Globalisation and workforce diversity: HRM implications for multinational corporations in Singapore.

Abstract

This paper presents findings based on a study involving local and foreign medium- to large-sized multinational corporations (MNCs) in Singapore. The findings highlight the connection between the stages of organisational development, headquarters-subsidiary orientation, and increasing workforce diversity in MNCs, as the Asia-Pacific Economic Cooperation (APEC) economies develop the regional human capacity as part of an economic and social imperative in response to globalisation. This paper introduces a new conceptual framework--construct domain of diversity--to identify the nature of the labour market, and discusses the need for firms to align company policies, strategies, and organisational structures with the dynamic business environment. A significant implication is the impact on strategic international human resources management for MNCs in the Asia Pacific region.

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As multinational corporations (MNCs) operate across transnational borders, business managers have acknowledged that the increasing globalisation of the world economy has allowed MNCs greater access to wider consumer markets and distribution networks, as well as coordinate production and business transactions within economic clusters or networks involving cross border internal and external relationships (Dunning, 1981). MNCs are in a better position to capitalise on other new specialised resources such as capital, technological competences, information and tacit knowledge, and production capabilities required to enhance future product and services development (Hennart, 1982, 1991; Chandler, 1986; Cantwell, 1991; Bartlett and Ghoshal, 2000; Hill, 2003). Furthermore, Hamel and Prahalad (1985) have noted that these global businesses are not just vying for dominance in world sales volume or market share, but also for greater capital flow to support new product innovations, investment in core technologies, and world-wide distribution channel. In due course, these factors have transformed MNCs into multi-unit, multifunctional institutions, which allow them greater managerial coordination, while intensifying global competition between rival corporations. Such structural changes would suggest there is greater complexity in the international business environment. Not surprisingly, MNCs are facing increasing managerial challenges associated with developing and implementing business strategies, in order to compete in the across the global economy.

This paper presents findings based on a study involving local and foreign medium to large-sized multinational corporations (MNCs) in Singapore. The findings highlight the connection between the stages of organisational development, headquarters-subsidiary orientation, and increasing workforce diversity in MNCs. The following section discusses the political, economic and social imperatives in the Asia-Pacific region as regional political and business leaders emphasise on strengthening institutional capacities to develop and implement effective strategies and practices that will provide a foundation for human resources development in response to globalisation (Asia-Pacific Economic Cooperation, 1999, 2000a/b, 2001a/b). Subsequently, this will bring about significant organisational changes in firm structures. This study examines the impact of globalisation in Singapore as a result of such regional developments. The justification for the study in Singapore stems from the fact that it is strategically positioned in this particular region, whereby the nation's leadership have placed much emphasis on strengthening institutional capacities to develop and implement effective national policies and strategies that will provide a foundation for continuous economic growth in the 21st century.

Political, Economic, and Social Developments in Asia Pacific and Southeast Asian Regions

Over the past decade, the Asia-Pacific Economic Cooperation (APEC) has become the primary vehicle in the Asia-Pacific region in promoting open trade and economic cooperation. In fact, the region is considered one of the most dynamic and fastest growing economic sectors in the world, incorporating 42 per cent of world trade (APEC, 2000a). The continuous growth in this region is attributed to the size of potential domestic markets, high standard of living and consumer purchasing power, the availability of natural resources, increasing regional trade relations, the existence of adequate infrastructure, and the quality of the workforce. Global and regional macroeconomic conditions have prompted the member economies to continue to reform and restructure so as to sustain growth. Such economic and political commitments have boosted the confidence for better prospects and economic outlook for the APEC region. Consequently, the rapid growth of the regional economies has made the region attractive to foreign investors, with promising economic and financial gains (UNCTC, 1992; Li, 1994; APEC, 2000a/b).

