Abstract
We examine how Anglo-American capital market logic penetrated into Singapore where relational logic tends to guide business activities and illustrate how domestic banks reacted to this imported logic in the corporate governance field. We argue that the banks’ ability to accommodate competing logics was enhanced by state agencies’ willingness to modify Anglo-American standards to fit the local context. Given the resulting institutional ambiguities in rules, local banks, while incorporating higher outside representation on their boards, reinterpreted the meaning of independence and emphasized the resource provision role rather than the monitoring function of outside directors. The resultant institutional change has been gradual.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Aguilera, R. and Cuervo-Cazurra, A. (2004) Codes of good governance worldwide: What is the trigger? Organization Studies 25 (3): 417–446.
Ahmadjian, C.L. and Song, J. (2007) Coopting globalization: Local politics and the transformation of corporate governance in South Korea and Japan. Paper presented at Interdisciplinary Committee on Organizational Studies, 16 March, University of Michigan.
Backman, M. (2001) Asian Eclipse: Exposing the Dark Side of Business in Asia. Singapore: Wiley.
Battilana, J. and Dorado, S. (2010) Building sustainable hybrid organizations: The case of commercial microfinance organizations. Academy of Management Journal 53 (6): 1419–1440.
Business Times Singapore (2006) Ensuring a level playing field for all. 24 September.
Carney, R.W. (2014) Singapore: Open state-led capitalism. In: M. Witt and G. Redding (eds.) The Oxford Handbook of Asian Business Systems. Oxford: Oxford University Press, pp. 190–213.
Carney, R.W. and Witt, M.A. (2014) The role of the state in Asian business systems. In: M. Witt and G. Redding (eds.) The Oxford Handbook of Asian Business Systems. Oxford: Oxford University Press, pp. 533–555.
Clegg, S. (1981) Organization and control. Administrative Science Quarterly 26 (4): 545–562.
CLSA (2004) G Watch: Corporate Governance in Asia. Hong Kong, China: Credit Lyonnais Securities Asia.
Coffee, J.C., Jr. (1999) The future as history: The prospects for global convergence in corporate governance and its implications. Northwestern University Law Review 93 (3): 641–707.
D’Aunno, T., Sutton, R.I. and Price, R.H. (1991) Isomorphism and external support in conflicting institutional environments: A study of drug abuse treatment units. Academy of Management Journal 34 (3): 636–661.
DBS (Development Bank of Singapore) (2010) Annual Report. Singapore: DBS.
Djelic, M.-L. (2010) Institutional perspectives – Working towards coherence or irreconcilable diversity? In: G. Morgan, J. Campbell, C. Crouch, O. Pedersen and R. Whitely (eds.) The Oxford Handbook of Comparative Institutional Analysis. Oxford: Oxford University Press, pp. 13–40.
Dow Jones International News (2000) Singapore Deputy PM Promises More Financial Reform. 3 April.
Economist Intelligence Unit and Andersen Consulting (2000) Beyond the Bamboo Network: Successful Strategies for Change in Asia. Hong Kong, China: Economist Intelligence Unit.
Eisenhardt, K.M. and Graebner, M.E. (2007) Theory building from cases: Opportunities and challenges. Academy of Management Journal 50 (1): 25–32.
Elsbach, K.D. and Sutton, R.I. (1992) Acquiring organizational legitimacy through illegitimate actions: A marriage of institutional and impression management theories. Academy of Management Journal 35 (4): 699–738.
Friedland, R. and Alford, R.R. (1991) Bringing society back in: Symbols, practices and institutional contradictions. In: W.W. Powell and P.J. DiMaggio (eds.) The New Institutionalism in Organizational Analysis. Chicago, IL: University of Chicago Press, pp. 232–263.
Gourevitch, P. and Shinn, J.J. (2005) Political Power and Corporate Control: The New Global Politics of Corporate Governance. Princeton, NJ: Princeton University Press.
Greenwood, R., Magan Diaz, A., Li, S.X. and Lorente, J.C. (2010) The multiplicity of institutional logics and the heterogeneity of organizational responses. Organization Science 21: 521–539.
Greenwood, R., Raynard, M., Kodeih, F., Micelotta, E.R. and Lounsbury, M. (2011) Institutional complexity and organizational responses. Academy of Management Annals 5 (1): 317–371.
Hall, P.A. and Soskice, D. (eds.) (2001) Varieties of Capitalism. The Institutional Foundations of Comparative Advantage. Oxford: Oxford University Press.
Hamilton-Hart, N. (2002) Asian States, Asian Bankers: Central Banking in Southeast Asia. Ithaca, NY: Cornell University Press.
Hansmann, H. and Kraakman, R. (2001) The end of history for corporate law. Georgetown Law Journal 89 (2): 439–468.
