Social Networks 33 (2011) 111

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Social Networks
journal homepage: www.elsevier.com/locate/socnet

Social networks and labour market outcomes in a meritocracy

Vincent Chua
Department of Sociology, University of Toronto, 725 Spadina Avenue, Toronto, Ontario, M5S 2J4, Canada

a r t i c l e

i n f o

a b s t r a c t
This paper examines the signicance of personal contacts in job searches, in the context of Singapores meritocratic system. I show that in certain sectors, such as the state bureaucracy, social networking brings no distinct advantages as appointments are made exclusively on the basis of the academic credentials of the candidates. Thus, personal contacts are not always useful, especially in labour markets that rely heavily on the signalling role of academic credentials to match persons to jobs and allocate rewards. In contrast, personal contacts are more useful among less qualied job searchers in the private sector. 2010 Elsevier B.V. All rights reserved.

Keywords: Education and labour market systems Job searches Meritocracy Personal contacts Varieties of capitalism

1. Introduction We know that personal contacts are generally useful for getting jobs (Granovetter, 1974, 1995), changing jobs (Bian, 1994, 1997) and getting good jobs (Marsden and Hurlbert, 1988; Lai et al., 1998; Erickson, 2001). However, should we expect personal contacts to work the same way in all kinds of labour markets? This seems a logical question, but the relative role and usefulness of personal contacts within and between labour market contexts remain relatively unexplored in the literature. Many researchers into the network theory of job searches argue that personal contacts, whether offering nuanced information (Wanous, 1980), facilitating newcomer socialization (Fernandez et al., 2000) or providing timely inuence (Bian, 1997), enable better job matches than non-network methods. Others like Granovetter (1973), Montgomery (1992), Burt (1992) and Lin (2001) posit that network characteristics such as weak ties, structural holes and high-status contacts, can be more important than matching methods per se. I argue that while matching methods and network characteristics are important, labour market contexts inuence the extent to which either is useful. Using representative data from Singapore, I show that who you know does not always lead to better job outcomes, especially where recruitment and promotion procedures are highly formal and bureaucratized. The heavy reliance on academic credentials for choosing the best candidates in Singapores state sector reects a situation where educational and labour market hierarchies are tightly linked and hence impermeable to informal inuences such as networking.

Broadly, this paper contributes to our growing understanding of the effects of institutional contexts on the role and value of job contacts. It argues that cultural explanations do not sufce in explaining variations in the use and value of job contacts.

2. Institutional explanations Rates of contact use vary by national context. In the United States, between 50% and 65% of Americans report using contacts (Granovetter, 1974; Lin et al., 1981; Campbell and Marsden, 1990; Lai et al., 1998). Rates are noticeably lower elsewhere. In East Germany (under Communism), 40% found jobs through personal contacts (Vlker and Flap, 2001). In the Netherlands, the percentage is between 35% and 50% depending on the period (see DeGraaf and Flap, 1988; Moerbeek et al., 1995). In Japan, the percentage is about 35% (Watanabe, 1987). In China, it is about 45% (Bian, 1997), although another study found that only 23% of men and 14% of women used a contact when nding their rst job (Lin and Bian, 1989). Further, job contact effects on post-hire outcomes may vary within and between countries. Although studies indicate that highstatus contacts consistently yield better post-hire outcomes (e.g. see Lins summary of studies, 2001, p. 84), the sizes of these effects may vary according to the context being studied. Some studies have found a positive effect of contact use on post-hire outcomes (e.g. Coverdill, 1998 in the United States and Bian, 1994 in China), while others have found no or negative effects (e.g. Korenman and Turner, 1996; Lin, 1999; Mouw, 2003, all in the United States). Variations in contact use and effects within and between countries suggest a need to further explore their structural sources. While laypersons and scholars alike may be tempted to rely on cultural explanations to account for national variations, such explanations potentially obscure the important role of institutional

Tel.: +1 416 871 1042. E-mail address: vincent.chua@utoronto.ca. 0378-8733/$ see front matter 2010 Elsevier B.V. All rights reserved. doi:10.1016/j.socnet.2010.08.001

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factors. Culture may be important for providing individuals with routine scripts and lines of action (Swidler, 1986, p. 277), but culture often intersects with institutions to shape behaviour. Noting the role of job contacts in a variety of countries, Granovetter (1995) notes that while there may be somewhat more cultural emphasis on strong ties in countries such as China and Japan, most of the reasons for network differences seem to lie in institutional variations. Lin (1999) concurs, arguing that national differences in the use of job contacts are likely the result of institutional factors, for instance, the association between specic educational institutions and methods of job allocations and searches. Building on this argumentation, this paper examines how education and employment systems impact the role and payoffs of contact use in countries as diverse as Singapore and the United States. Singapore is an excellent case study because it is located at one ideal-typical extreme of a scale of meritocracy (Evans and Rauch, 1999). In their innovative paper, Evans and Rauch (1999) devised a Weberianness scale to measure the extent to which a group of 35 countries had strong state bureaucracies characterized by meritocratic recruitment and predictable career ladders. That Singapore was rated at the top of this scale makes it an ideal site for testing the relationship between bureaucratic labour market structures, job contacts, education and status attainment.1 3. Varieties of capitalism My analysis draws upon a distinction from the varieties of capitalism literature (Hall and Soskice, 2001): liberal market economies (LMEs) and coordinated market economies (CMEs). Briey stated, LMEs and CMEs are ideal-type economies situated at the extreme ends of an array of nations. While multiple features distinguish LMEs and CMEs, one feature is the interrelationship between the supply (education) and demand (employment) sides of the labour market (Allmendinger, 1989). In LMEs, the supply and demand sides of the labour market are loosely-coupled: that is, education systems in liberal economies send only weak signals to employers about the skills and qualications of the labour pool. In CMEs by contrast, the supply and demand sides of the labour market are tightly-coupled, with education systems sending strong signals to employers about their potential employees. In the literature, the United States is often associated with LMEs, while countries like Norway and West Germany are often associated with CMEs (Allmendinger, 1989; Mayer, 2005). Based on the distinction between loosely and tightly-coupled, Singapore is more aptly described as a CME. LMEs and CMEs may be further distinguished by the standardization of educational provisions and the stratication of educational opportunities (Allmendinger, 1989; Mayer, 2005). In LMEs, schools have greater exibility in the design and administration of education. They have few prescribed national guidelines or standards. National examinations, particularly at the elementary and junior high school levels, are almost non-existent, and the idea of educational tracking at a young age is virtually unknown. Since students do not sit for national examinations, the signalling role of grades and certicates in LME labour markets is a less important issue. Educational certicates are of relatively minor importance in LMEs, as work lives are structured by individual attempts to make good earnings (Mayer, 2005). While a university degree is qualitatively different from a high-school diploma, but because of the large number and types of colleges and universities in LMEs, it is

