The state matters: management models of Singaporean Chinese and Korean business groups

Organization Studies, May, 2003 by Lai Si Tsui-Auch, Yong-Joo Lee

Yet, Lee Kuan Yew, while announcing some Confucian values, including nepotism, to be outdated, consistently emphasized the importance of preserving the core values of family bonds, loyalty, solidarity, and trust, and the need to nurture successors to receive the baton of Singapore Inc. (Straits Times 2001a, 2001b). The Asian currency crisis and the deepening national economic integration into the global economy did not precipitate a real retraction of the dominant role of the state and its control of 'Singapore Inc.' (this term is borrowed from Low and Johnston 2001). On the one hand, the government introduced institutional checks on government-linked corporations by specifying performance benchmarks, limited terms for chairmen and directors, and separate appointments of chairmen and chief executive officers. As the government-linked corporations are increasingly commercially driven and involved in joint ventures with private firms, they need more managers and directors with private-sector experience (Low 200 0a). For example, the current president and CEO of Singapore Technologies is a former banker of the Overseas Union Bank and Citibank. On the other hand, Temasek Holdings, an investor in numerous government-linked corporations, has appointed more ex-civil servants to run its member companies (Low 2000b; Straits Times 2001e).

Change and Continuity in the Chinese Business Groups

There were significant changes in management structure among banks that were subjected to strict regulation and the institutional pressures of the state. An American chief executive was appointed to the Development Bank of Singapore (the investment arm of the Singapore government), and this spurred organizational imitation. In 2000, the three largest Chinese family-controlled banking groups (the Overseas Chinese Banking Corporation (OCBC), the Overseas Union Bank, and the United Overseas Bank) bowed to the call for self-renewal and retired a total of 10 long-serving directors who were then in their 70s (Sunday Times 2000). In 1999, OCBC hired a Hong Kong Chinese chief executive (who had previously run the Hang Seng Bank of Hong Kong). The professionalization of the bank's top and senior levels of management, however, proceeded slowly until 2000, when the elderly board directors who voted with the founding family stepped down. Since then, more than 110 senior managers have been recruited from all over the worl d to manage the bank (Far Eastern Economic Review 2001). Nevertheless, Lee Seng Wee remains the largest shareholder (with about 23 percent of the shares in 2001) and is still the chairman, jointly ruling the bank with the newly recruited chief executive officer (Straits Times 2001c; OCBC 2000, 2001). In April 2002, the Hong Kong banker left the bank and handed over the position of CEO to his successor, an American, for whom the bank had spent five months searching worldwide (Straits Times 2002). Another banking group, the United Overseas Bank, indicated for the first time the university qualifications of its senior management in its 2000 annual report, which was probably a move taken to enhance its legitimacy in the eyes of the regulatory authorities, shareholders, and the international media.