Global Business Cultural Analysis: Singapore
Global Business Cultural Analysis: Singapore
This research paper will conduct a comprehensive Global Business Cultural Analysis of the nation of Singapore. The paper will point out the complexities of the relationship the US should consider before deciding to conduct business in Singapore. The analysis will explore the major elements and dimensions of Singapore’s culture, how these elements and dimensions are integrated by locals conducting business in the nation of Singapore, how these factors compare with US culture and business, and address implications for US businesses that wish to conduct business in Singapore.
History and Geography
Singapore, or the Republic of Singapore, was founded in 1819 as a British trading colony. It is located on the major sea route between India and China. Singapore is known today as one of the most prosperous countries and boasts the world’s busiest port. It is clean and orderly, and since becoming an independent country, Singapore is one of the least corrupt countries in the world. Because of such positive characteristics, multinational countries seek to do business in Singapore. Singapore, officially the Republic of Singapore, is a Southeast Asian city-state off the southern tip of the Malay Peninsula. Singapore is a parliamentary democracy and gained its independence in 1965. It is a multi-racial, multi-lingual, and multi-religious society consisting of four official languages: English, Chinese, Malay, and Tamil. Under the leadership of Lee Kwan Yew as prime minister, Singapore has developed into one of the cleanest, safest, and most economically prosperous cities in Asia. Singapore is the world’s fourth leading financial center, and its port is one of the five busiest ports in the world (De Prato, 2013). In order to understand the development of Singapore, we must first take a look into Singapore’s history. During the 16th and 19th century, the Malay Archipelago was taken over by the European colonial powers.
The Dutch controlled most of the ports in the region and established a monopoly over trade within the Archipelago region. At this time, Sir Stamford Raffles was appointed Lieutenant Governor of the British colony. During his reign, the trade route between China and British India passed through Archipelago. Raffles hoped to challenge the Dutch restrictions on trade by opening a new port. Once he received the funding, Raffles found an island that possessed a natural deep harbor, fresh water supplies and timber for upcoming ships. The island was named “the Lion City.” According to legend, when the Prince of Palembang, Sang Nila Tama, landed on the island, he saw an animal that was probably a tiger, but he mistook it for a lion, and so he named the island, Singa Pura, or “Lion City” (Singapore Country Report, 2003). Raffles rallied together with Temenggong Abdur Rahman, who headed a small Malay settlement, signed a treaty giving them rights to establish a trading port. After the treaty was signed, modern day Singapore was established. The people of Singapore made up around 1000 in population and, due to migration from Malaya and other parts of Asia, population grew to 100,000. Raffles was prohibited from collecting port duties during the beginning operations of the port because the port was a free port. This news spread quickly and by 1825, trade volume increased.
A second treaty was signed by John Crawford in 1823, giving the British access to much of the land and subjecting the island to British law. Under this law, Singapore had to take into account Malay customs, traditions, and religion. In 1826, the British settlements of Malacca, Penang, and Singapore were combined to form the Colony of the Straights Settlement (Business Source Complete, 2012). In the years between the 19th and the 20th centuries, the British established protectorates over the Malay sultanates on the peninsula. Large scale rubber and tin production as well as a system of public administration were developed during the British rule. The British had much control until World War II. After the war, territories of peninsular Malaysia joined together to form the Federation of Malaya in 1948. In 1963, the British colonies of Singapore, Sarawak, and Sabah joined the federation, which was renamed Malaysia (Business Source Complete, 2012).
After becoming independent, Singapore faced many dangers: the threat of an attack by the Indonesian military and forcible re-integration into the Malaysia Federation on unfavorable terms. Singapore’s survival was in question. Unemployment, housing, education and the lack of resources and land were also pressing problems. Singapore then joined the United Nations and the Commonwealth. Sinnathamby Rajaratnam was prime minister and he helped with developing diplomatic relations with other countries. The service and manufacturing sector grew. Singapore also attracted big oil companies like Shell and Esso. Education became a major focal point and English was adopted as the language of instruction. The government also emphasized training to develop a more suitable workforce.
