From entrepot to entrepot via merchant manufacturing: adaptive mechanisms, organizational capabilities and the structure of the Hong Kong economy

The economy of Hong Kong has developed a mix of adaptation mechanisms which has yielded spectacular performance. In one part of the mix, small Chinese family businesses provide an ‘entrepreneurial’ adaptation mechanism which reacts quickly to price signals. Elsewhere ‘peak organizations’ with deep hierarchies have coordinated activities which involve scale and scope. This has led to the development of a particular and restricted set of organizational capabilities which are ill suited to the ‘technological upgrading’ strategies that are frequently recommended for Hong Kong manufacturing. It is unlikely that such upgrading will take place, or that Hong Kong will become a technological development centre for manufacturing industry in the People's Republic of China.