ABSTRACT
Other contributors to this book argue that in post-Mao China private businesses are led to form alliances with other actors by the institutional environment. 1 Markets for capital, labour, and information are underde-veloped, liability laws, property rights, and contracts are weak, state regu-lation is negotiable, certain resources remain bureaucratically controlled, and private entrepreneurs are vulnerable to political persecution. Because a private sector emerged only in the 1980s, after almost 30 years of state planning, would-be business people face the ‘liability of newness’: they have few models of entrepreneurship to imitate or adopt and little understanding of how markets work. In this environment, it is rational for them to form two kinds of alliances. They ally with state officials to make the environment more predictable and reduce risk, 2 and they ally with other entrepreneurs both to promote ‘a stable set of expectations of “good” busi-ness behaviour’ and to learn about doing business in a market economy. 3
