Low-Quality Crisis and Quality Improvement: The Case of Industrial Clusters in Zhejiang Province

Abstract

Supporting institutions and policies are key in helping firms improve product quality. However, the emergence of quality-supporting institutions has not been well studied. Based on both qualitative and quantitative evidence from Chinese clusters, this chapter shows that quality-enhancing institutions and policies often emerge in response to crises. Crises such as consumer boycotts and impositions of export barriers can catalyze collective actions by entrepreneurs and local governments to improve product quality.