


































Economics, Law and Policy 
ISSN 2576-2060 (Print) ISSN 2576-2052 (Online) 

Vol. 7, No. 1, 2024 

www.scholink.org/ojs/index.php/elp 

 
 

154 

Original Paper 

Embedded Governance Perspective on the Theoretical 

Development and Evolution of Minority Village Regulations 

Chen Yaolu
1
 

1 
School of Management and Economics, Guangxi Normal University, Guilin, China 

 

Received: April 17, 2024        Accepted: May 31, 2024         Online Published: June 7, 2024 

doi:10.22158/elp.v7n1p154         URL: http://dx.doi.org/10.22158/elp.v7n1p154 

 

Abstract 

Village regulations, as an informal institution, can only function when embedded in specific social 

networks. In traditional times, village regulations were endogenous, embedded in the “cultural 

governance network” of traditional rural society, forming an important part of the rural governance 

system. Since modern times, especially since the founding of the People’s Republic of China, the 

“cultural governance network” supported by Confucian ethics, gentry, and clans has been replaced by 

an “organizational integration network” supported by modern state power, administration, institutions, 

and modern culture. The current village regulations are constructed by modern state forces and are 

detached from the current rural social network, thus their role in rural governance is limited. As an 

important form of “three-governance” integration in grassroots governance, village regulations need 

to be adjusted according to rural social networks to play their expected governance functions, activate 

autonomy to cultivate endogenous subjects, practice moral governance to revitalize the cultural 

foundation, and promote rule of law to optimize the state’s presence. 

Keywords 

village regulations, institutional evolution, embedded governance 

 

1. Introduction 

In recent years, the state has increasingly valued the role of millennium village regulations in rural 

governance. On December 27, 2018, the Ministry of Civil Affairs and other departments jointly issued 

the “Guiding Opinions on the Work of Village Regulations and Residents’ Conventions”, requiring that 

“by 2020, all villages across the country should formulate or revise practical and useful village 

regulations”. This represents the state’s use of administrative power to promote village regulations. As 

an important component of the villager autonomy system, village regulations are seen as codes of 

conduct for regulating rural life, as well as important means for maintaining rural social order, 



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protecting villagers’ autonomy rights, and revitalizing rural culture. In traditional Chinese rural society, 

there was a “dual-track politics”: on one hand, the top-down imperial power, and on the other, the 

bottom-up gentry power and clan power. These operated in parallel, interacting to form a rural 

governance model where the emperor ruled without direct intervention (Gao, 2013, pp. 133-136) and 

local governance relied on clans and gentry, which in turn relied on ethics (Qu, 2005, pp. 20-22). 

“Ethics” was the foundation of traditional Chinese governance, and village regulations, as a concrete 

manifestation of “ethics”, played an important role in traditional rural governance. However, since 

modern times, especially since the founding of the People’s Republic of China, rural society has 

undergone several profound transformations, dismantling the traditional relational networks and social 

structures. The cultural and institutional foundations that village regulations relied on no longer exist, 

and the traditional rural governance system has ceased to function. Therefore, to what extent can the 

current top-down state-promoted village regulations play a governance role? What are the conditions 

for their effective governance? 

 

2. Literature Review 

2.1 Research on Minority Village Regulations in Yunnan, Guangxi, and Guizhou 

Village regulations are one of the tools for effective rural governance in China, functioning to educate 

the people, stabilize order, manage public affairs, and supplement the deficiencies of formal institutions 

like state laws (Dang, Liu & Mo, 2022, pp. 117-129, p. 141). In areas with multiple ethnic groups, 

traditional village regulations might have different evolutionary paths compared to Han-dominated 

regions and follow an independent evolution logic. Since the 1990s, scholars have increasingly focused 

on village regulations of ethnic minorities in Yunnan, Guangxi, and Guizhou. Many scholars have 

made pioneering contributions to the study of these regulations, viewing them as concrete 

manifestations of the spiritual civilization requirements of different eras (Ma, 2016, pp. 36-45). Some 

studies have highlighted the deficiencies and limitations of minority village regulations, while others 

have examined their historical evolution and continued importance in modern society (Chen & Chen, 

1992, pp. 80-86). These studies provide new research directions for subsequent academic work on 

village regulations. 

