emerging challenges of hr in singapore.docx

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Emerging issues in strategic HRM in Singapore

Khatri, Naresh .International Journal of Manpower 20. 8 (1999): 516-

530.

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Show duplicate items from other databasesNaresh Khatri: Nanyang Business School, Nanyang Technological University, Singapore

The forces of globalization are sweeping across the world and national borders are

disappearing. One major outcome of this change is that competition has intensified

greatly. In the past, inefficient companies could survive because they were protected by

national boundaries. This may not be possible any more. In the global era, companies

have to be able to take on other companies located in any part of the world. They need to

be supple and adaptable to meet the competitive challenge.

Naturally, the question arises of how companies can face the competitive threats posed by

globalization. The premise of this paper is that people are one of the most important

factors providing flexibility and adaptability to organizations. For example, a chief

executive of a big company in Asia noted that, in tapping the many new opportunities in

the growth corridor of the Asia-Pacific region, or even the world, it is the human matrix

that determines the success of the ventures (The Straits Times, 1995). Further, one needs

to bear in mind that people (managers), not the firm, are the adaptive mechanism in

determining how the firm will respond to the competitive environment (Rundle, 1997).

Perhaps the field of strategic human resource management has emerged mainly in

recognition of the fact that human resources need to be managed strategically for the firm

to enjoy sustainable competitive advantage over competition. Several scholars have noted

that managing people is more difficult than managing technology or capital (Barney, 1991;

Lado and Wilson, 1994). However, those firms that have learnt how to manage their

human resources well would have an edge over others for a long time to come because

acquiring and deploying human resources effectively is cumbersome and takes much

longer (Wright et al., 1994).

HR managers in Singapore and many other Asian countries are facing difficult challenges.

However, with challenges come opportunities. For example, MacLachlan (1996) noted that

East Asia is the best place in the world to be an HR manager because of the focus on

recruiting, developing, and retaining staff. However, at present, HR managers in Singapore

and other Asian countries are not up to the challenge because of the lack of strategic

approach to HRM and lack of HR competencies (Cunningham and Debrah, 1995; Debrah,

1994; Khatri, 1998, 1999). For example, Debrah (1994) found that the ad hoc nature of

HRM policies and practices of companies in Singapore contributes significantly to the job-

hopping phenomenon. Cunningham and Debrah (1995) reported that line managers and

executives took over some of the functions of HR managers because HR managers lacked

the skills necessary to perform their duties competently. Khatri (1998) noted that

companies in Singapore under-practice strategic HR activities in two important areas:

recruitment/selection and training/development. Companies were found to use

employment tests rarely and give little emphasis, if any, to the validity of selection

instruments. The most common approach to selection was the use of unstructured

interviews and unstructured interviews have very low, if any, validity. The author

concluded that job-hopping in Singapore could be attributed to a significant extent to poor

recruitment and selection practices. Further, the author found that companies in Singapore
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neglect some critical aspects of training and development such as evaluation of training

programs, training needs analysis, and cost-benefit analysis. In another study, Khatri and

Chong (1999) found that poor management practices had much greater influence on

employee turnover than bad attitude of employees. Factors under the control of

management contributed a unique variance of 37.6 per cent and uncontrollable factors

(bad attitude and labor shortage) a meager 5 per cent of the unique variance to theturnover model. All the above studies suggest that HRM in Singapore is not a particularly

well-managed function. Given the competitive environment companies in Singapore face

now, they will contribute to their own demise by ignoring the vital role of strategic HRM.

The remainder of the article discusses issues critical in managing human resources in

Singapore companies strategically. It suggests that business strategy, organizational

culture, competency levels of HR managers, and presence of HR strategy are the four most

important factors for managing HRM strategically. One other major issue, HR outsourcing,

that is being widely discussed in both academic and practitioner circles is also dealt with.

The arguments are organized in the form of propositions around the above five issues.

Organizational strategy

P1: Strategic archetypes affect the integration of HR management with organizational

strategy.

Following the contingency perspective, firms that achieve a tight vertical fit between

strategy and HR management perform better than their counterparts who have a

disjointed linkage (Baird and Meshoulam, 1988; Boxall, 1991; Truss and Gratton, 1994).

While the relationship between HR practices and organizational performance has received

much empirical investigation (Arthur, 1994; Terpstra and Rozell, 1993; Huselid, 1995;

Youndt et al., 1996; Huang, 1998; Lahteenmaki et al., 1998; Wright et al., 1998),research on the relationship between strategy and HR practices is predominantly

theoretical in nature, with efforts generally focusing on normative frameworks on how HRM

should be integrated with business management processes (Miles and Snow, 1984; Baird

and Meshoulam, 1988; Lengnick-Hall and Lengnick-Hall, 1988; Schuler, 1992).

Surprisingly, there are few studies that look beyond what the vertical link actually

comprises (Golden and Ramanujam, 1985; Buller, 1988; Ropo, 1993; Bennett et al.,

1998). Thus, we know relatively little about what factors affect the degree of vertical

linkage and how they do this (Truss and Gratton, 1994; Bennett etal., 1998; Wright et al.,

1998).

Golden and Ramanujam (1985) noted that the HR function needs to address issues whichvary accordingly to the type and level of strategy and thus the HR system has to develop

different degrees of linkage to deal with those issues specific to the strategy. Buller (1988)

contends that firms engaging in a diversification strategy would have a looser HR-strategy

linkage than firms concentrating on their core business. This is because the strategic

conditions of the diversification do not allow the HR system and programs to be developed

and applied company-wide.

In a recent study, Wright et al. (1998) found that strategic HR involvement is more

prominent when companies are pursuing product innovation strategies. Bennett et al.

(1998) used Miles and Snow's (1978) typology and established that analyzers exhibit

higher levels of HR-strategy integration than either defenders or prospectors. They also

found that the level of HR integration between defenders and prospectors was virtually

identical. This is surprisingly different from Miles and Snow's (1978) proposition that


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defender and prospector exist as opposite ends of a continuum, with the analyzer in the

middle.

Miles and Snow's (1978) strategic typology is regarded as a relatively comprehensive

model, richly describing firm characteristics and the strategy configurations of each type of

organization. It is widely used in strategy literature because of its ability to generalizeacross a wide variety of organizations and industries. The typology is used here to

illustrate how strategic archetypes may influence the link between HRM and strategy.

It could be argued that different strategic archetypes differ in their approaches to acquiring

and developing human resources and thus require different degrees of integration between

the HR function and the organizational strategy. For example, defenders operate in a

relatively stable product-market domain and focus on developing employees to create and

support efficiency. Thus, HR practices are reactive, structured and well defined.

Prospectors face a more unpredictable and uncertain task environment than defenders and

thus desire to create and maintain flexibility in the workforce. To support this strategy, HR

function works in a manner that is proactive and less structured so as to identify anddevelop quickly critical human resources required by the ever-changing needs.

Analyzers, on the other hand, are expected to have greater integration because of the

need to design HR practices to strike a balance between the two sets of skills needed by

the unique array of defenders and prospectors. To fulfill the stringent requirements, The

HR function is expected to establish a stronger linkage with the corporate strategy.