What are the major elements and dimensions of culture in Singapore? Communication
Culture represents the historical experience of a people, is embedded in their institutions, and shapes their attitudes and expectations about the world (Zakaria, 2012). First, let’s begin with communication. Singapore has four major spoken languages: Malay, Mandarin Chinese, Tamil, and English. English is the most common language spoken which is very important in terms of conducting international business. Most of the schools in Singapore teach English as the first language. These two factors create a favorable advantage to doing business in Singapore. With Singapore’s port being one of the busiest in the world, English teaching and English speaking has proven to be a positive factor in conducting business. A business partner, with good English speaking background has very little difficulty in communicating with locals. Another positive factor besides Singapore’s multilingual background is its multi-ethnic blend. Ethnic Chinese people speak both Mandarin and English. This enables them to have access to the Chinese market. And it’s easier for importers, exporters and investors to do business with ease. Ethnic Indonesian speaking people provides better access to the market in India.
Singapore may be a small country but its diverse culture help to create a country that is able to thrive in a very competitive market. When considering doing business with them, note a few characteristics that are important aspects of completing business successfully. Non-verbal communication is just as important as verbal. Singaporeans rely on facial expressions, tones of voice, and posture when interacting with a business partner. And they really trust these non-verbal messages. Singaporeans rather say “I will try” or “I will see what I can do” rather than say “no.” This is what they call saving face and maintaining harmony. They believe in silence. One should pause before responding to show actual thought has taken into consideration before answering. Greetings are based on age and ethnic origin also. Younger Singaporeans shake hands with everyone while older Singaporeans are more reserve. In Ethnic Chinese, men and women shake hands but it is custom for the woman to extend her hand first. In Ethnic Malay, men shake hands with men but not with women. Muslim men do not touch women in public. It is more appropriate to use the “salaam” bowing of the head greeting Religion
Most modern states have policies for the management of religion (Lin, 2012). For those with diverse religious communities, such as Singapore, the question of how to ensure the peaceful coexistence of various religions becomes an important challenge for the governments concerned. (Lin, 2012). In an effort to maintain social stability and political power, the government introduced various measures, such as the White Paper on Maintenance of Religious Harmony (January 1989) and the White Paper on Shared Values (Ping, 2012). The major religious denominations in Singapore are Christianity, Buddhism, Islam and Hinduism. The origin of Christianity trace back to 1965 after Singapore gained its independence. English was the official language of Singapore, churches could easily communicate the gospel. Local laypeople and ministers became involved in establishing churches, Christian ministries and missionary schools. Missionary schools were established to produce the next generation of leaders. The National Council of churches was the first organization established to represent Christians.
The Singapore Industrial Mission was established in 1966 to help promote the vision and the building of a viable human and mature community; to help the community to become a participant and creative community organized for the interest of all; and, to foster new social values that would help in cultivating inter-racial community understanding and solidarity (Goh, 2010). Today, Christianity still exists in Singapore with majority of the members being of Protestant denomination and the rest Catholic. Christianity is viewed as one of affluence, progressive value and an international flair. Buddhism originated in India when Siddhārtha Gautama or Buddha went into meditation for 49 days and upon awakening, he had complete insight into the cause of suffering and he knew the steps necessary to eliminate it. The Four Noble Truths became his teaching.
They are: 1) there is suffering (dukkha), 2)there is a cause or origin of suffering (samudaya), 3) there is an end of suffering (nirodha), and 4) there is a path out of suffering (magga) which is the Noble Eightfold Path, (Ong and Chang, 2012). Buddha’s teaching are not just ethical guidelines but offer a grand insight into nature of reality. Buddhism, which was regarded as a newfound “religion”, became prevalent in the writings of travelers as well as philosophers and it was soon established as an academic discipline within various universities and colleges towards the close of the century, (Aljunied, (2005). Islam is a religion of peace, love, harmony, and tranquility for all human race (Tahir, 2012). The Almighty Allah revealed in the Quran, the Islamic Holy Book, guidance of humankind. The main focus of all the teachings of prophets is on the creation of a virtuous being, (p. 120). In order to become a muslin, faith in all the prophets or a revealed book is necessary. The first prophet was Hazrat Adams and Hazrat Muhammad is the last prophet revealed by the Almighty Allah. After World War II and Singapore gaining its independence, Muslims became a minority due to the separation. Muslims were deprived of many social advantages and prestige they were once accustomed to.
