avvari v. mohanuw.wtanet.org/ds_imgs/sub02/uw01/08.pdf · 2017-02-01 · avvari v mohan 3 •the...

2014 UNESCO-WTA International Training Workshop Daejeon, South Korea. Avvari V Mohan

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Avvari V. Mohan Nottingham University Business School [email protected]


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• The main aim is to understand how SMEs in cluster grow/develop

• Presentation Outline

– An Overview Penang (brown field) Cluster

• Findings from the Case Studies

– An Overview of Cyberjaya (greenfield) • Findings from Case Studies

– Cluster Factors that help SMEs to grow and develop


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• The island was a free port until 1969.

– Despite the loss of the island's free-port status, from the 1970s to the late 1990s – one of the largest electronics manufacturing bases in Asia was built up in the Free Trade Zone around the airport in the south of the island.

• Penang state is geographically divided into two sections:

– Penang island –

• A 293 square kilometres island located in the Straits of Malacca with an estimated population of 745,000; and

– Seberang Perai:

• a narrow hinterland of 753 square kilometres on the peninsula and has an estimated population of 833,000.

• It’s the third-largest economy amongst the states of Malaysia (after Selangor and Johor).

http://en.wikipedia.org/wiki/Free_port

http://en.wikipedia.org/wiki/Selangor

http://en.wikipedia.org/wiki/Johor


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• Manufacturing is the most important component of the Penang economy, contributing 45.9% of the State's GDP (2000).

• January 2005, Penang was formally accorded the Multimedia Super Corridor (MSC) status – Cyber City status, outside of Cyberjaya, this is to support the aim

of Penang becoming a high-technology industrial park that conducts cutting-edge research (in the ICT Sector)

• Some decline in the Port operations since the opening of Port Klang.

• Other important sectors of Penang's economy include tourism, finance, shipping and other services.

http://en.wikipedia.org/wiki/Multimedia_Super_Corridor

http://en.wikipedia.org/wiki/Cyberjaya


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• The electronics industries first set foot in Penang in the early 1970s and is still growing strong.

• Almost all of the pioneer multinational companies are still operating in Penang and are now extending their operations into Design and Development Activities in Penang, especially in hardware design.

• The nearly 40 years of track record in electronics industry has also contributed to the development of a strong local suppliers with capabilities in automation systems, precision engineering and software development.


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• 1969, Penang Development Corporation (PDC) created as the primary state development agency.

• 1972, the ‘Free Trade Zone’ (FTZ)

• 1989 –Creation of Penang Skills Development Corporation (PSDC).

– PSDC is a joint effort of government, academia and industry. PSDC operates as a non-profit society’ pools resources amongst the 4 Free Trade Zones and 4 Industrial Estates in Penang.

• 1990s competition from neighbouring countries led to creation of some high tech institutions to support and stimulate upgrading (at the national level)

– Action Plan for Industrial Technology Development (APITD)

– Human Resource Development Fund (HRDF)


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• 1993

– Malaysian Technology Development Corporation (MTDC), the National Electricity Board, the Telecommunications Corporation and the Malaysian Microelectronics Systems (MIMOS) and the Private Universities Bill was enacted in 1995 so as to enable the development of human resource with greater role for markets.

This is in addition to a large government university (USM) and

Supportive policies from Ministry of International Trade and Industry (MITI) and also Ministry of Science Technology and Innovation (MOSTI) and promotional activities undertaken by Malaysian Industrial Development Authority.


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• We now present three cases selected for this paper

– XYZ SDD (STEC)

– Creative Bliss

– Mayang Manufacturing


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The following slides present the diagrams of linkages developed by the Penang Cluster Case Study Firms to support Innovation


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Cluster Factors that support SME Development

• In the case of local firms –

– linkages to MNCs is a significant factor. • Many of them started out as sub-contractors/supplier to the

MNCs in the region and founders get their training from the MNCs –

• hence the MNCs themselves as an important factor in innovation system playing multiple roles.

– Other Linkages • Local University,

• Industry Association

• PSDC- the unique organisation in Penang.

– collaboration is more with suppliers or customers.


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• Obstacles for Innovation

– Lack of enough competencies among the suppliers,

– lack of talent / human capital (particularly PhDs),

– lack of higher research capability of the local university (in their related areas). All the respondents discuss that they are open for collaboration within the cluster and also globally – but somehow this has never happened.

• Policy Support seems more for ‘new’ industries than to strengthen existing industries

• Another issue in Penang is the need for staff with administration, economy, social sciences and law qualifications

– lack of talent in these sectors while there is no shortage of people with technical educational backgrounds


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• “… physically the MSC started as greenfield "corridor", 15 kilometers wide and 50 kilometers long (9 by 30 miles -

roughly the size of Singapore)

• Cyberjaya was part of the intial

“corridor located 30km (20mi) south of the capital.

• The plan was to develop this in three phases – first to start off attracting companies in the corridor, phase II spread to other parts and phase


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Mikimoto Sdn.Bhd. Supply for Equipment & Joint bid for Project.

