Sonja Opper

• Ph.D.
• Professor at Bocconi University

In China, the strategic use of personal relationships is pervasive in transactions with government authorities as well as in interfirm relations. Explanations as to when and why firms rely on guanxi emphasize a close link between organizational resources, environment, and corporate strategic choices. Our study shifts attention to the importance of...

Political connection in China is often tested for correlation with business success and government support under a suspicion that connected entrepreneurs enjoy special favors and protection. Research evidence is mixed. In revisiting the debate on political capital in China, we apply a socially embedded perspective on political connection. To this e...

This paper examines the link between the social networks surrounding business leaders and temporal myopia in strategic planning. Specifically, we hypothesize that processes characteristic of being embedded in a closed network are associated with a lack of foresight and a tendency to neglect long-run strategic planning. Using a probability sample of...

It is well known in economics, law, and sociology that reputation costs in a closed network give insiders a feeling of being protected from bad behavior in their relations with one another. A person accustomed to doing business within a closed network is, therefore, likely to feel at unusual risk when asked to cooperate beyond the network because o...

The Chinese word, guanxi, distinguishes a kind of relationship that is familiar, consequential for network predictions of performance — and consistent with, but not yet distinguished in, network theory. Phrased in terms of network theory, guanxi is a tie that has become strong through its history such that trust within the relationship is high and...

We all know people we find difficult to deal with. Some we trust despite major past transgressions, others we do not. What explains the difference? Rather than looking for explanations inside the trustor–trustee dyad, we explore the embedding social structure. Our argument focuses on two features: network closure around the trustor and the embedded...

Almost two decades ago, Asia Pacific Journal of Management , 19(2/3): 251–267 Peng (2002) called attention to the promise of institution-based strategy research. The puzzle was to explain differences in strategies around the globe. Building on the work accomplished so far, I ask: Can institution-based strategy succeed when embedded in inappropriate...

I have three goals in this chapter. First, I will briefly summarize some of the unforeseen challenges to institution building for economic growth. Second, on a more positive note, I will highlight unexpected development outcomes: the emergence of bottom-up institutional changes, and the development and viability of second-best institutions. Both de...

What does it mean for a private enterprise in China to be embedded in a family? Our purpose here is twofold: (1) use social network analysis to describe what it means for a firm to be embedded in a family, (2) reveal from the application a new kind of firm, not family, yet akin to family. Armed with data on a large probability sample of private ent...

We hypothesize that informal bank networks influence corporate credit access in China. Our sample comprises a panel of 515 corporations listed on China's stock exchanges with a total of 1,052 firm-year observations, holding a total of 7,009 major bank loans from 183 distinct banks between 2007 and 2012. Results support the hypothesis that closure i...

Are entrepreneurial cultures stable over time? In this paper, we use historical measures of the outgrowth of entrepreneurial culture in China and test whether these correlate with entrepreneurial activities today. We employ provincial panel data from China documenting the regional distribution of entrepreneurial activities during the Ming Dynasty (...

We study whether CEOs of private firms differ from other people with regard to their strategic decisions and beliefs about others’ strategy choices. Such differences are interesting since CEOs make decisions that are economically more relevant, because they affect not only their own utility or the well-being of household members, but the utility of...

In China, a large private sector has evolved alongside a still sizeable state-owned sector that is subject to government control. Several studies have found that in this mixed economy, the private sector is economically more efficient than the state-owned sector. In this paper, we investigate whether private firms are also more carbon efficient tha...

Where does generalized trust-that is, the inclination to place trust in strangers-come from? Our claim is that in economic action, sources of generalized trust may not differ much from the sources of personalized trust. Contrary to a common assumption of a sharp distinction between personalized and generalized trust, we assert a likely spillover ef...

We trace the social networks around Chinese entrepreneurs back to their firm's founding to learn about the role early events play in the later success of a business. We use name generator questions paired with career history questions to identify ‘event contacts’ missed by the usual focus on current business. We draw four conclusions from interview...

We trace the social networks around Chinese entrepreneurs back to their firm's founding to learn about the role early events play in the later success of a business. We use name generator questions paired with career history questions to identify 'event contacts' missed by the usual focus on current business. We draw four conclusions from interview...

China’s banking sector is dominated by four distinct organizational forms: policy banks (PBs), state-owned commercial banks (SOCBs), joint stock commercial banks (JSCBs), and rural credit cooperatives (RCCs). Economic analyses have especially focused on the development of bank efficiency and profitability over time. The equally important question,...

A parsimonious set of mechanisms explains how and under which conditions behavioral deviations build into cascades that reshape institutional frameworks from the bottom up, even if institutional innovations initially conflict with the legally codified rules of the game. Specifically, we argue that this type of endogenous institutional change emerge...

The rapid rise of an innovative private manufacturing economy in China challenges standard economic explanations of growth, which typically assume the existence of well-defined formal institutions such as property rights and company laws safeguarding investor and creditor interests. We highlight the social structure of cooperation that enables inno...

Structural changes of the elite have been a particular focus of sociological and economic research and debate since the outset of reforms in the post-communist transition countries. While most studies on elite changes focus on the relative income position as the indicator for the changing position of the old elite, we concentrate on the strength an...

This study examines the determinants behind the restructuring of China's SOEs in the late 1990s. We have reached two major findings. First, we find that the degree of labor retrenchment is negatively related to enterprise performance, suggesting that poor performance is a major force driving labor restructuring. Second, we offer evidence that decis...

