Strategic Adaptability (Strategic Entrepreneurship)

543 Pages·2014·1.77 MB·English

Strategic Adaptability(Strategic Entrepreneurship)of Family Businesses: An Analysis
of Successful FamilyBusinesses Listed in Hong Kong
By
Chan Kwok Ying, Arnold MBA
InternationalGraduate School of Business
Division of Business
University ofSouth Australia
Submitted on30thJuly,2013 for the requirements
Of the degree of
Doctor of Philosophy
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Table of Content
Table of Content…………………………………………………..………….……..…………i
List of Figures………………………..……………………………………….….…………...x
List of Tables…………………….………..………………………..…………….…………..xi
List of Appendices………………………………………………..…………………………xvi
Abstract………………………………………..……….…………………………………..xvii
Declaration………………………………………….……..…………..…………………....xix
Acknowledgements………………………………………………………………..………...xx
Chapter 1: Introduction...........................................................................................................1
1.1 Strategic Adaptability.................................................................................................1
1.2 Successful Listed Family Businesses in Hong Kong ...................................................5
1.3 Research Aims and Methodology..............................................................................10
1.3.1 Research Aims....................................................................................................10
1.3.2 Research Methodology.......................................................................................10
1.4 The Thesis................................................................................................................12
Chapter 2: Literature Review................................................................................................14
2.1 Introduction..............................................................................................................14
2.2 Strategic Entrepreneurship........................................................................................16
2.2.1 Strategy..............................................................................................................16
2.2.1.1 Whittington’s Generic Approaches to Strategy ............................................18
2.2.1.2 Strategic Management.................................................................................22
2.2.1.3 Strategic Management Process.....................................................................24
2.2.1.4 Adaptability and Performance......................................................................31
2.2.2 Entrepreneurship.................................................................................................33
2.2.3 Strategic Entrepreneurship..................................................................................40
2.2.4 Strategic Flexibility / Adaptability......................................................................45
2.2.4.1 Exploration versus Exploitation...................................................................47
2.3 Research Subject.......................................................................................................48
2.4 Conclusion................................................................................................................54
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Chapter 3: Research Aims and Methodology........................................................................57
3.1 Introduction..............................................................................................................57
3.2 Research Rationale...................................................................................................58
3.3 Research Objectives..................................................................................................59
3.4 Research Questions...................................................................................................60
3.5 Research Significance...............................................................................................61
3.6 Research Methodology.............................................................................................62
3.6.1 Stage One: Exploratory Study.............................................................................65
3.6.1.1 Research Design..........................................................................................66
3.6.1.2 Sampling Procedures...................................................................................69
3.6.1.3 Data Collection............................................................................................71
3.6.1.4 Initial Review..............................................................................................71
3.6.1.4.1 Listed Company......................................................................................73
3.6.1.4.2 Listed Family Businesses.........................................................................73
3.6.1.4.3 Successful Listed Family Businesses.......................................................73
3.6.1.4.4 Non-family Business in Loss...................................................................74
3.6.1.4.5 Segment Reporting..................................................................................74
3.6.1.4.6 Principle Activities..................................................................................76
3.6.1.4.7 Resources................................................................................................76
3.6.1.4.8 Management Participation by Family Member Director...........................77
3.6.1.4.9 Directors Turnover..................................................................................77
3.6.1.4.10 Family Member Director with Public Service...........................................78
3.6.1.4.11 Guerrilla Entrepreneurship Strategy..........................................................78
3.6.1.5 Analytical Method.......................................................................................79
3.6.1.6 Contribution to the Next Stage.....................................................................82
3.6.2 Stage Two: Descriptive Study.............................................................................82
3.6.2.1 Research Design..........................................................................................83
3.6.2.2 Sampling.....................................................................................................84
3.6.2.3 Instrument...................................................................................................84
3.6.2.4 Questionnaire Design...................................................................................86
3.6.2.4.1 The Wording of the Questions.................................................................86
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3.6.2.4.2 Planning Issues........................................................................................87
3.6.2.4.3 General Appearance of the Questionnaire................................................88
3.6.2.4.3.1 Statements...........................................................................................89
3.6.2.4.4 Final Design............................................................................................94