APEC leaders have realised that while the global economy has created unprecedented opportunities, it also presented many new challenges to the government institutions and business communities. In the advent of globalisation, the leaders are convinced that the paradigm shifts towards global political, economic, and social integration have significant implications to the developing member economies (APEC, 2001b). During the APEC Economic Leaders' Declaration (APEC, 2000b), they have considered the challenges of the new millennium and have reaffirmed the APEC vision of a community of open and economic interdependency as the means to strengthen the members' abilities to grow together in the global market and deliver prosperity to their economies. The APEC leaders are bound by a sense of mutual understanding regarding the challenges in each of the member economies and have reiterated their determination to optimise the benefits of globalisation through positive contribution in various cooperation programmes (APEC, 2001b). One significant agenda and commitment is the renewed emphasis for human capacity building in the region.

Labour Market and Human Resources Development in APEC

The APEC leaders have acknowledged that human resources development is central to the economic development in Asia Pacific, especially in the advancement of society and the sharing of prosperity with the people in the context of globalisation (APEC, 2001a). The strong emphasis of human capacity building is in recognition that the peoples of the region are APEC's most valuable assets. As a matter of fact, the leaders continue to believe that economic cooperation must be a process which is open and transparent, so as to foster an environment that assures the people will have greater access to employment opportunities (APEC, 2000b; 2001a). They have acknowledged that effective labour and employment policies can enhance a skilled and adaptable labour force, and improve trade and investment activities which will eventually benefit the workforce (APEC, 1999). Thus, the APEC leaders have agreed that human capacity building programmes should continue to be placed high in the APEC agenda. In this regard, they have encouraged their respective government institutions and business communities to prepare human capacity building strategies that would define the objectives, priorities, and principles for APEC (APEC, 2000a).

Some recommendations for policy reviews for the purpose of building a strong foundation for human resources development, include 1) Increasing access to quality education, relevant market-driven skills training, retraining and lifelong learning; promoting efficient and equitable labour markets through policies and services that facilitate people's transition into jobs, effective and inclusive labour market policies, employment-oriented social safety nets, mutual recognition of professional skills across the region; 2) Maximising the labour force potential by tapping under-utilised pools of workers such as people with disabilities, women, youth, older workers, under-employed workers, and indigenous people; 3) Increasing collaboration and information exchange with and among other regional and international organisations and through enhanced cooperation among government, business, labour, and civil society; 4) Building capacity to manage the transformation and innovation of workplaces and organisational practices; and 5) Addressing the needs of informal sector workers and facilitating their participation in the mainstream economy (APEC, 1999; 2001a).

Regional Developments Affecting Singapore

Consequently, such agenda actions proposed by the leaders of APEC would have significant implications for business development for countries in the Southeast Asian region. There have been several trends in the Association of Southeast Asian Nations, ASEAN, member countries, which have significantly influenced the growth of the region. Many of the factors contributing to the continued developments include high quality human capital, extensive infrastructure improvement, rising industrial and technological sophistication, increasing numbers of state-owned enterprises, greater national commitment towards establishing a free trade region, in and outflow of direct foreign investment, pragmatic business-oriented government, rising private consumption, greater public and private investment, higher saving rates, increased economic organisational and deregulation (Tan and Wee, 1995; Hew, 2005). Such dynamic development in this region has brought about greater competition and closer interdependence among the ASEAN countries. Gradually, Southeast Asia would emerge as an independent contributor of growth in the global economy, as the region extends its economic competition to other regions such as China, Japan, Europe and United States (Tan and Wee, 1995; Turcq, 1995; Hew, 2005).

It is not surprising that Singapore has benefited much from the above developments, as it is strongly committed to maintaining business competitiveness in the regions of Asia Pacific and Southeast Asia. For example, since the launch of the Association of Southeast Asian Nations Free Trade Association (AFTA) (ASEAN Secretariat, 2006), there has been closer intra-regional cooperation among member countries, resulting in a "regionalisation" towards the growth triangle of Singapore, Malaysia and Indonesia growth (Lasserre and Schutte, 1995; Tan and Wee, 1995; Turcq, 1995; Menon, 1996; Rao, 1996; Tongzon, 1998; Hew, 2005). Such strategic coalition has led to changes in human resources development strategies, in terms of the re-evaluation of the nature of jobs, skill requirements, prospective labour demands and division of labour, and new forms of employment. This has resulted in the enhancement of the quality of the labour force, the increase in the utilisation of the skills and expertise of the scarce human resources and a greater mobility of skilled professionals and semi-skilled workers in the regional labour market (Lasserre and Schutte, 1995; Tongzon, 1998; APEC, 2001a/b). In fact, the Singapore government has affirmed its support for proactive and comprehensive labour market policies in response to the changing demographic structures, developments in the nature of jobs, and complex workplaces in the country. And, the government has capitalised on its country-specific capabilities and its strategic position by attracting the best and highly innovative individuals, both locally and internationally, to work in the country. Moreover, Singapore's key economic focus on knowledge-intensity industries suggests there would be greater job opportunities and attractiveness for professionals with the relevant skills and knowledge of science and technology (Ministry of Trade and Industry of Singapore, 2006; Singapore Economic Development Board, 2006).

