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This dissertation investigates organizational change and market transition through the study of the emergence and transformation of China’s education and training industry (ETI). I ask how and why the ETI evolved into a for-profit industry led by large, private, formal and globally financed enterprises from 1980 to 2010, despite systematic restrictions placed on private ownership and for-profit activities in this industry by the Chinese state. ,Using interview, archival and observational data on 16 existing and defunct educational and training organizations and secondary data on additional 12, I develop a theory of double ambiguity. Doubly ambiguous industries, where it is unclear whether organizations are private or non-private and whether they are for-profit or not, draw on the state and the black market for teachers, facilities, information and organizational models. I argue that the ETI transformed not only because the ambiguous social space provided divergent resources and organizational models, but also because double ambiguity instilled in organizations a high concentration of socially marginalized entrepreneurs and internal conflicts. These entrepreneurs, their nonconforming practices and the internal conflicts of organizations pushed the non-incremental transformation of the industry from below. Nonconformity and conflicts, rather than compliance and cooperation as new institutionalists suggest, are the initial engines for the capitalistic development of doubly ambiguous industries. State restrictions on market behaviors and nonconforming practices further accelerated the transformation. Although institutionalization replaced nonconformity and conflicts as the new engines of development in later stages, fast institutionalization of doubly ambiguous industries created new areas of nonconformity and unpredictability. ,My dissertation moves beyond two major debates in organizational and economic sociology: the one between new institutionalism and existing theories of ambiguity, and the one between selection and adaptation. It also improves our understanding of the state’s role in China’s market transition. My study presents a novel trajectory for the rise of China’s private economy.


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