The influence of foreign investment on Malaysian Bumiputera technology firms: 1957-2016

Abstract

Purpose The purpose of this paper is to identify the historical influences and chronological development of foreign investors on Malaysian Bumiputera (indigenous) new technology-based small firms (NTBSFs). Design/methodology/approach Weick’s (1989) conceptual theory building approach is used to conduct a critical historical documentary analysis of the international, local, academic and government inward foreign investments literature from prior Malaysia’s independence (1957) through to 2016. Findings Increased foreign investment between 1957 and 2016 proved to be effective for Malaysia to transform its economy from a reliance on primary production to a focus on innovation and value-added industries such as the biotechnology and the information and communication and technology sectors. Research limitations/implications Local and international literature addressing inward foreign investments towards host countries yielded four key research implications: employment effects, strategic alliances, technology transfer and knowledge transfer. Creation of firm-specific resources in addition to government assistance, particularly through grants and advisory services, significantly contribute to the sustainability of Bumiputera NTBSFs. Practical implications Inward foreign investment through subsidiary multi-national companies (MNCs) leads to the formation of strategic alliances between MNCs and Bumiputera NTBSFs, generating employment opportunities, contributing to Malaysia’s development aims. Social implications Charting the chronological development and historical influence of foreign investment from a Malay-Bumiputera perspective provides an in-depth understanding of the evolution of what is now a multi-cultural Malaysian society. Originality/value This study provides a chronological development and discussion of the historical influences and implications of foreign investment towards the evolution and sustainability of Malaysian Bumiputera NTBSFs.