Since the formation of minority village regulations in Yunnan, Guangxi, and Guizhou, they have not 

only embodied minority cultures but also responded to the shortcomings of formal institutions (Duan, 

2011, pp. 21-25). Domestic scholars have examined how traditional cultures and morals act as 

endogenous variables in the creation of minority village regulations and have studied the relationship 

between official organizations, state laws, and the evolution of these regulations (Yang & Zhao, 2005, 

pp. 63-66). 

Existing research mainly focuses on the connotations, historical evolution, nature, characteristics, types, 

functions, forms, textual structures, main contents, effectiveness basis, and sources of authority of 

village regulations (Zhou & Liu, 2013, pp. 65-70). Some scholars have also explored the coordination 



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and integration between village regulations and state laws from the perspective of national governance. 

Specific issues studied include conflicts between minority customary laws and state laws and how these 

two can interact constructively (Xu, 2009, pp. 13-19). Scholars have also investigated the cultural 

characteristics and values of customary laws in ethnic regions based on historical evidence (An, 2013, 

pp. 8-11).  

2.2 Interdisciplinary Perspectives on Village Regulations 

The historical origins of village regulations can be traced back to the Zhou dynasty’s “codes of law 

(Zhou & Liu, 2017, pp. 126-134)”. Essentially, they are customary laws of rural society, independent 

of state laws, based on social authority and organizations, and possessing a certain degree of 

enforceability (Hao & Zhong, 2014, pp. 75-80). The unique natural ecology and social environment 

have nurtured multiple overlapping governance structures, ethical content, and distinctive social 

customs and regulations. Village regulations, also known as village conventions, have evolved from 

theoretical constructs to social practices. They are a cultural phenomenon involving knowledge from 

various disciplines, including history, law, and ethics, reflecting their interdisciplinary nature (Chen & 

Yao, 2019, pp. 90-99). 

From a historical perspective, scholars have traced the origins and development of village regulations, 

discussing their significant value in promoting rural governance, village integration, and social reforms 

in modern legal society. From a legal perspective, studies have examined the legal challenges of village 

regulations in minority areas and the constructive interaction between village regulations and state laws. 

From an ethical perspective, village regulations have strong ethical implications, with traditional ethics 

and customs becoming important criteria for regulating villagers’ daily lives and evaluating social 

behavior. 

2.3 Research on Minority Customs 

Village regulations are typical informal institutional norms, reflecting the connotations and colors of 

customs, habits, and morals. They are products of specific regions, groups, and cultures, and are unique 

norms and principles of rural society (Gao, 2018, pp. 56-64). Customs are social norms, independent of 

state laws, emphasizing social ethics and behavioral norms, existing in actual life, originating from 

practice, and applied to practice. In the process of ethnic formation, religious rituals and customs 

dominate social life, maintaining and controlling the survival and development of the ethnic group 

(Wang, Y. & Wang, W., 2015, pp. 100-103). Minority groups, often residing in unique natural 

environments such as mountains, forests, and valleys with isolated transportation and limited external 

contact, retain natural worship and traditional customs that influence their village regulations (Zhang, 

2004, pp. 51-57). 

Belief is the foundation and base of village regulations, which are rooted in local beliefs and cannot 

transcend or violate them. Village regulations first aim to maintain the stability and authority of beliefs 

(Xu, X. & Xu, B., 2019, pp. 90-99). Informal institutions combine with specific regional and cultural 

environments to unify and standardize basic thoughts and behaviors, guiding minority people’s 



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thoughts and actions within the advocated management track (Zhou & Liu, 2014, pp. 21-27, p. 110). 

