to overemphasize the laissez-faire aspects while downplaying the oligopolistic nature of many industries in the Hong Kong economy as well as the Hong Kong ...
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Rowley, Chris and Fitzgerald, Robert (2000), Managed in Hong Kong: Adaptive Systems Entrepreneurship and Human Resources, London: Frank Cass Publishers. In the wake of the Asian financial crisis, a number of books have been written to consider the problems facing East Asia. Relatively little work, however, has taken a detailed look at the local environment of a specific country. The book, Managed in Hong Kong: Adaptive Systems Entrepreneurship and Human Resources does that while also avoiding the generalities that often plague research on Hong Kong. Many books about Hong Kong tend to overemphasize the laissez-faire aspects while downplaying the oligopolistic nature of many industries in the Hong Kong economy as well as the Hong Kong government’s role in certain areas. This book avoids this pitfall while emphasizing the role of Hong Kong’s adaptive ability in its current and future development. The book, a collection of seven papers edited by Chris Rowley and Robert Fitzgerald of City University Business School and the University of London respectively, also does a solid job of spotlighting some lesser known areas of the Hong Kong commercial system. In particular, the book examines how Hong Kong has achieved very steady rates of economic growth over the past four decades, while changing from an entrepot, to a manufacturing centre, and again to an entrepot and financial centre. Hong Kong again faces a number of new challenges as it once again seeks to adapt to large environmental changes, this time to a post-Asian financial crisis, post WTO world. Specifically this book seeks to address the important question of whether Hong Kong’s traditional flexibility will well serve its industries as they seek to move upmarket and technologically upgrade. In that regard, the first three articles are the strongest in the book. They describe Hong Kong’s changes in the post war period up through today as well as Hong Kong’s ability to continue to make adjustments in its commercial sector. The book’s first article, written by the book’s editor, summarizes the main questions to be asked and frames the book in the context of recent previous work. The book’s main theme follows in the next two articles, the first of which is by Mick Carney and Howard Davies. This article examines Hong Kong’s transition from entrepot to manufacturer back to entrepot, and seeks to illustrate the mechanism by which Hong Kong has adapted to sizeable environmental shifts in the world industrial landscape over the past several decades. The authors ably describe a concise history of Hong Kong’s transformation in the post war years through the end of the 20th century. This is an interesting story that includes some lesser-known information about Hong Kong’s economic development. The Carney and Davies article divides Hong Kong’s development into three phases. Phase I covers Hong Kong’s early development into an entrepot. Imports came from China and countries outside the British Empire, and were often re-exported. In the post war period of Phase II, Hong Kong changed to an export-oriented manufacturing centre. With its entrepot activities curtailed by the embargo of Mainland China during this time, Hong Kong firms quickly refocused on light manufacturing and export, aided by numerous refugees from Shanghai. The authors report that textile and apparel was to account for about half of the manufacturing employment by 1970, for example. Phase III discusses Hong Kong’s return to entrepot status during China’s economic reform period after 1980 as well as the shift of manufacturing north into Mainland China.
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Hong Kong proved able to adjust to significant changes in its environment, this time effectively utilizing the reopening Chinese hinterland to expand its manufacturing capability and further buttress its skills as a trader. While this article provides explanation for Hong Kong’s exceptional adaptive ability throughout its history, it also expresses doubt that it will be possible for Hong Kong to once again adjust to a changing East Asian environment that is demanding higher technological skills and investments in R&D and brand building. Carney and Davies suggest that Hong Kong has established a trajectory along which organizational capabilities have developed; this path of making small investments in physical capital and R&D, and investing in general assests that can be shifted to different businesses (and even locations) quickly, worked well in the past but does not fit the demands of the future. The next article by Paul Ellis, a professor at the Hong Kong Polytechnic University continues to examine this important phenomenon of Hong Kong’s adaptability and path dependencies. Ellis characterizes Hong Kong as a complex adaptive system and analyzes the Hong Kong economy using the lens of increasing returns economics. After providing some background on Hong Kong’s growth, the article describes a complex adaptive system. The word “complex” carries a specific meaning here in that it represents a system that is somewhat chaotic but has some order of predictability often characterized by positive feedbacks, path dependencies and other reinforcing mechanisms. One example of an important chance event that has created a path and influences Hong Kong’s economy today is Hong Kong’s deep water port coupled with the traditional northsouth flow of commerce in China, which make Hong Kong a natural entrepot. But the point is made that paths can also change with chaotic disruptions that management scholars and economists, borrowing from paleobiology, have called punctuated equilibrium. Sometimes large-scale change can suddenly emerge causing major shifts in the functioning of the system. For example, a number of events in Hong Kong are described from World War II to the founding of the Independent Commission against Corruption (ICAC) in the 1970s. These are all very interesting both in terms of illustrating this theory and applying it to some lesser-known events that illustrate Hong Kong’s changes over the years. The use of increasing returns economics to describe Hong Kong’s changes provide an interesting lens to view the Hong Kong economy and fit