2021
Working Paper
HBS Working Paper Series

The Emergence of Mafia-like Business Systems in China

Format:Print
| Language:English
| Pages:22

Abstract

A large literature on state-business relations in China has examined the political role of capitalists and collusion between the state and the private sector. This paper contributes to that literature, and our understanding of the internal differentiation among China’s business elites, by documenting the emergence of a particular kind of large, non-state business group that we argue is more akin to a mafia system than any standard definition of a firm. Drawing on large-N descriptive data as well as deep ethnographic and documentary research, we argue that mafia-like business systems share organizational principles (plunder and obfuscation) and means of growth and survival (relations of mutual endangerment and manipulation of the financial system). Understanding the particular moral economy that underlies mafia-like business systems and their interactions with the state challenges methodological foundations of research on China’s political economy and helps explain recent conflict between high-profile business people and the state.