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Authors:

• Hongbin LI
  The Chinese University of Hong Kong

• Lingsheng MENG
  The Chinese University of Hong Kong

• Junsen ZHANG
  The Chinese University of Hong Kong

This paper examines the determinants of the entrepreneur’s political participation by employing a unique matched firm-institution dataset from China. We find that the likelihood of an entrepreneur’s participation can be explained by the underdevelopment of the market and imperfections in market-supporting institutions. Our findings support the view that the institutional environment shapes the private entrepreneur’s motivation to participate in politics; they also provide an example of how private entrepreneurs respond to state/market failure in transition economies.