difcult, even with visible degree and grade differences, to judge between so many different types of graduates. The symbolic role of modern education compounds the problem; as Dore (1976, p. ix) notes: [N]ot all schooling is education. . .much of it is mere qualication-earning. Given the uncertain meanings attached to degrees, diplomas and grades in LMEs, employers may rely on network mechanisms to select the best candidates in addition to formal qualications. CMEs are characterized by a standardized and examinationbased school system. CMEs whether West Germany, Norway (Allmendinger, 1989), Japan (Dore, 1976; Rosenbaum et al., 1990), Hong Kong, Korea, Taiwan or Singapore (Schmidt, 2006), are united by the highly signicant role of qualications for job allocation. The close relationship between school and job starts early in elementary school, when students are tracked into ability streams which set them up for certain kinds of employment (Cheung, 1994). Given that education is itself a rigorous sorting process, employers can rely on information given by certicates and do not have to screen or train individuals entering the labour force (Allmendinger, 1989, p. 60). To be clear, it is not that credentials are of little importance in LMEs. Standardized tests such as the SAT, GRE and GMAT are an integral part of the North American tertiary education system, and doing well in them is extremely important for gaining entry into prestigious universities. Furthermore, entry into professional careers requires specic forms of education, often in professional schools (DiMaggio and Powell, 1983). The difference between CMEs and LMEs is that the sorting process begins much earlier in the former (Turner, 1960). Furthermore, while LMEs may use a combination of credentials and networks to determine job hires, CMEs pay more attention to credentials alone. In the Singapore CME, education alone makes for all kinds of efcient matches, particularly in highly meritocratic jobs (MacDougall and Chew, 1976; Tan, 2004). The argument advanced in this paper is that in CME type labour markets where education and employment systems are tightly coupled, personal contacts are generally ineffective. By contrast, in LME type labour markets where education and employment systems are loosely coupled, personal contacts are more useful. 4. Singapore context In addition to its CME categorization, Singapore has been called the quintessential developmental state (Castells, 1988, p. 4). The most pressing objective of a developmental state is economic growth, even at the expense of political freedoms (Kim, 1994). In the literature, the developmental state is often contrasted with the liberal market economies (LMEs) of Britain and the United States where the governments role in the economy is more regulatory than interventionist (Wade, 1990; Woo-Cumings, 1999). Between 1965 and 1984, Singapore saw the rise of an administrative state, whereby politics was removed from civil society, and national decisions devolved to government bureaucrats (Chan, 1989). Because an administrative state is technocratic, its mode of leadership renewal is informed by an elitist and meritocratic selection process based on academic achievement rather than personal charisma (Barr, 2006). In practice, the Singapore case is very similar to the French developmental state whose administrative elite is recruited from Frances grande ecoles. These grande ecoles lead to well-paid and prestigious positions within the civil service and state enterprises, thus reinforcing Frances reputation as a Republic of Valedictorians (Loriaux, 1999, p. 240). As in France, the Singapore state is built upon a system of identifying and grooming scholars for high-level government work. The Singapore state is also much like ancient Chinas Confucian Mandarinate, whereby the best examinees are sponsored into the highest positions within the state bureaucracy (Barr and Skrbis, 2008).

1 Although Evans and Rauch (1999) did not include the United States in their study, Evans believes that the United States is on the whole less Weberian than Singapore (per. comm.).

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The developmental state draws its ideological power and legitimacy from its sterling economic performance and heavy reliance on human capital (Johnson, 1982). Without economic growth, the developmental state quickly loses its political legitimacy and must nd a way to restore condence among the electorate. The states answer to electoral expectations is, ironically, to intervene even more in industrial allocations (what jobs to do) and educational policy (what subjects to study). In the Singapore developmental state, human capital development, technocratic planning and political stability (arising from a meritocratic ideology that reasons that inequalities between individuals are due to differences in innate ability and personal effort rather than personal networks) are cited as fundamental engines of economic growth (Castells, 1988). The eviction of Singapore from Malaysia in August 1965 (due primarily to Singapores intransigent stand on meritocracy and its subsequent refusal to accede to Malaysias racial politics), allowed the ruling Peoples Action Party (PAP) to propagate an ideology of survivalism (Chan, 1971). The lack of natural resources in the island city-state, coupled with its small size, enabled the state to generate a discourse underscoring the redemptive role of an important substitute: human capital. Unlike other East Asian economies (e.g. Japan, South Korea and Taiwan) which built their post-World War II economies on the strength of entrepreneurial ventures initiated by local capitalists (hence the rise of such economic giants as Toyota, Honda and Samsung), Singapore chose the path of multinational company led growth (Schuman, 2009). To stem the tide of growing unemployment, the state elites marketed Singapore as a low-cost manufacturing base for foreign capital. During the 1960s and 1970s, American and European companies were looking for offshore manufacturing bases for their electronics sector, and Singapore had an attractive mix of developed infrastructure, tax incentives and educated labour (Castells, 1988; Tremewan, 1994). Today, multi-national companies (MNCs) continue to be an important part of Singapores economic landscape, but competition has intensied, with MNCs seeking out cheaper locations elsewhere. To remain competitive, Singapore has had to re-invent itself, upgrade its human capital and technological base while keeping wages relatively low, a policy that is clearly working, as the latest foreign investments have been in pharmaceuticals and biotechnologyhuman capital intensive spheres (Pereira, 2008). Singapores powerful state sector has three important sets of institutions: the civil service; statutory boards; and state enterprises (government-linked companies or GLCs). The main criterion for entering the state sector is high academic performance (Barr, 2006). By enforcing meritocracy within the state bureaucracies, political elites get to select the most talented individuals (Quah, 1998). To attract and keep the best talent, bureaucratic salaries in Singapore are about 10% higher than wages in comparable private sector positions (Evans, 1995). Thus, although the state sector employs only about 20% of the workforce, its contribution to the GDP is almost 45% (Castells, 1988). Singapores rigorous academic system extends into the military service that all 18-year-old Singaporean males undergo. Typically, those with excellent GCE A level scores are assigned to scholar platoons for ofcer-cadet training (OCS) and are considered for prestigious government scholarships to top universities abroad. After their three to four-year stints, these ofcer-cadets return to Singapore to serve their bond to their state sector employer (Barr, 2006). Depending on national needs, some are seconded to state enterprises (GLCs) where they are groomed for important roles mediating the link between state initiatives and free markets. Like the civil service, the GLCs offer overseas scholarships to attract young talent and bind these young people for six to eight years (Chan and Ng, 2000). As state enterprises, GLCs often have access to the civil services pool of talented elites. Indeed, some

