How can a nation be un-entrepreneurial?

On 15 July 2005, Raymond Lim, a Minister of the Singapore government, gave a speech to an audience comprising of budding entrepreneurs. The entire speech can be accessed here: speech.

Of particular interest to me is the notion that at the moment, Singapore is not a very entrepreneurial society.

Despite some increases in the overall rate of entrepreneurial activity (as calculated by the Singapore team of the Global Entrepreneurship Monitor) since 2001, Singapore still ranks behind many other countries with similar or higher levels of Gross Domestic Product (i.e. countries which have a similar economy).

This appears to be particularly "curious" as it is almost assumed that entrepreneurship -- broadly defined as having the desire to start one's own company -- is a very natural human behaviour. Don't believe me? Just see the number of "how to" guide books on the subject of entrepreneurship or start-ups.

Some psychologists posit that not everyone is inherently entrepreneurial. Some people's personality is just not suited for entrepreneurial activities, whereas others have the 'necessary' personality traits. These traits, according to these organizational psychologists, might include (but not be an exhaustive list) risk-taking, innovative, and calculative, etc.

Other social and behavioural scientists believe that the environment is the key factor behind why people become entrepreneurial, regardless of whether people have the necessary traits. The clearest example would be that people who have no other options for employment are forced by circumstances to start their own companies! Conversely, laws and rules in society could discourage entrepreneurship; for example, during communist times, entrpereneurship was in fact outlawed as a capitalist evil.

Of course there is some agreement between the 'nature' and the 'nurture' perspectives. The nature-nurture cooperation could be validated by an explanation such as the external environment forced people to become self-employed, but it is their traits that would affect whether these entrepreneurs are actually successful (or not).

A more problematic question is the claim that a people, a society, or a group of people are not very entrepreneurial.

Assuming that the data (or the empirical proof) is accurate, several hypotheses could be forwarded for such a situation:

1. The distribution of 'entrepreneurial genes' within this particular community is lower than in most other societies.

2. The environment is extremely discouraging towards entrepreneurs, suppressing even those that do have such traits.

Until we find a blood test that can test hypothesis no.1, the only hope we have of answering this question must be an examination of hypothesis no.2.

Therefore, in order to answer the question about Singapore, assuming that Singaporeans are not genetically un-entrepreneurial (or at least the distribution of such 'genes' is no worse than in most other societies), we need to find 'societal impediments' for being entrepreneurial.

What do you think might these impediments be?

(more coming...)

Outsourcing and offshoring

In the year 2000, a research monograph entitled ‘From Silicon Valley to Singapore: Location and Competitive Advantage in the Hard Disk Drive Industry’ (Stanford Business Books).

The research team, led by David McKendrick, explained that the shifting of hard disk drive production, once concentrated in Silicon Valley, to the island city-state of Singapore during the 1990s, was because of a combination of the strategic behavior of multinational corporations, and the initiatives of certain policy makers, such as those in Singapore.

In therefore seems to be a situation of déjà vu, when Maxtor—one of the largest makers of hard disks in the world—announced that it would be sharply reducing production at its Singapore plant, and relocating most of the production in China. In the process, Maxtor expects to lay off around 5000 employees in Singapore, and hire roughly the same number in China.

Singapore only found out about the retrenchments when Maxtor said, in a filing to the Securities and Exchange Commission, that it would boost revenues with the shift to a yet unnamed location in China. This, according to Maxtor, despite having to incur severance costs in Singapore and start-up costs in China.

Needless to say, there was shock in Singapore. But probably no worse than the shock once felt in Silicon Valley, and probably no greater when it is time to move production out of China to somewhere else in the future.

Maxtor is only doing what it feels is fiscally sensible, as it is entirely accountable to its shareholders. In the end, leaving Singapore was not a personal but a business decision.

So don’t cry for Singapore. The government and those working in the industry have long known that multinational corporations are footloose. It was precisely because the government understood the lure of cheaper costs that it targeted the hard disk industry in the 1990s, after many low-end manufacturers left Singapore. The government already has in place its biomedical sciences initiative, designed to attract the ‘big pharma,’ (a.k.a. the giant biotechnology and pharmaceutical corporations) to Singapore. By and large, the initiative has been relatively successful, as Singapore will soon become the pharmaceutical manufacturing hub, not just for Asia, but perhaps the world.

You might feel sorry for the workers, many of whom cannot be retrained for the biotechnology industry. The skills set for the latter are just out of reach for many from the manufacturing sector.

However, Singaporeans will probably get over it, especially when there is a government that will do its best to strategically place the retrenched in other less skill intensive sectors, such as the hospitality sector.

Be happy that the standard of living for around 5000 people in China will rise, thanks to Maxtor. Hope, for their sake, that when Maxtor decides to move once again, that the employees and most of Chinese society will be in position to take the next step up the technology ladder, perhaps even move into the biotechnology sector (which will probably come by way of Singapore again).

Workers in America complain about being ‘Bangalored,’ in reference to the number of jobs being outsourced to this city in India. But those in Bangalore already are bracing themselves to be Bangalored, most probably by other cities within India.

Workers everywhere need to realize that this is the way global capitalism operates. Governments everywhere already know how global capitalism operates. Some are in a better position than others to cope with it. Therefore, ranting to the World Trade Organization, the World Bank, the International Monetary Fund, the G-7 countries, and other organizations perceived to be representative of global capitalism will bring no actual benefit.

Just as capitalism spurs growth through competition, global capitalism generates competition between cities, regions and countries. As with all forms of competition, there will necessarily be winners and losers. If one argues that Singaporeans are losers today, then be reminded that they once were winners too, at the expense of Californians.

As a sociologist, I can only wish that everybody gets a chance sometime to ‘win’ in the global capitalism game. Maybe this is how global capitalism works, in that it gives a few places each a turn to experience the fruits of growth. Perhaps this sounds idealistic, as many places around the world appear to be permanently by-passed. However, remember the old saying? ‘To have loved and lost is better than to have never loved at all.’

Well, maybe in the industrial world, to have produced and then become outsourced is better than to have never been employed at all.

To Maxtor: thanks for the (hard disk storage) memories.