Improving Small Firm Performance Through Collaborative Change Management and Outside Learning: Trends in Singapore

Introduction: Small Enterprises Between Continuity And Change

Locally-owned small and medium-sized enterprises (SMEs) form the backbone of Singapore’s economy¹. They comprise 92% of the city-state’s total establishments, employing 51% of the workforce and generating 34% of total value added. The recession in 1985/86, the Asian crisis 1997/98 and the global economic turmoil in 2008/09 have underlined the resilience and challenges of Singapore’s SME sector in terms of employment generation or the imperatives of rapid environmental change. As Singapore progresses from her post-colonial dependence on Multinational Companies (MNCs) for technological transfer and financial capital to a knowledge-based economy that places emphasis on entrepreneurial culture, research & development, know why, intellectual assets and knowledge management capabilities (Menkhoff, Evers, & Chay, 2010), the government recognises the important role of SMEs in increasing the economy’s competitiveness in the global market as well as the strength and stabilising role of this “indigenous” sector that “… is more permanent and durable than a foreign one” (Lee & Low, 1990, p. 23). Despite various SME success stories and the dynamism of the small firm sector as a whole, Singapore’s policymakers have put in place various schemes to help local SMEs to master the transition to a knowledge-based economy. This requires the modernization of ‘traditional’ structures and mindsets as well as the willingness to learn from outside sources which explains why the topic of this paper, namely organizational change leadership, is so important in Singapore’s business and society.

Examples of major environmental changes impacting upon SMEs include the on-going process of economic globalization, intensified competition or continuous IT innovations such as E-commerce. All this has focused management’s attention on managing discontinuities in organizations’ lives. As management scholars have argued, these external forces of change require not only ‘adaptive’, ‘flexible’ organizations and ‘new’ management approaches but also competent leaders and managers able to adapt to changing times and to manage organizational change (Beckhard, 1969; Beckhard & Harris, 1987; Tushman et al., 1997; Schaefer & Thomsen, 1998; Bjerke, 1998; Menkhoff & Gerke, 2002). In view of turbulent markets, the need for SME owners to make strategic responses towards the changing environment is crucial for sustaining success and survival (Pfeffer & Salancik, 1978; Hannan & Freeman, 1984; EIU, & 2000; Pfeffer, 2005; Chew & Chew, 2008).

Organizational change refers to both planned and unplanned transformations of an organization’s structure, technology and/or human resources (Leavitt, 1965). Planned organizational change entails activities that are intentional and purposive in nature and designed to fulfill some organizational goals. It emphasizes managerial choice (Child, 1972, 1997) in contrast to unplanned change, which implies shifts in organizational activities due to forces that are external in nature and beyond the organization’s control. In the literature on organizational change, planned change is often used synonymous with organizational development (OD) while unplanned change is discussed in the context of adaptation (Dyer, 1985; Kirkpatrick, 1985). Planned organizational change interventions are typically designed and sequenced by an internal or external change / OD agent, following a detailed diagnosis of an organization’s shortcomings and needs. One of the core competencies of change agents is change leadership which we define as a systematic process of aligning the organization’s people and culture with changes in business strategy, organizational structure, systems and processes resulting in ownership and commitment to change, sustained and measurable improvement and improved capability to manage future change (Burke & Litwin, 1984; Hussey, 1995).