Lessons from the Singaporean model of entrepreneurship
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Singapore’s economic clout belies its tiny size. Boya Yang shows how its development raises questions about the practice of entrepreneurship, and government’s role in creating the opportunities, support mechanisms and skills that entrepreneurs require. And argues that the city-state’s modern entrepreneurial and technological ecosystem provides interesting lessons for countries facing economic stagnation.
Singapore has long been linked with small government and laissez-faire economics. But the actual Singapore has pragmatically mixed competitive private enterprise, business-friendly policies and open trade and investment with government interventionism.
As a British colony, from 1819, Singapore flourished as Southeast Asia’s key trading port and as a centre for commodity merchants and producers. On independence in 1965, government policy relied heavily on attracting foreign multinationals to bring about its industrialisation.
But the model of inward investment and labour-intensive manufacturing left it vulnerable to global crises and held back Singapore’s evolution into an innovative knowledge economy. The dependence on foreign multinationals inhibited local research and development (R&D) and the government worried that careers in multinationals, the professions or the public sector was reducing the pool of potential entrepreneurs.[1]
Crisis and policy
Government activism and regulation are frequently condemned for crowding out entrepreneurial pioneers. By contrast, Singapore’s combination of government-led institution building, sponsored private entrepreneurship and technological investment is transforming its economy.
From the mid-1980s, and more forcefully after the Asian financial crisis in 1997, Singapore began tackling its vulnerability to external financial and supply-side shocks, and its inability to move from a low-tech into a knowledge-based economy. Over three decades, policy has switched to building an integrated ecosystem of techno-entrepreneurship and innovation through initiatives uniting public grants, private finance, education, infrastructure, government agencies, firms and universities.
Founded on Singapore’s international connectivity and competitive markets, the sustained focus on co-operative networks and partnerships has increased start-ups and corporate venturing and accelerated the commercialisation of products and services.
What entrepreneurs do
Time and place shape the opportunities of entrepreneurship. From the 19 th century, when Singapore was associated with the entrepreneurship of the merchant and commodity processor, its port served an economic hinterland that stretched from the Malayan peninsular to the Indonesian archipelago. Following the period of industrialisation and multinational investment, Singapore needed to expand local entrepreneurship and risk-taking. The innovative and techno-entrepreneurship that emerged would have been unrecognisable to the merchant trader of previous generations.[2]
Singapore did not follow Japan, South Korea or China in drawing up long-term industrial plans. Undertaking initiatives as events demanded, policy since 1997 has been rooted in a pragmatic approach to entrepreneurship and technological innovation.
Economic theories have seen the defining characteristic of the entrepreneur as their special ability to perceive business opportunities . But this can overlook the difficulties they face in taking advantage of their insights. Others associate entrepreneurship with a willingness to bear uncertainty and risks , yet say less about how entrepreneurs can navigate these challenges. Both approaches reduce the firm to a “black box” that obscures the actions of entrepreneurs.[3][4]
There are descriptions of how start-up entrepreneurs with limited skills, market knowledge or contacts can deal opportunistically with uncertainty and risk. But they overlook how entrepreneurship might require ambitious strategic vision, seizing business opportunities, expanding existing capabilities and knowledge, or creating new markets. These entrepreneurial activities are addressed in Singapore’s evolving but comprehensive policy mix.[5]
Place and policy
Explanations of entrepreneurship pay insufficient attention to the institutional, economic or historical contexts that influence decisions and actions. But that overlooks the role of government policy in generating business growth and innovation.
With its market and knowledge transfer networks, and training, financial and advisory support mechanisms, the Singapore state has played a vital part in developing an entrepreneurial and innovation ecosystem.
