forms of firms and different forms of entrepreneurship can be expected within China. In short, local cultures matter.

dealing with uncertainty and risk, evolutionary economics, organisational change
Structure, Scope, and Performance of Government (jel H11), Firm (jel H32), Firm Objectives, Organization, and Behavior (jel L2), Business Administration and Business Economics; Marketing; Accounting (jel M), Business Administration: General (jel M10), New Firms; Startups (jel M13), Asia including Middle East (jel O53), Planning, Coordination, and Reform (jel P21), Socialist Institutions and Their Transitions (jel P3), Cultural Economics; Economic Sociology; Economic Anthropology (jel Z1)
Erasmus Research Institute of Management
ERIM Report Series Research in Management
Copyright 2000, B. Krug, This report in the ERIM Report Series Research in Management is intended as a means to communicate the results of recent research to academic colleagues and other interested parties. All reports are considered as preliminary and subject to possibly major revisions. This applies equally to opinions expressed, theories developed, and data used. Therefore, comments and suggestions are welcome and should be directed to the authors.
Erasmus Research Institute of Management

Krug, B. (2000). Ties That Bind: the emergence of entrepreneurs in China (No. ERS-2000-44-ORG). ERIM Report Series Research in Management. Erasmus Research Institute of Management. Retrieved from