Research in Singapore

Given the political, economic, and social changes that have taken place in the Asia Pacific and Southeast Asian regions, this has provided much opportunity for in-depth study of the impact of globalisation on the organisational development of firms, HQ-subsidiary orientation, and increasing workforce diversity in MNCs in Singapore. Secondary data of a number of local and foreign medium- to large-sized MNCs were reviewed between 2000-2002. The MNCs were in the manufacturing services sector of Singapore. Drawing upon the information gathered, general insights into the structural changes and HR strategies within the MNCs could be deduced, which is consistent with previous studies of the transitional developments of firms as they expand their business operations globally. The next section describes the different stages of the firms' general progress.

Evolutionary Changes in Multinational Corporation Structures

Bartlett and Ghoshal (1988, 1989, 2000) concluded that the extent of global business competition has led many firms to experience mounting pressures to restructure their organisations and systems as they strategically position themselves to capitalise on potential competitiveness within their specific industries, both within their home countries and the foreign countries they are operating in. Drawing from the underlying principles regarding MNCs' motivation to expand operations internationally, Vernon (1966), Perlmutter (1969), and Adler and Ghadar (1990a/b) have observed that corporations may transit four stages of organisational development or evolution, namely the 1) Domestic stage; 2) Multidomestic stage; 3) Multinational stage; and 4) Global or transnational stage.

In the initial phase, firms may operate within a domestic, ethnocentric perspective. The marginal importance of international competition and the uniqueness of product and services for an exclusive domestic market means that firms are operating within a business scope where there is limited regard for national cultural differences or sensitivity (Adler and Ghadar, 1990a/b). Ethnocentric attitudes may prevail in which the firms' business operations are towards a home-country orientation (Perlmutter, 1969). Managerial processes are expressed in the national identities of the firms by associating the companies with the specific nationalities of the headquarters. The extent of authority and control is managed at the headquarters-level. Furthermore, executives from the home nationality are recruited and developed for key appointments in the foreign subsidiaries across the world.

The next stage of development is the multi-domestic phase. In this stage, firms acknowledge that cultural sensitivity is critical to implementing effective business strategy (Adler and Ghadar, 1990a/b). As operations are shifting towards an international market orientation, there is greater need to emphasise on the different foreign domestic market separately, from a polycentric (Perlmutter, 1969) or regiocentric perspective (Moran, Harris and Stripp, 1993). Unlike the previous initial stage where the firms may hold an ethnocentric "one-best" approach to managing international business, the multi-domestic stage emphasises there are other alternative approaches to manage the operations, depending on the respective host countries. Corporate management recognises that culturally appropriate policies have to be designed to manage staff of the different foreign subsidiaries. Local or host-country orientation may be higher in which the firms assume "the local nationals always know what is best" for the business. Hence more local nationals may be assigned to key position within the subsidiaries.

The third stage of the development is the multinational phase. The firms maintain a global price-sensitive and cost-sensitive perspective, in which the main focus of business operations is on complete standardisation of product and services, and not the creation of culture awareness of the different foreign market segmentation. As such, the intense price competition has significantly reduced the impact of cultural differences and negated the importance of cultural sensitivity as firms seek out the "one least-cost way" to manage the international business instead (Adler and Ghadar, 1990a/b).