3.6.2.5 Data Collection............................................................................................95
3.6.2.6 AnalyticalMethod.......................................................................................97
3.6.2.7 Contribution to the Stage Three...................................................................97
3.6.3 Stage Three: In-depth Personal Interviews..........................................................98
3.6.3.1 Research Design..........................................................................................98
3.6.3.2 Sampling.....................................................................................................99
3.6.3.3 The Instrument..........................................................................................100
3.6.3.4 Semi-structured Questionnaire Design.......................................................101
3.6.3.4.1 Warm-up Questions...............................................................................102
3.6.3.4.2 Family Business Background.................................................................103
3.6.3.4.3 Strategic Entrepreneurship.....................................................................103
3.6.3.4.4 Strategic Adaptability............................................................................104
3.6.3.4.5 Resources..............................................................................................104
3.6.3.4.6 Family Member Directors......................................................................105
3.6.3.4.7 Investment.............................................................................................105
3.6.3.4.8 Closing Remarks...................................................................................106
3.6.3.5 Personal Interviews....................................................................................108
3.6.3.6 Analytical Method.....................................................................................111
3.6.3.7 Contribution to the Thesis..........................................................................112
3.7 Conclusion..............................................................................................................112
Chapter 4: Context: Successful Family Businesses Listed in Hong Kong............................114
4.1 Introduction............................................................................................................114
4.1.1 Key Statistics and Interpretation........................................................................114
4.1.2 History..............................................................................................................115
4.2 Political Environment.............................................................................................117
4.3 Economic Environment...........................................................................................118
4.3.1 Closed Links between China and Hong Kong...................................................120
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4.4 Social Environment.................................................................................................121
4.5 Other Environment.................................................................................................122
4.6 Successful Family Businesses Listed in Hong Kong...............................................123
4.7 Successful Hong Kong Economy............................................................................123
4.7.1 With Reference to Textile & Garment Industry.................................................123
4.7.2 Hong Kong Entrepreneurship............................................................................126
4.7.3 Hong Kong Chinese Family Businesses............................................................129
4.8 Conclusion..............................................................................................................131
Chapter 5: Stage 1–Exploratory Study..............................................................................133
5.1 Introduction............................................................................................................133
5.2 Initial Data Analysis and Hypothesis.......................................................................133
5.2.1 Significance of Family Business.......................................................................133
5.2.2 Results of Family and Non-family Businesses..................................................134
5.2.3 Growth Strategy and Segment Reporting..........................................................135
5.2.4 Investment Holding..........................................................................................137
5.2.5 Human and Financial Resources.......................................................................138
5.2.6 Family Member Directors.................................................................................139
5.2.7 Directors Turnover............................................................................................140
5.2.8 Public Service...................................................................................................141
5.3 Further Data Analysis and Hypothesis.....................................................................143
5.3.1 Family Firms’ Five Resources and Attributes....................................................143
5.3.1.1 Human Capital...........................................................................................143
5.3.1.2 Social Capital............................................................................................144
5.3.1.3 Patient Financial Capital and Survivability Capital....................................145
5.3.1.4 Governance Structure & Costs...................................................................146
5.3.2 Five Virtues for Successful Family Businesses..................................................147
5.3.2.1 Loyalty......................................................................................................147
5.3.2.2 Focus.........................................................................................................147
5.3.2.3 Speed.........................................................................................................148
5.3.2.4 Deep Pockets.............................................................................................148
5.3.2.5 Follow-through..........................................................................................149
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5.3.3 Four Priorities...................................................................................................149
5.3.3.1 Continuity..................................................................................................150
5.3.3.2 Community................................................................................................150
5.3.3.3 Connections...............................................................................................151
5.3.3.4 Command..................................................................................................151
