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Informal institutions, entrepreneurs’ political participation, and venture internationalization

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Abstract

Informal institutions such as Guanxi play a critical role in compensating for insufficient formal institutions in emerging markets. Arising from the institutional evolution, Chinese entrepreneurs’ participation in political systems induces the emergence of new types of Guanxi that the entrepreneurs can draw on in internationalizing their new ventures. Drawing from institutional and cognitive decision-making theories, we theorize that the entrepreneurs’ political participation enhances their self-perceived status (willingness) and resource acquisition (ability) in their new ventures’ engagement in high-commitment entry modes. Our analysis of 5,999 Chinese private new ventures offers empirical support for the mediating effects of self-perceived status and resource acquisition on the association between entrepreneurs’ primary and secondary political participation and their ventures’ engagement in high-commitment entry modes. Our research contributes to the international business literature by examining the micromechanism of the interplay between formal and informal institutions and to the international entrepreneurship literature by highlighting the critical role that individual cognition plays in new ventures’ internationalization decision-making.

Resume

Les institutions informelles, telle Guanxi, jouent un rôle essentiel pour compenser l'insuffisance des institutions formelles dans les marchés émergents. Emanant d'une évolution institutionnelle, la participation des entrepreneurs chinois aux systèmes politiques conduit à l'émergence de nouveaux types de Guanxi sur lesquels les entrepreneurs peuvent s'appuyer pour internationaliser leurs jeunes entreprises. Nous appuyant sur l’approche cognitive de la prise de décision et la théorie institutionnelle, nous argumentons que la participation politique des entrepreneurs augmente leurs statuts auto-perçus (volonté) et leurs acquisitions de ressources (capacité) dans le recours aux modes d'entrée engageants de leurs jeunes entreprises. Notre analyse sur 5,999 jeunes entreprises privées chinoises confirme empiriquement les effets médiateurs du statut auto-perçu et de l'acquisition de ressources sur l'association entre la participation politique primaire et secondaire des entrepreneurs et la mise en œuvre des modes d'entrée engageants de leurs entreprises. Notre recherche contribue non seulement à la littérature des affaires internationales en examinant le micro-mécanisme de l'interaction entre les institutions informelles et formelles, mais aussi à la littérature de l'entrepreneuriat international en mettant en évidence le rôle crucial que joue la cognition individuelle dans la prise de décision d’internationalisation des jeunes entreprises.

Resumen

Las instituciones informales como el Guanxi juegan un papel decisivo al compensar las instituciones formales insuficientes en los mercados emergentes. Resultante de la evolución institucional, la participación de los emprendedores chinos en sistemas políticos induce el surgimiento de nuevos tipos de Guanxi que los emprendedores pueden aprovechar para internacionalizar sus nuevos emprendimientos. Basándose en la teoría institucional y de toma de decisiones cognitivas, teorizamos que la participación política de los emprendedores mejora el estatus auto-percibido (disponibilidad) y la adquisición de recursos (habilidad) en el involucramiento de los nuevos emprendimientos en modos de entrada de alto compromiso. Nuestro análisis de 5,999 nuevos emprendimientos privados chinos ofrece apoyo empírico para los efectos mediadores del estatus auto-percibido y la adquisición de recursos sobre la asociación entre la participación política primaria y secundaria de los emprendedores y el involucramiento de los nuevos emprendimientos en modos de entrada de alto compromiso. Nuestra investigación contribuye a la investigación de negocios internacionales al examinar el micromecanismo de la acción conjunta entre las instituciones formales e informales y la literatura de emprendimiento internacional al resaltar el rol decisivo que tiene la cognición individual en la toma de decisiones de internacionalización de nuevos emprendimientos.

Resumo

Instituições informais como Guanxi desempenham um papel crítico na compensação pela insuficiência de instituições formais em mercados emergentes. Decorrente da evolução institucional, a participação dos empresários chineses em sistemas políticos induz o surgimento de novos tipos de Guanxi que os empreendedores podem utilizar para internacionalizar seus novos empreendimentos. Com base em nas teorias institucional e de tomada de decisão cognitiva, teorizamos que a participação política de empreendedores aumenta seu status autopercebido (disposição) e aquisição de recursos (capacidade) no envolvimento de seus novos empreendimentos em modos de entrada de alto comprometimento. Nossa análise de 5,999 novos empreendimentos privados chineses oferece suporte empírico para os efeitos mediadores do status autopercebido e da aquisição de recursos na associação entre a participação política primária e secundária dos empreendedores e o envolvimento de seus empreendimentos em modos de entrada de alto comprometimento. Nossa pesquisa contribui para a literatura de negócios internacionais ao examinar o micromecanismo da interação entre instituições formais e informais e para a literatura de empreendedorismo internacional, ao destacar o papel crítico que a cognição individual desempenha na tomada de decisão de internacionalização de novos empreendimentos.

摘要

像关系这样的非正式制度在补偿新兴市场正式制度的不足中起着至关重要的作用。由于制度的演变, 中国私营企业家的政治参与导致了他们可在其新创企业国际化中使用的新型关系的出现。借鉴制度和认知决策理论, 我们认为, 中国私营企业家的政治参与提升了他们的自我感知地位 (意愿) 和资源获取 (能力), 从而促使其新创企业在国际化中采用高承诺进入模式。我们对中国5,999家私营新创企业的分析发现, 自我感知地位和资源获取对企业家的主要和次要政治参与和他们的企业采用高承诺进入模式之间的关联起到中介作用。我们通过研究正式和非正式制度互动的微观机制为国际商务文献做出了贡献, 并通过强调个体认知在新创企业国际化决策中的关键作用为国际创业文献做出了贡献。

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Acknowledgements

We thank three anonymous reviewers and the Special Issue Editors Luis Dau, Jiatao Li, Aya Chacar, and Marjorie Lyles for their constructive comments. Feng Chen, Weiwen Li, Jane Lu, Bing Ren, Xuewei Zhai, and Lei Zhang provided very helpful feedback on earlier versions of this paper. We are grateful for the financial support of HKBU Faculty Research Grant (FRG2/15-16) to the second author, and the China National Natural Science Foundation Projects (71790604, 71572035, 71872045) to the fourth author. We thank Hongfei Ruan for his research assistance support.

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  1. Kelley School of Business, Indiana University, Bloomington, USA

    Dan Li

  2. School of Business, Hong Kong Baptist University, Hong Kong, China

    Li-Qun Wei

  3. School of Business, University of Connecticut, Mansfield, USA

    Qing Cao

  4. Business School, University of International Business and Economics, Beijing, China

    Deqiu Chen

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Correspondence to Dan Li.

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Accepted by Luis Dau, Guest Editor, 16 December 2020. This article has been with the authors for four revisions.

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Li, D., Wei, LQ., Cao, Q. et al. Informal institutions, entrepreneurs’ political participation, and venture internationalization. J Int Bus Stud 53, 1062–1090 (2022). https://doi.org/10.1057/s41267-021-00402-9

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