Clan and Entrepreneurship from the Perspectives of both Network and Cultural Norms: Effects and Mechanism
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| Title | Clan and Entrepreneurship from the Perspectives of both Network and Cultural Norms: Effects and Mechanism
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| Author | Zhang Chuanchuan and Li Tao |
| Organization | School of Economics, Central University of Finance and Economics |
| Email | ccz.zhang@gmail.com；econlitao@vip.sina.com |
| Key Words | Clan Network; Clan Culture; Entrepreneurship |
| Abstract | Clan has both the network attribute and cultural attribute and through both it affects the entrepreneurship. Using data from the baseline survey of China Family Panel Studies (CFPS 2010) and China’s 2005 1% Population Sample Survey, this paper tests empirically the role of clan in entrepreneurship, and examines both the network effects and cultural effects of clan. Empirical results demonstrate that the presence of clan measured by either the genealogy book or ancestral temple is positively related to the probability of starting private business at the individual level. After resolving the potential endogenous bias using an instrumental variable approach, the paper shows that the presence of clan significantly increases the probability of starting private business. However, further studies show that only entrepreneurship measured as self-employment is positively affected by the presence of clan, the presence of clan has no statistically significant effects on the probability of starting private enterprise. The paper then investigates several potential channels from clan to entrepreneurship and finds that the presence of clan boosts entrepreneurship mainly through facilitating the informal financing, and there are no evidence supporting the cultural belief channel or social trust channel, which are both popular in previous theoretical studies. Finally, regression results by region suggest that clan only increases the probability of starting private business in regions with lower development level of marketization and economic openness, while clan actually has negative effects on entrepreneurship in regions with high level of marketization and economic openness. |
| Serial Number | WP1015 |
| Time | 2016-01-08 |
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