5.3.4 Hong Kong’s Entrepreneurship.........................................................................152
5.3.4.1 Guerrilla Entrepreneurship.........................................................................152
5.3.4.2 Creative and Strategic Followership...........................................................152
5.3.4.3 Regional Arbitrageurship...........................................................................153
5.4 Summary and Conclusion.......................................................................................153
5.4.1 Preliminary Model............................................................................................155
5.4.2 Hypotheses.......................................................................................................159
5.4.2.1 Strategic Entrepreneurship.........................................................................159
5.4.2.2 Strategic Adaptability................................................................................159
5.4.2.3 Resources..................................................................................................160
5.4.2.4 Family Member Directors..........................................................................160
5.4.2.5 Investment.................................................................................................163
5.4.3 Comparison......................................................................................................163
Chapter 6: Stage 2–Descriptive Study...............................................................................165
6.1 Introduction............................................................................................................165
6.2 Data analysis of Ineffective Response.....................................................................165
6.2.1 Non-family Businesses.....................................................................................165
6.2.2 No Explanation.................................................................................................166
6.3 Data Analysis of Effective Response.......................................................................167
6.3.1 The Preliminary Data analysis..........................................................................168
6.3.1.1 Strategic Entrepreneurship.........................................................................168
6.3.1.2 Strategic Adaptability................................................................................170
6.3.1.3 Resources..................................................................................................172
6.3.1.4 Family Member Directors..........................................................................173
6.3.1.5 Investment.................................................................................................188
6.3.1.6 OverallResults..........................................................................................189
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6.3.2 Further Data Analysis.......................................................................................189
6.3.2.1 Efficiency of Resources Allocation............................................................189
6.3.2.2 Reduction in Operating Costs....................................................................191
6.3.2.3 Response to Environmental Changes.........................................................191
6.3.2.4 Resources Allocation in Response to Environmental Changes....................192
6.3.2.5 Overall Result............................................................................................193
6.4 Summary................................................................................................................196
Chapter 7: Stage 3–In-depth Personal Interviews...............................................................200
7.1 Introduction............................................................................................................200
7.2 Hypotheses not Supported by Mail Survey..............................................................201
7.2.1 Resources Allocation Efficiency.......................................................................201
7.2.2 Operating Costs Reduction...............................................................................203
7.2.3 Response to Environmental Changes in Daily Operations.................................207
7.2.4 Resources Allocation in Response to Environmental Changes...........................208
7.2.5 Overall..............................................................................................................209
7.3 Strategic Entrepreneurship / Strategic Adaptability..................................................210
7.3.1 Strategic Entrepreneurship –Mail Survey.........................................................211
7.3.2 Strategic Entrepreneurship –Personal Interview...............................................212
7.3.3 Strategic Adaptability–Mail Survey.................................................................212
7.3.4 Strategic Adaptability–Personal Interview.......................................................212
7.3.5 Overall..............................................................................................................214
7.4 Family Involvement................................................................................................214
7.4.1 Director............................................................................................................214
7.4.1.1 Director Appointment................................................................................215
7.4.1.2 Authority...................................................................................................218
7.4.1.3 Term of Office...........................................................................................219
7.4.1.4 Thorough Business Understanding.............................................................221
7.4.1.5 Overall......................................................................................................222
7.4.2 Resource...........................................................................................................222
7.4.2.1 Financial Resource....................................................................................223
7.4.2.2 Human versus Financial Resources............................................................224
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7.4.3 Environment.....................................................................................................227
7.4.3.1 Family and Non-family Businesses............................................................227
7.4.3.2 External Environment................................................................................230
7.4.3.3 Internal Environment.................................................................................235
7.4.3.4 Strategic Adaptability................................................................................238
7.4.3.4.1 Holding Company Structure..................................................................245
7.4.3.4.2 Overall..................................................................................................251