The final stage is the global or transnational phase. This stage entails a geocentric perspective in business operation in which firms are engaging in an increasingly complex and interdependent operation across the border (Perlmutter, 1969). The extent of the firms' competitive strategies is to capture significant market share by emphasising on product and service customisation, efficient production capabilities, extensive research and development, and strategic global alliances with other local or foreign firms (Adler and Ghadar, 1990a/b). As firms compete globally where there is greater transnational interaction between the organisations, the key factor in organisational success involves greater collaborations between the headquarters and subsidiaries to establish universal standards while identifying with possible local variations or national interests (Perlmutter, 1969). With this regard, there is recognition that a more effective managerial practice is to develop the best staff in the firms to participate in strategic operations across the world. As such, there is greater need for management to realign current organisational development towards a more culturally responsive orientation to enhance effective international human resource management as more staff from different nationalities and cultures is engaged to meet local and worldwide organisational objectives.

Evidently, as MNCs strategically adopt a more transnational perspective, senior management has recognised that the traditional strategic mindset that focused solely on domestic levels of business operations without considerations for global consequences would not produce sustainable competitive advantages for the corporations. The transition from the multinational to the global or transnational corporation marks yet another fundamental development in organisational perspective. Corporations may no longer be multi-domestic in nature, but global in their structures, strategies, markets and resource bases (Adler, Doktor and Redding, 1986). Table 1 presents an overview of the HQ orientation toward subsidiaries in an international enterprise according to the stages of organisational development.

Workforce Diversity in Singaporean-based MNCs

Apparently, the abovementioned structural transitions would have serious implications for MNCs based in Singapore. With the expanding complexity of the organisational design, there would be an emergence of workforce diversity in the workplace, which would bring about changes in the administration of strategic human resource management (Tung, 1984; Adler and Ghadar, 1990b; Milliman, von Glinow and Nathan, 1991; Kobrin, 1994; Schuler, Dowling and De Cieri, 1994; Taylor, Beechler and Napier, 1996). The significance of multiculturalism and diversity in the workplace is evident in the recruitment of local and foreign staff as part of organisational initiatives, when MNCs organise their strategic global operations at both the headquarters and foreign subsidiaries (Chandler, 1986; Adler and Ghadar, 1990a/b; Kobrin, 1994). The demographic profile of the workforce in the organisations would no longer be characterised by homogeneity or mono-culturalism. It is evolving into a composite of multifarious people from different socio-cultural backgrounds, in which workforce diversity could mean the representation of people from different group affiliations within organisations (Cox, 1991, 1993; Cox and Blake, 1991; Jackson and Alvarez, 1992; Jackson and Ruderman, 1995). Figure 1 illustrates the increasing workforce diversity as corporations experience evolutionary developments in their business operations.

[FIGURE 1 OMITTED]

Snapshot of Workplace Diversity

Table 2 presents a representation of the diverse workforce in the MNCs, characterised by their national-ethnic backgrounds. The Singaporean employees constituted the largest labour group (n = 314), in which they made up 63.3 per cent of the sample population. Within the Singaporean group, there were 270 Singaporean-Chinese, 18 Singaporean-Malay, 18 Singaporean-Indian and eight Singaporean-Eurasian. The second largest group was the Malaysians (n = 68), in which there were 60 Malaysian-Chinese, four Malaysian-Indian, and a similar number of Malaysian-Singhalese and Eurasian (n = 2). The ethnic Indians from India (n = 46) was the next largest group, followed by the Chinese from China (n = 30) and Indonesia-Chinese (n = 22). Last, there were 16 Filipino employees amongst the sample population.

Though the study has highlighted some features of the sample workforce, one must acknowledge that diversity is not only limited to identifying employee differences based on nationality and ethnicity. We need to consider other aspects of diversity as well, so as to understand and appreciate the complexity of the human capital composition. With the distinctive changes in the human resource factor in MNCs, this would lead to the following questions: How is diversity defined? What implications do diversity have for organisations? In order to address these questions, an understanding of the concept of diversity is essential.

