Generic Authority Structures and the Emergence of Credit Unions: Evidence from Indigenous Communities in Taiwan

Anthropologists and sociologists alike have long observed two generic types of human society-big man and chief-across indigenous tribes around the globe, but they are not in agreement on how and through what mechanisms they adapt to modern economic life. Drawing upon qualitative and statistical analysis, this study examines the establishment of credit unions across indigenous villages in Taiwan, where both of these traditional authority structures are present. The analysis shows that villages characterized by ascribed power and inherited hierarchy (chief villages) provide less structural support for the founding and operation of credit unions and are less likely to adopt credit unions than communities whose leadership is determined by individual merits and achievement (big man villages). This finding suggests that existing authority structures in these traditional societies constrain incentive schemes and trust structures critical to the founding and persistence of new economic organizations.