high-ranking civil servants sit on the boards of GLCs, and a few are sequestered to them full-time (Krause, 1989; Worthington, 2002). One Singapore study found that although GLCs are no more or less liquidity-constrained in their investment decisions than their private sector counterparts, they are rewarded in nancial markets with a premium of more than 20 percent (Ramrez and Tan, 2003, p. 20). The private sector tends to be less focused on credentials than the state sector. It comprises two major groups, the multinational companies (MNCs) and the large but relatively powerless smallbusiness sector (or SMEs). The SMEs value academic qualications, but do not emphasize it to the same exacting degree as the state sector. We may expect social networking to play a more active role in matching candidates to SMEs, and there is anecdotal evidence that in Singapores high-end banking industry, recruitment is based predominantly on old boy/girl networks. Although Singapore contains three main ethnic groups Chinese, Malay and Indian Chinese dominate in the private sector, arguably because during British colonial rule, they were assigned by the British to trade and commerce, with many working as coolies, shopkeepers and middlemen agents facilitating trade relations between the Europeans and locals (Visscher, 2007). Traditionally, then, Chinese have concentrated in sectors such as retail and wholesale, construction and light manufacturing, and banking. These industries tend to be more network-based than human capitalbased (Chan and Ng, 2000). 5. Propositions According to one inuential school of thought, institutions refer to the set of constraints and rules which exist to create order and reduce uncertainties in exchanges between social systems (North, 1991, p. 97). These constraints and rules make institutions predictable: over time, participants become familiar with the institutions incentive structure and orient their behaviour accordingly. A prevailing institutional rule of education-based meritocracies is that jobs are allocated based on what you know rather than who you know. According to this rule, job allocation should depend on achieved criteria such as formal qualications and accumulated skills rather than ascribed characteristics such as gender, ethnicity, family background or social connections. In meritocratic markets, criteria other than human capital will interfere with the selection of the most competent workers (Reskin and McBrier, 2000). To the extent that developmentalism is sustained in a meritocracy, we should expect to see job seekers more reliant on educational resources than personal contacts. Proposition 1. In a highly meritocratic society like Singapore, where educational credentials are sought after by employers, job seekers are less likely to use personal contacts. As credentials are highly valued in a meritocratic society, we should expect to see well-educated job seekers relying on their hard-earned credentials. Meanwhile, individuals who lack credentials will have to rely on alternative strategies such as job contacts. This principle of substituting social capital for a lack of human capital is reported in studies of ethnicity and immigration where individuals from lower-status ethnic groups rely on personal contacts to enter ethnic economies (Light and Gold, 2000; Sanders et al., 2002). Proposition 2. Highly educated individuals are less likely than less-educated individuals to rely on personal contacts during a job search. Assuming that well-educated job seekers are more likely to enter meritocratic jobs than lower-educated job seekers, and that

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meritocratic jobs are likely to value credentials over personal contacts, I hypothesize that well-educated job seekers are less likely than lower-educated job seekers to experience added returns from using job contacts. Proposition 3. The well-educated are less likely than the lesseducated to experience added returns (i.e. earnings) from job contacts. In a 1961 speech (in Quah, 1998, p. 111), Prime Minister Lee Kuan Yew said: I am in favour of efcient service. The brighter chap goes up and I do not care how many years he has been in or he has not been in. If he is the best man for the job, put him there. While the meritocratic ideology came from Lee, its implementation was often entrusted to his Finance Minister, Dr Goh Keng Swee. Gohs version of meritocracy was at times even more exacting than Lees. Holding a doctorate in Economics from the London School of Economics (LSE), Goh placed a high premium on intellectual ability and academic brilliance, rather than experience. . . and as Goh had carte blanche to hire anyone from the list of government scholars given to him, he paved the careers of many young ofcers (Neo and Chan, 2007, p. 163). This best man policy was recently reiterated by current Prime Minister Lee Hsien Loong, in a conversation with Charlie Rose (Straits Times, 16 April 2010): The whole of our system is founded on a basic concept of meritocracy. You are where you are because you are the best man for the job, and not because of your connections or your parents or your relatives. Based on Singapores strongly meritocratic state structure, we would expect the following two patterns: Proposition 4a. Job contacts are less likely to facilitate entry into the meritocratic state sector. Proposition 4b. Job contacts are less likely to pay off in the meritocratic state sector. In addition, we would also expect job contacts to be less likely than formal mechanisms to facilitate entry into industries that emphasize formal credentials. Proposition 5. Job contacts are less likely to be associated with entry into formal industries such as public administration and defence, health and social work, and education. 5.1. High-status job contacts A consistent nding is that high-status contacts create better post-hire outcomes for job seekers (Lin, 2001), arguably because high-status contacts provide better access to resources and thus wield greater inuence. Therefore, it is important to study the role of high-status contacts, in addition to contact use alone (Mouw, 2003). High-status contact use is a more targeted measure of social capital as it species the status of the job contact being mobilized. I hypothesize that if a social system is highly meritocratic, then high-status contacts (even though they embody better resources) should not provide additional advantages. That is, the economic payoffs associated with using a high-status job contact should not surpass the economic payoffs associated with using a non-highstatus contact. Proposition 6. earnings. High-status social capital need not lead to better

Proposition 7. Well-educated contact users are less likely to experience added returns from high-status contacts than lesseducated contact users.