Khatri (1999), in a sample of the 200 largest companies in Singapore, found that HR

practices of companies in Singapore varied according to their strategies. However, no

study in Singapore has examined the influence of organizational strategy on the

integration of HR practices with organizational strategy. It is argued that the integration ofHR with overall strategy in Singapore, like in the western companies discussed above, may

well depend upon strategic archetypes.

Organizational culture: control-based or commitment-based

P2: Organizational culture (control-based versus commitment-based) determines the

status of HR function and its integration with the rest of the organization.

Organizational culture is one of the most important factors of the internal organizational

environment that have a great bearing on SHRM (Buller, 1988; Truss and Gratton, 1994;

Gennard and Kelly, 1995; Aryee, 1991). Organizational culture exists in the form of

norms, values and rules used by organizational members to interpret and evaluate their

behaviors as well as those of others. At the same time, culture provides a system that lets

people function in a way coherent to the publicly and collectively accepted meanings

operating for a given group at a given time.

In examining the effect of culture, Truss and Gratton (1994, p. 675) commented that "the

type of culture an organization has can exert a strong influence on the nature of its

strategy (e.g. defender, prospector or analyzer) and also on its chosen HR strategy".

Similarly, one would expect the characteristics of the HR department and its activities to

alter following a change in organizational culture. This is because different organizational

cultures emphasize varying level of "shared vision" and "understanding of organizational

goals and values" (Lundberg, 1985), and thus place different needs and expectations on

the HR department (Buller, 1988). With this change of needs and expectations, the HR


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function would need to be transformed accordingly to reinforce or develop the

organizational culture.

Evans (1986) observed that organizational culture is managed partly through human

resource management practices such as selection, development and reward, and employee

retention (Wilkins, 1984). HR practices can be used effectively to reinforce the culture.

However, little is known about the relationship between culture and HRM. Issues such as

"What type of impact culture has on the HR practices and how great that impact would be"

are not well-examined (Aryee, 1991; Lundberg, 1985). Likewise, it is not known what role

HR function plays in different cultural contexts. Therefore, organizational culture, with

regard to managing HR strategically, is too powerful an issue to be ignored.

Following the globalization wave and the change in management thought, organizations

are gradually moving away from the centralized, top-down, ruled-based culture (control-

based) to adopting a decentralized, bottom-up and flexible culture (commitment-based)

(Walton, 1985). Walton's (1985) paper on control-based versus commitment-based HRMsystems is widely regarded as the classic statement of this position (Boxall, 1996; Lundy

and Cowling, 1996). The author noted that firms are experiencing a transition from

imposing control to eliciting commitment when managing their workforce. This is because

a model (control) that assumes low employee commitment and that is designed to produce

reliable if not outstanding performance simply cannot match the standards of excellence

set by world-class competitors (Walton, 1985, p. 79).

Organizations employing a control-based culture differ in their basic approach to managing

human resources from organizations having a commitment-based culture (Walton, 1985;

Arthur, 1994). For instance, employees are required to be efficient and behave in an

orderly manner in a control-based culture. To monitor and control effort, the hierarchy istall, roles are specialized, status symbols are emphasized, prerogative lies with the

management, and adversarial labor-management relations exist. In contrast,

commitment-based culture concentrates on attracting, satisfying and motivating highly

skilled employees. The focus of management is to minimize the status differences

presented in the organization, engage in activities such as employee involvement,

information sharing, job security guarantees, and extensive employee benefits. Further,

the organization emphasizes joint problem solving and planning, and invests in developing

harmonious relationships with employees (Walton, 1985; Arthur, 1992). In sum, the

commitment model represents a shift in societal values away from the traditional authority

and compliance.

According to the behavioral perspective, the control and commitment cultures require

different sets of HR programs and policies to elicit those characteristics, behaviors and

attitudes desired (Cappelli and Singh, 1992). In a control-based culture, since the

objective of the organization is to "control", the HR function takes on the "stick approach".

Much of the initiative comes from the top management, and the system is characterized by

stringent rules and procedures (Walton, 1985). HR practices are structured, reactive and

well-defined and thereby minimize the role of HR in the organization and the need for

managing HR strategically.

On the other hand, the goal of the commitment-based culture is to promote mutuality of

interest between employer and employee. This is achieved by increasing autonomy,

responsibility and influence of employees at all levels. Employees are extensively involved

in managerial decisions and formal participation programs and there is a higher


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percentage of group problem solving and socializing activities than in the control-based

culture (Arthur, 1992; 1994). To elicit the required behaviors, HR practices are flexible,

proactive and strategically inclined (Walton, 1985). Hence, it is expected that in a

commitment-based culture, the HR function plays an important role and that strategic

HRM would be more widely adopted.

At present, Singapore companies are relying mostly on control-based management

philosophy and thus one would expect a secondary role for HRM function in the majority of

the organizations (Khatri, 1999). This indeed is the case. HR function in most

organizations in Singapore is performing a routine, supportive, and fire-fighting role

(Debrah, 1994; Cunningham and Debrah, 1995; Khatri, 1999; Khatri and Chong, 1999).

The trend now is that HR function is seen to be playing an important role and there is

much emphasis on employee participation and involvement. Thus, organizations are

moving toward a commitment-based philosophy. Companies in Singapore are also

realizing the importance of organizational commitment because of chronic problem of job-

hopping. They ignored the importance of commitment-based culture and relied heavily on

monetary rewards and top-down mechanisms to tide over job-hopping only to realize thatsuch measures have only limited impact. For instance, an essential aspect of the

Singapore Government's human resource development program is to encourage managers

to adopt human management techniques to build "worker loyalty" and "team spirit"

(Cunningham and Debrah, 1995). It is argued that if companies had used theHR function

as a tool to create commitment-based culture, companies would have been more

successful in overcoming job-hopping (Khatri and Chong, 1999).

Competency level of HR managers

P3: The competencies/skills of HR managers determine the status of HR function and its

linkage with organizational strategy.

Human resource can be a potent source of sustainable competitive advantage to an

organization (Barney, 1991; Wright et al., 1994). Consequently, the firm's HR function,

which has much responsibility in managing this important resource, should receive more

commitment from the organization. However, Barney and Wright (1998) pointed out that

the real scenario is quite contrary to the above view. They observed that organizational

decisions do not reflect this stated commitment to people or a respect for the HR function.

They argue that the fault could lie in part with the competency level of HR managers. If

the HR managers are competent enough to focus attention and activities towards those

aspects that will truly develop and maintain sources of competitive advantage, the status

of the HR department would be heightened (Barney and Wright, 1998, p. 37). Similarly,Kelly and Gennard (1996, p. 19), through the use of extensive interviews with the HR

managers, concluded that the initial condition to enhance the status of HR managers in the

eyes of other directors was that "HRM directors should be competent and have a record of

achievement in their own basic field".

