Thesis
Topic 1: International Management or Strategic Management
Strategic management and Start-ups in Hong Kong SAR
Name: Wester Beune Student Number: 10826564
Date: 26/06/2018 Word count: 14748
First supervisor: Erik Dirksen MSC Second supervisor: Dr. Martin Stienstra
Table of content
Abstract Page 3
Acknowledgements Page 4
1. Introduction Page 5-7
2. Theoretical background Page 8-15
Strategic management and the internal and external environment Page 8-9
The theory of strategic management Page 10-11
Strategic management and performance Page 11-12
The role of strategic management on competitive advantage Page 12-13
Start-ups put in to perspective Page 13-15
3. Methodology Page 16-24
Research design and methods Page 16-19
Sample Page 19-20
Sources Page 20-21
Data analysis Page 21-22
Reliability and validity of research quality Page 23-24
Coding Page 24-25
4. Findings Page 26-38
General findings Page 26-27
Findings internal external, performance on competitive adv. Page 27-34 Findings on day-to-day and long-term strategic management Page 34-36
Findings on start-up phase and Hong Kong SAR Page 37-38
5. Discussion Page 39-43
6. Conclusion Page 44-46
Summary of findings Page 44-45
Implications Page 45-46
Limitations and suggestions Page 46
References Page 47-51
Abstract
Strategic management has become very influential in the twenty-first century. Descriptions of strategic management have been inconclusive as different assumptions and descriptions can be formed. To add to the wide range of theories and models, this research explores and focuses on the less researched part of strategic management; strategic management within start-ups in Hong Kong SAR. This study, therefore, examines the effect of various notions of strategic management and how and if they are used within Hong Kong SAR start-ups. The fundamental layout of this research will aim at discussing five propositions, focusing on Internal and external environments, theories and models of strategic management,
performance mechanisms, competitive advantage and the nature of start-ups, thus analysing the effect of the notions of strategic management through interviewing six firms with a start-up phase in Hong Kong SAR. For that purpose, a sample consisting of six organizations were interviewed in a semi-structured nature. Expressing the findings in a model, provided an explicit framework showing the structural relationship of notions of strategic management being implemented in the organizations. The use of different models and theories is
somewhat fabricated, in the sense that all of the organizations interviewed utilize components of models and theories of strategic management, but not to the full extent. Imperatively, one important suggestion is established in that survival strategies contribute mainly to the implemented strategic management framework for start-ups in Hong Kong. The combined use of models and theories of strategic management and the implementation of survival strategies result in a view that notions of strategic management are tailor-made to each individual start-up organization due to confining factors: internal and external environments, performance mechanisms and competitive advantage.
Acknowledgments
I would like to thank my supervisor, Dhr. Erik Dirksen MSC, for his guidance and
supervision throughout my thesis. I would also like to thank the six firms in Hong Kong SAR for contributing their time and knowledge to this thesis. Further, I would like to thank Berbe Sellemeijer for helping me with essential tips pertaining to this thesis. Last but not least I would like to thank my parents, for using their network to allow me to interview the six companies in Hong Kong SAR.
1. Introduction
Strategic management is the most confusing component of a business, but respectably one of the most prestigious (Mintzberg et al., 2009). Strategic management has been continuously given different inexplicable definitions in theories and models. An example of such a standard definition follows: "top management's plans to attain outcomes consistent with the organization's missions and goals" (Wright et al., 1994). Instead, Mintzberg, (1987) disputes such a standard definition, arguing that strategy requires a number of different definitions. Such as: strategies as plans and patterns, deliberate and emergent and positions and
perspectives, not withholding the use of the 5 Ps nor the 10 schools of strategic management (Mintzberg et al., 2009). Considering the wide range of theories and models presented within the field of strategic management, different methods of adoption may be valid for different types of organizations. Moreover, understanding the use and impact of strategic management may rely on the situation or point in time in which the organization is situated. Thus, this paper will discuss the use of different strategic management tools and measures. Upon
interviewing different start-ups firms in Hong Kong SAR, understanding which measures and tools were and are implemented, or if any have been implemented, this paper will then reflect on the corresponding methods or new methods used. This will allow for greater
understanding of the use of already established strategic management tools within start-up firms in Hong Kong SAR, or allow for new insight to be gathered. The researcher's view of strategic management will be implied through the combined view of Nag et al., (2007), Porter (1979) and Barney (1991). The definition of strategic management employed is the formation and implementation of various goals and exertion of resources in a competitive way,
therefore initiating differentiation among the competition.
There are many reasons individuals opt not to invest or embark on a start-up journey. This stems from the formidable odds of failing. Therefore, it is important to emphasize that implementing the appropriate strategy is vital to increase the chances of survival of any start-up (Cohan, 2014). Strategic management in terms of start-start-ups therefore lacks a common understanding, thus for each different start-up, a contrasting strategic map must be designed (Kaplan & Norton, 2000). Finally, there are three stages in which a start-up organization comes to the realization of the initial firm. These include market opportunity, business viability and business scope (Cohan, 2014). Accordingly, this paper will analyse different start-ups within Hong Kong SAR. Doing so it will research if there is a clear use of strategic management or not. The use of strategic management implementation, competitive
advantage, and the corresponding market environment will be analysed and then compared with the contracting companies. Lastly greater in-depth knowledge on how these particular start-up firms are able to gain the competitive advantage will be closely analysed as it is of the critical importance of any firm's survival or growth within any market.
Theories and methods within strategic management have always sparked discussion as each reveals different views on the matter. The origin of strategic management is still vague, as organizations have always unconsciously used strategic management, nevertheless theories, research and literature publications point back to the early 1960s. Ansoff (1965) came with one of the most important and initial building blocks for the course of further research and understanding of strategic management. The corporate strategy matrix
fabricated by Ansoff (1965) formed a view of the most advantageous way for a firm to grasp both the product and market. Importantly this provoked an increase in research which
reciprocated from a youthful discipline to a mature highly researched business phenomenon it is today (Guerras-Martin et al., 2014). Nonetheless, when establishing a brief overview of the importance of strategic management on the level of performance within an organization there is a wide exchange of views. The empirical debate about the importance of strategic
management and effect within the external (McGahan and Porter, 1997; Baden-Fuller & Stopford, 1992), and internal environment (Barney, 1991) of each organization. Furthermore, authors such as Bowman (1990) and Schmalensee (1985) argued that strategies leading to performance are accredited at the firm level of an organization. Due to this ongoing debate, there is no key understanding of which particular strategies leads to the greatest performance. Understanding industry, corporate and business effects internally and externally may be the key to performance, therefore research should use a combination of arguments from a variety of schools of strategic thinking (Guerras-Martin et al, 2014).
