Sharing the Experience of Diaspora Investment Governance: Lessons from a Chinese Island Economy

Global Conference 'Moving Up Global Value Chains: Options and Strategies for the Global South & Small States', the University of West Indies, Mona, Jamaica

26 Pages Posted: 29 Jan 2014

See all articles by Zhen (Peter) Ye

Zhen (Peter) Ye

Coventry University London; The University of Chicago Booth School of Business

Date Written: November 8, 2013

Abstract

This paper explores the dynamic of investment governance from the perspective of Diaspora investment governance in an island economy in China. It is not a study of investment governance as understood in the conventional developed sense. The study took place in a system absent of business angel, where trust is a big problem and new business venture faces a plethora of problem including incomplete contract, high transaction cost and political uncertainty. Never the less, entrepreneurship has taken its root and thrived, and new forms of organizational linkage and governance structure emerge with the arrival of foreign direct investment and human capital creating new linkages from the old and changing business practices which gradually transform the nature of institutions and governance structure. It is the focus of this paper to explore certain dynamic aspects of Diaspora investment governance from the perspective of institutional change during the process of industrial development. The starting point of the analysis is on a broader set of actors whose relationship dynamics shape the process of entry and driving the change in the governance structure of the island economy. Questions on how to enter a new territory, finding trustworthy partners, and developing partnership and negotiating entry are fundamentally a question of how to deal with ambiguity in business life as a result of information asymmetry and principal agent problem. New institutional design emerges to provide norm and standard to regulate the conduct of businesses. In the context of the island, a process of induced institutional change is partly simultaneous and partly driven by the developmental state although the actual process has more layers of intricacy and complexity beyond the theories of political economy. The paper takes its starting point in analyzing the changing nature of institutional relationships during entry and acquisition and explores wider implications for understanding the dynamic of institutional change.

Keywords: Governance, Diaspora, Investment, Human Capital

JEL Classification: D72, R58, D73, P41, F22, P16, F23, O53, M13, O20, N45, N48

Suggested Citation

Ye, Zhen (Peter), Sharing the Experience of Diaspora Investment Governance: Lessons from a Chinese Island Economy (November 8, 2013). Global Conference 'Moving Up Global Value Chains: Options and Strategies for the Global South & Small States', the University of West Indies, Mona, Jamaica, Available at SSRN: https://ssrn.com/abstract=2386638 or http://dx.doi.org/10.2139/ssrn.2386638

Zhen (Peter) Ye (Contact Author)

Coventry University London ( email )

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