Construct Domain of Diversity

Generally, diversity may be defined as the presence of differences among members of a social group or unit (Jackson, May and Whitney, 1995). In another perspective, Cox (1993) defines diversity as "... the representation, in one social system, of people with distinctly different group affiliations of cultural significance" Deresky (1994) highlighted that the differences between the group members may be illustrated in terms of the dimensions such as national origin, language, religious belief, culture, age, physical ability, socio-economic status, marital status, sexual orientation, race, family situation, and gender. Ferdman (1995) emphasised the fact that membership in social groups distinguish one person from another not only in name but also in their viewpoints of the world, in their construction of meanings, and in their behavioural and attitudinal preferences, and other patterns of values, beliefs, norms. Harris and Moran (1999) further expounded on the dimensions of diversity and included other characteristics not identified by Deresky (1994). The factors include physical appearance, cultural heritage, personal background, functional experience, mental and physical challenges, family responsibilities, military experience, educational background, style preferences, thinking patterns, political backgrounds, city, state or region of residence, IQ level, smoking preference, weight, height, non-traditional jobs, and white and blue collar.

Although researchers and institutions in the fields of international business, applied sociology, and anthropology have investigated the subject of diversity and have proposed some common denotations of diversity, they have not organised the identifiable characteristics or variables of diversity into a systematic, universal structure, which can be used for empirical analysis and contextual comparisons across and within societies. In other words, cataloguing the details of diversity is not enough, since each complex society is more than just consisting of 'presumably unrelated' societal features. This paper introduces a construct domain of diversity, which classifies employee differences in terms of three distinctive categories. The categories include demographic diversity, organisational diversity, and socio-cognitive diversity.

The first category is demographic diversity such as age, gender, ethnicity, and nationality (Cox, 1991; Cox and Blake, 1991; Jackson and Ruderman, 1995) whereby Jackson et al (1995) have commented that these are considered readily detectable attributes that can be easily characterised in particular individuals. The second category is organisational diversity. It is important to note that workforce diversity is not limited to the physical or social attributes of the organisational members: It also involves the organisational context that adds to the diverse perspective of the group dynamism. Organisational diversity may include the 1) occupation, functional or job portfolios of the employees such as marketing, finance, accountancy, manufacturing, production, etc; 2) staff job tenure or seniority in the firm; 3) hierarchical ranking within the organisation (for example, senior management, middle management, and lower management); and 4) work or professional experience (Jackson and Ruderman, 1995). The last category is socio-cognitive diversity, which includes cultural and religious values, beliefs, knowledge level, and personality characteristics (Jackson and Ruderman, 1995). It constitutes the underlying attributes of personal characteristics that are not so easily identifiable (Jackson et al, 1995).

By establishing and organising the staff according to their unique attributes, it will enable business managers to have a more objective understanding and appreciation of their diverse staff's behaviours, attitudes and values, given the implications for interpersonal and organisational processes and outcomes when staff members work together. Essentially, as people's values and beliefs vary distinctively as a consequence of their different socio-cultural predispositions, this will affect organisational processes and configurations, for example, supervisor-subordinate relationships, leadership and decision-making styles, cross-cultural communication, international team management, staff motivation, staff recruitment, selection and development, staff expatriation and repatriation, and other managerial functions. Figure 2 presents an illustration of the construct domain of diversity.

[FIGURE 2 OMITTED]

Workforce Diversity and Strategic International Human Resource Management

Undoubtedly, MNCs would benefit from the wealth of available business knowledge, differing experiences, and global perspectives that staff from diverse backgrounds can contribute. Porter (1990) contended that differences in character and culture may prove to be integral to global success, as diversity is considered important towards enhancing innovation and competition in an environment of multiculturalism in organisations. Thus, this signals a need for greater cultural sensitivity and empathetic orientations in the workplace, whereby there ought to be an emphasis on cultural acceptance rather than cultural tolerance. Policies and practices in diversity management should ensure that there is continuous learning and adaptation in organisations. As such, strategic international human resource management (SIHRM) and the related issues in workforce diversity in MNCs would become challenging areas of research and managerial practices for academics, management consultants and business managers, respectively. The ability to effectively manage diverse workforces in organisations is crucial in the wake of the increasing proliferation of transnational strategic alliances, international joint ventures and HQ-subsidiaries establishments.

