How Does the Reproduction of Informal Institutions in Rural China Affect Farmers’ Cooperative Organizations

As an important component of rural institutional system, informal institution is a vital factor that influences the behaviors and choices of farmers. This paper sets forth the correlation mechanism of social ties, informal institutions and cooperative behaviors and builds a theoretical framework for the reproduction of informal institutions. Moreover, this paper stresses that the functions of informal institutions in Chinese rural areas can be divided into “defensive type” and “explorative type”, and their reproduction plays different roles in the number and scale characteristics of farmers’ cooperative organizations. Following the logical deduction, this paper takes earthen fortresses in Datian County, Sanming City, as an indicator to measure the “defensive” function of informal institutions, and probes into its influence on rural organizations for economic cooperation. The empirical results show that earthen fortresses have a significant positive impact on the number of economic organizations in its villages, while it has a negative impact on the average scale of agricultural cooperatives, which does not appear in the manufacturing industry. These empirical results support the theoretical hypothesis. This paper suggests that at this stage, China’s rural modernization should advance agricultural scale management, meanwhile, this process should notice the industrial differences in the role played by informal institutions and stick to two standards—farmer-centric orientation and moderate scale management.