Hong Kong SAR is the chosen territory of this research. This has been chosen due to the range of knowledge and connections the researcher has within Hong Kong SAR. Not withholding the fact that the jurisdiction of Hong Kong SAR, is also known as being one of the best cities for the establishment and overall management of a business ("Advantages of setting up business in Hong Kong", 2015). Some of the reasons include low tax jurisdiction, world-class infrastructure, rule of law and being one of the world's freest economies ("Why do business in Hong Kong"). Furthermore, evidence has shown entrepreneurship to be key in Hong Kong's economy, with the government establishing start-up incumbents in Hong Kong Science Park, to provide various services and support through 3-year incumbent programs (Wong et al., 2005). Additionally, when analysing the flagship report of the World Bank
Group, both Ease of Doing Business (2018) and starting a business are appropriate to explore. The report focuses on the economies of 190 individual countries around the world, ranking them numerically with the first place being the best. Research suggests that Hong Kong SAR is the third best country to start a business and fifth best country overall in doing business. It is therefore interesting to focus on Hong Kong SAR within this research. This paper will focus on start-ups strategy, while additionally concentrating on the key
consequences of the affirmative start-up environment of Hong Kong SAR.
The insight of this paper aims to firstly advance the understanding of the use of the notions of strategic management within Hong Kong SAR start-up organizations. By revealing the already broad literature on the subject, it aims to identify the clear use of particular
strategic notions used today. Doing so, by distinguishing between different theories and models in an empirical way, furthermore linking new understanding about the impact of strategic management of start-ups in Hong Kong SAR through deepening knowledge through the results of this study. Finally, the goal of this research is to bridge the gap between the use of strategic management and the fast moving environment in which start-up companies within Hong Kong SAR are situated. Therefore, the research question that will be examined is: Do start-ups in Hong Kong SAR clearly make use of the notions pertaining to strategic management?
2. Theoretical background
In each section, a corresponding proposition will be raised in which the findings section will be analysed and tested to be able to answer the previously mentioned research question. 2.1 Strategic management and the internal and external environment
Over the years there has been a significant growth in both the ‘diversity of topics and ‘research methods' employed within the field of strategic management (Hoskisson, 1999). Firstly, exploration for strategic advantage was aimed at considering the impact of the external environment, with Michael Porter (1979) researching competitive forces within the corresponding environments. Porter (1979) finds that there are five external factors that contribute to the corresponding strategy an organization implements. Four of these external factors are forces: the threat of new entrants, suppliers, customers bargaining power and the threat of substitutes. These four forces "jockey for a position among current competitors" (Porter, 1979) within the corresponding industry, making the fifth external factor:
competitive rivalry. Michael Porter (1996) more contemporary paper on strategic positioning focuses on the essence of choosing both unique and valuable rooted systems of activities within the external environment, reaffirming the significance of strategic competition (Hokisson, 1999). Subsequently, the following study carried out by McGahan and Porter (1997) established that the industry's most important factors are connected to both the financial and economic performance of an organization. Additionally, McGhan and Porter (1997) realized that the effect of the industry environment is profoundly more noticeable within the service industry than in the manufacturing industry.
Contrastingly, Hedley (1977) addresses the growth-share matrix, which considered the relative competitive position and growth of an organization in a particular environment. This research gave a perspective on the effect and value of growth within an industry, stating that the growth of a business is essential to relieve financial and economic pressure on an organization. Additionally, market share corresponds to previous market growth among organizations, therefore Hedley (1977) emphasized the use of his theorized growth-share matrix into four broad strategic categories: stars, cash cows, dogs and question marks. Understandably it is questionable to the use of this abstract model, as there is no clear set of measures by which an organization can be placed into one of the four corresponding
address the forces and positioning of an organization within the firms' external environment. However, both construct an abstract view of the external environment of strategic
management, therefore individual understanding opinion bases them to be poised from a subjective stance when used.
Following this, research evolved with methods and theories looking at the internal environment of an organization, and how it could be set up to increase the strategic
advantage. Theories such as the business canvas model theorized by Alexander Osterwalder and Frederik Hertzberg’s hygiene theory were introduced. Baden-Fuller & Stopford (1992) emphasized the importance of the firm and not the external environment. This view
contrasted with the previously theorized external view grasped by Porter (1979) and Headly (1979), reverting to the internal importance of an organization. Also, Barney (1991) with his resource bases view (RBV) focuses on the organization's internal resources to obtain a competitive advantage, thus proposing the presence of resource-based view. Barney (1991) addressed the strength of implementing a firm's internal strategies which are indicators of resources that gain competitive advantage, theorizing the VRIN model. Resources that were valuable, rare, inimitable and non-substitutable would elevate a heterogeneous and immobile strategy that could sustain strategic/competitive advantage. Focusing on these
core-competencies (Prahalad & Hamel, 1990) thus became the key to organizational success in strategic management viewpoint by initiating both internal and external competitive advantage.
In the wake of these different external and internal views, interested theorists such as Wernerfelt (1984) amended and adjusted the growth-share matrix to focus on internal resources. Later, specified as the resource-product matrix (Wernerfelt, 1995). This allowed for new development into relative nature of heterogeneous resources in comparison with competitors. Initially allowing for increased competitive advantage and greater firm performance. Hoskisson et al., (1999) stated the use of differentiating a firm's resources making them inimitable (Barney, 1991). In doing so they were to "isolate mechanisms" (Rumelt, 1984) that were homogenous. Therefore, differences in specified models and theories, construct and initiate today's use of strategic management, with both an internal and external perspective.
The above leads to the following proposition:
Proposition 1: Internal and external environments strategically have a positive relationship to competitive advantage.
2.2 The theory of strategic management
Henry Mintzberg et al., (2009) drew up abstract views on how strategic management can be employed in various different environments, internally and externally. Initially, the five Ps for strategy (Mintzberg, 1987) was seen to be the most acceptable place to start within strategy formation of an organization. However, nowadays it is considered too elementary and other elements must be implemented, such as the 10 schools of strategy (Mintzberg et al., 2009). In the case of start-ups, intended and realized strategies contrast vastly, as unexpected events require vigorous adaption (Mintzberg et al., 2009; Cohan, 2014). Research into strategic management seems to build upon each other, however, there have been instances of confliction within consolidating theories and models. Cohan (2014) addresses start-up strategies and deviations of the techniques used in traditional companies with an ‘old heritage'.
