Role of Government in Changing Institutional Furniture for Firms in Digital Economy: Mixed Blessings from China

Even though the advancement of the digital economy has received ardent support, its development in Western societies has been perplexing owing to the predatory nature of firms. In contrast, this is less of an issue in China. In this article, the different forces that influence the socio-cultural values of “institutional furniture” (a notion of Thorstein Veblen) in the Western and Chinese contexts are discussed. Then, the positive/dominant but controversial role of the Chinese government in changing the institutional furniture to discipline firms in the digital economy are explicated. Through the newly instituted process for production and exchange, the predatory activities of Chinese digital firms also evolve but have been controlled to a certain extent within the country. However, differences in the political culture of China and the Western countries have impeded the global development of these Chinese firms. To achieve progressive ends, effective communication between a government and firms in the country and among governments of different countries is necessary.