7.4.4 Management.....................................................................................................252
7.4.4.1 Family and Non-family Member Directors................................................253
7.4.4.2 Participation in Business Management.......................................................259
7.4.4.3 Management Decision Implementation......................................................264
7.4.4.4 Guidelines.................................................................................................267
7.4.4.4.1 Formal Strategy Formulation.................................................................267
7.4.4.4.2 Strategy Communication.......................................................................268
7.4.4.4.3 Commitment to Management Development...........................................268
7.4.4.4.4 Balance between Inside and Outside Perspectives..................................268
7.4.4.5 A Fit between Business Activities..............................................................270
7.4.4.6 Overall......................................................................................................274
7.4.5 Investment........................................................................................................275
7.4.5.1 Strategic Entrepreneurship.........................................................................276
7.4.5.1.1 Transformation of Opportunity..............................................................276
7.4.5.1.2 Retention of Current Competitive Advantage.........................................281
7.4.5.1.3 Simultaneous Opportunities Transformation and Current Edges Retention
285
7.4.5.2 Making Investment....................................................................................290
7.4.5.3 Risk Management between Family and Non-family businesses..................295
7.4.5.4 Overall......................................................................................................298
7.5 Previous Stage Results............................................................................................299
7.6 Strategic Entrepreneurship: Family Involvement Model..........................................302
7.6.1 Family Involvement in Strategic Entrepreneurship Model.................................303
7.6.1.1 Director.....................................................................................................303
7.6.1.2 Resource....................................................................................................304
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7.6.1.3 Environment..............................................................................................305
7.6.1.4 Management..............................................................................................306
7.6.1.5 Investment.................................................................................................307
7.6.1.6 The Model.................................................................................................308
7.7 Summary................................................................................................................310
Chapter 8: Conclusion........................................................................................................314
8.1 Research Aims and Key Findings............................................................................315
8.1.1 Research Findings.............................................................................................316
8.1.1.1 Review of Annual Report –ContentAnalysis............................................316
8.1.1.2 Mail Survey...............................................................................................317
8.1.1.2.1 Resources Allocation to Exploit Opportunities and Handle Threats........317
8.1.1.2.2 Reduction in Operating Costs................................................................318
8.1.1.2.3 Response to Environmental Changes.....................................................319
8.1.1.2.4 Resources Allocation in Response to Environmental Changes...............320
8.1.1.2.5 Overall..................................................................................................320
8.1.1.3 Personal In-depth Interview.......................................................................321
8.1.1.3.1 Director.................................................................................................322
8.1.1.3.2 Resource................................................................................................323
8.1.1.3.3 Environment..........................................................................................323
8.1.1.3.4 Management..........................................................................................324
8.1.1.3.5 Investment.............................................................................................325
8.1.2 Family Involvement in Strategic Entrepreneurship Model.................................327
8.1.2.1 Director.....................................................................................................327
8.1.2.2 Resources..................................................................................................327
8.1.2.3 Environment..............................................................................................327
8.1.2.4 Management..............................................................................................328
8.1.2.5 Investment.................................................................................................329
8.1.3 Achievement of Research Objectives................................................................329
8.1.3.1 Strategic Entrepreneurship.........................................................................330
8.1.3.2 A Fit between Opportunity and Advantage Seeking Activities....................331
8.1.3.3 Explanation of the Fit................................................................................331
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8.1.3.4 Model Establishment.................................................................................333
8.1.4 Research Aims..................................................................................................333
8.2 Contributions..........................................................................................................334
8.2.1 Contribution to Theory.....................................................................................335
8.2.2 Contribution to Practice....................................................................................336
8.2.3 Contribution to Research Methodology.............................................................338
8.3 Research Limitations..............................................................................................340
8.4 Further Research.....................................................................................................342
References..........................................................................................................................345
Appendices.........................................................................................................................358
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