Apart from enhancing the status of the HR department, past research also suggests that

the competency level of HR managers has a major influence on the level of integration

between HR management and strategy (Golden and Ramanujam, 1985; Buller, 1988;

Truss and Gratton, 1994). Golden and Ramanujam (1985) commented that the

demonstration of expertise by HR managers resulted in a significant uplift of HR stature

and also tightened the HR management and strategy linkage. Ropo (1993, p. 51) stressedthat "the internal dynamism of the HR function (in this case, the presence of competent


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managers) serves as the most critical mechanism to keep the integration process going

after it has been started under favorable organizational and strategic circumstances".

Choosing the right HR managers is important to the strategic management of the HR

function. If HR professionals do not have the right skills, and are not able to think on a

macro-business level, the HR function would be relegated to a supportive/secondary role.On the other hand, if HR managers can re-evaluate their priorities and acquire a new set

of professional and personal competencies, the HR function would be able to ride the wave

of business evolution proudly with other functions in the organization (Ulrich, 1996;

Purcell, 1989; Ulrich et al., 1995; Becker and Gerhart, 1996; Barney and Wright, 1998;

Wright et al., 1998). As noted by Barney and Wright (1998), one of the reasons why HR

executives are not invited to the strategic planning table is that they are unable to display

the required competencies. Ulrich (1996) and Ulrich et al. (1995) have identified four sets

of HR competencies needed: knowledge of HR practices, knowledge of business, personal

credibility and ability to manage change.

One of the most important reasons for the low status of the HR function in Singapore isthe lack of competencies of HR managers (Cunningham and Debrah, 1995; Khatri, 1999).

For example, Cunningham and Debrah (1995), in a study of HR managers in Singapore

companies, found that when HR managers lack the necessary skills to perform their duties

competently, line managers and executives take over some of the functions of HR

managers. The authors observed that HR managers were excluded from the strategic

planning committees and meetings because they were perceived to lack the necessary

competence, authority, and influence to be involved in important organizational decision

making.

HR strategy

P4: HR strategy or lack of it affects vertical and horizontal fits of SHRM.

Apart from seeking a vertical fit between HR management and organization strategy,

achieving horizontal fit among individual HR practices is equally important. This is because

the full impact of HR practices on firm performance arises when HR practices exist as a

coherent system within a particular system strategy (Wright and Snell, 1991; Grundy,

1998).

Although past studies indicate that a coherent HR system maximizes the effectiveness of

the HR practices (Wright and Snell, 1991; Lado and Wilson, 1994; Huselid, 1995; Becker

and Gerhart, 1996), there are few empirical studies that looked at the factors affecting the

horizontal fit. Research on SHRM fit has mostly concentrated on testing whether firms'

policies are aligned with the overall strategy or whether benefits are derived (Morris and

Pinnington, 1998). Baird and Meshoulam (1988) proposed that it is equally important to

look at how individual HR practices can be effectively aligned.

An important contribution by Grundy (1998) sheds some light on why congruency is

lacking among HR practices: HR practices are viewed in segregation, and HR strategy is

frequently owned by HR managers and not shared with other functional managers. The

author also concluded that in the absence of a clear link between HR strategy and

corporate strategy, there would be a lack of synergies among HR practices. In other

words, HR strategy is important in achieving horizontal congruence among the individual

HR practices.


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Similarly, Tyson (1995, p. 169) defined HR strategy as being "the intentions of the

corporation, both explicit and covert, towards the management of its employees,

expressed through philosophies, policies and practices". In the absence of an HR strategy,

HR practices are likely to be inconsistent with one another because there is no broad

framework to guide individual HR practices. In other words, the presence of HR strategy,

formal or informal, explicit or implicit, serves as an "over-arching" framework which guidesthe individual HR practices to integrate and exist as a coherent system. Hence, one would

expect an organization having an HR strategy to have consistent and non-fragmented HR

initiatives (Massey, 1994).

The implications of the above argument fall into two areas: the presence of HR strategy,

whether formal or informal, explicit or implicit, helps to manage HR strategically and

organizations that manage HR strategically have consistent HR initiatives and thus their

HR practices are coherent with one another. This is because a strategic approach to HR

management would allow an organization to understand that its HR activities are inter-

related, and recognize the synergies or conflicts among HR practices (Wright and Snell,

1991). At the same time, the presence of an HR strategy might tighten the vertical linkagebetween HR practices and organizational strategy.

What is the Singapore scenario? Cunningham and Debrah (1995) noted that HR managers

in Singapore companies may be able to deal effectively with HR problems if they assume

broader and expanded roles in strategic HRM. That is, HRM needs to be included in the

formulation and implementation of organizational and HRM strategies. For example, HR

managers need to formulate and implement HR strategies to cope with the tight labor

market that could create and sustain competitive advantage for the organization. Such an

approach would help to minimize the erosion of the HRM role and the status of HR

managers as a result of the intrusion of line managers in HRM issues. Properly formulated

HR strategies could also curtail the ambiguity in the HRM role and increase the authorityand influence of HR managers in organizations.

HR outsourcing

P5: The outsourcing of HR activities or programs depends on (a) organizational strategy,

(b) organizational culture, (c) competencies/skills of HR managers, and HR strategy.

An increasing trend in many organizations is to outsource HR work (Lever, 1997), in

particular, administrative and high transaction cost activities (Grundy, 1998; Klass et al.,

1998). Much of the motivation originates from organizational desire to minimize the

workload of regular workers, reduce cost, reap economies of scale, improve quality andefficiency, and gain expertise from outside vendors (Laabs, 1993; Lever, 1997; Ulrich,

1996; Klaas et al., 1998). Others argue that HR outsourcing represents a strategic tool for

achieving competitive advantage. Their argument is that outsourcing the transaction-

based HR activities (e.g. benefit administration) frees HR managers and other managers to

grapple with strategic business issues (Switser, 1997).

Generally, some aspects of the HR functions are judged as cost centers (e.g. benefit

administration) but other elements of an HR system create value as part of a firm's

strategic infrastructure (Huselid, 1995). Decisions with respect to outsourcing might be

straightforward at the two ends of the cost-value continuum, but for many elements of an

HR system, the decision is not so clear. As a firm assumes a strategic perspective for its

HR system, HR activities like recruiting and selection, which used to be the potential

candidates for outsourcing when quantified against a cost standard, might be retained if


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their fit with the remainder of the HR system is a critical source of value for the entire HR

system (Becker and Gerhart, 1996). Outsourcing of these firm-specific skills would

represent short-sightedness on the part of the organization (Barney and Wright, 1998) and

would impede the ability of the organization to develop unique competencies within its

workforce (Ulrich, 1996).

There are few empirical studies on HR outsourcing, especially on factors influencing the

level of outsourcing activities, to provide possible answers. A study conducted by Klass et

al. (1998) used transaction-cost economies to explain why firms differ in their reliance on

HR outsourcing. They found that in those firms where decision makers perceive having a

unique HR, positive HR outcomes, lots of internal promotional opportunities, and

comparatively fewer competitors involving in HR outsourcing, would rely less on HR

outsourcing. In firms where the demand for labor fluctuates and the pay remuneration

leads, reliance on HR outsourcing would increase.

