Holding Options Open in the South: A Real Options and Institutional Theory of Entrepreneurship and Regional Economic Development in Southern China

Southern China has served for more than four decades as the country's principal laboratory for market reform, and its trajectory from export-processing zones to innovation-driven city-regions has made it one of the most consequential settings for entrepreneurship in the world economy. Yet theories of entrepreneurship in China have tended to treat the institutional environment as a static backdrop, and theories of regional development have tended to treat entrepreneurs as undifferentiated inputs. This paper develops an integrative theoretical framework that links the regional institutional context of Southern China to entrepreneurs' decision-making over time and, through venture-level outcomes, to regional economic development. Drawing on real options reasoning, institutional theory, the psychology of entrepreneurial persistence, research on organizational scope and the task environment, and work on legitimacy and media sentiment, the framework advances eight propositions. I argue that institutional experimentation in Southern China raised the value of holding entrepreneurial options; that entrepreneurs who staged reversible commitments and combined persistence with explicit exercise and abandonment criteria were best positioned to convert ambiguity into growth; that the performance consequences of venture scope and favorable media attention are contingent and, in the latter case, curvilinear; that artificial intelligence and cross-border institutional plurality expand the set of options available to entrepreneurs; and that regional development depends on whether institutions channel the exercise of these options toward productive ends. The paper concludes with implications for theory, for empirical designs that address analytic flexibility, and for policy in the Guangdong–Hong Kong–Macao Greater Bay Area and beyond.