6. Data and method I analyze data from the 2005 Project Network Survey, using a sub-sample of 656 currently employed Singaporean adults aged between 25 and 55. The survey was designed to better understand the nature of personal communities in multi-ethnic Singapore. As in Fischers Northern Californian study (Fischer, 1982), the survey employed a range of 12 name generators to delineate the names, followed by questions about each network member and the nature of the ties. The exact wording of the questions was modied (after pre-tests) to suit the Singapore context. To ensure quality, the data were collected with the help of a highly reputable market research company, ACNielsen. Following Granovetters (1974) study, the survey included a question about how respondents found their current jobs. As people often nd their jobs through a combination of means (Montgomery, 1992), a multiple response question was called for. The options were the following: (1) I saw an advertisement in a newspaper (or other sources of media); (2) I found out through an employment agency; (3) I submitted an application; (4) Someone I did not know contacted me and said that I had been recommended; (5) I asked friend/person who told me about the job; (6) A friend/person who knew I was looking for a job contacted me; (7) A friend/person who did not know I was looking for a job contacted me; and (8) others. Respondents who indicated options 5, 6 or 7 were assigned 1 on the job contact variable, while the remaining respondents were assigned 0. Table 1 presents information about the sample. Most of the respondents are between 40 and 44 years of age (23.3%), although other age categories are represented as well. Males and females constitute 58.4% and 41.6% of the sample respectively; this uneven gender distribution is due to mens greater participation in paid labour markets than women. As the numerically dominant ethnic group, Chinese make up 67.8% of the sample, with Malays and Indians making up 18.6% and 13.6% respectively. The sample distinguishes between three educational groups: 25.0% have low levels of education (i.e. no formal education or some secondary education), 40.9% have middle levels of education (i.e. have completed secondary school, technical school or preuniversity) and 34.2% have high levels of education (i.e. are polytechnic or university graduates). Of the respondents, 24.3% are employed in public sector jobs (comprising the civil service, statutory boards and GLCs), while 55.4% and 20.3% are employed in the small business sector (SMEs) and multinational companies (MNCs) respectively; 91% are fully employed, and 9% are employed part-time. Of the 656 respondents, 233 are contact users (35.5%). This percentage is substantially lower than in the United States (5065%), but closer to the percentages in Japan (35%), the Netherlands (3550%), East Germany (40%) and China (2545%). An earlier Singapore study conducted by Bian and Ang (1997, p. 1002) found that 35% of Singaporean respondents had used a personal contact to nd a job: this is almost identical to the current studys 35.5%. Of all contact users, 77.3% used an intimate tie (i.e. close, quite close or very close) to obtain their current jobs. This concurs with ndings in the literature, which suggest that job seekers in predominantly Chinese societies tend to rely on strong ties during the job search (Bian, 1997; Bian and Ang, 1997). Among contact users, friends (57.6%) and kin (23.1%) were most likely to be relied upon, suggesting that strong-tie-bridges are important sources of job information.

Proposition 7 is like Proposition 3. It asserts that well-educated job seekers are less likely than less-educated job seekers to experience added returns from social capital. In a highly meritocratic society like Singapore, the payoffs to social capital should tend to be lower for people with educational advantages.

V. Chua / Social Networks 33 (2011) 111 Table 1 Descriptive statistics of Singapore citizens and permanent residents sample (n = 656). Respondents personal characteristics Age 2529 years 3034 years 3539 years 4044 years 4549 years 5055 years Gender Male Female Ethnicity Chinese Malay Indian Employment status Full-time Part-time Education Low education (No formal education or some secondary) Middle education (Completed secondary or technical or pre-university) High education (Polytechnic, professional qualication, University) Work sector Private sector small business sector (SMEs) Private sector multinational companies (MNCs) Public sector civil service, statutory boards and GLCs Job seeking tie characteristics Proportion of job contact users Role relations of contact persons Kin Friends Coworkers/supervisors Neighbors Tie strength with contact persons Very close Quite close Close Not that close Distant Median tie strength 11.9% 16.2% 17.4% 23.3% 17.7% 13.6% 58.4% 41.6% 67.8% 18.6% 13.6% 91.0% 9.0% 25.0% 40.9% 34.2%

6.3. The problem of contact use One problem with studying contact use and post-hire outcomes is that one never really knows whether the contact affected the post-hire outcome or if another means of job search used in tandem with the contact was more important (Montgomery, 1992). One solution is to conne the analysis to the early stagethat is, study the sources of contact use without seeking to model the effects of contact use on post-hire outcomes. Another less restricting solution is to measure the extent to which multiple search methods are used by job seekers (i.e. check the extent of multiple responses) and decide whether to proceed with post-hire models. If the extent of multiple search methods is small, the researcher may justiably proceed with the modeling. If the overlap is big, the researcher may refrain or proceed while stating the limitations. In my case, the number of job seekers who reported using a combination of methods (formal and informal) was extremely small: 2 out of 656 respondents. Almost all respondents indicated either using a job contact (231) or some formal mechanism (407) (with only 2 indicating both and 16 indicating others), suggesting that, technically, the problem of multiple search methods is not a serious one in this particular study. But assuming that this gure is being underestimated due to factors such as respondents choosing to report in terms of their primary search strategy instead of reporting multiple strategies, we need other reasons for estimating post-hire models.2 Above all, we have to acknowledge the limitations and interpret the data with them in mind. 6.4. Controls