Jackson, G. (2005) Contested boundaries: Ambiguity and creativity in the evolution of German codetermination. In: W. Streeck and K. Thelen (eds.) Beyond Continuity. Institutional Change in Advanced Political Economies. Oxford: Oxford University Press, pp. 229–254.
Kim, H. and Lee, J.H. (2012) Transformation of corporate governance in Korea. In: A. Rasheed and T. Yoshikawa (eds.) The Convergence of Corporate Governance: Promise and prospects. Basingstoke, UK: Palgrave Macmillan, pp. 137–168.
Koh, E. (2001) Alex Au’s quit notice stuns industry. Straits Times, Singapore: Singapore Press Holdings Ltd, 16 October.
Lee, S.S. (2004) Searching for directors? Try a different tack. Straits Times, Singapore: Singapore Press Holdings Ltd, 23 November.
LianHeZaoBao (2000) 上市公司缺乏合格董事 (Listed companies lack qualified board directors). 6 December.
Lounsbury, M. (2007) A tale of two cities: Competing logics and practice variation in the professionalizing of mutual funds. Academy of Management Journal 50 (2): 289–307.
Low, L. (2001) The Political Economy of Chinese Banking in Singapore. Singapore: Faculty of Business Administration, National University of Singapore. Research Paper Series No. 2001-015.
MAS (2005) Banking Act (Chapter 19): Banking (Corporate Governance) Regulations 2005. Singapore: Monetary Authority of Singapore.
Miles, M.B. and Huberman, A.M. (1994) Qualitative Data Analysis: An Expanded Sourcebook, 2nd edn. Beverly Hills, LA: Sage.
Nag, R., Corley, K.G. and Gioia, D.A. (2007) The intersection of organizational identity, knowledge, and practice: Attempting strategic change via knowledge grafting. Academy of Management Journal 50 (4): 821–847.
Orrú, M., Biggart, N.W. and Hamilton, G.G. (1997) The Economic Organization of East Asian Capitalism. Thousand Oaks, CA: Sage.
Peng, M.W. (2003) Institutional transitions and strategic choices. Academy of Management Review 28 (2): 275–296.
Redding, S.G. (1990) The Spirit of Chinese Capitalism. Berlin, France: De Gruyter.
Rodan, G. (1989) The Political Economy of Singapore’s Industrialization: National State and International Capital. Basingstoke, UK: Palgrave Macmillan.
Shein, E. (1995) The Culture of Singapore’s Economic Development Board. Harvard, MA: MIT Press.
Siow, L.S. (2005) MAS tightens rules on board independence. Business Times Singapore, Singapore: Singapore Press Holdings Ltd, 9 September.
Streeck, W. and Thelen, K. (eds.) (2005) Introduction: Institutional change in advanced political economies. In: Beyond Continuity: Institutional Change in Advanced Political Economies. Oxford: Oxford University Press, pp. 3–38.
Tan, L.H., Tan, C.H. and Ching, L.H. (2006) Corporate Governance of Listed Companies in Singapore. Singapore: Sweet and Maxwell Asia.
Tsui-Auch, L.S. and Moellering, G. (2010) Wary managers: Vulnerability and the development of trust in foreign enterprises in China. Journal of International Business Studies 41 (6): 1016–1035.
UOB (United Overseas Bank) (2007) Annual Report. Singapore: United Overseas Bank.
Walter, A. (2008) Governing Finance: East Asia’s Adoption of International Standards. Ithaca, NY: Cornell University Press.
Walter, A. and Zhang, X. (eds.) (2012) Understanding variations and changes in East Asian capitalism. In: East Asian Capitalism: Diversity, Continuity and Change. Oxford: Oxford University Press, pp. 247–280.
Weimer, J. and Pape, J. (1999) A taxonomy of systems of corporate governance. Corporate Governance International Review 7 (2): 152–166.
Yee, L. (2005) DBS chief takes issue with quarterly reporting. Straits Times, Singapore: Singapore Press Holdings Ltd, 15 October.
Yin, R.K. (2003) Case Study Research: Design and Methods. Thousand Oaks, CA: Sage.
Yoshikawa, T., Tsui-Auch, L.S. and McGuire, J. (2007) Corporate governance reform as institutional innovation: The case of Japan. Organization Science 18 (6): 973–988.
Acknowledgements
The authors would like to thank Gregory Jackson, Anja Tuschke, Henry Yeung, the editor and the two reviewers for their valuable comments on earlier drafts of this article. They also thank Jun Jie Yang, Yong Hwa Tan and Dawn Chow for their research support. The research described herein was supported by a research grant from Nanyang Business School, Nanyang Technological University.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Tsui-Auch, L., Yoshikawa, T. Institutional change versus resilience: A study of incorporation of independent directors in Singapore banks. Asian Bus Manage 14, 91–115 (2015). https://doi.org/10.1057/abm.2015.1
Received:
Revised:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1057/abm.2015.1