The finding
Ronald Coase’s 1937 argument, “The Nature of the Firm,” remains the foundational account of why organisations coordinate some activity internally rather than through repeated market transactions — and of why that internal coordination itself carries a cost that rises with organisational complexity and dispersion. The finding is deceptively simple but has a specific implication for a small, domestically compact economy like Singapore: an organisation’s domestic footprint can stay modest even as its coordination complexity rises sharply, because the complexity is coming from regional reach rather than from domestic scale.
This distinction matters because it inverts an assumption most organisational-complexity research implicitly carries over from larger domestic markets: that complexity and headcount rise together, roughly in step, and that an organisation’s internal coordination structures can therefore be sized reasonably well against headcount alone. For a Singapore-based organisation with a genuine regional remit, that assumption breaks down specifically, in a way it does not for a comparable organisation operating primarily within a large domestic market.
Why it happens
Singapore’s economy is small and geographically compact — this is precisely why it has developed as a regional hub rather than growing primarily on the strength of its own domestic market. An organisation headquartered or regionally based in Singapore very often exists to coordinate activity across a wider Asia Pacific footprint that dwarfs its domestic operations in geographic and regulatory scope, even where domestic headcount remains comparatively small.
Jay Galbraith’s information-processing argument explains the mechanism: task uncertainty drives the need for information-processing capacity, and reach across multiple national regulatory regimes, languages and time zones is a significant driver of task uncertainty independent of headcount. A Singapore-based regional function coordinating decisions across North Asia, Southeast Asia and Australasia is managing a task-uncertainty load that a domestically-scaled organisation of the same headcount, operating only within Singapore, would not face at all.
Larry Greiner’s growth-stage model adds a further wrinkle specific to this pattern: Greiner’s crises are typically described in terms of headcount growth, but for a Singapore-based regional organisation, the equivalent crisis points are often triggered by geographic and regulatory growth — adding a new country to the regional remit, for instance — even where headcount growth is comparatively modest. The crisis arrives on a different axis than the model’s classic headcount-driven framing assumes.
Donald Sull and Rebecca Homkes’s research on strategy execution adds a fourth line of evidence that connects the other three. Their finding — that the execution problem which actually bites most organisations is cross-unit coordination rather than vertical alignment, with only 9% of managers in their sample reporting they could reliably count on colleagues in other functions and units — is, for a Singapore-based regional organisation, not a finding about domestic coordination at all. It is a finding about coordination across the very geographic and regulatory reach that Coase’s and Galbraith’s arguments identify as the actual source of the organisation’s complexity. The “cross-unit” coordination gap Sull and Homkes describe, in this specific context, is very often a cross-country gap wearing the same organisational clothing.
What it looks like in practice
This produces a specific and sometimes counter-intuitive pattern: a Singapore-based organisation can look, by headcount alone, like it should be managing a moderate level of organisational complexity, while actually managing a coordination load closer to that of a much larger, more geographically dispersed organisation — because the coordination cost Coase describes is being driven by regulatory and geographic reach rather than by headcount.
It is most visible in regional headquarters functions — finance, HR, operations, compliance — that are explicitly structured to serve a multi-country remit from a Singapore base. It is less visible, though not absent, in organisations that are Singapore-domestic in focus, where the coordination complexity is closer to what headcount alone would predict.
The distinction tends to be sharpest at points of organisational transition — a new hire evaluating the role, a board reviewing headcount plans, an investor assessing organisational risk — where headcount is the most immediately available proxy for complexity and the regional-reach driver is easy to overlook unless someone in the room is specifically prompted to name it. A Singapore-based regional finance function of a given size can be coordinating materially more regulatory and reporting complexity than a domestically-scaled finance function of the same size elsewhere, and that difference rarely shows up automatically in a standard organisational chart or headcount plan.
A common misconception is that organisational complexity should be benchmarked primarily against headcount or revenue, as it often is in less regionally-oriented markets. For a Singapore-based organisation with a genuine regional remit, that benchmark can significantly understate the coordination load actually being carried, because the driver of complexity — geographic and regulatory reach — is not well captured by headcount alone.
The consequence of this mismatch is usually a resourcing one. Coordination structures — reporting lines, decision rights, the systems used to keep multiple markets aligned — tend to get sized against the benchmark leadership is actually using, which means an organisation benchmarking against headcount alone is likely to under-resource exactly the coordination capacity its real complexity requires. This is a specific and somewhat counter-intuitive risk for a well-run, efficiently staffed Singapore hub: the same operational discipline that keeps headcount lean can also mean the organisation looks, on paper, too small to justify the coordination investment its actual regional reach requires — until a crisis in a market the hub was not adequately coordinating makes the mismatch visible.
Where this shows up
The questions here are set in Singapore. More Perspectives for this market are on the Singapore page, and the Markets index shows the other business hubs.
Questions worth considering
- Is the organisation’s internal sense of its own complexity benchmarked against headcount, or against the actual geographic and regulatory reach it is coordinating?
- Which recent increase in complexity was actually triggered by adding a country or regulatory regime to the remit, rather than by headcount growth?
- Are coordination structures (reporting lines, decision rights, information systems) sized for the organisation’s domestic footprint or for its actual regional reach?
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