55.4% 20.3% 24.3%

35.5% 23.1% 57.6% 18.5% .008% 26.9% 26.9% 23.5% 21.0% 1.7% Close

The effect of the respondents education is represented by two dummy variables: middle education and high education, with low education being the reference group (see Table 1 for the meaning of the categories). Age and age square are used as proxies for overall work experience. Gender, ethnicity and employment status are added as further controls, with male, Malay and full-time work being the reference groups respectively. 6.5. Interactions I test a number of interaction effects: (a) (b) (c) (d) (e) [Job contact] [Respondent has middle education] [Job contact] [Respondent has high education] [Job contact] [Respondent works in the state sector] [High-status job contact] [Respondent has middle education] [High-status job contact] [Respondent has high education]

6.1. Outcome variablescontact use and earnings The dependent variables are either contact use or earnings depending on the analysis. Contact use is dichotomous. Earnings are measured by the square root to the numeric codes representing each of 17 earning categories. 6.2. Focal independent variables Depending on the hypothesis being tested, the focal independent variable is either: (1) used a job contact (vs. did not use a job contact), or (2) used a high-status job contact (vs. used a nonhigh-status job contact). In the latter, the respondent was asked to report whether the job contact had a: (1) much lower-status than the respondent; (2) lower-status than the respondent; (3) a bit lower-status than the respondent; (4) same status as the respondent; (5) a bit higher status than the respondent; (6) higher status than the respondent; or (7) much higher status than the respondent. I dichotomized the variable: respondents who indicated 5, 6 or 7 were considered to have used a high-status contact (1), while the rest were considered to have used a non-high-status contact (0).

The rst two interaction terms (a, b) test Proposition 3, which predicts that payoffs of contact use are lower for highly educated individuals. The fourth and fth interaction terms (d, e) test Proposition 7, which predicts that payoffs of high-status job contacts are lower for highly educated individuals. The third interaction term (c) tests Proposition 4, which predicts that payoffs of contact use are lower for individuals working in highly meritocratic jobs (i.e. the state sector).

2 The problem of multiple search strategies notwithstanding, many scholars (e.g. Bian, 1994; Mortensen and Vishwanath, 1994; Fernandez and Weinberg, 1997; Coverdill, 1998; Fernandez et al., 2000; Castilla, 2005; Antoninis, 2006; Loury, 2006; Behtoui, 2008; Stainback, 2008) continue to estimate and report the impact of contact use on post-hire outcomes.

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Table 2 Binary logistic regression modeling the effect of education on the likelihood of using a job contact. Predictors Middle education High education Chinese Indian Female Age Small business sector (SMEs) Multinational companies (MNCs) Intercept N Degrees of freedom Chi-square Model 1 .746*** (.474) 1.220*** (.295) .435* (1.545) .034 (.966) .301 (.740) .078 (1.081) Model 2 Model 3 .770*** (.463) -1.409*** (.244) .709** (2.031) .150 (1.162) .223 (.800) .046 (.955) Model 4 .654** (.520) 1.217*** (.296) .618* (1.855) .246 (1.278) .189 (.828) .021 (.979) .915*** (2.496) .789** (2.201) .904 656 8 62.937***

.098 656 2 32.166***

1.210 656 4 12.461*

.008 656 6 46.915***

Note: Odds ratio of the response reported in parentheses. Omitted categories: Low education, malay, male, state sector. *P < .05, **P < .01, ***P < .001 (two-tailed tests). 2LL intercept is 853.582.

To test Proposition 2, I employ a binary logistic regression whereby I estimate the effects of education, ethnicity, gender and age on the odds of using a job contact. It is hypothesized that as education increases, the likelihood of contact use decreases. To test Proposition 5, I simply compare the proportion of job contact users across the various industries. These industries include manufacturing, utilities, construction, wholesale and retail trade, hotels and restaurants, transport, storage and communications, nancial intermediation, public administration and defence, education and health, and social work. 7. Results 7.1. Low level of contact use in Singapore Of the 656 currently employed respondents, 233 reported using job contacts. This percentage of 35.5% is substantially lower than the 5065% reported in North American studies, suggesting that on average, contact use is a much less prevalent job matching strategy in coordinated markets (CMEs) than in liberal markets (LMEs). National differences in contact use are interrelated, I argue, with the way in which education systems interface with employment systems in societies. In Singapore, educational credentials send strong signals to employers about a candidates ability to perform, while in the United States, these signals tend to be weaker and thus, are often supplemented by additional signals such as personal contacts. 7.2. Highly educated individuals are less likely than lower-educated individuals to rely on job contacts Model 1 in Table 2 shows that highly educated job seekers are less likely than middle or lower-educated job seekers to use job contacts (.746*** for middle education and 1.220*** for high education). This inverse relationship remains signicant at the .01 level when ethnicity, gender and age are controlled for (in model 3). Model 3 indicates that highly educated respondents and middleeducated respondents are about four times (1/.244 = 4.10) and two times (1/.463 = 2.16) less likely than lower-educated respondents to use job contacts respectively, suggesting that educational credentials reduce a job seekers need to rely on job contacts. Model 2 indicates that Chinese are more likely than Malays (and Indians) to use job contacts (.435*). When ethnic differences in education are accounted for in model 3, the Chinese effect on job contacts becomes even stronger (.709**), implying that their high credentials suppress their use of job contacts. So the question becomes: if well-educated people usually do not use contacts (model 1), and Chinese lead in education, why is it that Chinese are

still most likely to use contacts (e.g. .435* in model 2 and .709** in model 3)? While Chinese culture is one plausible explanation, another explanation, this time from an institutional viewpoint, is their active participation in the network-intensive spheres of the Singapore economy. Note that when the effects of private sector rms (SMEs and MNCs) are added in model 4, the impact of Chinese decreases from .709** (in model 3) to .618* (in model 4) suggesting that the active participation in private sector jobs by Chinese is a substantial source of their high contact use. Furthermore, since the effect of Chinese on contact use does not disappear but persists in model 4, we may argue that cultural factors account for their active use of job contacts. However, such an argument must remain tentative, since the models do not incorporate all relevant institutional factors. In sum, the pervasive use of job contacts among Chinese is probably due to some meaningful combination of cultural and institutional factors. More research needs to be done, preferably between different kinds of Chinese societies, to ascertain the size of a possible cultural effect.

