Do Social Institutions Matter to Markets in Transition? Investigating Consumer Sentiment in China

Abstract

This study assesses the impacts of the social institutions of a transitional economy on its market by examining how China’s political, economic and cultural institutions influence consumers’ sentiment and their purchase planning behaviors. We propose and empirically validate a four‐factor model of consumer sentiment that captures the impacts of these powerful social institutions. The validity of the model was supported with data from a multi‐level stratified survey that involved 9 cities and 3,960 consumers across a number of product categories. Our findings confirm the salience of social institutions in affecting consumers’ sentiment as well as their consumption behaviors in China.