"A government can run like a corporation and fulfill stakeholder expectations.

" Do you
agree? (Use Singapore as an example.)

The ever-changing landscape of the world we live in has resulted in governments of many

countries trying to operate as corporations, like Dubai and Singapore. Stakeholders are a

group of people who may be adversely affected by the decisions made by the organization or

entity. A corporation refers to a company or group of people with the legal authority to act as

a single entity. The purpose of the government is to provide for common defence, ensure

legislation, and to advance the common good for its people. Most governments have a large

number of stakeholders, who all play a vital role in governance. Fulfilling stakeholder

expectations would entail the government to build positive relationships with these

stakeholders. This may seem akin to what corporations do today, but therein lie several

differences. These differences have prompted me to believe that a government cannot run like

a corporation and fulfil stakeholder expectations.

A corporation is structured to run an economic activity that promotes tangible returns to its

shareholders. This is the primary reason for the existence of corporations. A corporation is

not considered a living entity and does not need to respect national boundaries, and could

outsource it’s productions to any corner of the world. In the recent past, there have been

greater roles of corporations within our community due to Corporate Social Responsibility

(CSR). However these are merely completed and not given much importance. These are not

essential components of corporate culture that enter society to benefit some privileged

sections rather than the whole population at large.

A country’s government, on the contrary, has a wider spectrum of roles to perform.

Furthermore, it is restricted by national boundaries and sets the terms and conditions for the

operations of corporations. Being the government would mean having to take care of a vast
pool of people, of varying demographics. This would mean the government would have to

undertake activities that do not always provide an economic return on investment. How could

everything in life be measured by dollars and cents? Effective and responsible governments

would ensure the re-distribution of wealth across its people to prevent social instability and

uphold fairness within its boundaries. It would uplift the national brand which encapsulates

the collective aims and behaviours of the country, sometimes not always rational or pleasant.

Corporations have the primary task of yielding large revenues so as to translate into quarterly

profit earnings so as to satisfy their respective shareholders. However, due to increased

competition and the complexities of the financial markets, corporations may find themselves

making a large loss. When a corporation is in a state of prolonged loss, would it still be

handing out handsome remunerations to its employees? It would, if money could be grown

on trees. Corporations would resort to retrenching their employees to reduce their costs

incurred and to try and yield a positive profit to satisfy their shareholders. Chartered

Semiconductors Manufacturing (CSM), a Singaporean corporation, was the world’s third

largest dedicated semiconductor corporation. In the fourth quarter of 2008, it had net losses of

US$114 million and cut 540 jobs in Singapore.1 These Singaporeans now found themselves

unemployed.

Governments have a far greater responsibility than mere corporations. In the midst of

economic downtrends, plagued with quarterly losses, corporations take radical decisions such

as retrenchment or declaring bankruptcy. In many instances, corporations are responsible for

human rights violation and can be dissolved by order of the court or shareholder’s action.

However, if a government is indeed run like a corporation, during recessions, could it simply

stop governing and dissolve its government? That would be disastrous to the country at large.

1
Adapted from http://www.singaporejobsmarket.com/forum/news/4805.html
Despite the sub-prime mortgage crisis in 2008, which caused many Singaporeans to be

unemployed and resulted in 12.5% decline in Singapore’s growth rate2, contrary to

corporations the government stepped in to mitigate the problems. Singapore implemented the

Skills Programme for Upgrading and Resilience (SPUR) to help workers manage the

economic downturn and invest in skills for the economic recovery. This helped thousands of

employees and citizens who were stakeholders of the government, and fulfilled their

expectations to a certain extent. In this light, if the fundamentals of a corporation were

applied to the Singapore government, stakeholder expectations would have been far from

fulfilled.

Many corporations take good care of their employees by providing them numerous healthcare

benefits. This is done as these employees are a valuable asset to their corporations. Hence, it

is imperative to take care of their employees as it would be beneficial to the firm. However,

once the employee has retired, for most corporations, the rendering of healthcare benefits

stops there. This is as the employee would no longer be able to contribute to the corporation.

