The influence of institutions on the entrepreneurial behaviour of family businesses in the context of China: a multi-level analysis

Abstract

The entrepreneurial behaviour of family businesses plays a significant role in boosting economic development in every country. As one of the largest economies in the world, China’s phenomenal economic growth has attracted scholarly interest in family businesses throughout the 21st Century. Scholars have recognized the complexity of such firms, since these are at the intersection of family and business institutions, which exert different influences on the behaviour of family businesses. In particular, the way that these influences impact on entrepreneurial behaviour is dependent on the context. This thesis argues that the interaction of three levels of context - macro, meso and micro - is relevant to fully appreciate the impact of different institutions in different contexts. The extant research on family businesses and entrepreneurial behaviour in developed economies has mainly focused on the influence of formal institutions on entrepreneurial behaviour. However, when considering the impact of macro institutions on the entrepreneurial behaviour in transition economies such as China, there is a theoretical and empirical gap. Furthermore, due to the formal institutional voids in such a context, informal institutions play a significant role in influencing organizational behaviour, particularly in terms of the country’s macro-culture. To date, research on informal institutions affecting the entrepreneurial behaviour of family firms in China is scarce. There are both theoretical and empirical gaps, which this thesis aims to address. Furthermore, the heterogeneity of family businesses has been acknowledged in recent scholarly discourse, with findings highlighting the varying impact of institutions on the entrepreneurial behaviour of family businesses in the same context. The thesis argues that there are theoretical and empirical gaps in understanding how specific institutional logics, such as family and business logics, impact on the entrepreneurial behaviour of family businesses in a given context such as China. Moreover, findings from the existing studies carried out in developed economies are inconclusive, particularly with regard to whether these institutional logics are complementary or conflicting between family and business systems, if they inherently exist at an organizational level and are observable by individuals. According to paradox scholars, tensions can remain latent until changing environmental conditions render them salient. Yet, when considering the impact of contradictions on family and business systems, there are theoretical and empirical gaps in understanding how specific tensions emerge from family businesses in a given context such as China. Given the exploratory nature of the thesis, the social constructivism research approach was adopted to explore how institutions impact on the entrepreneurial behaviour of family businesses in China, focusing on three levels of analysis: macro, meso and micro. The empirical work consisted of multi-case study analysis, based on 56 interviews with family business owners situated on the East coast of China. The research findings reveal that (a) at the macro-institutional level, national cultural aspects inform different types of social networks, which in turn generate various types of social capital that facilitate or constrain entrepreneurial behaviour; (b) at a meso-organizational level, the founding structure has an imprinting effect on the dominant logics in family businesses, and exerts long-lasting influence on subsequent entrepreneurial behaviour; and (c) at the micro-individual level, the tensions between family and business may only exist in a latent state and subsequently become salient through individual sense-making under conditions of institutional complexity. This thesis contributes new theoretical and empirical insights to the theory of entrepreneurship and family businesses with a focus on China, accounting for (1) the hierarchical order of informal institutions in China and their influence on the formation of social capital in family businesses; (2) the influence of heterogeneity in the initial set-up of family businesses in China and concomitant influence of the macro-culture and interplay of institutional logics; and (3) the dynamic institutional changes in a transition economy such as China and influence on how individuals frame tensions within family businesses.

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ORCID for Laura Costanzo: orcid.org/0000-0002-7197-6778

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