International and comparative human resource management

Culture and Diversity Issues in Expanding to Singapore

In today's increasingly globalized economy, expansion beyond an organization's national borders offers many benefits. For many organizations, expanding to operations into other countries offers access to a broader consumer base, as well as distribution networks. In addition, organizations many realize increased efficiencies by locating production processes and conducting business transactions outside of their national borders. These multinational enterprises (MNE), as Choy (2007) notes, are better positioned to capitalize on new specialized resources. These include: technological competencies, capital, production capabilities, and information and tacit knowledge that can enhance the organization's services and product development. Other benefits for multinational expansion include increased cost efficiencies due to economies of scale due to a world-wide distribution network and opportunities for product innovation driven by new markets. Prime expansion choices, to capitalize on these opportunities, often are found in rapidly developing nations, such as Singpaore.

The Asia-Pacific Cooperation (APEC) has been a primary driver of open trade and economic cooperation, for more than ten years, in that region of the world. As a result, the Asia-Pacific region is on of the fastest growing economic sectors in the world. Forty-two percent of world trade occurs in this region alone. The continuous growth the region has experienced has been, in part, due to its high standard of living, potential domestic markets and consumer purchasing power. Other factors contributing to the region's growth include: increasing regional trade relations, available natural resources, infrastructure, and the quality of the workforce in the region. For these reasons, the Asia-Pacific region is an attractive region for expansion and investment, with promising financial gains (Choy, 2007). One of the most attractive nations for expansion, in this region, is Singapore. However, with these opportunities comes significant challenges the organization must be aware of, if they wish to succeed. One such challenge, especially for non-Asian MNEs, is encountered with the culture and diversity issues that may present themselves as the organization establishes a base in Singapore.

Singapore Cultural Overview:

Singapore is a small, cosmopolitan, island nation of immigrants, from China, India, Malaysia, and Europe. This intermingling of many different cultures finds Singapore a fusion of both Eastern and Western cultures. Yet, despite this melting pot effect, there are still distinct ethic races evident. Even the geographic areas originally established by Sir Stamford Raffles, in the early 19th century, are still in place. These three ethnic neighborhoods include Little India -- established for those immigrating from India, Chinatown -- established for those immigrating from China, and Kampoong Glam -- established for those immigrating from Malaysia ("Singapore culture," 2009). As one would expect, with such racial diversity, Singaporeans also have considerable diversity in their religion as well.

Religion is an important part of Singaporean culture. Those Singaporeans of Chinese descent most often are followers of Taoism, Buddhism, Shenism, Christianity, Catholicism, or are considered to be 'free-thinkers', as they don't belong to an organized religion. Singaporeans of Indian descent are most often Hindi, Muslim or Sikh. Lastly, those Singaporeans of European descent are most often Christian, with a variety of other religions also being present. Because of this religious diversity, Singapore only functions because of religious tolerance ("Singapore culture," 2009). Not surprisingly, a mixture of languages are found on the small island as well.

There are four official languages in Singapore: Mandarin, Malay, Tamil, and English. The most common language used is English, and it is English that unites the different ethnic groups. English is taught to children, at school; however, they often learn their native tongue at home. Although English is common, Singaporeans often use a mix of English with other languages, Singlish, to communicate. Singlish phrases often end with a nonsensical exclamation. Common phrase endings in Singlish are: ah, lah, leh, mah, and what. The varied dialects of Chinese also are present in Singapore, sometimes causing communication troubles as most are vastly different from one another.

Culture and Diversity Issues When Expanding to Singapore:

Economic growth and development in the Asia-Pacific region, and specifically Singapore's commitment to maintaining business competitiveness (Choy, 2007), has made Singapore a prime target for organization expansion, for many non-Asian MNEs. However, with this development of cross-national business opportunities has come significant challenges due to cultural differences, for non-Asian organizations. Organizations looking to establish business in Singapore must understand the tremendous impact that national culture has on a society's interpretation and vision of the world, according to Havidan, Dorfman, de Luque, and House (2006). Culture biases nearly every facet of human behavior. Understanding the culture in which their to be operating within can help organizations more effectively conduct business. In fact, Zhang (2004) cites a study by Hofstede as noting that cultural differences are the largest barrier to doing business in a global market, ranking higher than: laws, pricing, competition, information, language barriers, delivery logistics, foreign currency, or time differences. One such cultural issue can be found in the need for western management to understand that their practices may differ significantly from those used in Singapore.

Hofstede (1993) notes that the term 'management', as understood by many non-Asian organizations is primarily an American invention. In Singapore, as well as other parts of the world, the concept is often entirely different. Understanding these differences in management is a helpful first step in better understanding how the cultural differences in Singapore can affect a non-Asian organization's attempt to establish a base in the country. Hofstede uses five dimensions to better understand the differences among national cultures.

