When Do the Last Become First? Multi-Dimensional Institutional Complexity and Rise of Underdogs during Market Transition

• In Event: 3240 - The Economic Sociology of Inequality

Abstract

Reconstructing detailed practices of eight Chinese education and training organizations with interviews, archives and observation data, this article reverses prevailing ideas in transitology and status advantage studies. Across the education and training industry (ETI), along with other industries related to socialist public goods, underdog organizations whose founders were marginalized by the state and whose practices were noncompliant with regulations and norms rose to market leader positions and their leadership was sustained. I argue that multi-dimensional institutional complexity, especially where it is unclear whether organizations therein are private and whether they are for-profit, provides the social condition for the last to become the first. A giant state sector and the informal economy constitute the two social sources for this type of multi-dimensional institutional complexity. Noncompliant practices drawn from the informal economy not only help underdog organizations secure key resources, but institutionally complex conditions unintentionally turned state regulations against noncompliance into advantages for underdogs. This article proposes the impact of competing models’ differentiated access to the social sources of the institutional complexity on the inter-model competition as a new mechanism of change under institutional complexity. The way the ETI became a private and for-profit industry also represents a novel bottom-up trajectory for the rise of China’s private sector.

Author

• Le Lin, University of Hawaii