Shared cultural foundations and the organization and advocacy of clans and leaders form a unified 

ideology and belief system, relying on villagers’ will and internal constraints of universal compliance, 

solving the problem of shared beliefs with low educational costs for enforcement (Liang, 1999, p. 60). 

Compliance with these beliefs and customs ensures orderly social structure within ethnic communities 

(Gao, 2013, pp. 133-136). 

These points of focus are both important influencing factors in the evolution of village regulations and 

the objective objects influenced by village regulations. As material carriers of informal institutions, 

village regulations involve the participation of different subjects in their evolution, shaping their 

current cultural characteristics and connotations. Therefore, analyzing village regulations based on 

existing theoretical foundations helps understand the evolutionary mechanisms of village regulations in 

Yunnan, Guangxi, and Guizhou minority villages and addresses the current challenges of detachment 

from traditional social networks. 

 

3. Analytical Perspective: Matching Informal Institutions with Social Network  

3.1 Research on Embedded Governance 

The term “embedding” originally refers to the organic combination of one system with another, or an 

endogenous phenomenon within other objects. Polanyi first proposed the concept of embeddedness, 

constructing the theoretical proposition that “economic actions are embedded in relational networks”. 

Later, Granovetter proposed a new theory of embeddedness, but their interpretations and theoretical 

perspectives differed. While both viewed humans as social beings whose actions are constrained by 

social, economic, political, and cultural factors, Polanyi emphasized the relationship between 

individual behavior and social structure, highlighting the importance of social relations in economic 

actions—a substantive embeddedness. Granovetter advocated a “formal embeddedness”, where 

markets and actors are influenced by social relations and are part of these relations. Granovetter further 

divided embeddedness into relational embeddedness and structural embeddedness. Relational 

embeddedness refers to the embedding of actors’ behaviors in the social networks of interactions with 

others, where expectations of regularity, desire for approval, and reciprocity principles significantly 

influence decision-making. Structural embeddedness refers to the connections between the network in 

which the actors are embedded and other networks, driven by social factors such as culture and values. 

The interaction and trust generated among economic actors limit opportunism and ensure smooth 

transactions. 

Subsequent researchers, while criticizing and developing Polanyi and Granovetter’s theories, have not 

surpassed them. Andersson expanded embeddedness to include business and technical embeddedness 

through network analysis of multinational companies’ value chains and internal operations. Halinen 

explained embeddedness in terms of time, space, society, politics, market, and technology. Scholars 

later advanced the discussion of embeddedness to hierarchical structures. Jessop viewed embeddedness 



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as including social embedding of interpersonal relationships, institutional embedding between 

organizations, and social embedding of complex centrifugal social functions’ institutional orders 

(Zhang, 2006, pp. 169-175). Hagedoorn classified embeddedness into environmental embeddedness, 

organizational embeddedness, and bilateral embeddedness based on the characteristics of enterprise 

embedding and external environment. Based on Granovetter’s embeddedness theory, many 

management researchers adopted the theory to analyze organizational performance (Chen, 2019, pp. 

80-90). As the embeddedness theory was continuously refined, it generated different theoretical 

frameworks for various analytical purposes. Granovetter classified embeddedness into structural and 

relational embeddedness, while Zukin and DiMaggio identified four types: (1): Cognitive 

embeddedness, where culture and shared knowledge shape actions; (2): Cultural embeddedness, where 

individual action norms align with community actions; (3): Political embeddedness, concerning 

relations with political entities; (4): Structural embeddedness, referring to social relations’ impacts. 

The concept of “embedded governance” is widely applied in rural governance studies (Chi, 2017, pp. 

78-82). Within this field, there is a substantial body of research on the “embeddedness” of government 

power and endogenous rural order. These studies primarily address two issues: the distinction between 

state power and endogenous rural order (informal institutions) in terms of embeddedness, and the 

“mutual embedding” of endogenous order and state power.  

