ADAPTIVE RESPONSE: ENTREPRENEURSHIP AND COMPETITIVENESS IN THE ECONOMIC DEVELOPMENT OF HONG KONG

Cheah Hock Beng and Tony F.L. Yu
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Cheah Hock Beng: School of Economics and Management, University of New South Wales, Australia
Tony F.L. Yu: School of Economics and Management, University of New South Wales, Australia

Journal of Enterprising Culture (JEC), 1996, vol. 04, issue 03, 241-266

Abstract: This paper examines the economic development and changes in competitiveness in the economy of Hong Kong, and explains those changes in terms of Austrian entrepreneurship. It begins with Schumpeter’s conceptual distinction between ‘creative response’ and ‘adaptive response’, and between two corresponding modes of (Schumpeterian and ‘Austrian’) entrepreneurship. The experience of the economic development in Hong Kong indicates that since the 1960s, Hong Kong’s international competitive advantage has been based on unskilled labour-intensive exports. The ability of this city state to prosper on predominantly labour intensive activities is due to the efforts of its predominantly small-scale entrepreneurs. Hong Kong’s development has been promoted not by revolutionary (Schumpeterian) innovations undertaken by creative Hong Kong entrepreneurs, but rather by incremental and evolutionary innovations, such as product imitation, subcontracting, spatial arbitrage and diversification, undertaken mainly by adaptive ‘Austrian’ entrepreneurs in small-scale enterprises. Hong Kong’s experience suggests that ‘Austrian’ entrepreneurship can offer significant potential benefits to other developing countries.

Date: 1996
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DOI: 10.1142/S0218495896000149

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