Theory of strategic management in the past has built on different areas without focusing on building upon each other with the initiation and concentration in its entirety. Mintzberg (2009) described strategic management using a metaphor, establishing strategic management as an elephant, with some previous research focusing on "some parts" of strategic management and others "railed on in utter ignorance about the rest". Accordingly, the 10 schools of strategic management were born (Mintzberg, 2009). Understanding not only each individual part but appreciating the subject in its entirety. The 10 schools of
management focus on the extensive field of the strategic-formation process, each focusing on a small insightful part of the process. For example, the first school developed by Mintzberg was presented in the early 1960s, establishing the basic need for strategic design as a process of conception. Snow & Miles (1984) were affirmative in their premise that successful
companies were to achieve a strategic fit in their market environment with the formation of appropriate design mechanisms and organizational management processes. This built on the use of both external and internal appraisals, using the famous notion of SWOT- the judgment of internal strengths and weaknesses and the impact of external opportunities and threats. Therefore, putting the design school in its elementary form, it proposes a model that seeks to promote both "internal capabilities and external possibilities" (Mintzberg, 2009). For each school, Mintzberg addresses the similar corresponding mechanisms and theories to justify the strategic formation-process in each stage.
Another example of theory of strategic management is Henry Mintzberg research in The strategy concept I: Five Ps for strategy (1987). Mintzberg addresses the concept of
strategy as a plan and some sort action that is used within businesses as a set of guidelines that can be followed. The five Ps mentioned by Henry Mintzberg, Plan, Ploy, Pattern,
Position, Perspective. Organizations may use this to design a more effective strategy, aiming at competition, organization culture and other developments. Furthermore, the marketing mix is also used in strategic intent, the use of these 5Ps these include Product, Price, Place,
Promotion and People are used strategically to grow and market a business successfully. The consolidation of strategic management within theory has steadily increased since its speculated origin in the 1960s with prior discoveries by Ansoff (1965) and Chandler (1962). The definitions raised by these works came to form the backbone of strategic management. Increasingly a consensus on the elemental notions on the concept of strategic management (Guerras-Martin et al., 2014) is being formed, even though there is an increase in contradictory definitions. Ronda-Pupo and Guerras-Martin (2012) co-word analysis, led to the consensus that the notions of strategic management is ever changing with the trend. Furthermore, a prime consensus in their works, concentrating on 1962-2008, established the significant shift from achieving firms' goals towards improving its performance. Based on this a consensual definition was created on the basis of the concept of strategy: “the dynamics of the firm’s relation with its environment for which the necessary actions are taken to
achieve its goals and/or to increase performance by means of the rational use of resources” (Ronda-Pupo and Guerras-Martin, 2012).
Previously mentioned information leads to the following proposition:
Proposition 2: Different strategic management theories and models are integrated in Hong Kong SAR start-ups.
2.3 The role of Strategic management in performance
Strategic management has traditionally been focused on firms' performance (Hoskisson et al., 1999). Key initial works based on Ansoff (1965) and Chandler (1962) provide the foundation for strategic management, collectively providing insight into the fundamental instruments leading to firm performance within the area of strategic management. Nag et al., (2007) constructed the idea of firm resource utilization to enhance the performance of the firm both internal and within external environments. A reflection of this concept is displayed in previous research by Mintzberg (1979). Mitzberg (1979) emphasizes the use of contingency theory when mentioning the structure of an organization. Performance depends on the
alignment of firms resources or fits within its external environment, reflecting that there is no one correct way but that it depends on the situation.
Stoelhorst (2008), Buzzel & Gale (1987) and Porter (1979) mention in their articles the relationship between strategy and performance, fundamentally focusing on market share, profit and quality. Achieving organizational performance may be visualized through the planning school in a formal process (Mintzberg, 2009). Contrastingly, Kaplan & Norton (2000) address an informal process of strategy implementation through the balanced scorecard technique, which accentuates the process of strategy development using a visual representation through a strategy map. Additionally, Bourgeois & Brodwin (1984) argue that strategy implementation is achieved by five key approaches, with the precedent performance in the theorized change model, in which the CEO is the architect of the structure which is made to fit the identified strategy. Increased performance, therefore, translates to the implementation of the value-creating strategy, also being rare, inimitable and non-substitutable by any current or potential competitors (Barney, 1991).
The above leads to the following proposition:
Proposition 3: Different performance mechanisms are used strategically in Hong Kong SAR start-ups.
2.4 The role of strategic management on competitive advantage
Competitive advantage mentioned in the previous paragraph is achieved through the
implementation of value creation techniques, conceived by simultaneously outmanoeuvring competition (Barney, 1991). Not to mention, competitive advantage can only be sustained if competitors are unable to duplicate the existing leading strategy. Building on sustained competitive advantage, Buzzel & Gale (1987) introduce the profit impact on market strategy, which focuses on the collection of four key pieces of information: market conditions,
competitive position, the financial and operating performance of an organization. The practical implication of this is that a well thought out strategy that is implemented professionally can lead to an increased competitive advantage. These principles guide
managers to understand and create strategic choices that affect a business performance in the correlated market conditions. Furthermore, Buzzel & Gale (1987) emphasize the importance that managers are educated with the corresponding general principles of strategy for a
Comparably Porter (1979) introduces competitive forces, which essentially looks at the collective strength of the previously mentioned forces affecting competition, determining the ultimate profit potential in a particular industry. Porter (1987) furthermore addresses competitive advantage through the use of corporate strategy, effectively articulating the need for diversification programs by adding value to each separate business unit. Value is added to each business unit by providing a benefit that offsets the cost. Furthermore, diversification is also used in a way that the increased benefit cannot be replicated, as this is usually
unsuccessful. Lastly, Hamel & Prahalad (1989) furthermore mention how competitive advantage is created by being faster than your competitors can imitate. They acknowledged this through four approaches that adopt competitive innovation: building layers of advantage, search for ‘loose bricks', changing the terms of engagement and competing through
collaboration.
2.5 Start-ups put into a strategic perspective
Entrepreneurship in the realm of research is rather new. Organizational structure is rather important when analysing the strategic nature of start-ups as they tend to start off as small organizations. The 1970's seeing a considerable alteration in organizational structure (Cornelius et al., 2006). Accordingly, only a few studies have been done addressing both leadership and entrepreneurship. The relevance and correlation of leadership and the success of start-ups is rather high, therefore it is very surprising that both domains have been
understudied (Zaech & Baldegger, 2017). Linking entrepreneurial leadership to strategic management, Gupta et al., (2004) state that leadership focusses on the exploitation of value creation from a strategic perspective.
Neo-classical economic theory sits at the centre of economic theory, theorized by Adam Smith (1723-1790), essentially suggesting that consumers drive the market, expressing their needs and wants as a demand, with firms subsequently responding by the supply of services and goods, under perfect competition. The entrepreneurial school (Mintzberg et al, 2009) prominently figures in this neo-classical economic theory, confined to the prices and quantities of products and services, with the act of competition achieving the excess. Schumpeter (1950) introduced creative destruction, having the entrepreneur being someone with the business idea, keeping capitalism moving forward. He addresses the fact that ideas are elusive but using the right strategy ideas become powerful and therefore very profitable. Therefore, it is important to note that start-ups with a value-creating an idea, must likewise be
put in the hands of an entrepreneur that can elicit the intended strategy within the given market.