Firms may vary in their propensity to outsource the number, type and kind of HR

activities. However, little is known about what factors cause firms to outsource more orless of their HR activities and also which HR activities are most frequently outsourced.

Organizational strategy may be one of these factors. Miles and Snow (1984) match

different HR strategies with the three strategic archetypes. The fact that different

strategies differ in their requirements for HR practices may imply varying needs for HR

outsourcing. For example, in firms that have a strategy emphasizing the criticality of the

HR function, one would observe less reliance on HR outsourcing. Likewise, for a strategy

that regards the HR function as administrative and relatively unimportant, one would

observe more outsourcing of HR activities.

Often, one of the weaknesses of outsourcing is the inability to reinforce and preserve thecorporate culture (Quinn and Hilmer, 1994). In other words, there would be greater level

of HR outsourcing if outside vendors are able to replicate the corporate culture.

Competencies possessed by the HR managers may also affect the level of HR outsourcing.

Laabs (1993) asserts that activities should be in-sourced if companies can perform them

cheaper, better and in a more timely manner. And if HR managers have the critical

competencies and experience to manage an outsourcing project at a lower cost and higher

efficiency, most likely the project would be conducted in-house. Therefore, the presence of

a competent HR manager may reduce the likelihood for HR outsourcing.

The presence of HR strategy may also affect the outsourcing of HR activities. If the HR

practices of an organization exist in a coherent system, the level of strategic activities

would go up. Outsourcing vendors would then find it difficult to replicate those strategic HR

activities and firms would also be unwilling to outsource HR activities that would have an

added advantage to them (Becker and Gerhart, 1996).

In Singapore, at present the state of HR function and competencies of HR managers are

not satisfactory. As a result, line managers have much say in HR decisions and they want

to avoid the involvement of HR function as they see it as bureaucracy or burden. So, the

tendency may be to outsource a lot of HR activities/programs. However, doing so may be

more expensive than organizations realize. In view of the changing role of HR function in

Singapore, the strategic HR activities would be performed more and more inside and

routine HR activities would be more and more outsourced. Vaidyanathan (1992, p. 34)

puts it nicely:"Things are looking up . . . their (line management) attitude will change in


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the coming years, simply because Singapore has no resources other than its people . . .

So, if an HR manager is capable of performing effectively as an in-house consultant linking

his/her people with the productivity or performance of the organization, the role he/she

plays will be pretty much indispensable."

Implications and conclusions

Despite many theoretical and empirical studies in strategic HRM, no coherent theoretical

framework has emerged in the field. This paper discussed various propositions on key

strategic HRM issues. It is hoped that an understanding of these issues would go a long

way in developing a coherent body of knowledge in the field.

Further, all the above issues would lend themselves better to a qualitative study. A major

limitation of prior work in the strategic HRM area is the lack of in-depth qualitative studies

(Dyer, 1985; Guest, 1991; Boxall, 1996; Becker and Gerhart, 1996; Guest, 1997). This

form of research is very much needed in strategic HRM in developing comprehensive and

more valid models and frameworks. This is because the long-term, multidimensional andpolitical nature of both business and human resource strategies require such form of

research methodology (Boxall, 1993; Ropo, 1993; Kelly and Gennard, 1996; Tyson, 1995).

Qualitative research also shifts focus from content to process and is consistent with the

shifting focus of the field from planning to strategizing. For instance, Dyer (1985, p. 26)

argued that "the immediate need is for descriptive research aimed as much as possible at

providing accurate descriptions of what is in a variety of settings . . . such research, by its

very nature, is exploratory and being pursued through qualitative methods, principally in-

depth case studies. Once the territory begins to become better known, and descriptive

theories begin to emerge, attention can turn to smaller-scale measurement and hypothesis

testing studies . . ." Becker and Gerhart (1996, p. 796) also suggested that "deeper

qualitative research is needed to complement the large-scale, multiple-firm studies thatare available in order to find out managers' HR decision making process". Guest (1997, p.

274) complemented the view by writing that "case study research can help to generate

insights which can be more extensively tested". In a manner similar to Dyer (1985), Guest

(1991) proposed that more detailed case study research on HRM strategy is needed.

Unfortunately, response to these increasing calls for more case study research has been

quite disappointing. "What is lacking is not an understanding of this need (for case study

research), but the commitment of academics to take it more seriously" Boxall (1993, p.

658).

Further, most of the studies in the strategic HRM field are based on the Western context

and there is relatively little research in the eastern context. Boxall and Dowling (1990)noted that the seminal HRM texts are all American and the most significant critical

responses to date have been British. Boxall (1993) suggested that globalization and

increasing environmental complexity have called for the development of a comparative and

international stance on the subject. Likewise, Guest (1997) emphasized that researchers

need to ensure that the studies are not confined to the USA only. Therefore, conducting

strategic HRM studies in other parts of the world, for example Asia, would help to meet the

shortage of empirical work in the field in those parts of the world and also serve as a

vehicle for comparative studies.


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Some future directions of human resource practices in Singapore

Chew, Irene ;Goh, Mark .Career Development International 2. 5 (1997):

238-244.Turn on hit highlighting for speaking browsers

Show duplicate items from other databasesAbstract (summary)TranslateAbstract

It is argued that the regionalization and globalization of companies in the Asia Pacific region is forcing

human resource managers and general managers to rethink their systems of management. A survey of

HRM practices and policies in Singapore was conducted recently with the purpose of enabling

managers , faced with the increasing regionalization of firms, to understand better the role of HR

development.

Full Text TranslateFull text

Irene Chew: National University of Singapore, Faculty of Business Administration,

Singapore

Mark Goh: National University of Singapore, Faculty of Business Administration, Singapore

Introduction

In an increasingly competitive global economy, managers at all levels are seriously looking

for practices, procedures and policies to use to gain a competitive advantage. One area of

focus is the more effective management and use of human resource (Ferris, Russ,

Albanese and Mortoccio, 1990). Indeed, human resource management (HRM) has

increasingly become important to the organization. It has evolved from a traditional role of

just handling employee welfare and compensation to the current major functions of

recruiting, manpower planning, training and development. In the past, Tung (1984)

asserts that HR practitioners generally are less active in the strategic planning and

implementation of the organization, and are often regarded as "glorified file clerks".

Traditional HR managers simply assist in the hiring function of the organization by

screening applicants and handling mundane tasks like company payroll and other

compensation benefits (Laurent, 1986; Lorange, 1985).

Today, HRM, in many countries, is undergoing rapid development and fundamental change

(Bevort, Peterson and Sundbo, 1992; Gunnigle, 1992; Papalexandris, 1992). Singapore is

no exception. In Singapore, HRM development has undergone many phases in recent

years (Chew and Teo, 1991). The reasons underpinning this change in HRM practices and

policy are attributed to two main factors - internal and external. Regionalization of local

companies and the international economic forces at work contribute to the external push

factors. The tight labour market, a better educated workforce, an ageing workforce and

the better quality of work life are just some internal factors. In total, these factors present

new challenges to HRM. Few would dispute that companies which can overcome these

challenges and harness the human resources to their fullest potential can only stand to

gain from the quantum leap in productivity improvement and achieve a competitive edge

over competition.
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This empirical paper examines the extent to which the traditional role of HR practices are

present in Singapore. It also asks if differences exist in the HR practices between

organizations with and without HR departments, and the HRM practices and policies

organizations focusing on. For instance, is the HR function perceived as an integral part of

a company's operations and are the requisite skills and knowledge required of HR

practitioners to enhance the level of professionalism?

