Singapore, Israel and the importance of culture to the start-up sector
By Yap Shiwen
Looking at the plans for our airport and port mapped out by the Prime Minister during his National Day Rally, one wonders how much a component our local start-ups will play in the grand scheme of Singapore’s economic progress.
Start-ups produce marketing value for an economy, as they encourage others to engage in start-up ventures. In the long-term, multi-national companies (MNCs) can shift capital around the world, but more often than not maintain their roots and headquarters in a single place. Home-grown start-ups and firms like Creative generate employment in the long run if nurtured correctly, keep their capital in their home base and nurture an ecosystem that supports it and grows the potential for new developments.
In short, it makes economic sense, strategically speaking, for us to grow our economy with a stronger emphasis on start-ups.
There are several critical things vital to creating a start-up. Amongst them are funding, the different forms of capital, talent, the general state of the labour force, tax regimes, business policies, entrepreneurial initiative and market demand.
However the start-up sector, the entrepreneurs that drive it and the investors that fund it, often fails to consider culture and the importance it plays. Cultural capital is the non-financial social assets unique to a geographic location and underpin many of the informal structures that enable entrepreneurship, just as much as the formal structures that do. A case in point are the oft-compared nations of Israel and Singapore.
Comparisons, in numbers
In a report published by Telefonica, Singapore ranks in the top 20 globally for our technology start-up ecosystem. That is decent, but we can surely do more. Interestingly, Tel Aviv ranks second just after Silicon Valley. For a nation that size, this achievement is commendable, and clearly Singapore, ranked at 17, has some catching up to do.
Israel and Singapore share comparatively small populations relative to their neighbours, with both being relatively young states with no significant natural resources. Yet the Israeli economy produces more start-up ventures than socio-economically stable societies like Japan, China, India, Korea, Canada and the UK. The Economist noted in a 2010 review that Israel had more high-technology start-ups and a larger venture capital industry per capita than any other nation.
Singapore possesses a higher GDP per capita, having surged ahead of Israel since the 1980s in that area. Based on IMF estimates of GDP per capita, adjusted for purchasing power parity, Singapore’s stood at USD $61,000, against Israel’s USD $32,300. It is also noted for the ease of funding available through state-sponsored channels for aspiring entrepreneurs, local and foreign, as well as enjoying connectivity with a large number of countries, and its strategic position at the Malacca Straits and proximity to China, Japan, South Korea, Vietnam, India and Indonesia.
However Israel’s start-up sector continues to enjoy more success in generating and sustaining start-ups, with the notable merger of Objet with Stratasys, a major global 3-D printing firm. The Israel start-up scene is noted for the number of acquisitions made by global MNCs and foreign firms.
Comparisons, in society and culture
Singapore and Israel share many commonalities, if not just as many differences. Both share a conscription-based military and exist amidst majority-Muslim states that have been at odds with them at one point or another throughout their history.
Israel is a society that has endured great conflict and external oppression, founded through a struggle for independence against the British in the aftermath of the Holocaust, and then struggled for their existence as a state against the USSR-sponsored Arab states throughout the Cold War, the Hizbollah and Palestinian revolts. Despite all this, it has prospered, to become a nation renowned for its entrepreneurial acumen and technological prowess.
Singapore did not struggle for independent statehood so much as have it reluctantly imposed, mostly for political and social differences with Malaysia. Its people underwent significant economic hardships during its economic development, but it has emerged as one of the world’s most economically competitive and economically liberal yet politically repressive states. Singapore is nominally multicultural but has a Chinese-majority population, with a Confucian bent to its social policies and renowned for its efficiency and ease of doing business, but not so much its entrepreneurial spirit.
Israel and Singapore differ markedly in their societies’ ability to take risks and question assumptions. Israeli culture, or rather Jewish tradition, has maintained a scholarly, legalistic tradition that relies on questioning established conventions and wisdom. This process of questioning assumptions leads to greater understanding, with the aim of eventual improvement and progress arising from the process.
This Jewish cultural attitude to questioning assumptions manifests itself in many forms. It manifests in the power-distance of their military and their fault-tolerant military culture, with great command autonomy enjoyed by junior commanders. It expresses itself in their entrepreneurial ability, willingness to take risks and their people’s inter-disciplinary agility.
No single solution, but having the right culture helps
Singapore and Israel both have merits and deficits as start-up venture destinations, but start-up creation is just as much a matter of funding, various capitals, initiative, market demand, talent, timing and a little bit of luck, as it does have to do with culture. Culture underlies many of the informal support structures and networks that enable the success and sustainability of start-up ventures and SME success.
These factors do not necessarily exist in isolation to other factors that determine success. For example, Singapore’s orderliness and efficiency is contrasted with the Israeli tolerance for chaos, and the ability to thrive in that chaos.
The ability to question assumptions, learn and adapt to the market, and finally, the ability to endure and learn from failure, are critical. While a very general statement with many exceptions, this critical cultural difference underlies just one of the many factors that vary between the systems existing in Singapore and Israel.
For Singapore, getting our people into the habit of questioning assumptions would surely make a good step in the right direction.
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