7.3. Job contacts are less likely to pay off for the well-educated Table 3 shows that job contacts are negatively associated with earnings (.261***, model 1). When controls for respondents education, gender, age and ethnicity are added (in model 2), the negative relationship remains signicant at the .01 level (.084**), suggesting that job contacts lead to downward mobility, net of other factors. This downward effect could be interpreted to mean that job contacts are not so much a strategy for getting ahead, as they are a substitute for lack of formal resources. The negative interaction effect, [(Job contact) (R has high education), .163*] in model 3 supports the proposition that welleducated job seekers tend to gain less from job contacts than less-educated job seekers (Proposition 2). For the well-educated, job contacts seem a useless strategy for getting ahead. If job contacts tend to be useless for the well-educated, why do some university graduates still use them? A possible explanation is that employers may choose to evaluate their job applicants on multiple dimensions of education: for example, level of education (i.e. years of schooling) and quality of education (e.g. reputation of applicants university and grades). A pool of applicants may all be university graduates, but in labour markets seeking talented candidates, excellent grades and reputable universities are distinguishing factors. In Singapore, a good university degree (e.g. rst or second-upper class honours from a good university) is a valuable asset. University graduates with poorer grades often experience difculty getting the best jobs, despite being well-

V. Chua / Social Networks 33 (2011) 111 Table 3 OLS regression modeling the effect of job contact on earnings. Predictors Focal independent variable Job contact Control variables Middle education High education Female Age Age square Chinese Indian Part-time employment Interactions: (Job contact) (R has middle education) (Job contact) (R has high education) Intercept R-square Degrees of freedom N Model 1 .261*** (.045) Model 2 .084** (.033) .369*** (.040) .941*** (.045) .204*** (.031) .368*** (.071) .027*** (.006) .036 (.041) .027 (.055) .463*** (.055) Model 3 .009 (.061) .424*** (.055) 1.010*** (.057) .206*** (.031) .372*** (.071) .028*** (.006) .031 (.041) .026 (.055) .463*** (.055) .106 (.079) .163* (.085) .870 .5420*** 11 656

2.508 .0492*** 1 656

.926 .5393*** 9 656

Omitted categories: Low education, malay, male, full-time employment. *P < .05, **P < .01, ***P < .001 (two-tailed tests). Standard error in parentheses.

educated (in terms of number of years) (see MacDougall and Chew, 1976). The absence of signicant ethnic effects on earnings (in models 2 and 3 of Table 3) is attributed to education effects already being accounted for. Indeed, educational inequalities between Chinese, Malays and Indians are a major source of earning differences among Singapores ethnic groups. The inequality dynamic of gender is different from ethnicity. As women are as likely as men to be well-educated, gender differences in earnings (models 2 and 3) may be attributed to factors other than education, such as persisting gender discrimination in paid work. In Singapores state sector, men are paid more than women, net of education. The state rationalizes the gender wage gap by evoking mens later entry into paid work due to national (military) service. 7.4. Job contacts are less likely to pay off in meritocratic job sectors (i.e. the state sector) As credentials are especially important in Singapores state sector, it is not surprising that its employees are generally more highly
Table 4 Job sector differences in education, earnings and proportion of job contact users. Job sector # of respondents

educated than employees in the private sector (6.96 vs. 6.01, t-test, .95*** in Table 4). Net of education, state sector jobs tend to pay higher than private sector jobs (.088* in Table 4): this corroborates Evans (1995) ndings that bureaucratic salaries in Singapore are 10% higher than wages in comparable private sector jobs. Because of attractive salaries, state sector jobs are often target destinations for new university graduates, especially the high performers. The data show that state sector employees are signicantly less likely than private sector employees to rely on job contacts (.18 vs. .43, Table 4), thus supporting Proposition 4a. The negative interaction effect in model 3 of Table 5a [(Job contact) (R works in state sector), .153 ] constitutes evidence at the .10 level that job contacts are not likely to be as useful in the state sector as in the private sector. This attenuating effect becomes more obvious when we make a further distinction between private sector jobs: small business sector (SMEs) and multi-national companies (MNCs). The updated reference category is small business sector (SMEs) (Table 5b) instead of more generally, private sector (Table 5a). With this distinction, the interaction term [(Job contact) (R works in a state sector job), .169* in Table 5b] regis-

Mean education level

Proportion of contact users

Difference in mean earnings between public and private job sectors when effect of education is controlled

Public sector (1) Private sectora (2) Total or difference (1)(2) Industries Public administration and defense Education Health and social work Electricity, gas and water Transport, storage and communication Financial intermediation Manufacturing Real estate, renting and business Wholesale and retail trade Hotel and restaurants Construction

159 495 654

6.96 6.01 .95***

.18 .43 .24*** 15.8 19.6 24.3 27.8 29.5 33.3 36.6 39.1 50.7 55.9 61.4

.088*

*P < .05, **P < .01, ***P < .001 (two-tailed tests). a Private sector includes both the small business (SME) sector and the multinational companies (MNC) sector.

V. Chua / Social Networks 33 (2011) 111

Table 5a OLS regression modeling the effect of job contact on earnings by work sector. Predictors Focal independent variable Job contact Control variables Middle education High education Age Age square Female Chinese Indian Part-time employment State sector (civil service, statutory boards, GLCs) Interaction (Job contact) (R works in state sector job) Intercept R-square Degrees of freedom N Model 1 .258*** (.045) Model 2 .073* (.033) .358*** (.040) .925*** (.046) .368*** (.071) .027*** (.006) .208*** (.031) .046 (.042) .023 (.055) .454*** (.055) .076* (.037) Model 3 .048 (.036) .357*** (.040) .924*** (.046) .359*** (.071) .027*** (.006) .208*** (.031) .040 (.042) .023 (.055) .450*** (.055) .109** (.042) .153 (.088) .932 .5425*** 11 654

2.508 .0482*** 1 654

.915 .5403*** 10 654

Omitted categories: Low education, malay, male, private sector, full-time employment. P < .10, *P < .05, **P < .01, ***P < .001 (two-tailed tests). Standard error in parentheses.