We attempt, through this study, to offer an insight into the role and representation of the

HR function in organizations, current HRM practices of companies in Singapore as well as

anticipated future practices. On HRM policies, the survey covers a wide range of topics,

including recruitment and selection, performance appraisal, incentive schemes, labour-

management relations, employee involvement and communications. The coverage allows

for provision of information on the similarities and differences in HRM policies and practices

between companies with HR departments and companies without.

Research methodology

The data presented in this study were collected by means of structured personal

interviews. The sample was selected from the National Productivity Board's database of

organizations and the Singapore Business Listing. The sample frame contained business

establishments of all industry sectors but excluded establishments employing fewer than

ten people. A total of 2,042 establishments were contacted. Of these, 408 companies

participated in the study, yielding a response rate of 20 per cent. Of the 408 companies,

190 respondents were reported to have either a personnel or human resource department

in which HR functions are carried out formally. The rest of the sample do not have a formal

HR department. Further investigation on this subset revealed that either the HR function is

carried out by the CEO or in an ad hoc manner mainly by the finance department.

Profile of respondents

Companies from the manufacturing sector constituted 30 per cent of the total sample, and

those from the commerce, and finance and business services sectors comprised 25 per

cent each.

The majority of companies with HR departments were from the manufacturing sector (35

per cent) followed by those from the commerce sector (26 per cent). As for companies

without HR departments, the majority were from the financial and business services (28

per cent) sector, followed closely by the commerce (27 per cent) and manufacturing (26

per cent) sectors. These results are exhibited in Table I.

Ownership

Slightly more than half of the companies were locally owned. Foreign-owned companies

constituted about a third. Half the companies with HR departments were local firms, and

about 40 per cent were foreign-owned. For companies without HR departments, there was

a larger proportion of locally owned companies which made up 57 per cent of the total

sample, and the foreign-owned ones accounted for 29 per cent.

Company size

About six in ten companies were small and medium-sized firms (SMEs), with less than 100

employees. Companies with 500 or more employees accounted for 12 per cent of the


12/29

sample. The majority (65 per cent) of the companies with HR departments were fairly

large firms with at least 100 employees. For companies without HR departments, SMEs

constituted a large proportion (81 per cent) of the total sample.

Role and representation of HR functions

Person in charge of HR functions

The study was targeted at the person in charge of the organization's overall HR functions.

About one-third of the 408 respondents identified themselves as CEOs, indicating that

CEOs sometimes take charge of the responsibility of personnel or HR matters. Another 25

per cent were HR managers. Most of the respondents in companies with HR departments

were HR managers (49 per cent). On the other hand, for respondents in companies

without HR departments, the majority were CEOs (42 per cent) followed by

administrative/finance managers (19 per cent) and executives (18 per cent).

Profile of HR practitioners

Of the HR managers 59 per cent were in the 36-40 age group. HR executives were

relatively younger as most (57 per cent) of them were between 21 and 35 years old. On

the length of service with current organization, half of the HR managers have one to five

years service and 40 per cent have six years or more. As for HR executives, 40 per cent

have one to five years service and 49 per cent have six years or more. In general, half of

the managers and executives are university graduates and 40 per cent have either a

diploma or A-level qualifications.

Most HR managers have less than ten years of working experience in directing HR

functions, including present and previous organizations while most of the HR executives

(51 per cent) have less than five years.

Personnel in HRM

Overall, about 40 per cent of companies have a position of personnel or HR manager,

while half of them hold executive positions. All companies have at least a position of

personnel or HR clerk. Not surprisingly, companies with HR departments were likely to

have designated managers or executives handling HR functions than companies without.

Academic qualifications required

To take up either the post of personnel or HR manager, the minimum academic

qualification specified by 21 per cent of the companies was a degree. However, there was

a good proportion (15 per cent) of companies that specified a diploma qualification,

preferably one in HRM.

For the post of executive, most companies prefer a diploma holder. As to the post of HR

clerk, half the respondents would look for a person with O-level qualification or equivalent,

while another 43 per cent did not specify any qualification. Companies with HR

departments were more likely to specify a minimum qualification for the post of clerk than

companies without. This suggests that the former were relatively more stringent in the

recruitment of HR personnel.

Skills and knowledge required by HR practitioners to enhance professionalism


13/29

The five major skills or knowledge that HR practitioners feel they require to enhance

professionalism in the next three years were effective communication, human resource

development, knowledge of employment act and industrial relations, computing and

technology, and recruitment and selection. Given the continuous advance of HRM

techniques and computer technology coupled with the growing emphasis on HR

development in Singapore, it is likely that these major skills would continue to exert theirpresence on the need for the HR profession to upgrade periodically.

Human resource practices and policies

Before examining the various HR policies and practices, respondents were first asked to

indicate the major functions currently performed, and their relative importance now and

over the next three years (Table I).

HR function currently performed

The five most commonly performed HR functions, as cited by over 80 per cent ofrespondents, were recruitment and selection, welfare and benefits administration, wage

administration, performance appraisal and employee communication. Among the least

performed functions were industrial relations and liaison with unions (which depended on

whether the company was unionized), productivity promotion, job evaluation,

promotion/career planning, and manpower planning. The incidence of the functions being

practised was significantly higher in companies with HR departments than companies

without. More than half of the former group performed at least one of these functions. The

biggest gaps - by as much as 40 percentage points - were seen in industrial relations,

transfer and rotation, manpower planning, promotion and career planning, and HR policy

formulation.

Importance of HR functions now

Considering the current tight labour market situation, it was not surprising that

recruitment and selection function was, given the highest rating in terms of importance by

HR practitioners. The other important HR functions were training and development, wage

administration, performance appraisal and manpower planning.

The pattern differed from the previous one where respondents were asked to indicate the

various functions performed currently. For instance, training and development was the

sixth most frequently performed function, but it was rated second in terms of importance.

Similarly, although manpower planning was not as popularly practised by companies, it

was nonetheless an important function for those companies which practised it.

The welfare and benefits administration function, on the other hand, was given a lower

priority when compared to other HR functions, even though it was one of the most widely

performed HR functions.

Importance in the next three years

All the companies surveyed predicted a substantial increase in the importance of training

and development - from the second most important ranking currently to the number one

position in the next three years. During the same period, an increasing emphasis will also

be placed on manpower planning which rose to third position from its current fifth position.

The other three functions, viz. recruitment and selection, wage administration and


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performance appraisal, will remain among the top five most important HR functions in

future.

Although functions such as .job evaluation, career planning and productivity promotion

would maintain their relatively low popularity, more companies are however beginning to

give more emphasis to them. The priority of HR functions now and in the next three yearsis exhibited in Table II.