In the ‘creative response' Schumpeter (1947) addresses ‘new combination' which incorporates the need for new business to achieve competitive advantage and organizational success by ‘doing new things' or ‘doing things that have already been done in new ways'. Drucker (1970) withstood this interpretation effectively stating that entrepreneurship carried heavy risk because of the continuous transformation in the environment, therefore having to withstand increased uncertainty. Schumpeter (1947) also mentioned that the role of the entrepreneur is solely to innovate, and as soon as this stops the person ceases to perform such a function. Consequently, Cole (1959) wished to capture entrepreneurship within four
viewpoints: (1) the calculating inventor, (2) the overestimated promoter, (3) the builder of a strong enterprise and (4) the inspirational innovator. Accordingly, in the perspective of start-ups, leadership is key to building a strong enterprise, therefore it is important to capture the essence of a ‘good' entrepreneur when positioning itself in the market and to create value by means of innovation.
Building upon this, Michael Hitt et al., (2006) mention the notion of entrepreneurial strategies. In essence it is formed to combat the harsh landscape in which competition is acting within the twenty-first century. Essentially an entrepreneurial role within a firm may be introduced both in new and established firms (Bettis and Hitt, 1995). Entrepreneurial strategies fundamentally allow firms to grasp a new creative insight into elusive markets. It effectively enhances key market effectiveness within existing markets enlarging market share (Hamel, 2000). Increasing internal capabilities are seen to be of utmost value within new ventures (Batum et al., 2001). Therefore, intangible assets such as unique technology, information and people are of great importance for new ventures to increase firm
performance and competitive advantage. This is aimed at outwitting rivalry and making the strategies and intangible assets difficult to imitate or understand (Hitt et al., 2001a).
Dynamics are therefore crucial to start-ups as outwitting rivalry can be achieved through nimbleness within markets and the ability to create new markets, for example creating a niche (Hitt et al., 2006). Lastly, the relevance of entrepreneurial teams is admitted to the fact that individual's knowledge's builds on the creation of strategies, techniques and niche markets (Hitt et al., 2006). These entrepreneurial teams are commonly shaped upon social networks in which association leads to the creation of new ventures. Consequently, the last proposition raised is formulated to address these entrepreneurial strategies and the relationship start-ups have with the common notions of strategic management.
The above mentioned information leads to the following proposition:
Proposition 4: Entrepreneurial strategies and prevailing notions of strategic management are used with the start-up organization within Hong Kong SAR.
3. Methodology
The following sections will introduce the methods behind this research and the implementation of different techniques.
3.1 Research design and methods
The research question ‘Do start-ups in Hong Kong SAR clearly make use of the notions pertaining to strategic management?’ demands the use of qualitative research as well as the previously mentioned equated literature.
This research is to be considered a descriptive research and will be conducted by means of the case-study method by analysing in-depth interviews looking at the use of strategic management notions within Hong Kong SAR start-ups.
Exploratory research is used to investigate and connect potential relationships
between strategic management of start-ups by understanding what is being observed (Cargan, 2008., Robinson, 2005). Additionally, the exploratory side of this research will include relevant information on the unstudied area, by generating new ideas for future studies
(Sarma, 2012). The research will follow a descriptive approach to portray an accurate profile of the situation (Robinson, 2005). Tukey (1980) addresses the need for research to be both exploratory and confirmatory, therefore, respectively this research will make the use of confirmatory research to pronounce the relationship on misrepresentation to see if the theory is supported by the facts. Furthermore, this combination of both will allow for a broader scope and avoid multiplicity (Tuckey, 1980)
The deductive and inductive reasoning
This research will be substantive in that it will contain research restricted to a particular group in the specific start-up phase of the organization (Saunders et al., 2016). Furthermore, this research involves both deductive and inductive reasoning. The inductive approach will allow for the development of theory, through data collection analysing established patterns and regularities. The deductive approach will be used by applying theory previously mentioned in the theoretical background, narrowed down to the specified propositions mentioned previously. These propositions are tested by examining and analysing the data retrieved from the interviews. These established propositions are linked to key themes that were constructed through the research into existing theories and models to form the
framework of the data collection. These themes are Internal and external environment forces, extended theory into strategic management, performance measures, competitive advantage and the start-up phase. These themes are assembled as they are all key categories within the studies of strategic management, therefore they may have the possible importance within the set research question.
Johannessen et al., (2008) address both positivism and interpretivist within social science research. Within this research, an interpretivist approach will be taken as an attempt to analyse data through impressions of the researcher when gaining information through interviews. Saunders et al., (2012) analyse the use of both longitudinal and cross-sectional studies, based on the time constriction of this research and the research question, it is important to note that this research will adopt a cross-sectional approach. As this research focuses on the start-up phase of organizations within Hong Kong SAR, a snapshot will be made using qualitative interviews over that phase. There is one restriction to using the cross-sectional approach as there may be a problem with reversed causality, therefore the use of semi-structured in-depth interviews will be used to allow for extensive data formation. Data collection will take place through qualitative interviews with the chosen
interviewees (Saunders et al., 2016). Semi-structured interviews will be used to allow for free but structured form, to allow for law-like generalizability (Saunders et al., 2016). Semi-structured interviews will allow the researcher to ask predetermined questions about
corresponding themes, whilst still allowing the interviewer and interviewee to slightly deviate to allow for extra information encompassing the theme (Saunders & Lewis, 2011). Grounded theory will also be applied to this research. The goal is to achieve a developed theory that is tested against generated data through a series of different interviews into contrasting Hong Kong SAR companies within their start-up phase.
Case study research has gained a very respectable presence among studies when put into comparison with other research method approaches (Yin, 2014). Case study research refers to an in-depth, detailed study of an individual or a small group. Case studies are often used when the researcher has no control of the situation (Hæreid & Indregård, 2014). Furthermore, forming this research as a case study initiates a rich understanding of the particular contemporary phenomenon within the relevant context as the boundaries to the research are not clearly evident (Saunders et al., 2016). Additionally, the context is not controlled as such that semi-structured interviews will allow for slight open discussion, although focusing on numerous variables to allow for comparison.
Data collection
Data collection will take place through qualitative interviews with the chosen interviewees (Saunders et al., 2016). Semi-structured interviews will allow the researcher to ask
predetermined questions about corresponding themes, whilst still allowing the interviewer and interviewee to slightly deviate to allow for extra information encompassing the theme (Saunders & Lewis, 2011). This will allow for law-like generalizability through the free structure. Grounded theory will also be applied to this research. The goal is to achieve a developed theory that is tested against generated data through a series of different interviews into contrasting Hong Kong SAR companies within their start-up phase.
