Perceived Strategic Uncertainty and Environmental Scanning Behavior of Hong Kong Chinese Executives Bahman P. Ebrahimi UNIVERSITY OF DENVER Against the backdrop of the handover of Hong Kong to the People’s 1988; Kirkbride and Westwood, 1993; Phillips and Calantone, 1994; Wang, 1995; Du Bois, 1997). Republic of China (PRC) and the existence of an atmosphere of uncertainty in the territory, I attempted in this study to examine the relationship The social, political, and cultural distinctiveness, which sets Hong Kong apart from the mainland and has been taken between perceived environmental uncertainty and scanning behavior of Hong Kong Chinese executives. Contrary to expectations, results indicated for granted, now appears uncertain (Lau and Kuan, 1988). Despite Chinese promises, no one knows with certainty how that Hong Kong Chinese executives perceived higher degree of uncertainty in the competitive, customer, and economic sectors than the political. a communist and a capitalist system will function together in harmony. Many analysts, however, believe that Beijing wants These managers also scanned the task environment more intensely than the remote. Finally, there was a positive relationship between the degree the transfer of sovereignty to be smooth. There are at least two reasons for this desire. First, the smooth transition is a of perceived strategic uncertainty and scanning behavior as measured by frequency and interest. J BUSN RES 2000. 49.67–77.  2000 Elsevier matter of saving face for Beijing. Second, Beijing hopes that a smooth transition may persuade Taiwan to rejoin the moth- Science Inc. All rights reserved erland (Du Bois, 1997). Only time will tell! The uncertainties regarding future political and regulatory conditions pose great challenges for strategic decision makers H ong Kong is at the dawning of a new era. On July 1, in the territory. Under these circumstances, strategic managers can not afford to be oblivious to their environment. Strategic 1997, Hong Kong ceased to be governed by Great Britain and became a Special Administrative Region management and environmental scanning are major vehicles of the People’s Republic of China (PRC). During this period for adapting to external environmental change. The purpose of political and economic change, companies operating in of strategic management is to align or match the organization Hong Kong face the formidable task of adapting to new and with its external environment (Ansoff, 1965; Andrews, 1987; uncertain environmental conditions. The merger of a dynamic Zahra, 1987). Environmental scanning is the process of seek- and ambitious China with entrepreneurial Hong Kong poses ing and collecting information about events, trends, and tremendous opportunities as well as enormous risks (Barna- changes external to the business to guide the company’s future than, 1997). On one hand, integration with the mainland course of action (Aguilar, 1967; Fahey and King, 1977). appears to provide an opportunity to explore the potential of Environmental scanning is primarily the arena of corporate a huge market, cheaper labor, and manufacturing sites and elite, that is, top executives. Top executives can spend as an abundant supply of cheap labor (Phillips and Calantone, much as one quarter of their time monitoring the environment 1994; Barnathan, 1997). On the other hand, although Beijing (Kefalas and Schoderbek, 1973; Hambrick, 1981). Top execu- officials have promised a “one country, two systems” and a tives, however, are not the only source of environmental scan- period of 50 years with no change in the social and economic ning in organizations. While structure models of strategy such system of the territory, the Hong Kong environment has as Porter’s (Porter, 1980) recommend the formation of formal plunged into a “quagmire of uncertainty” (Lau and Kuan, scanning units, relatively few companies have dedicated indi- viduals or units to environmental scanning (Fahey and King, 1977; Thomas, 1980). In addition, research has failed to show Address correspondence to Bahman P. Ebrahimi, Department of Manage- ment, Daniels College of Business, University of Denver, Denver, CO 80208. benefits associated with utilization of formal scanning pro- An earlier version of this article was presented at the International Con- ference on Transition to HKSARPRC, Hong Kong, July, 1997. grams (Stubbart, 1982; Lenz and Engledow, 1986). Therefore, Journal of Business Research 49, 67–77 (2000)  2000 Elsevier Science Inc. All rights reserved ISSN 0148-2963/00/$–see front matter 655 Avenue of the Americas, New York, NY 10010 PII S0148-2963(98)00120-9