Written policies on HRM practices

Over 80 per cent of the respondents maintained some written HR policy. Many companies

tend to have written policies on welfare and benefits (69 per cent), wages (60 per cent)

and performance appraisal (59 per cent). Training and development, although accorded a

high priority among the various HR functions, were guided by written policies by only six in

ten companies. The non-existence of written policies was also detected in the areas of

promotion/career planning and transfer and rotation - functions which currently received

little attention by most companies.

As expected, companies with HR departments were likely to have a formalized system of

dealing with HR matters. For instance, while over 90 per cent of companies with HR

departments maintained some sort of HR policies, only seven in ten companies without did

so. The biggest disparities were seen in the areas of training and development,

recruitment and selection, and performance appraisal.

Recruitment and selection

The recruitment and selection function is expected to be the most pressing challenge

facing HR practitioners in the 1990s. Current skill shortages and predictions of a huge drop

in the number of job entrants point to rapidly deteriorating recruitment prospects. Clearly,

the situation looks bleak for those employers who fail to change their ways or are slow to

use a more innovative form of employment.

As earlier stated, recruitment and selection was the most performed function among

companies. It was considered by most HR practitioners to be one of the most important

functions currently, and continue to be so. It is therefore appropriate to examine the

various methods that have been adopted to identity and recruit the three major employee

groups, namely the managers, supervisors, and the rank and file.

In general, employers generally used a wide variety of recruitment methods. On average,

a company used at least four channels. Several other points about the findings are worth

noting. First, newspaper advertisements were most frequently used to identity and

recruitment employees across the occupational groups, irrespective of the HR department

status. Second, employee recommendations were the second most popular source of

recruiting all three occupational categories. This suggests that employers relied heavily on

internal sources of labour market information, and perhaps they used these sources before

searching for employees in the external labour market.

Third, the use of executive search firms and professional societies were more popular to

recruit employees higher up the organization. For example, over half of companies use

executive search firms to recruit managers as compared to only 20 per cent and 14 per

cent to recruit supervisors and the rank and file respectively. Fourth, walk-ins were the

third most popular source to identify and recruit supervisors and the rank and file.


15/29

Companies with HR departments tended to use them to recruit the rank and file more than

companies with none.

Fifth, pamphlets, sign and bus advertisements, and radio and television advertisements

were among the least popular recruitment methods, with less than 20 per cent of

companies using any one of these methods.

Effectiveness of various recruitment methods

A comparison of each employee group revealed that newspaper advertisements were

considered by most companies to be effective in recruiting managers. Employee

recommendations and executive search firms came in a distant second and third in the

ranking of effectiveness. Newspaper advertisements and employee recommendations were

also rated highly by companies for its effectiveness in recruiting supervisors. For the rank

and file, newspaper advertisements, employee recommendation and walk-ins were rated

highly on effectiveness. An interesting finding is that many of the companies which relied

on employee recommendations to recruit the rank and file found it effective - more so formanagers and supervisors.

Selection procedure

Respondents were asked to indicate which procedures were used in selecting job

applicants for the three employee groups. Weighted application forms, reference or record

checks, unstructured and structured interviews and medical examinations were among the

most frequently used methods. Between 20 per cent and 30 per cent of the companies

adopted these methods to select the three employee groups. However, some discernible

features associated with each group can be observed. Reference/record checks were more

popularly used to select manager (58 per cent), compared with supervisors (46 per cent)and rank and file (37 per cent). On the other hand, performance tests/work samples, job

knowledge tests and physical ability tests were more frequently used to select the rank

and file.

Companies with HR departments showed a greater reliance than companies without on the

following methods: personality tests on managers, reference and weighted application

forms for both managers and supervisors; performance tests/work samples on the rank

and file; and structured interviews and medical examination for all three employee groups.

Interview procedures

Respondents were also asked to indicate the methods used to interview applicants for each

of the three job categories. Multi-stage interviews were most heavily used in the case of

managerial jobs (40 per cent), followed by group panel interview (24 per cent) and one-

to-one interviews by the prospective immediate supervisor (25 per cent). For supervisory

jobs, group panel interviews were less often used compared with multi-stage interviews

(28 per cent) and one-to-one interviews by either the immediate supervisor (29 per cent)

or manager above immediate supervisor (25 per cent). As for rank and file jobs, one-to-

one interviews were the most frequently used by firms, with the interview likely to be

conducted by an HR representative (31 per cent).

In companies with HR departments, group panel and multi-stage interviews were more

heavily used than companies without, particularly so for managerial positions.


16/29

Promotion policies and practices

The study showed that seven in ten companies have a policy of promoting employees from

within. About a similar proportion of companies included a promotion potential rating in

the appraisal of employee performance. On promotion practices, about two of three

companies filled most jobs within, and a slightly smaller proportion promoted employeeswith more than five years of service at least once. Also, about three-fifths of the

companies informed the staff on promotion policies.

When comparing companies with HR departments and those without, significant

differences were observed in all promotion practices and policies except for the practice of

promoting from within. This might indicate that companies with HR departments provided

more structured job ladders and promotion paths for its employees than companies

without.

Training and development

Formal training for employees

A large proportion (83 per cent) of companies provided some sort of training for their

employees. On the type of training, a quarter of the companies relied on external training

resources and only a small proportion (2 per cent) turned to in-house facilities. The

majority of companies (60 per cent) used a combination of both types. As expected,

companies with HR departments provided more training opportunities than those

companies without.

Almost 40 per cent of the companies expended 1 to 4 per cent of total payroll on off-the-

job training while another two-fifths did not expend any amount. A further breakdown

showed that a significantly larger proportion (35 per cent) of companies without HR

departments did not expend any amount of training as compared to companies with HR

departments (16 per cent).

Hours spent on training

In general, the rank and file spent longer hours on training than supervisors and

managers. Of 40 per cent of companies indicated that rank and file spent up to 59 hours of

training a year while 17 per cent indicated they spent between 60 and 299 hours. The

comparative figures for the supervisors were 31 per cent and 14 per cent, and for

managers 36 per cent and 10 per cent respectively.

Pay and incentive systems, and evaluation

Incentive schemes implemented

Many companies used some form of incentive pay to motivate their employees. Only

between one-tenth and two-tenths of companies did not provide incentive payments to

any one employee group.

By far, individual performance pay was the most widely used type of scheme, with

relatively small differences in access to such schemes across occupations and HR

department status. Productivity incentive pay was the next popular scheme. The rank and

file and supervisors tended to benefit from it more than managers. When it comes to


17/29

giving employees a share in the profits, a larger proportion of companies preferred to

motivate their managers this way than the other two employee categories.

Small-group incentive, where the pay-out depends on the performance of the whole work

unit, was less used than the first three schemes. When used, they tended to be offered to

the rank and file and supervisors. The least frequently used scheme was stock ownershipthrough ESOP where only about one-tenth of companies provided them, particularly to

managers.