Given that SIHRM knowledge and competencies are essential to maximising and capitalising on the synergistic capabilities of diverse workforce activities (Cox, 1991, 1993; Cox and Blake, 1991; Cox, Lobel and McLeod, 1991; Jackson and Alvarez, 1992; Jackson and Ruderman, 1995; Adler, 2002), both the regional political and business leaders have placed considerable emphasis on strengthening institutional capacities to develop and implement effective strategies and practices that will provide the necessary foundation for human resources development required to address the challenges of the dynamic labour market in this era of globalisation (APEC, 1999, 2000b, 2001a).

From an economic regional viewpoint, APEC officials have acknowledged that human capacity building should be given high priority on the APEC agenda. They recognised the opportunities for result-oriented tripartite partnership among government, business, and education and training institutions, and have emphasised greater cooperative actions so as to give greater impetus to the human capacity building programs within APEC. For example, by increasing collaboration and information exchange with and among other regional and international organisations, the leaders hope to further develop the quality of the labour market; enhance general skills training appropriate to the needs of the regional market, with specific attention to the needs of SMEs; expand executive, professional and technical personnel development; engage all stakeholders to implement programmes to address the needs of vulnerable populations, in particular, women, youth, migrant workers, older workers, disabled and indigenous populations (APEC, 1999, 2000b, 2001a).

From the perspectives of the business organisations, Adler (1980) strongly emphasised the fact that cultural synergy, as an approach in managing workplace diversity, involves a process where managers establish organisational policies, strategies, structures and practices according to the unique characteristics of staff members and clients. This approach recognises the similarities and differences among the staff, and seeks to capitalise on diversity as a resource in designing and developing effective organisational systems and learning. To ensure organisational staff are able to cope effectively, at the macro-level of the organisational system, management need to develop organisational policies and formal education programmes that: 1) create awareness and increase social consciousness; 2) emphasise the importance of organisational culture, management responsibility and accountability, and program content in diversity education in the workplace; 3) reduce the sense of alienation experienced by minority group employees within the company; 4) actively ensure the incorporation of diversity management as an integral part of overall organisational development and change process; 5) empower of management and employees so that they are more involved in the process of institutionalising diversity in the workplace; 6) create stronger vision and commitment amongst management and staff; 7) review corporate infrastructure, systems and policies that promote diversity; and 8) create internal support systems that encourage diversity of thought and actions of staff from different socio-cultural backgrounds.

At the micro-level of the organisation, management need to integrate and build upon the values and beliefs of the various members of the work team, and develop group strategies that produce better results and solutions, which are more innovative than the single contributions of individual member (Adler, 1980; Maznevski, 1994, 1995). In other words, diversity would lead to synergistic performance when team members are able to understand and appreciate each other, and capitalise on one another's experiences, knowledge and perspectives. Through effective communication, members would be able to evaluate problems and situations from various viewpoints, determine underlying cultural assumptions and create a common social reality, ascertain and explain culturally synergistic alternative solutions appropriately, and establish agreed-upon norms for interaction (Adler, 1980; Maznevski, 1995).

Conclusion

As the world economy becomes progressively more global in nature, business corporations are engaging in increasingly complex and interdependent operations across national borders. A key factor in organisational success involves closer collaboration between the headquarters and subsidiaries to establish universal standards, while maintaining business operations that identify with possible local interests. In this regard, there is greater need for management to align organisational development with a more culturally responsive orientation, to enhance effective international human resource management. This is essential as more staff from different nationalities is engaged to meet organisational objectives. The increasing interaction of staff from diverse sociocultural backgrounds in organisations has serious implications for management in terms of international human resource development. Academics, researchers, business leaders and managers have stressed the fact that there are dynamic changes in the composition of employees in organisations, from a traditionally homogenous nature to a more heterogeneous characteristic. Business managers and leaders must fully understand and appreciate the extent of the complexities that workforce diversity would create for their organisations, as more MNCs become increasingly multinational and multicultural in nature.

