How do states build vital institutions for market development? Too often, governments confront technical or political barriers to providing the rule of law, contract enforcement, and loan access. In From Click to Boom, Lizhi Liu examines a digital solution: governments strategically outsourcing tasks of institutional development and enforcement to digital platforms鈥攁 process she calls 鈥渋nstitutional outsourcing.鈥�
China鈥檚 e-commerce boom showcases this digital path to development. In merely two decades, China built from scratch a two-trillion-dollar e-commerce market, with 800 million users, seventy million jobs, and nearly fifty percent of global online retail sales. Contrary to conventional wisdom, Liu argues, this market boom occurred because of weak government institutions, not despite them. Gaps in government institutions compelled e-commerce platforms to build powerful private institutions for contract enforcement, fraud detection, and dispute resolution. For a surprisingly long period, the authoritarian government acquiesced, endorsed, and even partnered with this private institutional building despite its disruptive nature. Drawing on a plethora of interviews, original surveys, proprietary data, and a field experiment, Liu shows that the resulting e-commerce boom had far-reaching effects on China.
Institutional outsourcing nonetheless harbors its own challenges. With inadequate regulation, platforms may abuse market power, while excessive regulation stifles institutional innovation. China鈥檚 regulatory oscillations toward platforms鈥攆rom laissez-faire to crackdown and back to support鈥攗nderscore the struggle to strike the right balance.
Awards and Recognition
- One of the Best 快色直播 on China, China-Britain Business Council Magazine
- Winner of the Axiom Silver Medal in International Business, Globalization Category
- A Practical Ecommerce Notable Business Book
Lizhi Liu is assistant professor at the McDonough School of Business at Georgetown University, where she is also a faculty affiliate of the Department of Government. She was named one of Poets&Quants Top 50 Undergraduate Business Professors.
"How did impersonal exchange flourish at such a scale, seemingly defying conventional wisdom that robust state-backed legal frameworks are prerequisites for market efficiency? Lizhi Liu’s From Click to Boom: The Political Economy of E-Commerce in China offers a theoretically innovative and empirically rich answer to this question, one that holds significant implications for institutional change in the age of digital platforms."鈥擲huang L. Frost, Administrative Science Quarterly
"Illuminating. . . . Liu’s important book provides a template for understanding how platforms can shape markets and society, and it documents a remarkable transformation, but it is only the first chapter in a rapidly evolving story."鈥擡ric Thun, The China Quarterly
“How did China’s e-commerce market emerge and thrive in the absence of strong, formal institutions? In From Click to Boom, Lizhi Liu offers fresh answers to classical debates in the twenty-first century context, blazing a new path for future studies on China’s digital economy.”—Yuen Yuen Ang, author of China's Gilded Age
“From Click to Boom is a fascinating account of how Chinese big tech rose to such powerful heights and put China in the forefront of many new digital industries. An essential read for understanding China’s enormous success in e-commerce and answering larger questions about China’s development path and its future trajectory.”—Mary Gallagher, University of Notre Dame
“From Click to Boom is a masterful and captivating work of scholarship that poses – and persuasively resolves – crucial puzzles regarding the successful development of China’s e-commerce markets in the absence of strong legal institutions. Liu’s provocative insights offer an innovative approach to understanding institutional development in China and beyond.”—Brian S. Silverman, University of Toronto
“From Click to Boom will quickly become the leading English-language research monograph on the governance functions performed by China’s e-commerce platforms, and a must-read for anyone who wishes to understand how and why this occurred. Its combination of research methods is cutting-edge and sets a new standard in the field.”—Kellee Tsai, Northeastern University
“From Click to Boom is a landmark book, one of the best books I have read on political economy and Chinese politics in the last two decades.”—Yuhua Wang, Harvard University
