The Winds (and Walls) of Change : A Theoretical Framework for Understanding Entrepreneurship in the Midst of Reform

The analogy of ‘letting a thousand flowers bloom' leads to a perspective that institutional change should focus on making it easier to become an entrepreneur. In this paper, we develop a theoretical framework that links the attributes of institutional change and its local context with the nature of entrepreneurship and implications for firm performance. Contributing to the institutional theory literature, the framework offers a compelling deviation from our traditional view that more entrepreneurship is always better. It highlights that there are several distinct types of institutional changes that influence entrepreneurship by at times unexpected consequences. The framework leads to a novel view that we may be able to alter the nature of the entrepreneurial firms in society and their performance through careful reforms in institutions. This framework also contributes to research on entrepreneurial firms by offering a view of how the role of new actors entering the market, the type of institution ushering such change, and the local context in which the change occurs all present rich opportunities to understand the dynamics between institutions and entrepreneurs