Whether state-owned banks are growth promoting or not is highly contested given the assumed disincentives associated with public ownership. Bank efficiency, however, does not only depend on distinct ownership regimes, but also on the bank’s main functions, lending strategies and market competition. This paper provides a first comparative analysis o...

This study reports findings from the first large-scale experiment investigating whether entrepreneurs differ from other people in their willingness to expose themselves to various forms of uncertainty. A stratified random sample of 700 chief executive officers from the Yangzi delta region in China is compared to 200 control group members. Our findi...

China’s unbalanced growth strategy has seemingly fostered growing inter-regional growth disparities and there is little evidence of wealth trickling down from richer provinces to poorer provinces. Standard convergence tests, however, may be ill specified to detect underlying long-term growth trends in small samples due to the pronounced and frequen...

More than 630 million Chinese have escaped poverty since the 1980s, reducing the fraction remaining from 82 to 10 percent of the population. This astonishing decline in poverty, the largest in history, coincided with the rapid growth of a private enterprise economy. Yet private enterprise in China emerged in spite of impediments set up by the Chine...

This study examines the determinants of Chief Executive Officer (CEO) turnover in Chinese state-owned firms. Based on a sample of 1 555 turnover cases among listed firms in China during the period 1999–2003, we obtain three main results. First, CEO turnover is negatively related to the sales performance but not the profitability of the core busines...

The aim of this paper is to specify a theory to explain why transitions to a market economy cause a shift to a higher level of innovation. Marketization increases the power of economic actors relative to political actors, increases inter-firm competition, creates new opportunities for entrepreneurship, and subsequently motivates innovative activity...

In a recent paper Pedroni and Yao (2006) present strong evidence suggesting that Chinese provincial per-capita output is diverging, a result that goes against the Chinese government's goal of a balanced wealth-creation across provinces. This paper provides an in-depth analysis of the reasoning behind this finding. Our main result is that the diverg...

This research applies a transaction-focused institutional analysis to compare the value of political capital in different institutional domains of China's market economy. Our results show that the value of political capital is associated with institutional domains of the economy in which agents can use political connections to secure advantages. Po...

Market transition theory has specified general mechanisms to explain change in the balance of power between political and economic actors in transition economies. These mechanisms drive the endogenous construction of informal institutions of a market society; moreover, it is within the context of an ongoing change in relative power that the formal...

Recent research on financial market development has focused on the nature of the legal system. The law and finance literature, however, exclusively focuses on the abuse of management power as a major cause of shareholder expropriation. We examine the role of the administrative capability of the state in providing and guaranteeing the institutional...

Introduction: In departures from centrally planned economies the threat of financial crisis, breakdown of political order, and re-evaluation of social values cause what Williamson (2000a) has termed “defining moments.” Transition economies share broad similarities with other developing economies with respect to the importance of building institutio...

During the last three decades, China has undergone a period of unprecedented institutional change. The gradual market transition of the economy and China's integration into the WTO have created a strong demand for new laws and regulations. For institutional economics this period provides a unique opportunity to study the qualities, implications, an...

In a recent paper Pedroni and Yao (2006) present strong evidence suggesting that Chinese regional output is diverging, a result that flies in the face of the current opinion of Chinese policymakers. This paper provides an in-depth analysis of the reasoning behind this finding. Our main result is that divergence does exist, even when new data and mo...

China¡¦s state-guided economic miracle has revitalized a long-standing and unsettled debate about the role of government in transformative economic development. In a firm-level study of corporate governance we examine whether direct state involvement actually makes a positive contribution to the economic performance of newly incorporated firms in C...

This paper provides systematic evidence for both the cross-country and sector-independent validation of political-economic theories used to explain changes in national property rights arrangements. A political-economic model for privatization will be developed and then tested on progress in large-scale and small-scale privatizations in 14 Central a...

In this study we use a dataset that provides information on Chinese Communist Party grassroots organizations' political control over decision-making in China's listed firms. Specifically, we examine how different types of shareholders affect (1) the party's level of decision-making power and (2) the implications of party control for firm performanc...

The key objective of this paper is to highlight the interconnectedness between China's political and economic system and its weak enforcement of accounting and auditing standards. The institutional analysis shows that the prevailing political and economic priorities constituting China's "socialist market economy" create a framework, that basically...

The key objective of this paper is to highlight the interconnectedness between China's political and economic system and its weak enforcement of accounting and auditing standards. The institutional analysis shows that the prevailing political and economic priorities constituting China's “socialist market economy” create a framework, that basically...

The dual-track approach is characteristic of evolutionary reforms in China. The most important aspect of this dualism has been the reform of the ownership structure. On the one track, new, basically market-oriented institutions emerged in a parallel economy comprising non-state enterprises. On the other track, stateowned enterprises were retained a...

Die Neue Institutionenökonomik stellt ergänzend zur Neoklassik die Kosten von Transaktionen in den Mittelpunkt. Dabei wird das Hauptaugenmerk auf die Institutionen gerichtet, die das menschliche Handeln beeinflussen. Welche Entwicklung nahm die Institutionenökonomik? Wo steht sie heute? --

This paper explores promotion patterns of China’s provincial leadership. Building on the strong organizational need for commitment, consensus-building and reliable vertical information flows within China’s corrupted M-form state structure we show that network- based promotion plays a crucial role in leadership recruitment. Our empirical evidence is...