What drives change? Examining wealthy Chinese entrepreneurs' creation of foundations: an institutional entrepreneurship theory perspective

Abstract

A significant literature gap exists in our understanding of the motivating mechanisms for creation of foundations by philanthropists, a rapid paradigm shift that is occurring in many countries. This study aims to address the literature gap by discovering Chinese entrepreneurs' heterogeneous responses to the conditions that may lead to creation of their own foundations. Adopting the institutional entrepreneurship theory, which examines agency/change in breaking from an old institution, the researcher tested and operationalized four major factors derived from the institutional entrepreneurship theory--i.e. conflict, heterogeneity, institutional logic, and power--to account for the behavioral change. Through investigating 209 wealthy Chinese entrepreneurs from the 2003-2004 Top 100 Philanthropists List produced by the Hurun Research Institute, utilizing the event history analysis method, the study discovered that among the four factors only heterogeneity resulting from strategic industry intersection and the entrepreneurs' political power are the antecedents of their creation of foundations. Other factors--such as conflict, heterogeneity resulted from civil network, and institutional logic--were not relevant in this study. These results suggest that Chinese entrepreneurs who benefit from their improved political and social standing and increased capital are also making endeavors to take initiatives to contribute to the social and economic well-beings in the social areas that the entrepreneurs' industry intersect heavily. This study enriches our understanding of the creation of foundations from entrepreneurs' contextual background in an emerging market. The empirical validation of the antecedents of behavior change and civic leadership innovation also provides practical implications for policy-makers, philanthropy advisers, and nonprofit leaders.