In general, embedded governance refers to the integration of state or governmental power into 

grassroots society within the overall framework of national governance (Dang, Liu & Mo, 2022, pp. 

117-129, p. 141). This effective political strategy aims to integrate various social resources to achieve 

effective state governance over grassroots society. To achieve effective rural governance, it is 

necessary to consider the normative guiding role of formal institutions, as well as the indispensable role 

of informal institutions, such as village regulations and customs, in rural governance.  

From the above, it is evident that the academic community has developed a deep understanding of the 

concept of embeddedness (Duan, 2011, pp. 21-25). The boundaries of its connotation have expanded 

beyond the original concept, and its meaning has become increasingly generalized.  

From the diverse explanations, it is clear that “embeddedness” remains a core concept. Almost all 

theoretical propositions can be judged based on the idea that the economy is always embedded in 

society, and economic actions are merely a subset of social actions. In other words, economic activities 

are shaped and constrained by interpersonal networks, hierarchical organizations, cultural beliefs, and 

economic ideologies. Without these “social factors”, economic activities would be impossible. 

 

 

 

 

 

 



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4. General Theory of Institutions and Their Evolution 

Institutional evolution is a complex process. Since Adam Smith, the importance of institutions to 

human economic and social activities has been widely acknowledged in the field of economics. Many 

economists have been exploring theories of institutional evolution, presenting a diverse landscape of 

research from different perspectives. How do institutions evolve? Mainstream economics often 

employs the concept of “institutional change”. 

Mainstream theories of institutional change suggest that when factors such as production technology, 

the relative prices of resources, exogenous transaction costs, and institutional choice sets change, 

people demand new institutional services (Fang, 2002, pp. 58-60). This disrupts the original 

institutional equilibrium, leading to institutional imbalance and creating opportunities for new 

institutional arrangements. If the transaction costs of institutional change are not prohibitively high, the 

change can occur, potentially altering the entire economic structure (Dong Zhiqiang, 2008). 

Research on institutional evolution in institutional economics has yielded valuable insights, focusing on 

several aspects: 

1) Modes and Paths of Institutional Change: North (1994, 2013) established a theoretical framework 

for analyzing “institutional change”, transitioning from a static to a dynamic perspective. This 

framework integrates property rights, state theory, and philosophical ideologies as core foundations of 

institutional change, addressing the shortcomings of neoclassical economics in explaining historical 

economic performance and providing a solid theoretical basis for subsequent research. 

2) Game Theory in Institutional Analysis: Aoki (2001) introduced evolutionary game theory to 

institutional analysis, defining institutional change as a fundamental shift in participants’ 

decision-making rules and associated common beliefs. 

3) Case Studies of Institutional Change: Greif (1994) examined the institutional foundations of market 

transactions through historical case studies, such as the Genoese merchants, to explain the 

self-enforcing nature of market institutions. 

Evolutionary economics focuses on the role of entrepreneurs in institutional evolution, the relationship 

between knowledge evolution and institutional evolution, cognitive models and institutional evolution, 

and the co-evolution of technological innovation and institutions. Entrepreneurs and innovation are 

central to evolutionary economics, crucial for understanding Schumpeter’s “creative destruction”. Later 

economists extended this idea, highlighting the importance of entrepreneurs in institutional evolution. 

Kirzner’s (1973) concept of “alertness” discusses entrepreneurship as the source of innovation in 

economic systems. 

The relationship between knowledge evolution and institutional evolution is also examined. 

Evolutionary economics posits that human ignorance and incomplete knowledge necessitate institutions 

as means to reduce uncertainty. Participants’ rationality and cognitive abilities are limited, leading to 

fundamental uncertainty about the future (Fei, 2006, p. 72). This incomplete knowledge leads to the 

hypothesis of “bounded cognition”, where individuals rely on past experiences and others’ knowledge 



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to solve new problems. When these sources are insufficient, logical thinking becomes the source of 

institutional innovation. 

