Abstract
This chapter analyses an original firm-level dataset collected by our own Hong Kong (HK) Company Survey 2007 to investigate agility patterns applied by HK companies in the Pearl River Delta (PRD) in organising relations to their producers in the PRD and their customers. It also investigates the role of informality proxied by personal relationships for companies in the PRD in governing their production as well as their innovation activities, which have gained greatly in importance in the PRD in the new century. Our findings suggest that different agility patterns can be identified that are applied by companies to organise their relations to their producers and customers. Moreover, the findings show that companies generally tend to vertically integrate their production or innovation activities rather than carrying out such activities under a cooperative governance structure. With regard to cooperative governance structures, there is evidence of a complementary relationship between the importance of informality proxied by personal relationships and the importance of cooperative governance structures both for production and for innovation.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
Producers and suppliers are used as equivalent terms in this chapter.
- 2.
One may argue, for example, that companies carrying out R&D may benefit from stable relations with research partners, for example, universities, and that these stable relations may need to be based on formal and more rigid contractual agreements.
- 3.
- 4.
Cooperations may be “equity based”, in which case cooperation partners are linked by equity relations, such as partial ownership arrangements or joint ventures and/or “non-equity” or “agreement based”, in which case cooperation partners are not linked by certain type of equity relationships but by long-term contractual agreements only.
- 5.
Similarly, if intra-firm reputation effects improve, opportunism within the firm will be reduced, and the costs of hierarchical governance will fall (Williamson 1996: 116).
- 6.
See http://comtrade.un.org/ for more information.
- 7.
According to Enright et al. 2005, industrial output in the GPRD is mainly from light manufacturing (e.g. toys, textiles and garments) and the electrical and electronics industry (e.g. consumer electronics, watches). The few heavy industries (e.g. chemicals or plastics) mainly serve as suppliers for these industries.
- 8.
According to the HK statistical standard, firms with 100 employees or less are defined as SMEs in HK (HKSCC 2008.
- 9.
Guided interviews with 15 large HK electronics companies were additionally carried out to cover their more complex operations.
- 10.
The “Guangdong Statistical Yearbooks” were the main sources in this regard. In addition, the “China Statistical Yearbooks on Science and Technology” were used to obtain information about the innovation tendency of innovators in the PRD in Guangdong compared to the other Chinese provinces over the past decade.
- 11.
Pairwise two-tailed Wilcoxon Signed-Rank Tests (WSRTs) confirm that cooperative forms of production are of statistically significantly lower importance than the other two alternatives. No significant difference in importance is found between the two cooperative forms of production.
- 12.
Customers are not geographically restricted to the PRD only.
- 13.
See Meyer 2009 for more information.
- 14.
Note that only executives from companies which carry out innovation activities (n=70) were asked to answer the corresponding question.
- 15.
More detailed analysis regarding criteria for partner decisions and the role of personal relationships in this context can be found in Bickenbach and Liu 2010.
References
Alchian A, Demsetz H (1972) Production, information costs and economic organization. Am Econ Rev 62:777–795
Barzel Y (1982) Measurement cost and the organization of markets. J Law Econ 25:27–48
Bickenbach F, Liu W-H (2010) On the role of personal relationships for doing business in the Greater Pearl River Delta, China, Econ J 3(3):281–306
BrandHK (2005) Pearl River Delta – factory of the world. Brand Hong Kong. URL: http://www.brandhk.gov.hk/brandhk/e_pdf/efact12.pdf
Enright M, Scott E, Chang K-M (2005) Regional powerhouse: the greater Pearl River Delta and the rise of China. Wiley, Singapore
FHKI Federation of Hong Kong Industries (2003) Made in PRD—the changing face of Hong Kong manufacturers. FHKI, Hong Kong
FHKI Federation of Hong Kong Industries (2007) Made in PRD—challenges and Opportunities for HK Industry. FHKI, Hong Kong
Hart O, Moore J (1999) Foundations of incomplete contracts. Rev Econ Stud 66:115–138
Hart O, Moore J (2004) Agreeing now to agree later: contracts that rule out but not rule. In: NBER working paper no. 10397. Harvard University
HKSCC, Hong Kong Support and Consultation Centre for SMEs (2008) SMEs in HK. URL: http://www.success.tid.gov.hk/english/lin_sup_org/gov_dep/service_detail_6863.html
Lin GCS (2004) Toward a post-socialist city? Economic tertiarization and urban reformation in the Guangzhou metropolis, China. Eurasian Geogr Econ 45(1):18–44
Lu L, Wei YHD (2007) Domesticating globalisation, new economic spaces and regional polarisation in Guangdong Province, China. Tijdschr Econ Soc Geogr 98(2):225–244
Meyer S (2009) Informal modes of governance in customer producer relations. The Electronics Industry in the Greater Pearl River Delta (China). PhD thesis. University of Hannover
NBSC(a), National Bureau of Statistics China (2001–2008) China statistical yearbook on science and technology. China Statistics Press, Beijing
NBSC(b), National Bureau of Statistics China (2001–2008) China statistical yearbook. China Statistics Press, Beijing
North D (1990) Institutions, institutional change and economic performance. Cambridge University Press, Cambridge
Sit VFS, Yang C (1997) Foreign-investment-induced exo-urbanisation in the Pearl River Delta, China. Urban Stud 34(4):647–678
Williamson OE (1985) The economic institutions of capitalism. The Free Press, New York
Williamson OE (1991) Comparative economic organization: the analysis of discrete structural alternatives. Adm Sci Q 36:269–296
Williamson OE (1996) The mechanisms of governance. Oxford University Press, New York
World Bank (2008) Doing business in China 2008. World Bank Group, Washington, DC. URL: http://www.doingbusiness.org/subnational/exploreeconomies/China.aspx
World Bank (2009) Gross domestic product 2008, PPP (Quick reference tables), World Development Indicators Database. URL: http://siteresources.worldbank.org/DATASTATISTICS/Resources/GDP_PPP.pdf
Yang C (2004) From market-led to institution-based economic integration: the case of Pearl River Delta and Hong Kong. Issues Stud 40:79–118
Acknowledgement
The authors would like to thank the German Research Foundation (DFG) for its financial support of the cooperative projects – “Informal Dynamics of Agile Firm Organisation in the Greater Pearl River Delta” (Phase 1) and “Regional Agility and Upgrading in Hong Kong and the Pearl River Delta” (Phase 2) within the Priority Program 1233: Megacities – Megachallenge: Informal Dynamics of Global Change.
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2014 Springer Science+Business Media B.V.
About this chapter
Cite this chapter
Liu, WH. et al. (2014). Agile Firm Organisation and Upgrading in the Greater Pearl River Delta. In: Kraas, F., Aggarwal, S., Coy, M., Mertins, G. (eds) Megacities. International Year of Planet Earth. Springer, Dordrecht. https://doi.org/10.1007/978-90-481-3417-5_9
Download citation
DOI: https://doi.org/10.1007/978-90-481-3417-5_9
Published:
Publisher Name: Springer, Dordrecht
Print ISBN: 978-90-481-3416-8
Online ISBN: 978-90-481-3417-5
eBook Packages: Earth and Environmental ScienceEarth and Environmental Science (R0)