Lessons from the Singaporean model of entrepreneurship

Connecting business research with policy, practice and public debate Connecting business research with policy, practice and public debate Singapore’s economic clout belies its tiny size.Boya Yangshows howits 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 governmentworriedthat careers in multinationals, the professions or the public sector was reducing the pool of potential entrepreneurs. 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. Time and place shape the opportunities of entrepreneurship. From the 19thcentury, when Singapore was associated with the entrepreneurship of the merchant and commodity processor, its port served aneconomic hinterlandthat 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. 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 theirspecial ability to perceive business opportunities. But this can overlook the difficulties they face in taking advantage of their insights. Others associate entrepreneurship with awillingness 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. There aredescriptionsof 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. 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 entrepreneurialcompetenciesin line with the evolving needs of firms. It recognises, too, the economic value of continuous innovation and adaptation over the historicalbreakthrough technologies associated with “creative destruction”. The Singapore government has regularly updated its multifaceted “toolkit” of public and private sector assistance for entrepreneurs and innovation. TheEconomic 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. In 2002 the NSTB was converted intoA*STARto 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.UNESCOhas recognised the achievements of Biopolis, Singapore’s biomedical and healthcare hub, and Fusionopolis, the hub for engineering and related industries. Later initiatives strengthened the connections between entrepreneurship, technological innovation, finance, and global commercialisation.SG Innovatesupervised co-investment in deep-tech companies, alongside developing high-skilled personnel and mentorship and engaging multinational companies. 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 SGdid the same for start-ups, whileSEEDSbecame responsible for co-investment in newly-found firms by venture capitalists and angel investors. SG Growth Capitalrecently brought together various agencies and their investment expertise to service potential industry leaders and to anchor multinational activities in Singapore. TheCorporate Venture Launchpadconcentrated on corporate venturing, integrating new ventures, established businesses and extensive follow-up funding. 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, includingAsian values, Singaporeans have traditionally feared the social shame attached to financial failure and do not take easily to entrepreneurial risk-taking. 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 thesupport frameworks and fundingprovided by Enterprise Singapor