THE SME ADVANTAGE : ADDING THE LOCAL TOUCH TO FOREIGN TRANSNATIONAL CORPORATIONS IN SINGAPORE

Abstract

The fast-changing nature of technology and the high-quality requirements of manufactured products have altered the role of suppliers from passive manufacturers to proactive and innovative manufacturers. Singapore is the base for about 700 foreign transnational corporations (TNCs). Many local small and medium enterprises (SMEs) are suppliers to these foreign TNCs in Singapore, supplying them with parts and components and other kinds of production-related services. This thesis examines the areas in which local SME suppliers play a part in transferring expertise to their foreign TNC customers. Indeed, this reversed transfer contrasts the common wisdom of technology transfer rendered from TNCs to suppliers via supplier-buyer linkages, or subcontracting relations. To support the hypothesis that local SME suppliers are capable of reversed transfer to their foreign TNC customers, a postal survey of local SMEs and interviews with representatives of nine SMEs were conducted. Findings show that local SMEs are found to be superior than their foreign TNC customers in local knowledge and soft technology. Local knowledge includes local technical specifications, standards, management styles and local culture. Furthermore, such expertise in soft technology as process and product technologies has resulted in more participation in customers' product designs by local SME suppliers. On a national scale, the local knowledge and expertise in sofi technology embedded in Singapore's supporting industries can enhance the locational or 'L' advantage of Singapore. The performance of these supporting industries is definitely vital in helping Singapore achieve its vision as an international manufacturing hub, specializing in knowledge-based activities.