Locked in tradition? Clan culture and network closure: Evidence from China

Abstract

This study investigates how clan culture, as an informal institution, may affect a focal firm’s alliance network structure. Using data from Chinese A-share listed firms from 2010 to 2021, our research suggests that clan culture within the focal firm’s locality increases its alliance network closure. Furthermore, we examine the moderating role played by two formal institutional factors, local protectionism and trade openness, and discover that they both weaken the impact of clan culture on alliance network closure. These findings deepen our understanding of the connections between an informal institution and inter-organizational network structure, while further validating informal institutions’ role in strategic contexts, such as alliances, which are often viewed through a rational lens. Moreover, by elucidating the weakening effects of two distinct formal institutional factors, despite their opposing characteristics, our study enriches the scholarly discourse on the interaction between formal and informal institutions.