well with the more micro explanations of the first article. Thus the first two articles in the book provide both interesting historical background and theory, effectively suggesting that while managers and policymakers are affected by complex systems, path dependencies and environmental shocks beyond their control, they are also able to make some choices about how to respond those changes. Professor Ellis is more optimistic about Hong Kong’s ability to respond to the increasingly globalized, technological environment, arguing that Hong Kong’s entrepreneurs may be among the first to “discern and adapt to rules of the game emerging from the political fog and uncertainty of their environment.”1 The third article in the book written by Victor Lee is more descriptive and veers off into the somewhat different territory in discussing business education in Hong Kong. This article is more of a policy paper that reviews some interesting data on employment by occupation and projected educational requirements. Given the lack of published work in English on this topic, this article is a reasonable contribution to the book and provides
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useful data for those concerned with business education and the effectiveness of tertiary education in Hong Kong. The article could have been more consistent with the book’s theme if it had discussed in greater detail the demand for professionals in specialties such as engineering and information technology as well. That would have been helpful given one of the complaints often heard from Hong Kong business people is that not enough engineers, programmers and information technology professionals are being trained in Hong Kong and indeed in parts of East Asia. This would have better continued the theme of the book on Hong Kong’s adaptive mechanisms had this article discussed more in terms of Hong Kong’s reaction to the changing environment, particularly the need for upgrading Hong Kong’s technological capabilities. The next two articles deal with human resource issues including organizational commitment and human resources practices by two large Japanese retailers in Hong Kong. These articles are at a more micro level of analysis as individual firms are discussed. The article on organizational commitment written by Aimee Wheaton provides a rich description of various types of organizational commitment such as exertion of effort for an organization and desires to maintain membership in an organization. The author also provides some comparisons between Chinese and Western employees in these Hong Kong firms. This article is engaging but at times suffers from a lack of clear summarizing themes, particularly in the organization of quotes to illustrate key points. A table summarizing themes and providing comparisons and contrast would have been helpful. This would have helped the readability of what is otherwise an interesting article with some novel insight on organizational commitment. The next to last article was written by May Wong and Chris Hendry and provides a case study that contrasts the Japanese retailers Yaohan and Jusco in Hong Kong. The human resource practices described by both companies are engaging and gives the reader an inside look at some of what transpired inside two major retailers in East Asia not well known outside of the region. The article makes a somewhat heroic assumption, however, in concluding that Yaohan’s ethnocentric international human resource policies led to its decline, eventually ending in bankruptcy. Finance scholars would tend to argue that Yaohan over-expanded in China and Southeast Asia at the worst possible moment in the years prior to the Asian financial crisis, thereby accumulating a number of too-large and extravagantly stocked stores and a mountain of debt. It would be difficult to attribute so much of Yaohan’s difficulties to the ethincity and experience of its management teams. It probably would have been better to not link IHRM policy to firm performance directly. In general, there are some fairly rich examples in this article that give the reader insight into the large and important retail sector in Hong Kong. All of the articles provide useful information and original research but did not fit too well together in one volume. Although the final summary article by the editors does a fairly good job of pulling the arguments together, one gets the feeling that the overall theme of Hong Kong’s adaptive ability to face large environmental shocks could have been better developed in the book. After the first three articles set up the case at a macro level, subsequent articles could have considered Hong Kong’s adaptibility more directly; some of the articles tended to dance around this theme. The editing of the book could have also been tighter. For example, it is much more convenient to have one set of references at the back of the book
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rather than individual bibliographies for each article. The editors could also have insisted on summary tables and perhaps might have provided a table of their own to illustrate the argument and position of each article. The book does raise a number of questions about where Hong Kong’s economy is headed next. Hong Kong’s economy must now plot a new future whereby entrepreneurs struggle to emerge from the shadow cast by the local oligopolies and big property firms (and perhaps cast off what made them successful in the past), while policymakers must seek to provide appropriate assistance and positive incentives. How Hong Kong is able to transform its economy with the coming changes in post-WTO China in an increasingly technological and global economy will be a challenge to the adaptive mechanisms discussed in the book as great as any posed by previous shocks over the past fifty years. The next fifty years are likely to be as challenging as Hong Kong seeks to again adopt to maintain its living standards and (again) recreate its economy. The book, Managed in Hong Kong, does provide a different way to think about Hong Kong’s, or any society’s, ability to adapt. David Ahlstrom Department of Management Chinese University of Hong Kong Note 1. Ellis, P. (2000). “Hong Kong as a Complex Adaptive System.” In C. Rowley and R. Fitzgerald (eds.), Managed in Hong Kong: Adaptive Systems, Entrepreneurship and Human Resources. London: Frank Cass Publishers, 33–55, p. 50.