Singapore seeks to maximise entrepreneurial opportunities and to develop entrepreneurial competencies in line with the evolving needs of firms. It recognises, too, the economic value of continuous innovation and adaptation over the historical breakthrough technologies associated with “creative destruction” .[6][7]
Facilitating an ecosystem
The Singapore government has regularly updated its multifaceted “toolkit” of public and private sector assistance for entrepreneurs and innovation. The Economic Development Board (EDB) is the city-state’s key economic institution. The National Science and Technology Board (NSTB) was founded in 1991 to foster technologies, new industries and big corporations such as ST Engineering. SME 21 co-ordinated the public and private sectors in providing financial and mentoring support.[8]
In 2002 the NSTB was converted into A*STAR to oversee, link and promote scientific discovery, indigenous entrepreneurship, small and medium enterprises (SMEs), venture capital and knowledge-intensive innovation. Finance for start-ups, automation, scaling-up, training and internationalisation became extensive. And networks highlighting market opportunities, partnering, investment, mentoring and technology hubs were equally important. UNESCO has recognised the achievements of Biopolis, Singapore’s biomedical and healthcare hub, and Fusionopolis, the hub for engineering and related industries.[9][10]
Later initiatives strengthened the connections between entrepreneurship, technological innovation, finance, and global commercialisation. SG Innovate supervised co-investment in deep-tech companies, alongside developing high-skilled personnel and mentorship and engaging multinational companies.[11]
Government and public-private funding schemes responded to the difficulties SMEs and start-ups encountered when searching for finance. Enterprise Singapore , established in 2018, reinvigorated support for SMEs, funding their capabilities, scaling up and internationalisation. Startup SG did the same for start-ups, while SEEDS became responsible for co-investment in newly-found firms by venture capitalists and angel investors.[12][13][14]
SG Growth Capital recently brought together various agencies and their investment expertise to service potential industry leaders and to anchor multinational activities in Singapore. The Corporate Venture Launchpad concentrated on corporate venturing, integrating new ventures, established businesses and extensive follow-up funding.[15][16]
Entrepreneurs and ecosystem
State-backed de-risking through an ecosystem of financing, co-investment, training and networks has catalysed private enterprise and innovation. Despite assumptions about entrepreneurship being founded in cultural characteristics, including Asian values , Singaporeans have traditionally feared the social shame attached to financial failure and do not take easily to entrepreneurial risk-taking.Top of Form[17]
Entrepreneurs must recognise and grasp business opportunities, build organisations and skills and secure the resources, capabilities and resilience that can transcend competitive pressures and commercial risks. Singapore government policy has been effective in providing finance or practical help for each of these critical activities.
During its early capability-development phase, Blue Aqua International, an agri-tech company, used the support frameworks and funding provided by Enterprise Singapore and the EDB. Skillsfuture and the Skills Development Fund provided finance for personnel training, people management, international benchmarking and labour-saving equipment for Cleaning Express and converted it into a professional, service-orientated facilities company.[18][19][20][21]
Market changes, scaling-up, or diversification mean that the needs of any business evolve over time. Adaptability and reinvention can be as important as the founding strategic opportunity or vision. Singapore’s ecosystem, notably, assists failing enterprises that can complete a “strategic pivot”.
When a livestream retailing firm, BeLive , was brought to the brink of bankruptcy, Enterprise Singapore and the Infocomm Media Development Authority provided a combination of finance, mentoring and partnership connections. The firm was able to move from consumer retailing locally to selling its livestream technology to companies worldwide.[22][12][23]
Razer has established itself globally as a designer and maker of high quality, fast-reacting computer gamer controls. Its founder, Min-Liang Tan, was an gamer who had shared his fellow competitors’ frustration with standard equipment. His ethos put commercial risk or financial returns behind the self-belief and “no compromise” product development that secured Razer’s success and reputation .[24][25]
Increasing competition forced Razer to diversify into brand-integrated products and services, multiply revenue streams and develop expand partnerships. Advances in laptops, cloud and mobile gaming, merchandise services, gamer furniture and e-payment platforms allowed Mr Tan to build a complex organisation to complement his entrepreneurial vision. Razer purposefully developed a one-stop business ecosystem for gamers, which, in turn, benefitted directly from Singapore’s national ecosystem of design studios, R&D, partnership networks and government support.[26]
Policy lessons
UNESCO , the OECD, the World Intellectual Property Organisation (WIPO), the Asian Development Bank have recognised Singapore as a model of business and entrepreneurial transformation. The city-state has few natural advantages and a small domestic market. Government policy and institution building, therefore, have focused on its flexible markets, SMEs and international connectivity to drive entrepreneurial innovation, technological knowledge, commercialisation at scale and economic development.[27][28]
The OECD acknowledges the range of support for entrepreneurship and innovation, and the clear intention to build a complex self-reinforcing ecosystem. The WIPO has emphasised the symbiotic relations between large enterprises, multinationals, entrepreneurs and venture investors. More than half of business incubators and accelerators in Southeast Asia are located in Singapore .[29][30][31]
Both Japan and South Korea have economies dominated by large firms that leave narrow openings for challengers. Japan has attempted to establish an ecosystem of innovative entrepreneurship and start-ups. South Korea provides substantial financial support for R&D and start-ups, but its unreformed ecosystem restrains grassroots initiatives.[32][33]
There have been calls for UK Research and Innovation , the British funding agency for science, research and business innovation, to evolve as the strategic “integrator” of a well-designed ecosystem . British industrial policy has been criticised for lacking coherence or a long-term perspective. Policy currently targets breakthrough technologies, scaling-up promising businesses and establishing international unicorns, using seed-corn government funding and tax relief.[34][35][36][37]
Outside of America, China , and perhaps Japan and the European Union, innovation through high-cost R&D is challenging, especially in those countries without a strong industrial or digital technology base. The Singaporean ecosystem has achieved less in converting SMEs into large-scale or international companies, or in embedding deep-tech research, although the government has made progress by leveraging the city-state’s links with multinationals. But, to date, the Singaporean ecosystem has correctly built upon its economic strengths and presents a set of pragmatic policies that countries facing economic stagnation can adapt and emulate.[38]
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