Informal kinship networks and business dynamism: evidence from firm entry and exit in China

Clan networks may ease entrepreneurial frictions but may create localized advantages that shape market selection. This paper examines how clan networks are associated with firm growth and entry-exit dynamics in China. Combining prefecture-level data for 267 cities from 2000 to 2017 with genealogy records and firm-level data from the Annual Survey of Industrial Firms, we distinguish an aggregate city-level proxy for market activity from city-surname-year measures of firm entry and exit. Clan networks are positively associated with city-level firm growth. The entry-exit evidence is more selective: the relatively more stable pattern is lower observed exit among high-efficiency same-surname firms, while the baseline same-surname entry estimate is positive but less robust across checks. Evidence for different-surname groups is weaker and concentrated mainly on entry. The findings suggest that kinship-based informal institutions are associated with selective entry-exit patterns that vary across institutional settings, rather than with a uniform expansion of business dynamism.