Institutional holes and entrepreneurship in China.

Abstract

Theories of entrepreneurship and institutions have grown up in partial isolation, but they are actually complementary. By analogy with Ronald Burt's structural holes, the idea of institutional holes calls attention to the ways entrepreneurs create connections among sites kept separate by existing institutions. Especially in transitional economies, entrepreneurs strike a risky balance between acquiring institutional support for new enterprises without allowing institutions to absorb those enterprises, on one side, and creating profit-making connections, on the other. The experience of a daring Chinese entrepreneur illustrates both the exploitation of institutional holes and the perils of institutional entrepreneurship.