Singapore and Australia: Cultural Differences in Corporate Governance

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ne of the first people to register with the Corporate Governance NETwork, Jin Liu, Liu.Jin@anu.edu.au, is doing a comparative study of Australia and Singapore. The Seven Cultures of Capitalism by Charles Hampden-Turner and Alfonss Trompenaars (H-TT) offers insights to comparative corporate governance. The book is based on a questionnaire administered to 15,000 managers from around the world by the Center for International Business Studies in Amstelveen, The Netherlands. At the risk taking H-TT's work out of context and of alienating both the Chinese and English sides of my family, I offer a few of their findings that might be of interest to Jin Liu and others interested in cultural differences in corporate governance.

Singapore's culture seems to favor long term working relations; managers from Singapore responding to the survey are almost 3 times more likely than Australians to assume a long term commitment to the company they work for. They have a cultural affinity for the cooperative approach of Deming's quality circles and Joe Scanlon's self-managed groups. Australia is more typical of English-speaking cultures which tend to idolize the individual entrepreneur such as T. Boone Pickens, Lord Hanso and Rupert Murdoch. (p. 60)

Managers in the English speaking countries of USA, UK, Canada and Australia have a strong belief that when competition is relaxed industry takes advantage of their monopoly status and raises prices. Those in Singapore, Japan and most European countries, believe that national survival depends on intra industry collaboration. There are advantages and disadvantages to each strategy and we can see how each has grown out of cultural experience. H-TT argue that "America has responded in the last decade to foreign incursion into her markets, not by uniting but by dividing, by giving more to her rich while abandoning her poor, by trying to break unions when industrial partnerships is vital, and arguing in effect that the only way of holding off the Japanese challenge is for American corporations to compete more vigorously with one another." (p. 72) However, now that global competition extends to products made in the United States (and Australia), such strategies may no longer work.

Achievement/Ascription based on Age. Australians were more like to confer status by achievement; Singaprorians by age. H-TT argue that "a company, knowing it must pay more as its employees age, will make sure that they mature in all possible ways, as well and grow more valuable to their company in that process. To fail to invest continuously in their upgrading would be disastrous." (p. 91) "The system of mutually reinforcing ascription and achievement seems to work best." (p. 93)

When posed with the dilemma concerning an employee whose performance has slipped but who has worked for the company for 15 years with a satisfactory record, Australian managers were almost twice as likely as managers from Singapore to place primary importance on the objective work standards. Singapore managers were more likely to consider the context of 15 years of experience and question if the company has failed to nurture the employee and how dismissal might impact morale and harmony of employees remaining with the firm. "Singaporean managers were most concerned for with the employees' particular circumstances." (p. 113)

Communitarian values. Faced with the theoretical problem of a fire that had destroyed a shop, Singaporeans were almost twice as likely as Australians to suggest turning to relatives for assistance rather than borrowing money on their own. (p. 165)

Managers in Singapore were more likely to:

take a long-term view of their business
have a higher concern for product quality
be more oriented to marketing
anticipate net increases in business over the next 2 years
anticipate new employment opportunities over the next 3 years
Australian managers were more willing to accept postings abroad.

HT-T conclude their book with some criticisms of the UK and the USA which may also apply to Australia. There seems to be a tendency in English speaking countries to follow the highest returns. However, this orientation of working for the benefit of shareholders, "people whom the employees rarely see and do not know, is neither meaningful nor inspiring, while making challenging products for known customers is often both." (p. 311)

The orientation to earn the highest profit makes such cultures reluctant to cut prices to stay competitive. The emerging cultures of East Asia, such as Japan and Singapore, seem to be more willing to seek a long term strategy which emphasizes learning and knowledge over the highest short term gain. Companies are often worth more when sold off in bits and pieces. However, the net result of disaggregation and disintegration in the USA, UK and perhaps Australia has been the perpetuation of damaged morale and economic underperformance which, in turn, leads to chronic underinvestment. (p. 313)

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All material on the Corporate Governance site is copyright ©1995-1997 by Corporate Governance and James McRitchie except where otherwise indicated. All rights reserved.