Within this research six companies will be interviewed: Zegal, 3PM China manufacturing, Moelis & Company, Perception Digital, Lincogn Technology Co limited (Yoswit) and Nowpresso. Following is a list of these six companies pertaining a small description of each:
1. Nowpresso, a company that created a portable espresso machine that automatically pumps and pours coffee (appendix 1 and 5). Nowpresso is a small company with six people at the moment running the operations and organization (Leon Bruggeman, personal conversation, 2018). Founded in 2013, and starting official the sales on Kickstarter on July 5th, 2017 (John Rochecouste, personal conversation, 2018). The interview consisted of two interviewees, these being John Rochecouste the founder and Leon Bruggeman co-founder and CEO.
2. Lincogn Technology Co. Limited otherwise known as Yoswit. Lincogn Technology Specializes in Bluetooth wall switches (appendix 1 and 5). Yoswit is a small start-up with 20 employees founded in 2013 (Colin Ng, personal conversation, 2018). The interview consisted of two interviewees again, these being Colin Ng the Co-founder and Leon Bruggeman from Link4Success that helps with the marketing, scaling and sales activities (Leon Bruggeman, personal conversation, 2018).
3. Perception Digital, founded and established by three professors from Hong Kong University of science and technology in 1999. The organization aims at embedding firmware to enable smart consumer electronic devices (appendix 1 and 5). Perception Digital now employees over 250 staff within Hong Kong, China and the United States (Appendix 5). the interviewee was Jack Lau the founder, chairman, and CEO of perception digital (appendix 1).
4. Moellis & Company, a leading global independent investment bank (appendix 1 and 5). The interviewee was Bert Griesel, who initially started an independent investment banking boutique with six employees in 2010 (Bert Griesel, personal conversation, 2018). Moelis & Company later acquired the APA in 2011 where Bert Griesel now acts as managing director in Hong Kong (Bert Griesel, personal conversation, 2018) serving clients in over 19 geographical locations (appendix 5).
5. Company five is 3P.M. China Manufacturing, one of the most experienced retail display phone manufacturers worldwide (appendix 1 and 5). The interviewee was Máno Markovits former founder and CEO in 1996 (Máno Markovits, private
conversation, 2018). The company started off as a one-man business, with nowadays 1,000 employees with the majority being blue collar workers (Máno Markovits, private conversation, 2018).
6. Company six is Zegal, founded in 2013 it is the fastest growing legal tech company operation across the Asia Pacific and Europe (appendix 1 and 5). The interviewee was Stephan Hablutzel, who is a director, COO, and co-founder, initially setting up the firm with friends from his social network (Stephan Hablutzel, personal conversation, 2018). Zegal nowadays consists of 60 employees working in offices across the world (appendix 5).
3.2 Sample
Essentially, the interpretive approach to this research will allow for socially constructed, subjective view of the nature of reality and the social phenomena occurring. Research is therefore somewhat value-bound (Saunders et al., 2016) as a small sample is used to grasp in-depth information into the set research question. Therefore, a collection of data will not be taken from the census but in the form of a sample, to allow consideration into the subgroup: start-ups within Hong Kong SAR. The research will be done in this fashion as grasping the whole census would be near to impossible and impracticable due to budget and time constraints that apply.
Therefore, the non-probability sampling approach is applied, since the sample is not chosen at random (Saunders et al., 2016). The sample size was appropriated from Thomas and Pollio (2002) suggesting that for phenomenological research 6 to 12 participants must be
interviewed to be successful, provided that there is thematic redundancy (Gubrium, 2012). Specific criteria were set to select the participating organizations:
1. An organization that has had its main start-up phase predominately within Hong Kong SAR.
2. Judgemental sampling is applied since it enables purposive decision making in which cases are best applicable to answer the research question.
Although this purposive sampling approach is used, both a homogenous and heterogeneous sampling strategy is used (Saunders et al., 2011). Subsequently, the interviewed organizations are chosen because of their indicated start-up phase in Hong Kong SAR, although each is intended to have diverse characteristics because of his or her different intended business operations. This allows for supplementary information into the topic as diverse information is grasped. Extensive research has been done on the topic of strategic management, with the search for companies willing to participate in coming from the corresponding network of the researcher. The interviewed participants are in all of the cases the CEO/entrepreneur of the company, all being contacted to voluntary participation in this research.
Moreover, both individual and multi-person interview techniques were used
(Gubrium, 2012). The multi-person interview was used for Yoswit and Nowpresso through a conference call considering Leon Bruggeman has close relations with both organizations and would, therefore, allow compiling additional and deeper understanding into each
organization. This technique may allow revealing of social interaction which may supplement each other's understanding (Allan, 1980).
3.3 Sources
The interviews were, as previously mentioned, undertaken in a semi-structured manner. This allows for relevant data to be obtained but also inhibit open discussion to allow for alternate responses. Questions were predetermined according to the propositions made (Saunders et al, 2012). Therefore, this research positioned as an explanatory study. The adoption of this technique hence allowed for simplified analysis than for example unstructured interviews. Nonetheless, it allows for deeper discussion as the interviewer is able to probe the
interviewee to address underlying notions attaining to the topic of strategic management (Saunders et al, 2012). Understandably, semi-structured interview technique allows for the
data collection into internal environment, external environment, competitive advantage, performance measures, theory and the start-up phase of various start-ups in Hong Kong SAR.
Qualitative interviews aim to research a small number of individuals who represent a social phenomenon (Gubrium, 2012). Accordingly, dichotomous perspectives may be given although there may be a variation in social roles upon each interviewee (Gubrium, 2012). Interviewing a range of different disciplines and sectors within start-ups in Hong Kong SAR has allowed for a realistic view of the findings. For example, one company sells consumer electronics and the other sells the service of investment banking both representing an array of different functions and therefore perspectives into the notions of strategic management.
Another source of data along with the interviews are the secondary data retrieved prior to the interviews. Prior to interviewing the selected organization's background research was carried out to understand the company before commencing with the semi-structured interviews (Gubrium, 2012). Gaining awareness before undertaking an interview is constructive as it allows the interviewer to dive deeper into the conversation immediately without querying about the initial background that can be found online.
3.4 Data Analysis
Data analysis began before the commencement of the interviews as initial research was conducted upon each organization. Furthermore, in the course of the interviews, data analysis took place as information was gathered. Subsequently, the interviews were undertaken via Skype (Skype, 2018) and recorded through a program called Ecamm Movie Tools (Call Recorder for Skype, 2018). The recordings were transcribed through a transcription service; www.rev.com (Transcription, Captions, Translation, 2018) with the help of CASDAQ (Saunders et al., 2012).
