The influence of cronyism on entrepreneurial resource acquisition

Abstract

AbstractThis research focuses on how entrepreneurs utilize cronyism to acquire resources. A case study method allowed us to explore three firms in the private property development industry in China. These firms uniquely cultivated cronyism and achieved distinctly different outcomes. Our findings highlight Chinese entrepreneurs in start-up ventures and later-stage enterprises employ cronyism. The underlying rationale for using cronyism have common and heterogeneous motivations. The similarity and distinguishing rationale also apply to the impact of cronyism. We also find two contingency working mechanisms for cronyism: entrepreneurial characteristics and a staged model for cronyism. With the firm’s growth, cronyism remains important, but firms with more community involvement outperform others. This research contributes to the theory on strategic network utilization for resource acquisition during entrepreneurial development stages. We investigate how entrepreneurial strategies can assist in adapting to the “rules of the game” while utilizing resources within the set contextual constraints.