Table 5b OLS regression modeling the effect of job contact on earnings by work sector. Predictors Focal independent variable Job contact Control variables Middle education High education Age Age square Female Chinese Indian Part-time employment State sector jobs (civil service, statutory boards, GLCs) Multinational Company (MNC) Interactions (Job contact) (R works in state sector job) (Job contact) (R works in MNC) Intercept R-square Degrees of freedom N Model 1 .258*** (.045) Model 2 .068* (.033) .351*** (.040) .898*** (.046) .352*** (.070) .026*** (.006) .210*** (.031) .049 (.041) .018 (.054) .443*** (.055) .126*** (.039) .161*** (.040) Model 3 .041 (.041) .350*** (.040) .895*** (.046) .342*** (.070) .025*** (.006) .210*** (.031) .043 (.041) .017 (.054) .438*** (.055) .164*** (.044) .164*** (.050) .169* (.089) .00089 (.081) .939 .5545*** 13 654

2.508 .0482*** 1 654

.920 .5518*** 11 654

Omitted categories: Low education, malay, male, small business sector (SME), Full-time employment. *P < .05, **P < .01, ***P < .001 (two-tailed tests). Standard error in parentheses.

ters a higher level of signicance (p < .05), granting stronger support to Proposition 4b.
70

Percentage of job contact users

7.5. Job contacts are less likely to be associated with formal industries Table 4 and Fig. 1 support the hypothesis that job contacts are less likely to be associated with entry into formal industries such as public administration and defence, health and social work and education (Proposition 5). According to post-hoc one-way ANOVA tests, the industries being examined can be divided into three clusters: generally, jobs in public administration and defence, education and health and social work tend to go with the lowest levels of contact use. Jobs in electricity, gas and water, nancial intermediation, manufacturing, real estate, renting and business, and transport, storage and communication tend to go with middle levels of contact use, and jobs in wholesale and retail trade, hotels and restaurants, and construc-

60 50 40 30 20 10 0

e ef en s D dm in & ic A Pu bl H Ed

Fig. 1. Rate of job contact use by industry.

Tr

an

sp

at io & n El So ec ci tri al or ci W t, ty or St ,G k or as ag & e& W Co at er m Fi m na un nc ic ia at lI io nt n er m ed Re ia al tio M es n ta an te uf ,R ac en tu rin tin W g g ho & le Bu sa sin le es & s Re ta H il ot Tr el ad & e Re sta ur an ts Co ns tru ct io n

ea lth

uc

V. Chua / Social Networks 33 (2011) 111 Table 6 OLS regression modeling the effect of high-status contact on earnings by respondents education. Predictors Job contact is of higher status than respondent Respondents characteristics Middle education High education Age Age square Female Chinese Indian Part-time employment Interactions: (Job contact has higher status than R) (R has middle education) (Job contact has higher status than R) (R has high education) Intercept R-square Degrees of freedom N Model 1 .029 (.070) Model 2 .064 (.050) .295*** (.056) .808*** (.070) .325** (.114) .026* (.010) .240*** (.051) .025 (.071) .002 (.097) .461*** (.071) Model 3 .032 (.085) .310*** (.069) .910*** (.082) .322** (.113) .025* (.010) .238*** (.051) .034 (.071) .017 (.097) .467*** (.071) .060 (.115) .293* (.131) 1.120 .5372*** 11 237

2.264 .0007 1 237

1.140 .5259*** 9 237

Omitted categories: Contact is of same or lower-status than the respondent, Respondent has low education, malay, male, part time employment. *P < .05, **P < .01, ***P < .001 (two-tailed tests). Standard error in parentheses.

tion tend to go with the highest levels of contact use. In sum, the more formal the industry, the less prevalent the use of job contacts. 7.6. High-status job contacts do not result in higher earnings for contact users Model 1 in Table 6 reports no signicant relationship between high-status job contacts and earnings (.029, ns). With relevant controls added in model 2, this non-signicant effect persists (.064, ns in model 2), suggesting that high-status job contacts do little to facilitate status attainment (Proposition 6). It appears despite strong evidence of signicant post-hire benets associated with high-status contacts in many contemporary labour markets (see summary table in Lin, 2001, p. 84), Singapore seems an exception, at least in this particular study. 7.7. Well-educated contact users are less likely to experience added returns from high-status contacts than less-educated contact users Model 3 in Table 6 tests the interaction between respondents level of education and the status of their job contacts relative to their own. The negative interaction effect [(Contact has higher status than respondent) (R has high education) .293*], suggests that well-educated contact users are less likely than less-educated contact users to experience added returns from using high-status job contacts (Proposition 7). This reinforces the point that those with already good credentials may nd social capital a less valuable route of status advancement. 8. Discussion I have drawn upon a distinction popularly used in the varieties of capitalism literature: liberal market economies (LMEs) and coordinated market economies (CMEs) (Hall and Soskice, 2001). Each shows a unique relationship between the education and labour sides of the labour market (Allmendinger, 1989). My results have suggested that in labour markets that stress the tight bureaucratic link between educational signals and labour markets, personal contacts are less prevalent and effective in job searches, especially among the well-educated and those working in the highly meritocratic state sector.