Erez and Early (1993), Early and Singh (1995), and Early and Mosakowski (2000) have stressed that diversity could bring potential organisational benefits, such as greater creativity and innovation in human resource management and development. A major consideration for managers is the wide scope of behaviours, attitudes, and values of the diverse staff across socio-cultural and national boundaries, which are bound to affect organisational processes. Thus, it is crucial for managers to distinguish how staff of different socio-cultural backgrounds could be interacting within the organisation, and identify how perceptual effects may be manifested in the multinational-multicultural group relationships (Cox, 1991, 1993; Cox and Blake, 1991; Cox et al, 1991; Adler, 2002). Consequently, the extent of diversity in the workplaces also has serious implications for the regional labour market in the Asia Pacific. APEC member countries, including Singapore, have recognised the opportunities for human capacity building in the region. Not surprisingly, the APEC members have endorsed the Human Capacity Building Initiative, aimed at developing concrete, responsive and well-prioritised strategies in promoting collaboration, including the sharing of experiences and best practices in human resources development and labour-management policy formulation.

The author wishes to acknowledge the important insights and contributions of Associate Professor Prem Ramburuth, University of New South Wales, Australia.

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Dr William KW Choy

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Table 1: HQ Orientation toward Subsidiaries in an International
Enterprise

Organisation
Design            Ethnocentric        Polycentric       Geocentric

Complexity of     Complex in home     Varied &          Increasingly
organisation      country, simple     independent       complex &
                  in subsidiaries                       interdependent

Authority;        High in             Relatively low    Aim for a
decision-making   headquarters        in headquarters   collaboratively
                                                        approach
                                                        between
                                                        headquarters
                                                        and
                                                        subsidiaries

Evaluation &      Home standard       Determined        Find standards
control           applied for         locally           which are
                  persons                               universal &
                  & performance                         local

Rewards &         High in             Wide variation;   International &
punishments;      headquarters,       can be high or    local execu-
incentives        low in              low rewards for   tives rewarded
                  subsidiaries        subsidiary per-   for reaching
                                      formance          local worldwide
                                                        objectives

Communication;    High volume to      Little to         Both ways &
information       subsidiaries        and from          between subsi-
flow              (orders,            headquarters;     diaries part of
                  commands,                             management
                  advice)             Little between    team
                                      subsidiaries

Identification    Nationality         Nationality       Truly
                  of owner            of host           international
                                      country           company but
                                                        identifying
                                                        with national
                                                        interests

Perpetuation      Recruit & develop   Develop people    Develop best
(recruitment,     people of home      of local          people
staffing,         country for key     nationality       everywhere
development)      positions           for key           in the world
                  everywhere          positions         for key
                  in the world        in their own      positions
                                      country           everywhere in
                                                        the world

Source: Adapted from Chandler, Alfred D Jr (1986). "Evolution of modern
global competition". In ME Porter (ed) (1986). Global industries.
Boston, Mass: Harvard Business School Press, pp 405-449

Table 2: Nationality and Ethnicity of Sample Labour Force in the
Singapore-based MNC

                                 Ethnicity

Nationality   Chinese   Malay   Indian   Eurasian   Singhalese

Singaporean     270      18       18        8
              (54.4%)   (3.6%)  (3.6%)    (1.6%)
Malaysian       60                4         2           2
              (12.1%)           (0.8%)    (0.4%)      (0.4%)
Indian                            46
                                (9.3%)
Chinese         30
               (6.0%)
Indonesian      22
               (4.4%
Filipino         4       10
               (0.8%)   (2.0%)
Total           386      28       68        10          2
              (77.8%)   (5.6%)  (13.7%)   (2.0%)      (0.4%)

              Ethnicity

Nationality   Filipino     Total

Singaporean                 314
                          (63.3%)
Malaysian                   68
                          (13.7%)
Indian                      46
                           (9.3%)
Chinese                     30
                           (6.0%)
Indonesian                  22

Filipino         2          16
               (0.4%)      (3.2%)
Total            2          496
               (0.4%)     (100.0%)