Compensation policies and practices

For those companies which did not implement incentive schemes, most cited the lack of

top management support as a reason. Other reasons were the difficulty in setting the

formula, lack of definite and accurate measures of performance and ineffective schemes.

Performance appraisal

Formal appraisals were conducted for managers (78 per cent), supervisors (77 per cent)

and the rank and file (83 per cent). The study showed that about nine in ten companies

with HR departments indicate that managers, supervisors and the rank and file were

appraised as compared to about seven in ten companies without.

In general, companies appraised employee performance once a year. A few companies

indicated that the rank and file, and supervisors were appraised quarterly or monthly.

Methods used in performance appraisal

Rating scales using standard form were the most commonly used methods for assessing

employee performance for the three employee categories. The least used methods were

point system and ranking or paired comparison. Further analysis of the data showed that

employee goal setting or management by objective was more frequently used among

higher-ranking than the lower-ranking employees.

Employee relations, communications and employee participation

State of labour-management relations

Employee relations is an important topic in the domain of personnel and HRM. It has been

a major element of traditional HRM, largely because of the central role of collective

bargaining in areas such as pay setting, training and health and safety. About three-

quarters of respondents described their state of labour-management relations as co-

operative, i.e. ones that have acceptance and teamwork between labour and management.

Extent of communication

Among the various factors that affect employee relations, employee communication plays

an important role. The study showed that employees used a wide variety of

communications channels to get their message through to employees. The most commonly

used communications channels were departmental meetings, notice boards, letters to

individuals and briefing groups. A breakdown by HR departmental status revealed that

companies with an HR department were more likely to use some form of communications

channel than companies without. Among the larger differences between the two groups


18/29

was the use of newsletters or house journals, employee handbooks, videos, tapes/slides

and union representative.

Importance of communication channels used

Respondents were also asked to rate the relative importance of those channels being used.The three channels ranked in order of importance were notice boards, departmental

meetings and letters by individuals. This pattern was different from one that was ranked in

order of usage indicating that employers felt that widely used channels such as

departmental meetings need not necessarily be effective in getting the information across

to a wide spectrum of employees.

Extent of information on HR matters being discussed

Respondents were also asked to indicate to what extent the following five different HR

matters: salary scales and ranges, career development, training needs and plans,

performance/production issues and welfare and benefits. It was found that the first threeareas were least open to employees for discussion. Over half the companies surveyed

indicated they either never discussed or discussed very little the salary scales and ranges

with staff. About two in five companies expressed similar comments for career

development. Interestingly, given the current emphasis on HR development, career

development and training needs and plans were not given high priority for discussion by

employers.

Employee participation programmes implemented by companies

One area that can affect the quality of work life is the extent of employee participation in

productivity improvement. Some of these programmes are as small group activities like

quality circles (QCCs), joint consultation and suggestion schemes.

The two most popular employee participation programmes, as cited by about half of the

companies surveyed, were employee communication meetings and suggestion schemes.

These were followed by employee attitude survey (23 per cent), QCCs (21 per cent) and

work restructuring/job design groups (5 per cent). The study further revealed that more

than two-thirds of companies with HR departments have implemented QCCs, autonomous

work groups and labour-management consultative committees (such as Work Excellence

Committees, Work Councils), as compared to less than a third for companies without.

Manpower planning

Manpower or HR planning was conducted by seven in ten companies. Of those that did not

conduct manpower planning, a large proportion indicated the small company size as a

reason. Improper company policies were also cited as a reason for not having such a

practice. A small percentage of the companies did not see the necessity to do so.

Of the 70 per cent that conducted manpower planning, about half of them had their

manpower planning conducted jointly by the department in charge of HR functions

together with other relevant departments. In addition, there was a fairly high proportion

(34 per cent) of individual departments doing their planning independent of the HR

department. Very often, as the study showed, manpower planning was seldom conducted

solely by the HR department or senior management.


19/29

HR information systems

Helping HR functions to improve productivity in a more cost-effective manner is the

computer. Computerization of HR functions in companies generally encompasses two

areas: HR records and payroll administration.

Overall, about half of the companies surveyed had a computerized system of HR records.

Companies with HR departments showed a higher incidence of usage than companies

without. Seven-tenths of the former group had computerized its HR records whereas only

one-third of the latter had done so. Among those companies without a computerized

system of HR records, company size and the availability/knowledge of computer were cited

as the two main reasons for not computerizing.

As expected, most of the computerization was by the departments in charge of HR

functions and to a lesser extent by departments such as administration.

If there is a need to computerize HR functions, companies are more likely to do so for theirpayroll administration. Of the companies 72 per cent have computerized their payroll

administration as compared to half for HR records. As in the case of HR record

computerization, companies with HR departments were more likely to have a computerized

system of payroll administration as compared with companies without.

Among those companies without a computerized system of payroll administration, small

company size and the lack of availability of computer knowledge were the two main

reasons given for not computerizing. Most respondents, with a computerized payroll

administration, cited that non-HR departments such as the account and finance

departments were responsible for the computerization.

Conclusion

HRM occurs at all levels of the organization. In Singapore, with a tight labour market,

there is a greater need to manage HR not only for operational efficiency but also for

strategic effectiveness. HRM rarely emerges as a fully formed set of practices but the trend

is changing. The survey results indicate a shift from the traditional or conscious economic

strategy to the new techno-human paradigm. HRM is in a state of rapid development as

well as fundamental change.

HRM practices are changing, though slowly. The professional body, the Singapore Institute

of Human Resource Management (SIHRM) changed its name in 1993. Originally, when

founded, it was known as the Singapore Institute of Personnel Management. This is in

keeping with assertions by McLaughlin (1983) that the field of HRM was known as

Personnel Management more than two decades ago. Today, companies whose HR

departments are named personnel department tend to treat HR practices and policies in

the traditional sense, performing a maintenance and firefighting function. For an

organization to remain globally competitive, its HRM practices have to adopt a more

strategic role as Lundy (1994) has argued. Strategic human resource management is a

new concept which bridges HRM and strategy.

The changing role is for HR practitioners to be partners in the global business strategy of

the company, i.e. to take a more proactive role in the five major HR functions of selection,

manpower planning, training and development, career development and compensation. It

is asserted by Pucik (1992) that the process of globalization not only brings the HR


20/29

function closer to the strategic core of business, but also changes the scope and content of

human resource management. This survey has indicated that this changing role would be

more forthcoming from companies which already have HR departments, where HR

directors report directly to the CEO and the board of directors. The study also suggested

that more foreign-owned companies will take a lead role in this than local-owned

companies. Further, the trend would also change as more business graduates becomeinterested in the HR function and regard HR as a profession. The HR positions in the past

were mainly occupied by production personnel from the rank and file.

Hence we conclude that companies in Singapore have a long way to go in turning the

traditional HRM to the strategic HRM. Very few HR directors are involved in business

strategy, although the majority of HR practitioners are becoming aware of the importance

of strategic HRM. Therefore the HR function of firms in Singapore needs to shift from an

administrative to a process orientation so that it can flexibly reconcile the organizational

paradoxes inherent in the activities of global firms (Pucik, 1992).