While Singapore is a broadly meritocratic society and may have a strong meritocratic system in government, this power of the meritocracy is less pervasive in the private sector. This may soon change: the Singapore state is encouraging private sector rms to emulate the meritocratic practices of government sector jobs. Indeed, the government recently set up a council: the Tripartite Alliance for Fair Employment Practices (or TAFEP) to encourage employers to sign an Employers Pledge against discrimination in hiring. To date, 1000 private sector companies have signed, and the numbers are growing. In state sector jobs, the link between qualications and earnings at entry level is clear and transparent. Recently, in the Ministry of Home Affairs, rst-class graduates got a starting salary of $3494; second-class (upper) honours graduates received $3310; basic degree holders $3310, and so on. With such standardization in place, there is little room for job contacts to inuence remuneration outcomes. To be sure, salaries are adjusted after a few years; once the person is in the job, he/she is assessed on current performance. But the base-pay remains a strong function of formal qualications. This is not to say that credentials are only important among Singaporeans or that only Singaporean employers consider them worthy. The growth of tertiary education around the world reects the increasing importance of formal qualications, even if its role is symbolic and not always matched by real increases in productivity (Dore, 1976; Collins, 1979). Dores credentialism (1976) is probably stronger in Singapore than in the United States. Comparing Singapore and America, the former Minister of Education of Singapore, Tharman Shanmugaratnam, said: We both have meritocracies. Yours is a talent meritocracy, ours is an exam meritocracy. We know how to train people to take exams. You know how to use peoples talents to the fullest. Both are important, but there are some parts of the intellect that we are not able to test well like creativity, curiosity, a sense of adventure, ambition. Most of all, America has a culture of learning that challenges conventional wisdom, even if it means challenging authority. These are the areas where Singapore must learn from America. (Zakaria, 2008, pp. 193194). In the North American context, talent is often elicited through a combination of credentials and networks; in fact, the two are often perceived as inextricably bound together (see Coleman, 1988 or Erickson, 2001). In Singapore, talent is typically elicited solely through national examinations. Rodan (1996, p. 24) notes:

10

V. Chua / Social Networks 33 (2011) 111

The pattern of increased educational attainment in Singapore is often compounded by the exceptional importance on credentials in meritocratic Singapore. . . there is probably no other place in the world where formal qualications represent as much economic or social capital. The lower importance of job networking in the Singapore context may seem strange to the American public who have since 1970, read popular job hunting manuals such as Nelson N. Bolles What Color is your Parachute? (Bolles, 2009). Job hunting manuals are generally few in Singapore. Instead, the bookstores are typically lled with tests and assessment material teaching students how to excel in the national examinations. This invites the question: what makes it so difcult to move away from an exam-based meritocracy? For one, institutional structures are notoriously difcult to change (see Meyer and Rowan, 1977 and Hannan and Freeman, 1984 on organizational inertia, myth and ceremony). Power holders have a vested interest in reproducing their advantages, and education seems an expedient way to do it. As class factors (namely family background) are strong predictors of educational resources, children from wealthier families get a head start (Bowles and Gintis, 1976). Indeed, a discourse of meritocracy enables the wealthy to attribute their success to personalized attributes such as effort and ability rather than having to evoke structural issues such as class standing (Young, 1958). In an exam-based meritocracy, education contributes indirectly to political stability by serving as the only (in principle) legitimate means of upward mobility. The motif of meritocracy spawns the often unquestioned belief that individuals from humble backgrounds are as likely as individuals from privileged backgrounds to succeed if they are willing to work hard. Meritocracy upholds the myth of equal educational opportunities for all, and conceals the fact that kindergartens and elementary schools continue to vary greatly in quality. The logical end of a meritocracy is an elitist system whereby class privileges are reproduced through education, even as schools continue to be at least, partly, social levellers of inequality (Bowles and Gintis, 1976). In Singapore, education is a means for the Chinese majority to maintain their political hegemony and economic dominance in relation to the other ethnic groups (Rahim, 1998). As the most highly educated ethnic group in Singapore, Chinese have a vested interest in upholding education as the most important route of status advancement. Through education, they (especially Englisheducated Chinese) can maintain their control over the powerful state and MNC sectors. Chinese-educated Chinese, on the other hand, rely not on education, but on their networks to nd opportunities within the small business sector. Either way, Chinese have secured for themselves either through education or networks lucrative and stable positions in both state and non-state sectors. 9. Conclusion Granovetter (1974) found that in the United States, more than half of his respondents used a personal contact to nd a job. By contrast, this study shows that only a third of Singapore respondents used a contact. Why the difference? In his Afterword, Granovetter (1995, p. 160) posits that there do not seem to be sharp variations by country in what proportion of people nd jobs through contacts, but institutional variations do lead to differences in the detailed process. Based on my ndings, I would disagree with the former part of his argument and agree with the latterinstitutional variations do matter. Cultural differences cannot fully explain the role of personal contacts in different kinds of job sectors and economies, and institutional involvement should also be considered. Several studies

have pointed to the contingent nature of job contacts on status attainment (e.g. Granovetter, 1995; Burt, 1997; Lin, 1999), but the question of mechanisms needs further exploration. Evoking a varieties of capitalism framework, I have argued that variations in contact use and payoffs may be explained by variations in the manner with which education and labour market systems are interrelated in different types of economies and job sectors. While several LME-based studies show that high-status contacts lead to status attainment (Marsden and Hurlbert, 1988; Lai et al., 1998; Lin, 2001), my study suggests that such effects do not necessarily apply to labour market institutions which rely heavily on academic credentials for job matching. Although individuals are free to choose the kinds of search methods they think relevant, contextual factors play a critical role inuencing the usefulness of those strategies. My contention is that in order to better understand the role and value of job contacts, we must consider the role of institutions, namely the different ways in which education and employment systems are interrelated within and between national economies. Acknowledgements The 2005 Project Network Survey is supported by the National University of Singapores (NUS) University Research Fund (R-111000-051-112 PI: Stephen Appold). Bonnie Erickson, John Myles, Shyon Baumann, Barry Wellman, Zaheer Baber, Bob Andersen, Eric Fong, Bian Yanjie, Naoko Shida and Swee Eik Leong, along with the reviewers and editors of Social Networks provided valuable comments on the earlier drafts. I also gained much from the participants at the Research Practicum Seminar (Department of Sociology, University of Toronto). I thank Elizabeth Thompson for her editorial assistance. References
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