Following this, coding of the data is undertaken, essentially this allows for increased simplification of results as it is represented in subsequent groupings so that there is no need to read the complete transcript (Raymond, 1992). Firstly, open coding was used with the list of codes and labels forming throughout the data collection phase and reading of the initial transcripts (Corbin & Strauss, 1990). Open coding also known as initial coding is the disaggregation of data into units, emphasizing and deriving meaning from the initial text (Saunders et al., 2012). The next step is to unitize data (Saunders et al., 2012), accordingly, this is achieved by bundling relevant chunks of data into appropriate categories.
Throughout the formation of categories, within-case and cross-case analysis are conducted. Firstly, the within-case analysis allows for the formation of key themes and unique patterns to emerge (Eisenhardt, 1989), therefore granting the rich development of overall understanding in each case/interview. Subsequent to this cross-case analysis allows for within-group similarities and intergroup differences to emerge (Eisenhardt, 1989). Essentially looking at the relationship of each case. Consecutively focused coding is used to bundle frequently initial codes (Gubrium, 2012). Synthesizing a large amount of data by reanalyzing the data by categorizing large amounts of initial codes, accessing comparison among different interviews (Saunders et al., 2012).
Dominant codes appear after within-case and cross-case analysis is conducted (Eisenhardt, 1989). This research consists of six different organizations where six different interviews are taken place. One key similarity is that all six organizations are interviewed upon the start-up phase of the organization. Therefore, it allows for a more in-depth
understanding of strategic management within the start-ups within Hong Kong SAR. Upon the completion of this, the dominant codes are interpreted and followed by the use of axial coding.
Axial coding is paramount to the process of recognizing the relationship between the formed categories (Saunders et al., 2012). These axial codes allow for the exploration of the key themes to enhance the understanding of in the case of this research, strategic
management and furthermore explain the underlying phenomenon. Axial coding is a more abstract process and therefore is a more descriptive, putting back open codes to form correlating links between the already distinguished patterns and categories (Hennie, 2010). This allows for better coherence to the analysis of the data. Lastly selective coding is used to integrate categories to make sense of what is happening, additionally, it adds to existing theory but may also allow for a new theory to emerge (Saunders et al., 2012; Hennie, 2010).
Lastly, data display will be used to organize and display axial and/or selective coding into diagrammatic displays (Saunders et al., 2012). This will allow for the visual
representation of matching key themes and categories, by creating a visual representation of the interviews. Furthermore, it allows for an open comparison of data (Gubrium, 2012). Through comparison of interviews in visual depiction emergent models and theories arise, which may be compared to existing models and theories (Eisenhardt, 2012).
3.5 Reliability and validity of research quality
With regard to the reliability and validity of the research quality, different components must be addressed. In terms of the quality of the data retrieved the underlying value of semi-structured is examined. The key success of the use of semi-semi-structured interviews within research lies in the thoughtful construction of the interview questions (Saunders et al., 2012). This is achieved by establishing a high level of knowledge on the research topic and context to avoid any misinterpretation when interviewing (Saunders et al., 2012). Furthermore, the development of interview themes with appropriate opening comment to promote credibility and supplying key knowledge to the interviewee is key in terms of research quality (Saunders et al., 2012). Because of using skype interviews (Skype, 2018) the nature of both the
researcher's appearance and appropriateness of the location had no direct influence within the data collection process (Saunders et al., 2012). Lastly, the use of both Open questions and probing questions (Saunders et al., 2012) allows for open exploration into the researched topic, however, may affect the replicability of data, as it may not reveal similar findings (Saunders et al., 2016). However, due to the use of theoretical proposition the data becomes testable through a range of different explanation building and pattern matching processes (Saunders et al., 2012).
Subsequently, interviewer and interviewee bias impact the reliability of data. These include comments, tone or non-verbal behaviour used by the interviewer and in terms of the interviewee; response bias in which the participant may not wish to disclose all information fully or honestly (Saunders et al., 2016). In addition to this participation bias also affects the reliability of data collection because of the nature in which the interviewee agrees to be interviewed (Saunders et al., 2012). Nonetheless, these issues are alleviated in response to unequivocal bias with the use of Skype interviews (Skype, 2018), correct questioning, neutral tone and appropriate use of language and knowledge into the subject of strategic management and start-ups (Saunders et al., 2016).
This research predominantly takes an exploratory approach in that it aims to address if the notions of strategic management are naturally used by start-ups in Hong Kong SAR. The use of exploratory approach research approach aims to generate new ideas, yet testing it against existing research (Sauders et al., 2016). The use of confirmatory approach reciprocally advocated the relationship between theory and facts to mitigate
misrepresentation of results (Tukey, 1980). The relevant findings are not only compared to the other interviews but also with existing theory mentioned previously to examine the
adequacy of the conceptual framework (Saunders et al., 2012). Therefore, even though there may be a lack of standardization, within-group similarities and the in-group difference in both the interviews and existing theory form a considerably reliable conceptual model (Eisenhardt, 1989; Saunders et al., 2012).
Due to the somewhat abstract nature of this research, validity plays a fundamental and formidable role. Therefore, assessing the methods in which the researcher is able to gain access and the ability to measure the intended information correct and truthfully is crucial (Saunders et al., 2016; Kirk & Miller, 1986). Measurement validly is split into three key areas; content validity, criterion-related validity and construct validity.
Within this research external validity is increased through the comparison with alternate theories and models mentioned before. Similarities and differences within existing literature will allow for the research to answer the research question which thus also admits to the increase in the generalizability of the results. With regard to constructing validity,
clarification of different models, terms, and theories are discussed within each interview and otherwise re-phrased to suit the intended interviewee (Hennie, 2010; Saunders et al., 2012). The intended approach in which this research aims to process and analyse data is done in a positivist epistemological view (Kuzmanic, 2009). The positivist approach is offset by social constructivism, in that the reality is socially contracted and thus must be measured somewhat subjectively (Kuzmanic, 2009). Therefore, to limit the impact of the interviewer a non-judgemental stance is taken, along with the data being put into comparison with existing theory and compared to alternate interviews.
3.6 Coding
Analysis into the notions of strategic management in the start-up phase of different
organization within Hong Kong SAR led to the initial open coding of each interview. These open codes were appropriated by "starter code" which were contrived from the fundamental interview questions developed to investigate the research question. See Appendix 4 for codes and abbreviations of these codes with the corresponding supporting data. Each interview is separately coded and matched, thereafter listed in the supported data column with the complementary numbering seen in Appendix 1 and Appendix 4 for the corresponding interview. After the completion of this cross-case analysis is taken place to analyse the complete list of open codes and address them using axial and selective coding process. Throughout this process, dominant codes emerge. The irrelevant codes were excluded from
the list of codes as they are of no intended use in answering the research question. This irrelevant information was therefore excluded from the research as it would only make the answering of the research question more burdensome. Thereafter axial coding was used to create correlation connections between the distinguished codes. This would, therefore, build a model of interrelated connections and relevant relationships between the codes selected. This would henceforth enable the distinction of dominant codes which in turn assembled the meaningful core code. Within this research three essential codes were established: COMP-ADV, DEF-SM, and STR-PHASE (see Appendix 4). Other codes have a close or direct relationship with these different core codes, the intent of these core codes is to answer the research question and five propositions.
