Abstract
This paper explores the start-up process of Chinese private manufacturing firms in the Pearl River Delta during the post-global recession. Previous studies on the emergence of private enterprises in China have emphasized the perspective of ＂capitalism from below,＂ arguing that entrepreneurs devised institutional innovations through trial and error that enabled them to decouple from the established, unfavorable economic order. These informal institutional arrangements in the Yangzi River Delta not only resolved the free-rider problem, but also developed competitive advantages in self-organized industrial clusters. The perspective of ＂capitalism from below,＂ however, overlooked the local institutional divergence in studying Chinese economic transition. Since local manufacturing firms in the Pearl River Delta are embedded in an organizational field controlled by transnational enterprises, Taiwanese investors in particular, these nascent private entrepreneurs may acquire capital, techniques, human resources, and management skills from transnational capitalists other than local social networks. In other words, China's capitalist economic institutions and business norms are forms of ＂capitalism from outside.＂ This case study is intended not only to enhance our understanding of late-comers on the emergence of capitalism, but also to contribute to the dialogue with Chinese state capitalism at this stage.