CULTURE AND FOREIGN COMPANIES' CHOICE OF ENTRY MODE IN THE SINGAPORE BUILDING & CONSTRUCTION INDUSTRY

Abstract

The objectives of this study are to investigate the relationship between culture and venture choice in a Singapore context, given the ecumenical nature of Singapore culture, the relatively free and isotropic foreign investment environment, and the apparent propensity for investors from certain countries to choose the joint venture investment mode, and to determine whether a specific cultural attribute was related to a greater propensity for joint venture creation, rather than the relative socio-cultural distance between investor and host countries. The most significant finding of this study is that uncertainty avoidance is a more important cultural determinant of joint venture selection in the Singapore construction industry than socio-cultural distance. This result is significant not only because it implies that investors view Singapore as a culturally accommodating investment environment but also because it contrasts with the results of previous studies in this field, which may have been misinterpreted, or at least skewed by specific conditions, to conclude that socio-cultural distance is the primary cultural determinant in the choice of entry mode. In addition, because the literature indicates that cultures with high levels of uncertainty are unlikely to effectively transfer technology, and since the data indicates that foreign investors involved in joint ventures in Singapore are predominantly from countries with high uncertainty avoidance characteristics, the efficacy of the preferential margin scheme in encouraging technology transfer in the Singapore construction industry is called into question. The finding that companies may be influenced more by certain cultural characteristics than by general perceptions of cultural difference, particularly when investing in relatively stable countries such as Singapore and the United States, has implications for both attracting investment to Singapore and the effort to regionalize and globalize Singapore industry. The importance of accurately quantifying national culture and sharing this data with Singapore development boards and regionalizing companies is argued. Finally, an examination of the collected data shows that Singapore possesses a relatively uniform cultural distance to most investing countries, and that the rate of formation of foreign investment joint ventures is relatively low. While this may indicate that technology transfer is correspondingly limited, it can also be interpreted as validation of the efforts of Singapore's creators and developers to both achieve in reality and instill a perception of the Lion City as a multicultural, global-business-and-investment-friendly place of business.