4. Findings
4.1 General findings
Existing literature presents the key understanding of the function of strategic management, however linking it with start-ups is not widely examined. Existing research has claimed that exploitation of value creation, competitive advantage and organization success (Gupta et al., 2004; Schumpeter, 1947) in ‘new combinations' and in consolidation with the entrepreneurial role is preconditioned as being of most significance for start-ups (Schumpeter, 1947; Drucker 1970). Despite appreciation of such theoretical research, there is a lack of literature that represents the clear use of strategic management notions within start-ups. Because of the latter, it is of importance in this research to address the key findings and identify the interrelatedness of different codes and core codes to analyse the research question.
The main findings interpreted in the following sections will display the correlating effect of strategic management on start-ups within Hong Kong SAR. The three main core codes will be at the forefront of these models showing the interrelated relationships of the other codes through axial coding. Additionally, all the interviews of the different companies will be distinguished to show similarities and differences. Furthermore, propositions will be used to test and mediate the relationship between start-ups and the notions of strategic management. The models and propositions will be mentioned and findings will be analysed and put into contrast with the corresponding literature. Lastly, the findings will be used to answer the research question through the previously mentioned propositions.
An additional proposition is added to this research to allow for greater understanding of operations within start-ups in Hong Kong SAR, in terms of understanding the longevity of the notions of strategic management. This understanding builds upon the previously
mentioned perception of strategic management as constituted by the researcher within the first chapter.
Proposition 5: Strategic management plays a role in the day-to-day business for start-ups in Hong Kong SAR.
Within these sections different terms will be used to simplify different terms within strategic management addressed in the six corresponding interviews. Links and connection are made and are simplified by use of the following: Core-relationships (CR) and Sub-relationships. Core relationships focus on individual terms that have a greater depth and are used to explain
in this case competitive advantage (COMP-ADV). Sub-relationships are termed to display and explain the individual connections in the general terms (see figure 2) using more specific terms.
Figure 1 shows a depiction of a model that consists of three core relationships (CR1,2,3) linking towards competitive advantage is one of the three codes when analysing the notions of strategic management in this research. The two other codes are the definition of strategic management (DEF-SM) and the start-up phase (STR-PHASE). In this section, each relationship will be examined to examine what builds upon the notions of strategic management within the perspective of start-ups in Hong Kong SAR. Figure 1 shows a depiction of these essential relationships that aim to explain the effect of the notions within strategic management within start-ups of Hong Kong SAR.
Figure 1: Core codes
Note: For abbreviations see Appendix 4
4.2 Findings on internal and external environments and performance mechanisms on competitive advantage
Internal environment
In this section, the focus of the findings is on the analysis of external and internal
environments within the organizations that lead to competitive advantages. Focusing on the internal environment (INT-SM) in terms of strategic management we notice how
organizations make use of value (VALUE), five P's (5P) and organization structure(O-STR). Firstly, we notice that in INT-SM shows an overall underused representation of its models
COMP-ADV
P-MECH CR1
INT-SM EXT-SM
Notions of strategic management start-ups Hong
Kong
DEF-SM STR-PHASE
and theories by the start-ups, as mentioned by Stephan Hablutzel director and COO of Zegal (see Appendix 4 and 5 for more information). Stephan Hablutzel explains that Zegal
possesses a very flat O-STR, with no direct reports. (Stephan Hablutzel, personal conversation, 2018). He mentions that big organizations have the luxury and time to
undertake VRINE and SWOT analysis where start-ups don't have the time nor the money to. The concurrent feeling is recognized within a comment made by NowPresso and Yoswit (Appendix 4 and 5) although addressing the indirect use of INT-SM tools that are adjusted to suit the start-up framework. The start-up framework essentially states that organizations do not have the time or the money to effectively use the actual models mentioned previously within the theoretical framework section.
Nonetheless, some sort of SWOT and VRINE analysis is used as value creation (VALUE) techniques are used to gain a competitive advantage (COMP-ADV). As mentioned by Colin Ng from Yoswit (see Appendix 4 and 5), stating that they do not really make use of the SWOT analysis model but indeed do look at the strengths of their product. These
strengths are therefore used to gain competitive advantage needed in their industry, in this case, smart wall switches.
In terms of VALUE and the VRINE analysis, Leon Bruggeman CEO of Nowpresso addresses that they do not use the theoretical framework behind the VRINE model but instead look at VALUE and five Ps and Porters five forces (P5F) (see Appendix 5). Indicating that Price, Product, Place, Promotion and People is of grave importance within their firm as they are used to effectively grow within the market. Therefore, the findings persist that intended strategies used by Nowpresso are fabricated to suit their organization and not the explicit theoretical models mentioned previously. For example, it is mentioned that eliciting the power and strengths of key employees within Nowpresso is essential to the internal strength of the Nowpresso (Leon Bruggeman, personal conversation, 2018). Through this, they create a competitive advantage as they enable internal strengths that are difficult to imitate by competitors.
Figure 2 shows a depiction of the three sub-relationships that correspond to the internal environment of the organization. Essentially VALUE, 5P and organization structure (O-STR) are used by start-ups in Hong Kong SAR internal environment to elicit competitive advantage. This is derived from the above mentioned example of Nespresso but is seen in similar fashion with the other organizations within this research, therefore the findings can be somewhat generalized.
Figure 2: Internal Strategic Management
Note: For abbreviations see Appendix 4
External Environment
On the external environment side of strategic management (EXT-SM), Boston Consulting Group (BCG) matrix otherwise known as growth-share matrix and Porters five forces were examined to exhibit the use within start-ups within Hong Kong SAR. In terms of examining the growth-share matrix for any firm market data needs to be retrieved. In terms of
Nowpresso, if they were to purchase market data it would cost about 5,000 USD for the ‘coffee making business' (see Appendix 4). Nonetheless, Nowpresso has the intention to focus its resources on the survival of their organization and building their brand to be like the "GoPro of the espresso market" (John Rochecouste, Appendix 4). Essentially creating a niche, in that it is aimed at a specific consumer group. The overall representation of the external environment for the interviewed start-ups is that the BCG matrix is alike VRINE and SWOT used in singular effect and not in the theoretical depiction mentioned in the theoretical framework section except for Moelis & Company (Bert Grisel, personal conversation, 2018). Moelis & Company are different to large established company operating worldwide,
therefore depicting the difference between start-ups and large corporations in their use of strategic management.
