Kinship Networks and Rural Entrepreneurs
in China's Transnational Economy

by Yusheng Peng

[November 17, 2006]


Max Weber once observed that the strong lineage system in rural China had impeded the development of entrepreneurial capitalism in China. This paper attempts to reevaluate the old Weber thesis by empirically testing the relationship between kinship networks and the bourgeoning rural industrialization during the reform era. Analysis of village-level data shows that lineage networks, measured by the share of households belonging to the largest surname group, have large positive effects on the count of private entrepreneurs and total workforce size of private enterprises in rural China.  I interpret this finding from a neoinstutionalist perspective and argue that lineage networks support rural entrepreneurs by enforcing informal norms regarding private property rights when formal rules were ambiguous during China’s market transition.







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