		ne of the first people to register with the Corporate Governance NETwork, Jin Liu, Liu.Jin@anu.edu.au, is doing a comparative study of Australia and Singapore. The Seven Cultures of Capitalism by Charles Hampden-Turner and Alfonss Trompenaars (H-TT) offers insights to comparative corporate governance. The book is based on a questionnaire administered to 15,000 managers from around the world by the Center for International Business Studies in Amstelveen, The Netherlands. At the risk taking H-TT's work out of context and of alienating both the Chinese and English sides of my family, I offer a few of their findings that might be of interest to Jin Liu and others interested in cultural differences in corporate governance. Singapore's culture seems to favor long term working relations; managers from Singapore responding to the survey are almost 3 times more likely than Australians to assume a long term commitment to the company they work for. They have a cultural affinity for the cooperative approach of Deming's quality circles and Joe Scanlon's self-managed groups. Australia is more typical of English-speaking cultures which tend to idolize the individual entrepreneur such as T. Boone Pickens, Lord Hanso and Rupert Murdoch. (p. 60) Managers in the English speaking countries of USA, UK, Canada and Australia have a strong belief that when competition is relaxed industry takes advantage of their monopoly status and raises prices. Those in Singapore, Japan and most European countries, believe that national survival depends on intra industry collaboration. There are advantages and disadvantages to each strategy and we can see how each has grown out of cultural experience. H-TT argue that "America has responded in the last decade to foreign incursion into her markets, not by uniting but by dividing, by giving more to her rich while abandoning her poor, by trying to break unions when industrial partnerships is vital, and arguing in effect that the only way of holding off the Japanese challenge is for American corporations to compete more vigorously with one another." (p. 72) However, now that global competition extends to products made in the United States (and Australia), such strategies may no longer work. Achievement/Ascription based on Age. Australians were more like to confer status by achievement; Singaprorians by age. H-TT argue that "a company, knowing it must pay more as its employees age, will make sure that they mature in all possible ways, as well and grow more valuable to their company in that process. To fail to invest continuously in their upgrading would be disastrous." (p. 91) "The system of mutually reinforcing ascription and achievement seems to work best." (p. 93) When posed with the dilemma concerning an employee whose performance has slipped but who has worked for the company for 15 years with a satisfactory record, Australian managers were almost twice as likely as managers from Singapore to place primary importance on the objective work standards. Singapore managers were more likely to consider the context of 15 years of experience and question if the company has failed to nurture the employee and how dismissal might impact morale and harmony of employees remaining with the firm. "Singaporean managers were most concerned for with the employees' particular circumstances." (p. 113) Communitarian values. Faced with the theoretical problem of a fire that had destroyed a shop, Singaporeans were almost twice as likely as Australians to suggest turning to relatives for assistance rather than borrowing money on their own. (p. 165) Managers in Singapore were more likely to: take a long-term view of their business have a higher concern for product quality be more oriented to marketing anticipate net increases in business over the next 2 years anticipate new employment opportunities over the next 3 years Australian managers were more willing to accept postings abroad. HT-T conclude their book with some criticisms of the UK and the USA which may also apply to Australia. There seems to be a tendency in English speaking countries to follow the highest returns. However, this orientation of working for the benefit of shareholders, "people whom the employees rarely see and do not know, is neither meaningful nor inspiring, while making challenging products for known customers is often both." (p. 311) The orientation to earn the highest profit makes such cultures reluctant to cut prices to stay competitive. The emerging cultures of East Asia, such as Japan and Singapore, seem to be more willing to seek a long term strategy which emphasizes learning and knowledge over the highest short term gain. Companies are often worth more when sold off in bits and pieces. However, the net result of disaggregation and disintegration in the USA, UK and perhaps Australia has been the perpetuation of damaged morale and economic underperformance which, in turn, leads to chronic underinvestment. (p. 313) Back to the top with the Corporate Governance NETwork! Contact: corpgov@usa.net All material on the Corporate Governance site is copyright ©1995-1997 by Corporate Governance and James McRitchie except where otherwise indicated. All rights reserved.