Electronic Thesis and Dissertation Repository


Doctor of Philosophy




Shih-Fen Chen


Despite the prevalence of business entertainment in economic life, nearly all studies on the phenomenon have explored it from a social perspective by labeling it as a social vice. Although a few scholarly works have identified the role of business entertainment in facilitating exchange relationships; none of them has offered a systematic explanation of how business entertainment plays such a role. Meanwhile, despite some scholars’ recognition of the role of social sanctions in regulating economic activities, virtually none of them has explored the relationship between social sanctions and business entertainment. This dissertation aims to bridge these gaps by arguing that business entertainment plays a governance role by reinforcing social sanctions to regulate economic transactions.

Drawing on theories from the literatures on economics, business management, anthropology, sociology, and psychology, I start with the proposition that each society during its evolution forms a transaction governance structure (TGS) featuring a unique combination of market, social, and legal sanctions in regulating economic relationships. Depending on their social and cultural heritages, some societies rely more on social sanctions, and others more on legal sanctions, to compensate for the failure of market sanctions. I further argue that underdeveloped market and legal infrastructures are associated with prevalent practice of business entertainment because the latter plays a role in reinforcing social sanctions that supplement market sanctions. These arguments set up a theoretical framework for systematically explaining the social practice of entertainment in business settings from a perspective of economic transaction governance.

To verify the above arguments, I derived two sets of hypotheses and conducted two empirical tests within the Chinese context: one to predict the pervasiveness of business entertainment at the firm level, using secondary data collected from firms listed on the Shanghai Stock Exchange in China; the other to test the effectiveness of business entertainment at the transaction level, with primary survey data collected from a sample of Chinese corporate client sales managers. Statistical results from both tests provide support for my transaction governance approach to business entertainment.