Why Entrepreneurs Fail to Promote Regional Development: The Case of the Shantou Special Economic Zone
DOI:
https://doi.org/10.55578/jedip.2607.011Keywords:
Effective Market, Regional Development;, Entrepreneurial Collective, Organizational Capacity;, Special Economic ZoneAbstract
Regions with a higsh density of well-organized, capital-abundant entrepreneurs do not always experience developmental leaps. Frequently, they fall into economic stagnation, structural rigidity, and institutional lock-in. This paper addresses the interactive dilemma between entrepreneurial collectives and local development. It explores why highly organized business groups often fail to drive local prosperity. Using a typological framework of Chaoshan merchants and Shantou, the research reveals a striking paradox. The organizational capacity of these entrepreneurs yields positive externalities in open markets like Singapore and Hong Kong. However, in Shantou, where market openness is constrained, this same organizational advantage drives market closure and institutional sclerosis. The core of this paradox lies in the institutional interaction between entrepreneurial collectives and local markets. Under conditions of ambiguous state-market boundaries, homogeneous economic structures, and weak rule of law, entrepreneurs' strong organizational capacity degenerates into a catalyst for rent-seeking and market exclusion. On the contrary, the global success of Chaoshan merchants stems from enduring historical capital accumulation and robust social capital networks bound by clan culture and dialect. Yet, upon their return to the relatively closed and opaquely governed Shantou market, these exact social advantages trigger market failure. Ultimately, this study proposes a generalizable theoretical proposition: the developmental utility of entrepreneurial collectives is fundamentally contingent upon the local market mechanisms and institutional environment.
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