Any attempt to systematically study the institutional foundations and mechanisms underlying the Yangzi delta’s rise of private enterprise capitalism can neither build on isolated case studies for firms nor focus solely on distinct industrial sectors or specific production clusters. For our analysis we have designed a multi-method study using a random sample of 700 entrepreneurs based in the Yangzi delta region.
To capture the potential influence of different geographic conditions as well as structural and institutional legacies shaping the region’s development, we selected seven of the sixteen municipalities of the Yangzi delta region. These municipalities are all sizeable economic centers of the region and broadly represent the diversity of local development models.
The set of survey cities reflect different historical legacies and varying political and economic starting conditions at the outset of reforms. Included are (1) municipalities with a long-standing private commercial culture, where post-reform private-firm development took off already in the early 1980s (Wenzhou and Ningbo in Zhejiang Province), (2) municipalities with traditionally strong reliance on public ownership (Hangzhou in Zhejiang Province and Nanjing and Changzhou in Jiangsu Province), and (3) municipalities with sizeable state-owned production in combination with massive foreign direct-investment inflows (Nantong in Jiangsu Province and Shanghai).
Today, private enterprises in the Yangzi delta region range from labor-intensive industries, such as textiles, to capital-intensive industries, such as shipbuilding, to technology and research-intensive industries such as biomedicine. Local industrial specialization has followed distinct development patterns, in accordance with local historical traditions, local comparative advantages, and national and local industrial policies. For our survey, we selected a stratified random sample of firms reflecting the heterogeneity of manufacturing technologies in the Yangzi delta region. To narrow down and control for industrial diversity, we selected five different manufacturing sectors, by applying the following principles. First, the sectors should have substantive importance for China’s overall industrial development. Second, they should represent different levels of industry concentration, since highly concentrated sectors may involve different market entry and marketing strategies than sectors with rather low concentration ratios. Third, they should reflect the industrial specializations within the Yangzi delta. Lastly, they should cover different production technologies.
The textile and ordinary machinery industries represent labor-intensive production, with national concentration ratios of the top ten producers of 6.5 and 7.8 percent, respectively. Vehicles and auto parts represent capital-intensive industries, with a rather high concentration ratio of around 20 percent. This sector was also a national priority ever since the central government published the first national industrial policy guidelines in 1989. Finally, the pharmaceutical and electronic industries represent technology-intensive production. These industries have concentration ratios of 10 and 20 percent, respectively. In 2006, the accumulated production value of these five sectors reached close to 28 percent of China’s total industrial output value. In our survey, the distribution of these five sectors follows roughly the relative importance of these sectors in the region, with textile, automobile, and machinery each accounting for 25 percent of the sample, and pharmaceuticals and electronics for 12 percent and 13 percent respectively.
To generate information on the sub-institutional domain of social action and concrete relationships, and the meso-and macro-institutional domains of customs, conventions, law, organizations, ideology, and the state, we implemented a three-fold approach combining (1) qualitative interviews with various stakeholders, (2) survey research, and (3) field experiments.
Through open, semi-structured interviews we collected firm ethnographies that allow reconstruct the financial and economic history of the firm and the corresponding entrepreneurial activities within the relevant social community. These interviews are also used to test and calibrate the design of the various survey instruments. Interview firms and case studies were selected randomly from the local firm population. In addition, we conducted interviews with representatives of local government administration, industrial associations, local party committees and labor unions to also incorporate different stakeholder perspectives.
Two entrepreneur surveys conducted in the 2006 and 2009 assemble a dataset appropriate to analyze the development of the private sector in China. The survey instrument covers information on firm activities, organizational fields, government bodies, strategic firm responses to changing institutional conditions. In particular the survey allows identify the strength of local networking, firm legitimacy, and reliance on informal norms versus formal rules (see also survey instrument for more detailed information).
Survey participants were also asked to participate in experimental tasks. This provides the opportunity to recruit a large random sample of firm managers to investigate their behavior in controlled and incentivized decision-tasks. This is in stark contrast to most studies of entrepreneurs and CEOs, which often are based on “convenience samples”. An attractive feature of obtaining experimental data is that it can be linked with survey responses and actual firm data.