Hofstede's (1993) first dimension is Power Distance. This is the degree of inequality among citizens in a nation, that the country considers to be normal. If all citizens are relatively equal in power, then this is a small power distance. If they are extremely unequal, this is a large power distance. The second dimension is Individualism and refers to the degree to which citizens act as individuals, rather than members of a group. The opposite of this dimension is Collectivism. The third dimension is Masculinity, with its opposite being Femininity. Masculinity refers to the degree that values such as assertiveness, success, performance, and competition are associated with specifically men. The fourth dimension is Uncertainty Avoidance. This dimension can be defined as the degree to which citizens prefer structured situations over unstructured. Lastly, the fifth dimension is Long-Term vs. Short-Term Orientation, which has the long-term end of the spectrum focusing on the future (such as saving and persistence) and the short-term end focusing on the past and present. Organizations from countries outside of Singapore, who differ in these dimensions can expect to encounter vastly different cultures than in which they're used to operating.

Cultural Management Differences in Singapore:

In Singapore, non-Asian organizations are likely to find a significant lacking of nearly all modern management characteristics. The organizational chart and management theories American business students spend years studying and developing are scarce in this thriving country. Instead, the organizations that have thrived in the island nation are those that are often small, and they frequently share essential functions with other small companies, based on networks built on personal relationships. The Chinese, in particular, have had an important impact on the nature of business in Singapore, with their unique organizational formats. Today's ways of doing business have evolved from a time in Chinese society when there were no formal laws, but simply formal networks of influential people and the general principles of Confucianism that guided business, as well as daily life (Hofstede, 1993). For this reason, the structure of companies in Singapore are often vastly different from those found outside the country.

Hofstede (1993) surmises, "they are family-owned (businesses), without the separation between ownership and management typical in the West, or even in Japan and Korea" (p. 86). Singaporean, and other 'overseas Chinese' nations, often feature organizations that focus solely on a singular product or market that obtain growth through opportunistic diversification and, therefore, are extremely flexible. These organizations feature centralized decision making, typically placing decisions into the hands of the one dominant family member. Singaporean organizations are low-profile businesses that are extremely cost-conscious. There is not the traditional Western focus on market processes and management, instead the focus on the organization, their developed relationships and the workers. Non-verbal communication is another excellent example of how Singaporean culture differs.

Communication Differences Due to Culture, in Singapore:

In addition to the challenges that can occur due to language barriers in Singapore, for non-Asian organizations (Tse, 2008), other cultural communication differences can also impact the business. When considering Hofstede's second dimension on Individualism, Singaporeans are definitely more towards the Collectivism end of the spectrum. As they are group dependent, in general, they often rely on facial expressions, posture, and tone of voice to determine how a person is feeling. These non-verbal messages are often trusted more than the actual spoken word ("Singapore: Language," 2009).

Singaporeans tend to be subtle, in their communications, and indirect, which is contrary to most Western cultures who value directness especially in business dealings, but is done as a means of saving face. Silence too is an important part of communication in Singapore. It is customary to pause before answering a question, to indicate that the person has given the question the appropriate thought and consideration that is needed. Westerners habit of responding quickly to a question, to Singaporeans, often indicates thoughtlessness and rude behavior. Their demeanor is typically calm, and Westerners more aggressive style is often seen as off putting ("Singapore: Language," 2009). Authority is to be respected for both employees of an organization, in Singapore, and when dealing with other organizations (Tse, 2008), and communication content and tone should represent this respect. Business etiquette is also different in Singapore than in many Western countries.

Cultural Business Etiquette in Singapore:

Business is more formal in Singapore than non-Asian organizations are often used to. There are strict rules of protocol, with a clear chain of command, which is expected to be kept on both sides of the relationship. Personal relationships are key to all business relationships in Singapore and take time to build. Networking is extremely important and is built on long-standing personal relationships of others and the proper introductions to introduce new people into the network. As Singapore is a group-oriented culture, these links are often forged based on ethnicity, education, or place of employment. Once recognized as a member of a certain group, individuals are expected to obey the unwritten rules of the group. Tse (2008) surmises that Singaporeans often have trouble initially trusting someone they perceive to not be part of their in-group. Respect and courtesy in all dealings are expected, with meetings being made at least 2 weeks in advance ("Singapore: Language," 2009). Again, a non-Asian MNE employee may be used to being able to fit in an appointment with only a few days notice, if they have a flexible schedule, and may not plan accordingly when doing business in Singapore.

An appointment not must be made significantly in advance, but Singaporeans often schedule their meetings in writing. This echoes the formality found in many other aspects of their business dealings. Although most will schedule a meeting via e-mail, telephone or fax, most will not schedule a meeting during Chinese New Year, as businesses are often closed for that entire week. When scheduling a meeting for negotiations, a list of people who will be attending, and their titles, should be sent well in advance. Seating at the meeting is established by organizational hierarchy. As Singaporeans are non-confrontational, most will not simply say "no" and a "yes" does not necessarily mean an agreement has been made. When signing a contract with ethnic Chinese, the signing date may be decided upon by an astrologer or feng shui man (geomancer) ("Singapore: Language," 2009). Although these cultural nuances will obviously affect a non-Asian organization setting up a base in Singapore, even small things, like business cards have an effect as well.

After the initial introductions are made, business cards are exchanged. This exchange takes place using both hands. If an organization is dealing with ethnic Chinese, in Singapore, it is considered polite to have the reverse side of the card translated into Mandarin. It is also polite to examine the business card you've been handed carefully, before putting them in a business card case. The premise of this is that Singaporeans believe that how you treat their business card is indicative of how you will treat their relationship ("Singapore: Language," 2009). The practice of quickly tucking them away found in Western culture is considered rude in Singapore.