Porters five forces (P5F) are used to establish a comprehensive illustration of the perceived market and overall competitive rivalry in the external environment. Fundamentally, P5F looks at analysing competition in organizations, doing this through five different forces
INT-SM
VALUE
5P
SR1
SR2
SR3
to measure the magnitude of competition. Therefore, consideration of market growth (MG) and market share (MS) of an organization (see figure 3) can also be used in the help of analysis into the competitive external environment. Essentially it can be stated that with the use of P5F and MS indication of MG of an organization can be made.
Essentially within Nowpresso, Yoswit, and Moelis & Company the groundwork for P5F is used but it is not theoretically worked out and therefore used implicitly within each organization. Inherently, market growth is very important within start-ups as survival is crucial and the key to survival is growth and capital. As mentioned in an interview with Zegal you have a certain ‘burn rate' (see appendix 4), in which you importantly attempt to stretch your money as far as you can. This is furthermore represented by Leon Bruggeman from Nowpresso as he indicates the dilemma of having enough market to sell products but not enough stock to sell products, due to capital needed to purchase the minimum order quantity requirement of the factory (Leon Bruggeman, personal conversation, 2018). Additionally, it is stated that the strategic component to this is to raise enough capital to survive. This may be achieved through big investments or perhaps by enticing a ‘venture capital firm' to invest. Therefore, the underlying external strategy is to raise enough capital for MG and to increase MS too, therefore, be able to survive.
Concrete use of P5F is established when focusing on the barriers of entry (P5F-BA) within 3P.M. China Manufacturing and Perception Digital. Perception Digital essentially grasps the notion of vertical integration affecting the market in which it operates. Jack Lau explains that the industry is continuously evolving and that there is a constant battle in both factories and brand names, essentially digging into the forces in which they are affected competitively. Additionally, Máno Markovits explains China as the ‘wild west' with continuous changes in competition due to the extent to which companies imitate products. Nonetheless, operations in which 3P.M. China Manufacturing found success was through the battle against the threat of substitutes (P5F-SUB). They positioned themselves as a reliable manufacturing firm, because of their western background, which increased the confidence level of important customers, in this case, Ericsson and Motorola. This shows a moderate link of both P5F-BA and P5F-SUB within external environments having a strategically positive relationship to competitive advantage. Furthermore, the inimitability or the ability to withhold substitutes (SUB) relies on the internal technologies, resources, and patents
pertaining to the start-up organizations (Appendix 4,) mentioned by all of the organizations. Therefore, internal capabilities strengths are seen to be implemented through strategies to inhibit imitation by competition.
Figure 3 shows a depiction of the five sub-relationships that correspond to the external environment within the start-ups. These imply the theoretical notions of strategic management being used to a certain degree.
Figure 3: External Strategic Management
Note: For abbreviations see Appendix 4
In the case of the first two propositions, the previously mentioned findings are liked as a competitive advantage (COMP-ADV) (see figure 1). Furthermore, additional findings into the performance mechanisms will allow for an extensive look at measurement mechanisms of these strategies mentioned before, the following proposition is supported within the
previously mentioned findings:
Proposition 1: Internal and external environments strategically have a positive relationship to competitive advantage.
Different strategic management theories and models are partially integrated within the
specified cases. Unconscious and non-theoretical involvement of both theories and models of strategic management have been presented. Although it is difficult for start-ups to directly implement theory, for example, Nowpresso survival is their key strategical goal. Therefore, there is a higher focus on survival, it can thus be detected that intrinsic added value has a pronounced role when it comes to strategic management in start-ups in Hong Kong SAR. As
EXT-SM SUB MG SR4 SR5 SR6 MS P5F-BA P5F-SUB SR7 SR8
previously mentioned, capital is essential to any start-ups survival and therefore the main goal of any organization. Effectively the theoretical models are not worked out but unintentionally used to a certain degree.
Proposition 2 intentionally address the key involvement of the previously mentioned theories and models and the extent to which internal and external environments play a role in the competitive advantage of start-ups in Hong Kong SAR. Internal and external
environments have a direct effect on each organization, however direct notions are acquitted due to the start-up nature of the organizations. Successively, the following proposition is moderately supported and will be addressed by concentrating on the previously mentioned findings and COMP-ADV:
Proposition 2: Different strategic management theories and models are integrated in Hong Kong SAR start-ups.
Four of the six interviewed start-ups mentioned the uniqueness of their market, in effectively implementing new and forthcoming products or services. For example, both Nowpresso focusing on portable coffee machine and Yoswit focusing on smart systems, respectively adhere to new upcoming markets with constant new technologies and competitive
involvement. As a result, as mentioned in the interviews with both organizations, competitive involvement is both fundamental and indispensable when it comes to the strategic
management of each organization. Moreover, Yoswit mentions that technological
advancement is of primary organizational responsibility, with at the moment competitive advantage coming from internal value and external market research being "one of the leading technology providers" (Coling Ng, 2018). In contrast, both Zegal and Moelis & Company aim at evolved markets, however in retrospect implement different frameworks to enhance competitive advantage and organizational success. As an illustration of this, Zegal is an incorporated company with shareholders, creating legal documentation with focus on convenience and ease of use. In essence Zegal possesses a monopoly of technology being their main strategic advantage in which they raise both internal and external success in a previously saturated market. This information indicated that there is a recognizable relationship between internal and external environments in having a strategically positive relationship with the competitive advantage of start-ups in Hong Kong SAR.
Lastly, it is essential to look at the corresponding relationship between COMP-ADV and COMP-SUS (see figure 4). Comprehensively Nowpresso, Yoswit, Perception digital and
3P.M China manufacturing respectively indicate the constant battle of competitive advantage and the strong relationship SR9(see figure 4) being at the forefront of their goals. On the contrary Zegal mentions the affirmative role monopoly plays within their organization. Bert Griesel, adds that the reciprocal role in which their organization previously aimed at
nimbleness (N-MARKET) within the market, altered in 2011 as his previously co-founded private investment firm was acquired by Moelis & Company. Moelis & Company are
considerably large organization bearing a market cap of over three and half a billion USD and over 700 employees' world-wide, but still they attain some sort of nimbleness as they fight against big banks, but the necessity of nimbleness decreased due to their MS and MG.
Interestingly in terms of 3P.M. China Manufactures (Máno Markovits, private conversation, 2018) Therefore, there is an indication of a relationship between both internal and external environments within the organization having a strategical effect on their competitive advantage. Although precise sub-relationships are halted to specific parts of strategic management. However, both CR1 and CR2 show radical involvement when affiliation with COMP-ADV (See figure 1)
Figure 4: Competitive advantage
Note: For abbreviations see Appendix 4
The last proposition involved within figure 1, involves grasping the effect of performance mechanisms (P-MECH) and if they are used strategically within Hong Kong SAR start-ups. This is of importance because it involves addressing the CR3, which underlines the traditional focus that strategic management collectively leads to firm