The Santa Fe School has re-examined fundamental economic propositions from behavioral and 

evolutionary perspectives. Arthur (1995) introduced self-reinforcement mechanisms into institutional 

analysis, discussing increasing returns and the lock-in phenomena in institutional change, leading to 

multiple equilibria. 

Prominent domestic scholars are concentrated in three research areas: 

1) Institutional Factors as Drivers of Economic Growth: Huang Shaoan and Wang Wei (2023) studied 

the economic disparity between northern and southern China from the perspective of Confucian culture, 

revealing the differential impact of informal institutions in these regions as a deep-rooted cause of 

economic disparity (He & Li, 2013, pp. 21-24). Sheng Hong (2011) analyzed the “Chinese miracle” 

through the lens of institutional economics, discussing the role of economic liberalism in China’s 

economic performance (Jia & Li, 2016, pp. 16-20, p. 25). Yang Ruilong (2003) explored the 

relationship between economic growth and institutional change, proposing that natural endowments 

and institutional determinants can complement each other in economic development (Jiang, 2010, pp. 

17875-17877). 

2) Interdisciplinary Perspectives on Institutional Change: Wang Dingding and colleagues (2005) 

studied institutional change from a behavioral science perspective, proposing an evolutionary 

equilibrium model based on “evolutionarily stable strategies” and discussing the genetic basis of 

altruistic behavior. 

3) Institutional Change in Evolutionary Economics: Jia Genliang (2015) discussed the two main 

schools of thought in evolutionary economics—old institutionalism and neo-Schumpeterianism—and 

proposed creating a new Listian evolutionary economics, offering strategic and policy 

recommendations from an evolutionary economics perspective (Miao, 2016, pp. 18-21). Yang Huta 

(2009) detailed how evolutionary economics views the world, emphasizing the formation of diversity 

and differences over history and employing anti-reductionism as a guiding principle (Liu, 1998, pp. 

42-46). 

In summary, the evolution of institutional change might go through several stages: unconscious natural 

selection, unconscious social selection, conscious social selection, and conscious design and social 

selection. Institutional evolution involves both unconscious and conscious processes. Although 

unconscious behaviors may lead to many unintentional social institutional changes, spontaneous order 

does not exclude conscious rational choices, as human decisions encompass both rational and irrational 

elements. 

 

 

 

 



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5. Adaptation of Village Regulations and Conventions in Rural Revitalization 

In Chinese society, particularly in rural areas, the influence of informal institutions is crucial in aspects 

such as economic development, social policy implementation, and even the enforcement of legal 

systems. Informal institutions need to be the premise, integrating formal institutions within them to 

achieve the desired policy effects (Zhou, 2006, pp. 2-10). Formal and informal institutions together 

constitute the institutional framework; thus, the concept of “institutional embedding” applies to 

informal institutions. The embeddedness of informal institutions means that they are deeply understood 

and believed by social members, forming part of the social structure and integrating with local social 

culture (Rao Xupeng & Liu Haixia, 2012). Therefore, when an informal institution is deeply ingrained 

in people’s minds and integrated into the social structure, this state can be called “embeddedness”. 

Conversely, it is in a state of “disembeddedness”. Specifically, for village regulations and agreements, 

when they can regulate villagers’ behaviors and effectively maintain the order of rural society, this state 

is “embedded” in the rural social network. On the contrary, if village regulations and agreements 

cannot perform their expected governance functions and maintain rural order, they are “disembedded” 

from the rural social network (Mou & Xu, 2018, pp. 117-125). 

In traditional periods, most village regulations and agreements were endogenous to the village, usually 

arising from a lack of institutional supply, leading to spontaneous order. These were customary rules 

among villagers, representing their interests and aligning with the actual production and living needs of 

the rural society. Formal institutions are rigid, but humans are social animals who need the coupling of 

informal institutions (Qin, 2004, p. 9). These endogenous informal institutions do not require coercive 

forces to enforce but rely on villagers’ spontaneous spiritual constraints, using ethics and morality to 

guide, educate, and regulate people’s behaviors, thereby embedding in the traditional rural governance 

network and order to perform governance functions. 

