| General note |
Using Penang as its study location, this thesis argues that linkages between MNCs with SMEs did not really produce innovative high end local SMEs to help spur Malaysia to become a leading player in the global electronic and electrical industry. Studies have shown thath relations between MNCs and SMEs have both positive and negative implications for such linkages. With this as the background, this study's objectives are three-fold: First, to investigate the type of linkages that exist between MNCs and SMEs in the electronic and electrical sector in Penang. Second, to investigate the types of knowledge transfer between MNCs and SMEs. Third, to access the capability of and constraints experienced by SMEs in relation to backward linkage and knowledge transfer. Unlike most studies on SMEs which use quantitative method, this study adopts an inductive interpretive approach using a qualitative multiple progressive case studies method. The empirical evidence was derived from multiple cases involving three MNCs (US, Germany and Japan), and seventeen local and foreign SMEs in Penang to examine backward linkages and knowledge transfer between the former to the letter. The multiple progressive case studies were conducted through interviews, observations and examination of documents. A comparative analysis of informants' narratives enables the researcher to identify themes emerge in relation to backward linkages and knowledge transfer. From the data, the following finding emerged. First, there are various types of backward linkages between MNCs firm and their SMEs. The American and German MNCs engaged their SMEs through formal procedures of e-bidding and awarding jobs through contract manufacturing. The Japanese MNC engaged its SMEs through an informal arrangement as a means to complete the end part of its production process with the SMEs acting as agents or sub-contractors offering simple and non-value added supplies jobs. Knowledge transfer occurred both ways between American and German MNCs and their SMEs. Different types of knowledge transfer occurred over time from American and German MNCs to their SMEs through training, design and trade shows. On the other hand, SMEs transferred product knowledge and design to the American MNC. During the life-cycle of the firms, none of the local SMEs were able to come out with their own high end electronic or electrical products. Most of the local SMEs view linkages for short term profit, as they lack R&D and are not risk takers. Foreign SMEs are increasing as a result of poor performance of local SMEs. This behavior is further influenced by the lack of domestic economies of scale and institutional support which impose constraints on local SMEs for business innovation. While the findings corroborate existing literature, what is new in this research is the inductive multiple progressive case study approach. It provides insights gained from first hand study of the firms with regard to the issue of linkages and knowledge transfer. These findings call for further reflection on SMEs policy measures aimed at promoting the formation of linkages and knowledge transfer between MNCs and SMEs in Malaysia. |