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Abstract This conceptual article contributes to institutional analysis and the neo‐institutional theory literature by identifying and analysing the linked rules, values, norms and patterned practices that surround and structure the way rural migrant workers are treated in urban areas ofChina in terms of Scott's integrated model of institutions. It argues that thesehukou‐based rules, values, norms and patterned practices that discriminate against rural migrants can be considered to be a unique institution — the institution ofhukou‐based social exclusion (IHSE).IHSEhas dominatedChinese urban society for 3 decades and significantly shaped the lives of millions of rural migrant workers, the character of contemporaryChina and the nature of managerial practices amongChinese firms. This is the first article to examine the social exclusion of rural workers from the perspective of neo‐institutionalism, providing the first systematic analysis of the regulative, normative and cognitive dimensions that together socially exclude migrants in urban areas ofChina. It presents a holistic picture of the newly identified institution that offers new insights intoChina's urban society and management, and a new starting point for research.
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