Legitimation, Social Status, and Entrepreneurial Entry

• In Event: 106 - Open Refereed Roundtable Session I
  In Refereed Roundtable: A. Table 04. Economic Sociology

Abstract

Although past sociological and economic studies suggest that the legitimation of entrepreneurship in a society pulls individuals of high social status into entrepreneurship, the process has not been systematically studied. Based on the neoinstitutional insight that the scope of legitimation depends on the existence of sub-universes of meaning in society, we propose that the legitimation of entrepreneurship does not universally shift individuals of high social status into entrepreneurship. Rather, the legitimation scope depends on the pre-existing sub-universes of meaning, which are ongoingly reproduced by the segmented structures that high-status individuals belong to. Analyzing a nationally representative life-history data set of citizens of transitional China from 1978 to 1996, we find that until private entrepreneurship is fully legitimized, individuals of high social status (cadres and professionals) are reluctant to engage in it. We also find that cadres’ entry into private entrepreneurship is amplified by the national regulative legitimation process but not by local traditional entrepreneurial culture. In contrast, professionals’ entry into private entrepreneurship is amplified by local traditional entrepreneurial culture but not by the national regulative legitimation process. The implications of these findings for entrepreneurship research, neoinstitutional theory, and the market transition literature are discussed.

Authors

• Hongwei Xu, Institut Européen d'Administration des Affaires

• Litao Zhao, National University of Singapore