Singapore in transition: from technology to culture hub

Caroline Y.L. Wong ;Carla C.J.M. Millar ;Choi, Chong Ju .Journal of

Knowledge Management10. 5 (2006): 79-91.

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Abstract (summary)TranslateAbstract

This paper aims to present an approach to the knowledge-based economy that focuses on the

developmental synergies between technology (especially information and communication

technologies), culture and place (hub) as expressed in the innovative milieu of the inner city. This

paper draws on research in city and urban planning, which emphasizes the importance of quality of a

place, location or city and the more intentional emphasis given to development of human and cultural

resources, which are conducive to innovation, learning, creativity and change in a knowledge-based

economy. Singapore is chosen as a case study of analysis for a knowledge-based economy in transition

because of its developmental approach and strategic shift from one focused on technology-intensive

sectors to one focused on high knowledge-intensive companies and towards a free-spirited dynamic

creative hub in the making. It displays many characteristics typical of a knowledge-based economy in

which people, their ideas and capabilities are the key sources of wealth and opportunities. This paper

observes a missing link in the transition from technology to knowledge to culture hub, which might

have implications for Singapore's effort towards establishing itself as a cultural industries metropolis, a

renaissance city using culture to re-position its international image as a global city for the arts. The

originality and value of this paper lie in this analysis, which makes one conclude that, although

Singapore's developmental model had created benefits in many ways, it had also negatively constrained

its development, particularly in the area of knowledge creation and application to entrepreneurship,

innovation and creativity.
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Full Text TranslateFull text

Knowledge Cities 2006. Professor Francisco Jaview Carrillo

Introduction

In the post-industrial economy, knowledge-related activities have become central to

creating national wealth and sustaining economic growth in the so-called "knowledge

economy", also variously known as "knowledge-based economy" (KBE), "knowledge-driven

global economy", "new networked economy" or the "new economy" ([63] Ofori, 2003).

The sustenance of these knowledge-related activities requires continuous renewal of

human and organizational capacities and creating environments, which are conducive to

creativity, innovation, learning, and change ([44] Knight, 1995, p. 226). Researchers in

city and urban planning such as [28] Florida (2002), [58] Mendieta (2001), [38] Hall

(1998) and [70] Saxenian et al. (2002) have emphasized the importance of quality of a

place, location or city in attracting talented knowledge workers such as those in theconsulting, investment banking, law, science and technology industries. Global cities such

as Paris, New York, London and Sydney are increasingly viewed as crucibles in the

development and utilization of knowledge as a resource, and the term "knowledge city"

has been used to define cities that are purposefully designed to encourage the nurturing of

knowledge ([24] Edvinsson, 2002). These cities have also been associated with an

intentional emphasis on the development of human and cultural resources ([44] Knight,

1995).

Singapore makes for an interesting case study for a knowledge-based economy in

transition because of its developmental approach and strategic shift from the technology

intensive sectors to one focused on high knowledge intensive companies ([54] Loo et al. ,2003) and towards a free-spirited dynamic creative hub in the making. It displays many

characteristics typical of a knowledge-based economy such that people and their

capabilities are the key sources of wealth and opportunities ([9] Chia, 2000). The World

Economic Forum ranked Singapore as one of the most network-ready nations in the world

in its Global Information Technology Report 2003-2004, coming in a close second to the

US ([87] (The) World Economic Forum, 2003).

Singapore also has a dynamic business environment that spawned a well established IT

and telecommunications infrastructure and services including over 6,000 multinational

companies (MNCs) and 100,000 local enterprises comprising small- and medium-sized

enterprises (SMEs) and large local corporations ([18] EDB Media Releases, 2003a). In2001, the Swiss-based Institute for Management Development ranked Singapore third in

R&D in its global location attractiveness rankings. The impressive economic growth record

of Singapore in the last four decades has been achieved through continuous industrial re-

structuring and technological upgrading ([89] Wong, 2001). The knowledge-based

industries as defined by the OECD have increased their percentage of GDP from 48 percent

between 1983 and 1985 to 56 percent in 2001 ([2] APEC Economic Committee Report,

2003). Singapore's commitment to knowledge-based economic development in the past

decade has enabled it to make a rapid and successful transition to a newly industrialized

economy. The future growth of sectors such as healthcare, information and communication

technologies (ICT), education services, photonics, nanotechnology identified by the

economic review committee as being crucial is dependent on Singapore's knowledgecapabilities. This is where knowledge creation, acquisition, dissemination and application
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interact with each other in the economy to create the main drivers of growth, wealth

creation and employment across all industries ([1] APEC Economic Committee Report,

2000). Singapore's information society development trends have been shaped by its

developmental state ([90] Wong, 2004) and though it has created benefits in many ways,

it has also negatively constrained its development, particularly in the area of knowledge

creation and its application to entrepreneurship and creativity.

Creativity has been deemed important in the knowledge economy and the creative

industries development strategy was developed on analyses conducted by the [23]

Economic Review Committee (ERC) (2002) to enable Singapore to compete globally ([22]

Economic Review Committee (ERC) Reports, 2001). Although Singapore displays many

characteristics typical of a knowledge-based economy, Singapore's new economy

seemingly lacks a stimulating climate conducive to imagination, innovation and adventure

that will attract and retain globally mobile talent ([80] Tan, 2003, p. 403), in other words

the lack of cultural and environmental institutions, which determine the quality of life and

buzz of the city-state.

This paper seeks to analyze the seemingly missing link in the transition from technology to

knowledge to culture hub, which might have implications for Singapore's effort towards

establishing itself as a cultural industries metropolis, a renaissance city using culture to re-

position its international image as a global city for the arts. The challenges to the city-state

were outlined in the end together with some recommendations.

The role of ICT: from technology to culture hub

The [64] Organisation for Economic Co-operation and Development (OECD) (1996) defines

a knowledge-based economy as one in which the production, distribution and use of

knowledge are the main drivers of growth, wealth-creation, and employment for allindustries. An important part of the knowledge-based economy is formed by knowledge

intensive business services (KIBS) which include legal services, management consulting,

IT services, market research, engineering services, architectural, quantity surveying,

building and appraisal services ([92], [93] Wong et al. , 2005a, b). Such services

concerned with the supply and management of knowledge and intangible assets are often

seen as a driving force in the spread of new knowledge through information and

communication technologies (ICT) ([3] Aslesen, 2003). In that regard, many authors

identify ICT and globalization as key drivers of the knowledge-based economy ([17]

Economic and Social Council, 2000). The rise of ICT gives the KBE a new and different

technological base that changes significantly the conditions for the production and

distribution of knowledge ([9] Chia, 2000) to the extent that location and the ability tocombine and manipulate new knowledge has become increasingly important ([3] Aslesen,

2003). Such a development has already stimulated considerable interest among

governments and policy communities within the Asia-Pacific including Singapore, Japan,

Malaysia, Hong Kong and China ([41] Hutton, 2004). In recent years, ICT has also been

deployed as a key instrument of urban transformation and modernization with both

substantive effects (like higher p

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