Institutional Impact on Chinese SMEs, 20th Annual Interdisciplinary Conference on Entrepreneurship and Innovation

Economies in transition such as China are among the world’s fastest growing. Small and medium-enterprises (SMEs) in such a transitioning environment face dramatic institutional changes. We strive to uncover how institutions impact SMEs in the transitioning Chinese economy. Dominate institutional-based views on entrepreneurship suggest that comparing to advanced economies, entrepreneurship in transitioning economies face difficulties due to the lack of formal institutions. However, how formal institutions impact the development of industries remains unclear. This paper reports a comparison case study which includes ten Chinese SMEs from three different industries: international trading, manufacturing and real estate developing. The findings highlight that formal institutions created during the transitioning stage in all three industries represent as barriers. However, compare to other two sectors, only real estate developers actively overcome the barriers through informal institutions. Our study enhances the institution-based view on entrepreneurship in transitioning economy by adding industrial differences in institutional transitions.