Taiwanese Business Associations are widely expected to be strong organizations, regardless of whether these views are based on news sketches or theoretical models. Yet according to our investigation, such expectations turn out to be completely mistaken—Taiwanese Business Associations are in fact quite weak. What has gone, then? According to our fieldwork, we argue that it is the strong state and powerful networks together that make these voluntary associations powerless. To prove our hypothesis, we propose a framework that draws from the theory of social capital, political capital, and selective incentives-to demonstrate how an organization’s effectiveness will be determined by its institutional environment. By this study, hopefully, we may shed some light on the institutional origins of the weak associations in Chinese society.