We advance a dynamic institution‐based view of the firm that extends the theory's current focus on scope of pro‐market reforms (degree of market liberalization in a given year) to consider how speed of reforms (rate of market liberalization achieved over time) affects the performance of firms from transitioning economies. Utilizing a sample of public firms from Chinese provinces with varying reform speeds, we find that while scope of reforms positively impacts firm performance, speed of reforms detracts from firm performance. We further find that while family firms have an advantage in gradually reforming provinces, non‐family firms have an advantage in rapidly reforming provinces. Thus, we extend the institution‐based view across time (speed of reforms) and firms (family vs. non‐family firms).