Racist feelings began to form among the people. Muslims formed the Dar Al-Arqam society in an effort to confront the effects of the Christian missionaries who were trying to convert individual faiths. The Dar Al-Arqam was formed with the objective of having a place where the new Muslim converts could get together and develop the fraternal, religious and social relationships among themselves. Official Hinduism is dominated by Agamic, Shaivite precepts and practiced by the elite in Singapore, (Sebastian, 2008). Sinha has argued that a large number of Hindu reformist organizations have established a presence in Singapore since the 1970s and that many of the adherents of these organizations refer to themselves as Hindus but “redefine the category in doing so by assigning new meaning to it”, (Sebastian, 2008, p.75) They are considered a minority but make their presence known by holding public festivals, establishing temples, and locals have established what they call, Little India. Today, there are many temples dedicated to Hindu gods and goddesses. The Hindu Endowments Board and The Hindu Advisory Board are set up by the government in order to monitor Hindu affairs.
Values and Attitude, Ethics
Singapore’s culture is based on Shared Values and Confucian Ethics. Asian cultures are distinguished by a set of values that include obedience to authority, intense allegiance to groups, and a submergence of individual identity. It is the state’s attempt to unite its people through the vision of a “shared fate.” The ideal of a shared fate is expressed by the state developing institutional and conceptual contexts in which different communities can foster ties and shared practices while preserving religious and cultural differences (Tan, 2012). Because of multiracialism in Singapore, Deputy Prime Minister Goh Chok Tong created a vision of “Our Shared Values,” which are intended to be shared by all Singaporeans, regardless of ethnicity, religion, and other differences. The Shared Values consist of the following five broad principles: * nation before community and society before self
* family as the basic unit of society
* community support and respect for the individual
* consensus, not conflict
* racial and religious harmony
Confucian is based on the same theory. Confucianism upholds the cardinal belief that every individual possesses the right to human dignity and equality (Tan, 2012).
In 1997, National Education (NE) was added to the curriculum to strengthen the messages of moral and citizenship education, particularly those to do with young Singaporeans’ attitudes to the country. National Education takes the form of school activities distributed throughout the school year. Its messages are also incorporated in school subjects wherever appropriate, and comprise the following: Singapore is our homeland; this is where we belong; we must preserve racial and religious harmony; we must uphold meritocracy and incorruptibility; no one owes Singapore a living; we must ourselves defend Singapore; and we have confidence in our future, (Han, 2007; MOE, 2004a)
How are these elements and dimensions integrated by locals conducting business in Singapore? Combating
Understanding corruption is imperative for legal scholarship, both as an intellectual subject and because corruption impedes the operation of law in much of the world and inflicts damage on well-being, governance, and quality of life (Nichols, 2012, p.145). Corruption inflicts substantial damage to a nation. It weakens the government and causes poor decision making. It also affects the composition of the decision maker. Corruption causes economic fragility, it degrades the connection between the government and the people, and it degrades the quality of life. The Transparency International’s Corruption Perceptions Index was developed by Johann Lambsdorff, and is used by specialist in order to find out how much corruption there is within a country. According to the index, Singapore scored 9.3 which means Singapore effectively is among those countries with the least amount of perceived corruption in the world (Nichols, 2012, p.151).