In accordance to the same logic, should the Singaporean government cease to provide

subsidies for medical expenses to senior citizens, as they do not contribute to economic

growth? Doing so would save the Singapore government in excess of S$2.2 billion3 each

year. However, that would result in a large number of deaths, which would defeat the purpose

of the government, which is to advance the common good. This apparent contradictory aims

between governments and corporations would disallow governments which run like

corporations to fulfil stakeholder expectations.

2
Adapted from http://www.tradingeconomics.com/singapore/gdp-growth

3
Statistic obtained from http://www.healthxchange.com.sg/healthyliving/specialfocus
Corporations are not interested in issues such as wealth distribution in countries. They would

invest in countries so long as there exist enough people to purchase their goods and services,

so that they could increase their revenues. For governments, unequal income distribution is a

pertinent issue, which could lead to even greater problems. Apple is not interested in the

number of poor people in the states so long as they can sell their products and maintain their

status of being the largest company in the world4. On the other hand, if governments

completely ignored the poorer sectors of the community, it would lead to political and social

instability, definitely not fulfilling their expectations. Governments cannot afford to adopt

such a myopic view of society as corporations do. Despite many people saying that Singapore

runs like a corporation, they have the Workfare Income Supplement (WIS) scheme, Edusave

Endowment Fund, ComCare Endowment Fund5 etc. to help lower-income families. Vast

amounts of money were poured in for assistance reflected in the budget 2012, something

corporations would seldom do, to build an inclusive society and build a positive relationship

with their stakeholders.

Despite the apparent differences between corporations and governments, these two are inter-

dependent upon each other. Corporations are the entities which are responsible for the

economic growth of the nation. Governments are the ones who are responsible in giving the

green light to corporations to carry out their activities. The governments also ensure that the

corporations do not take advantage of their position. The importance of the Singaporean

government is accentuated due to the fact that Singapore relies heavily on foreign direct

investments (FDIs), amounting to S$618 billion in 20106. Governments may be more

4
Adapted from www.telegraph.co.uk>technology>Apple

5
Extracted from FY2012_budget_in_brief.pdf

6
http://www.singstat.gov.sg/stats/latestdata.html
economical if they run like a corporation, but they will be abdicating their larger purpose,

which is to be an adequate governing body for the people.

Governments and corporations should understand and acknowledge their differences, and not

try to emulate each other. Doing so would most likely produce a budget surplus, but would

place many other things in deficit.

References
1. Adapted from http://www.singaporejobsmarket.com/forum/news/4805.html

2. Adapted from http://www.tradingeconomics.com/singapore/gdp-growth

3. Statistic obtained from http://www.healthxchange.com.sg/healthyliving/specialfocus

4. Adapted from www.telegraph.co.uk>technology>Apple

5. Extracted from FY2012_budget_in_brief.pdf

6. http://www.singstat.gov.sg/stats/latestdata.html
Bibliography
http://www.mom.gov.sg/skills-training-and-development/adult-and-continuing-
education/skills-upgrading/Pages/skills-upgrading.aspx

http://www.singaporejobsmarket.com/forum/news/4805-chartered-semiconductor-
announces-q4-loss-cuts-540-jobs-singapore.html

http://en.wikipedia.org/wiki/Chartered_Semiconductor_Manufacturing

http://www.tradingeconomics.com/singapore/gdp-growth

http://www.healthxchange.com.sg/healthyliving/SpecialFocus/Pages/Understanding-
Medisave-MediShield-Medifund.aspx

http://www.telegraph.co.uk/technology/apple/9488458/Apple-the-most-valuable-
company.html

http://app2.mof.gov.sg/budget_2012/default.aspx

http://www.singstat.gov.sg/stats/latestdata.html