ABSTRACT
This chapter uses the twin concepts of institutional holes and double entrepreneurship to make a useful link between institutional rules and entrepreneurship in China's economic reform. Joseph Schumpeter brought entrepreneurship to the centre of the analysis of economic development. Ironically, Ronald Burt's theory of structural holes provides an analogy that helps identify and repair a defect of that very theory. Walter Powell and Paul DiMaggio used the term 'organizational field' to refer to an aggregate of organizations that share a common institutional life. Transitional economies are full of institutional fields with boundaries that are hard to identify. Structural autonomy in social relations will not lead to competitive advantage without a certain level of legitimacy acknowledged by state officials. Viable enterprises are those that can find and occupy the position of institutional holes while at the same time remaining legitimate.
