Entrepreneurship in the shadow of clan culture: Informal institutions and entrepreneurs’ subjective well-being

Informal institutions play a crucial role in supporting entrepreneurship when formal institutional support is scarce. Subjective well-being (SWB) provides entrepreneurs with resilience in such contexts, but how informal institutions affect entrepreneurs’ SWB remains unclear. Our mixed-methods investigation set in China examines the relationship between clan culture—a pivotal informal institution in rural communities—and entrepreneurs’ SWB. The findings from our initial qualitative study point to three key mechanisms: 1) obligation-induced drainage, whereby entrepreneurs divert resources to fulfill clan obligations, leading to relationship strain; 2) status-based burden, whereby higher-status entrepreneurs face intensified expectations; and 3) institutional buffering, whereby village conventions (a new type of informal institution) attenuate clan pressures. The results of our subsequent quantitative study demonstrate that strong clan cultures are detrimental to entrepreneurs’ SWB, with the effects more pronounced for those with higher in-clan status yet reduced in communities with village conventions.