After the establishment of New China, the state power began to penetrate the countryside, with the state 

establishing rural people’s governments and gradually building a top-down administrative management 

system, where orders were transmitted downwards to the villages, reducing villagers’ participation in 

rural public affairs (Wen, 2010, pp. 39-46). 

Unlike endogenous village regulations and agreements, the new village regulations and agreements 

depend on external forces from the village for their generation, execution, and continuation, and they 

have a certain degree of coercion. The promotion of village regulations and agreements is mainly 

undertaken by grassroots governments and village committees, with state orders transmitted 

downwards and the final implementation by grassroots townships (town) governments. At this stage, 

grassroots governments also advance the work related to village regulations and agreements based on 

state directives (Xu & Liao, 2004, pp. 73-77). Compared with the traditional period, the rural society 

lacks authoritative internal organizers like clans and gentry, making it difficult to genuinely penetrate 

the countryside and effectively mobilize the villagers’ enthusiasm with mere administrative tasks by 

village committees and grassroots governments. Moreover, village regulations and agreements, 



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originally tools for village self-governance, should align with villagers’ needs. However, in practice, 

some village regulations and agreements are often template-based and not closely related to villagers’ 

actual lives, making them difficult to gain villagers’ support and recognition (Zhou & Liu, 2014, pp. 

21-27, p. 110). 

After being integrated by state power, the village regulations and agreements constructed by state 

power actually lack endogenous support and villagers’ participation in their operation. Additionally, 

due to the loss of traditional cultural authority in rural areas, village regulations and agreements, as 

tools of cultural governance in traditional periods, have relatively low recognition in the current rural 

areas and fail to perform the expected governance functions (Yuan, 2013, pp. 20-21). It can be said that 

they are disembedded from the organizational integration network of contemporary rural society. 

In summary, domestic and foreign scholars have conducted extensive research on institutional 

evolution and the embedded governance of village regulations and agreements, achieving fruitful 

results worthy of learning and reference. However, existing research still has certain deficiencies:  

1) Most scholars’ research on the village regulations and agreements of ethnic minority villages focuses 

only on the excavation and analysis of existing data, rarely exploring the evolutionary mechanisms and 

embedded governance of village regulations and agreements from the perspective of institutional 

evolution. 

2) Most existing literature on village regulations and agreements mainly focuses on rural governance 

and social governance, neglecting the exploration of the generation background and evolutionary 

process of village regulations and agreements in ethnic minority villages in the 

Yunnan-Guizhou-Guangxi regions and the “disembeddedness” issue between village regulations and 

agreements and rural governance. 

3) The formation of village regulations and agreements is based on the long-term development of 

disciplines such as anthropology, history, and law. However, existing literature on the village 

regulations and agreements of ethnic minority villages in the Yunnan-Guizhou-Guangxi regions mainly 

interprets from a single dimension, lacking interdisciplinary comprehensive analysis (Yuan, 2005, pp. 

122-127). 

In view of this, based on field investigations of village regulations and agreements in the 

Yunnan-Guizhou-Guangxi regions of ethnic minorities, we aim to collect and organize issues of 

traditional cultural legacy under the protection of existing systems, and through methods such as 

evolutionary game theory, social network analysis, text mining (Python), mark coding, evolutionary 

dynamics modeling, combined with theories from institutional economics, evolutionary anthropology, 

and ethnology, explore the reasons for the evolution and current state of embedded governance of 

village regulations and agreements, systematically summarize their evolutionary mechanisms, and 

assess the problems and obstacles in protecting the traditional culture of ethnic minorities. 

Subsequently, we aim to construct macro-universal practical paths, providing practical measures to 

promote the modernization of grassroots governance systems and governance capabilities in China. 



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