Gender discrimination and job related outcomes
When considering doing business in Singapore, expect to encounter female business partners. Female Singaporean business owners have at least 10 years schooling, while 35 percent held first or postgraduate degrees, 15 percent had professional or polytechnic qualifications and 50 percent had completed second;–level education (Ramon, Valerie, 1999). The five major factors which best motivate Singaporean female business owners in particular are: (1) the perceived presence of a business opportunity; (2) the desire to put their knowledge and skills into use; (3) the need for freedom and flexibility; (4) the desire to achieve personal growth and recognition; and (5) the need to make more money for financial independence (Ramon, Valerie, 1999; see also Teo, 1996). Although the Singaporean women choose to become members of the working population, society still expects the role of traditional women in the household to be played, particularly as wife and mother. The working women still face the conflict of work and family and despite the number of rising educational level and attainments, Singapore’s female managers are still fewer in number when compared to males.
From a Confucian Perspective
Singapore’s state vision, Shared Values, resemble Confucian values. How do they differ? Confucian does not recognize civil and political rights. Confucian upholds the idea that every individual possesses the right to human dignity and equality. For Confucians, social relationships are characterized by social positions, or roles, and social positions are defined in terms of obligations, (Nuyen, (2008). Confucian core teaching is the ethical idea of a noble person, the virtue of humanity, and the process of self-cultivation. Confucian values are group identity, duty consciousness, personal discipline, consensus formation, the priority of collective interests, and emphasis on education and pragmatism (Tan, 2012, p. 462). These values recognize cultural differences. From a Confucian perspective, shared values should not be regarded as a religion in the sense of being a faith system. Shared values should remain nonreligious. Many of Singaporeans religious teaching are compatible to Confucian.
How do both of the above items compare with US culture and business?
Communication is one of the most important factors when considering doing business with Singapore. Due to the fact that English is the most common language spoken in Singapore, this has made conducting business with the United States easier. Understanding other factors will aid communicating with business partners. Communication differences can be found between the two countries. Singapore is a high-context country while the United States is considered a low-context country. In high-text, both the sender and the speaker are involved in the context and each are expected to interpret the conversation with ease. In low-text, what must be said, will be said. As I mentioned earlier, in Singapore, non-verbal communication is just as important as verbal. Singaporeans rely on facial expressions, tones of voice, and posture to understand someone who is conducting a business transaction. And they really trust these non-verbal messages.
Americans prefer comparatively little touching and relatively large personal space. Singapore is a collective society and the United States is a highly individualistic society. Therefore, Singaporeans belong to in groups and rely on loyalty to between one another. In the United States, Americans
look after themselves and their families. Communication between Singapore may be different but with interpretation and knowledge, a prosperous business relationship can be formed.
The major religion in the United States is Christianity. Singapore is very diverse. There are four major religions in Singapore, Christianity, Hinduism, Buddhism, and Islam. Americans are becoming more tolerable of one another beliefs. Religion should not be a problem when doing business in Singapore because the United States is more tolerable of different religious beliefs. And with Singapore and the United States both identifying the freedom of religion, mutual respect should be given to any religious background. It is good practice to become familiar with religious backgrounds in order to conduct business more effectively.
Individualism pertains to societies in which the ties between individuals are loose; everyone is expected to look after himself or herself and his or her immediate family. Collectivism pertains to societies in which people are integrated into strong, cohesive in-groups from birth that continue to protect them in exchange for unquestioning loyalty (Hofstede 1980). Based on these theories, we assume that compared with individualist cultures, managers in collectivist cultures are relatively less likely to follow social norms such as honesty, integrity, and law obedience. When there is a conflict of interest between corporate insiders (the in-group) and outside investors (the out-group), managers may prefer corporate insider interests, resulting in higher agency costs in collectivist cultures (Zhang, X., Liang, X., & Sun, H., 2013).
Values and Attitudes, Ethics
When it comes to values and attitudes of Singaporeans and Americans, we must remember Singaporeans are group oriented and Americans are concerned with making a living for themselves. Singaporeans respect higher authority where Americans live by the saying, “liberty and justice for all.” Singapore’s first Shared Value principle is, “nation before community and society before self.” This is opposite of the American value system. American shared values consist of Americans working, talking about their achievements, and earning monetary rewards. Education
It is mandatory to attend school in the United States. It is mandatory for primary age students to attend school in Singapore. If the child does not attend school, it is a criminal offense. Both the United States and Singapore have primary, secondary, high school and education beyond graduation. Today, the United States government provides sponsorship for Singaporeans to attend schools in the United States. These students attend the most prestigious schools such as, Harvard, Cornell, and Stanford. Singaporeans are noticed for their high achievement in math and science. The United States government offer scholarships to outstanding Singapore students. The number of Singaporeans studying in the United States reflects that Singapore and the United States relationship could not be any better.
