Organizational Culture, Innovativeness and Market Orientation in Hong Kong Five Years After Handover

Abstract The 1997 handover of Hong Kong to the Peoples' Republic of China (PRC) constituted a unique “natural experiment” for Hong Kong firms. The arrangement of “one country, two systems” promised for 50 years was unprecedented, and the related managerial waters were largely uncharted. This paper examines aspects of marketing-related organizational behavior as well as changes aspects of personal values of managers in Hong Kong and the PRC. The framework of a Modified Competing Values model augmented with results on managerial reaction to environmental change is used to frame hypotheses. Two samples of senior managers of Hong Kong firms which compete in business-to-business markets are examined for changes between 1997 and 2001. In establishing bench-marks with mainland Chinese firms for these comparisons, we find unsurprising differences between a sample of PRC firms, which were more bureaucratic and less competitive than the Hong Kong firms at handover. We find significant changes between 1997 and 2001 both in the averages of organizational measurements of Hong Kong firms and in the measured personal values of Hong Kong managers. Most changes are in the direction of similar measurements on the mainland Chinese firms at handover. The regression weights of marketing-related “success factors” to firm performance were unchanged over time in Hong Kong. Success in Hong Kong was and is more related to market orientation than to innovativeness.

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