Indian, Syria & USA Firms

Supply for Technology;

Expertise & Market Input

Mayban Ventures Private Venture

Capital

Other MSC Company

Server Facilities

NOKIA Multimedia Content

Development Platform& Market

Flare Studios

Sdn. Bhd.

MSC Policy MSC Flagships- Technoprenuer

DevelopmentMSC BoGs- Tax Allowance; Freedom of

Ownerships & MDeC as One Stop center

MDeC

MSC Central Incubation Program & Technoprenuer Development

Program; Industrial Forum & Marketing

Clusters’ Universities Knowledge Workers &

Product Application Testing

SUPPORT/ INNOVATION

LOCAL & GLOBAL MARKET

Networking and Basis formed in

Greenfield Cluster

Factors Attracting Firm into Greenfield Cluster

Factors in Cluster Leveraged and Linkages formed by F Studios


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Peking University Basic Research

MSCMS

Professional services

PUC Group

Foundation

Financial & Capital

Founder GlobalTech Ltd. (Hong Kong) Maintenance and

software development for overseas market

based

MSC Policy MSC Flagships- R&D Cluster MSC BoGs- Tax Allowance;

Freedom of Ownerships

Freedom of sourcing capital

globally; Unrestricted

employment of knowledge

workers; competitive telecoms tariffs; and

& MDeC as one stop center

MDeC

MGS Grant; Industrial Forum & MSC Global

Reach Marketing

Clusters’ Universities

Knowledge Workers & Joint-

research

MESDAQ

LOCAL &

GLOBAL

MARKET

INNOVATION

PUC-

F

Factors in cluster leveraged by PUC Founder Bhd and Linkages Formed


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UK based Associates

R&D programs, support

services, sales & marketing

Paragon IC Solutions

(USA); Taiwan

Semiconductor

Manufacturing Co. &

Silterra Sdn.Bhd.

Technology partners

MSC Policy

MSC Flagships- R&D Cluster

and Technoprenuer

Development

MSC BoGs- Tax Allowance

Freedom of ownership;

Freedom of sourcing capital

globally; and MDeC as one

stop center

Clusters’ Universities

Knowledge workers and joint

research

SiRES LABS

Sdn. Bhd.

MDeC

MGS Grant; Technoprenuer

development programs and MSC

Global Reach Marketing

INNOVATION

LOCAL & GLOBAL

MARKET

Factors in Cluster Leveraged and Linkages developed by SiRES Lab


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In Penang - the brownfield cluster

Pro Industry Policy

Presence of Human Capital from university,

other industrial organisations

from MNCs

Low Costs

Entrepreneurial Culture

in Cyberjaya - the greenfield cluster

leveraged the various factors that helped as “inputs” for firm / product development

Grants, tax benefits etc

But more importantly, leveraged on “knowledge” gained from the seminars organised by cluster organisation


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In Penang the brownfield cluster

Unique Cluster Organisation (PSDC) Penang Skills Development Corporation Training / Skills Upgrading

Linkages between Govt, MNC (Customers) and Suppliers.

Links to the University (albeit at a lower level),

Training Institutes,

Presence of large supplier network

Strong role of MNCs

in Cyberjaya the greenfield cluster Role of (MDeC) the Cluster

Development Organisation

Providing “ legitimacy” when operating in the global markets.

promotion benefits from the cluster organisation

Developed links to the cluster university

Lodged in global pipelines

Strong role of MNCs


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University –

Laboratories

MSC

Commercialisation

Centre (formerly

MSC Incubator)

Regional

Devp’t

Agency

(MDeC)

Firm A

Firm B

Firm N


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• Entrepreneurial Culture for Innovation – • There are several cultural factors that can be helpful or be hindrance

Innovation related activities. – An interesting aspect of Penang – is the cultural identity of the people

– the indication is that entrepreneurship is not the issue in the context of innovation – there seems to be a slow but steady growth of ‘local’ firms emerging from the supplier base – with human capital from the cluster firms eg. Kontron, VITROZ, Engtek etc etc. Some of these firms are acquisition targets for foreign firms also.

– The cultural impediment seems to be ‘satisfied with the current situation’ or conservative culture. So this has implications for eduction and S&T policy to create a risk taking culture among the entrepreneurs and also among the new graduates.

– The MSC project in Cyberjaya had interesting Technoprenuer programme – supported by policies and incentives specific to SME/SMIs and also programmes that are collaborative and aimed to reduce risks to start ups and offers lessons for Penang to create a new pool of technology entrepreneurs.


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Avvari V. Mohan

Associate Professor of Strategic Management

Malaysia Coordinator - ICBBR and Co-Chair PhD Programme

Nottingham University Business School.

University of Nottingham – Malaysia Campus

Jalan Broga. 43500. Semenyih (Sl). Malaysia

avvari v. mohanuw.wtanet.org/ds_imgs/sub02/uw01/08.pdf · 2017-02-01 · avvari v mohan 3 •the...

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