Using Hofstede’s cross cultural analysis model is one way to understand the difference in culture between Singapore and the United States. From 1967 to 1973 Geert Hofstede applied the subset of cultural dimensions to the field of business management, segregating them into independent areas to be further divided in order to get a more precise understanding, Satterlee, 2009, p. 56). He analyzed a data base of employee values from IBM which covered more than 70 countries. Hofstede included Power Distance Index, Individualism, Masculinity, Uncertainty Avoidance Index, and Long-Term Orientation. Singapore scored higher in Power Distance Index. This means that members of organizations rely on their higher ups for authority rather than making decisions for themselves. Relationships are unequal between people. The United States scored higher in Individualism. Singapore is a collective society. The Americans are more concerned about individuals or themselves. Singapore scored in the middle in the Masculinity Index but tends to lean more to the feminine side. This shows a modest, humble, and softer aspect of culture. The Uncertainty Avoidance Index is the level of tolerance for uncertainty and ambiguity within the society.
Singapore scored low. Singaporeans abide by the rules due to high PDI. Singapore has many fines. The Americans operate on the idea of freedom of expression and do not require a lot of rules and strict laws. The last dimension is Long-Term Orientation. Long-term orientation refers to long-term versus short-term orientation toward the future, (Boonghee, Donthu, and Lenartowicz, 2013, p. 194). Singapore scored in the middle of this Index also. Singapore is showing an immense economic success. Singaporeans are showing a way to do things. The United States has seen signs of economic growth in Singapore and, by using Geert Hofstede’s five dimensions to further understand the country, business relations are sure to continue in the future.
What are the implications for US businesses that wish to conduct business in that region?
Singapore and the United States are close strategic partners. Singapore is the United States’ 15th largest trading partner and 11th largest export market. United States investment in Singapore is over $116 billion and Singapore has $22 billion of foreign direct investment in th United States. Job creation and economic development in Singapore due to American companies using Singapore as a regional base for doing business.
U.S. Trade with Singapore and ASEAN
Singapore sees in the United States an economic partner and security ally that offers the most present value, hence motivating it to forge a free trade agreement as well as foster a military strategic partnership (Page, 2007). Economic conditions, an urgent demand for security, and fear of diplomatic isolation, are factors that lead to the United States and Singapore to put into effect the United States-Singapore Free Trade Agreement (USSFTA). There were other extenuating circumstances that also drove the United States and Singapore to sign the FTA, most notably their common frustration with the stalled multilateral trade liberalization during the WTO’s first decade; the sluggish progress in the regional economic integration within the respective free trade region of ASEAN and the Free Trade Area for the Americas; the inability of the 21 APEC members to come to binding terms as to the way the ambitious Bogor agenda can forge Pacific Basin economic integration; Singapore’s desire to spur ASEAN cohorts to move faster with market opening; the US desire to bind the right of preferential access to the world’s largest market to Washington’s global security agenda; and finally, ASEAN’s inability to keep political risk low to discourage capital flight (Page, 2007).
The agreement was signed by the President of the United States, George Bush and Prime Minister Goh Chok Tong, May 2003 in Washington, DC. Both the United States and Singapore benefit from the signing of the FTA. With a population of 287.7 million and a per capita income of US$36,273, the United States can provide a strong economic stimulus which is badly needed during these times of sluggish regional growth and uncertainties (Tongzon, 2003).
U.S. littoral combat ships (LCS) in Singapore
In early 2012, US flexible basing in the region inched forward when the United States requested concurrence from Singapore to deploy up to four littoral combat ships (LCS) to Singapore by 2016 (Dalpino, 2012). The primary missions of the (LCS) are antisubmarine warfare, mine countermeasures and surface warfare against small boats. The Singapore military agreed to allow the naval ships to deploy in Singapore. The United States and Singapore navy will work together to finalize the process. Previously, Singapore had agreed to deploy two ships. Agreeing to deploy a total of four ships will strengthen U.S. engagement in the region. This is another strong in implication that the U.S. wants to conduct business in Singapore.
U.S. Foreign Domestic Investment (FDI) Analysis
Foreign Direct Investment (FDI) refers to an investment made to acquire lasting interest in enterprises operating outside of the economy of the investor. The investor’s purpose is to gain an effective voice in the management of the enterprise (Journal of US-China Public Administration). While no standard percentage of ownership exists, most nations consider the threshold to be within the range of 10 to 25 percent. The US Department of Commerce’s FDI ownership is 10% (Satterlee, 119). Most companies seek out foreign investments as a way to gain a better return for their money. So, the company is looking to expand in global markets but what about the local economy? Do local firms benefit from FDI? Spillover effects and linkages play a key role in this determination. Spillover effects relate to
increased productivity benefits of local firms and technology diffusion from multinational enterprise (MNEs) to the domestic economy. Up until the 70’s, attitudes toward MNEs were hostile. Governments have since changed their policies pertaining to investors entering the local markets due to the potentially positive impact of FDI. Governments attempt to attract FDI expecting to increase the productivity of local firms. Intangible assets, such as knowledge and technology are “spilled over” to local firms.
It is believed that local firms benefit from superior knowledge of product or process technologies or markets without occurring a cost that exhausts the whole gain from the improvement (Asian Social Science, p.68). In addition, the Asian Social Science journal explains how MNEs set up direct linkages to suppliers when entering through FDI (Stephan, (2013). Linkages are non-equity relationships with suppliers or customers and are a crucial channel for knowledge diffusion. When MNEs enter the host country, local firms do not have knowledge about technical innovation or it may be too costly for them. This leads to locals feeling a sense of uncertainty, which is an example of knowledge confusion. Another example refers to the movement of labor. MNEs may provide more training for their employees and invest in staff development than local firms. This builds more human capital. The spillover occurs when these MNE employees move to other local firms and transfer their gained knowledge to local firms, increasing the local’s productivity. Another example of the spillover effect on locals refers to increased competition. When MNEs enter the market, local firms are forced to become more efficient. Local firms have to update their technology or use it more efficiently in order to become more competitive.
This could yield productivity gains and also increase the speed of adoption of new technology. Increased competition can also lead to productivity losses for local firms. This article gives an example of how a study of 4000 Venezuelan companies that the productivity of wholly domestically owned firms decreases when FDI increases. The presence of MNEs lead to a loss of market share and referred to this loss as the “market stealing effect” of MNEs. The presence of MNEs may lead to crowding out of local firms.
? Singapore is the fifth least corrupt country in the world. ? Strikes and labor protests will remain rare, if not absent, for the foreseeable future. Weaknesses ? The government censors the media and limits the distribution of foreign publications. Opportunities ? Owing to the lack of progress at the WTO, the government has committed the country to sign 18 bilateral free trade agreements with 24 trading partners. ? Singapore has one of the best business operating environments in Asia.
? The city-state has previously been identified as a target by Islamist militants from neighboring Indonesia and elsewhere, (Singapore Defence & Security Report, 2013).
As stated earlier, Singapore is known today as one of the most prosperous countries and boasts the world’s busiest port. It is clean and orderly, and since becoming an independent country, Singapore is one of the least corrupt countries in the world. It is a multi-racial, multi-lingual, and multi-religious society consisting of four major languages and four major religions. These factors aid in having successful business relation. By identifying cultural similarities and differences, Americans can benefit from the structure of the Singaporean family values. Americans are known for making money instead of building relationships and establishing strong social bonds. There is opportunity for economic growth within the Singaporean region. The United States has already recognized the prosperity within the region and has built on that knowledge. The United States and Singapore will continue to develop a better relationship in the future and form a solid base for amicable relations between the two countries.
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