an empirical case study of strategic alliances in malaysia

435 Pages·2009·1.35 MB·English

AN EMPIRICAL CASE STUDY OF STRATEGIC
ALLIANCES IN MALAYSIA

AHMAD BASHAWIR ABDUL GHANI
BBA, MBA-Financial Mgmt (Hull)

This thesis is presented for the degree of Doctor of Philosophy of
Murdoch University

2006
STATEMENT

I declare that this thesis is my own account of the research and contains as its main

content work which has not previously been submitted for a degree at any university.

_________________________
Ahmad Bashawir Abdul Ghani

i
ACKNOWLEDGEMENTS

This thesis is itself the result of an alliance and an alliance journey. Without the efforts of
many people who laboured behind the scenes over the years this journey would not have
been possible. First amongst them are my supervisors Associate Professor Dr Malcolm
Tull and Dr Ameer Ali, both of whom have not only created a climate conducive to field
based empirical research, but have also provided constant encouragement, thoughtful and
incisive comments about the thesis. Through their different lenses come the richness of
thought and complementarities of experiences and ideas from which this thesis benefits.
Without their help and generosity, many of the practical foundations of this thesis would
have been impossible. For their comments and suggestions as the studies were unfolding
and for their unwavering assistance throughout my journey, I owe my sincerest thanks.

From the beginning, the support of both The Public Services Department of Malaysia
(PSD) and University Utara Malaysia (UUM) has been essential. PSD funded my studies
while UUM awarded me a period of study leave. Without their support throughout my
candidature, I would not have able to undertake such a study.

Applause is in order for all participants in this study. This study has benefited a great deal
from their thorough, rigorous and thoughtful comments. My thinking has been shaped by
these interactions and much of this learning has been incorporated in this thesis. I thank
these managers for their candour and their receptivity to my work. Due to the
participants’ requirements for confidentiality, I cannot mention companies or individuals
by name, nonetheless, thank you for your support.
ii
On a personal note, I thank my family who has not only endured but also supported me
through this long and arduous journey. I would like to acknowledge my profound
gratitude to my wife Noridah and the children, Izzat, Anis and Amili who gave up
precious time to allow me to complete this endeavor. This journey came at a difficult
time given the health issues with my mother and the passing away of my father and it
placed an intense time burden on my wife, to whom I am very grateful for her ever
present support. My mother, Robiatuladawiyah was forever praying for me to complete
soon, thank you. My father, Abdul Ghani was not only a strong coach in life, but a
mentor as well. Despite his physical absence, I will continue to draw support and strength
from his coaching and advice. I am also thankful for having had him as a father for thirty
eight years. My journey continues and this thesis documents my thinking to date.

iii
TABLE OF CONTENTS
PAGE

Statement of authentication i
Acknowledgements ii
List of Figures iv
List of Tables v
Abbreviations and Acronyms vi
Abstract vii

CHAPTER 1: INTRODUCTION
1.1 Background to the thesis 1
1.2 The main research problem 5
1.3 Conceptual Framework 7
1.4 Justification for undertaking the research 8
1.5 Methodology 14
1.6 Thesis Outline 17
1.7 Limitations of scope and key assumptions 19
1.8 Conclusion 20

CHAPTER 2: THE CASE OF MALAYSIA
2.1 Introduction 22
2.1.1 An overview of Malaysia economic performance 26
2.2 Malaysia’s economic strength and overall competitiveness 29
2.2.1 Continuous economic growth 30
2.2.2 High Level of Global Integration 31
2.2.3 A Knowledge Based Economy 39
2.2.4 Supportive government policies 46
2.3 Privatization and Government Linked companies 56
2.4 Governance and Transparency 64
2.5 Coping with the Asian Financial crisis 65
2.6 Liberal Equity Policy 73
2.7 Attractive Tax Incentives 74
2.8 A Vibrant Business Environment 76
2.8.1 Chambers of Commerce and Industry 78
2.8.2 Developed Financial Facilities 79
2.9 Vision 2020 80
2.10 Conclusion 83

CHAPTER 3: LITERATURE REVIEW
3.1 Introduction 87
3.1.1 Globalization 88
3.2 Defining Strategic Alliances 91
3.3 Economic Theories Relevant to the Phenomenon of Strategic
Alliances 101
3.3.1 Background Theory 101
3.3.2 Transaction Cost Analysis 102
3.3.3 International Trade Theory 107
3.3.4 The Resource Based Theory of Competitive Advantage 114
3.3.5 The Resource Dependency Perspective 119
3.3.6 Corporate Learning 124
3.3.6.1 Role of Organizational Learning 130
3.3.6.2 Importance of Learning in Strategic Alliances 131
3.3.7 Chaos Theory 133
3.3.8 Culture, Strategy and Alliances 136
3.3.9 Trust/Bonding and Organizations 144
3.3.10 Institutional Theory 147
3.4 Role of Strategic Alliances 152
3.5 Motives for Creating Strategic Alliances 155
3.6 Challenges in Implementing Global Alliances 158
3.7 Salient Factors Influencing Strategic Alliances 164
3.8 Partner Selection 167
3.9 Limitation of the Literature Review 185
3.10 Conclusion 188

CHAPTER 4: RESEARCH METHODOLOGY
4.1 Introduction 196
4.2 Justification for the paradigm and methodology 199
4.2.1 Strength and weaknesses of the positivistic paradigm 204
4.2.2 Strength and weaknesses of the interpretivist paradigm 207
4.2.3 Phenomenology 210
4.2.4 Case Study Method 214
4.3 Research procedures 220
4.3.1 Selection of case studies 220
4.3.2 Checkland’s Soft System Methodology 222
4.3.3 Case Study Selection Process 225
4.3.4 Selection of unit of analysis 230
4.3.5 Case studies: interviews 231
4.3.6 Confidentiality 236
4.4 Research quality issues 237
4.4.1 Construct Validity 237
4.4.2 Internal Validity 239
4.4.3 External Validity 240
4.4.4 Reliability 240
4.4.5 Bias 241
4.4.6 Triangulation 243
4.4.7 Software – Computer Assisted Qualitative Data Analysis 244
4.5 Generalization of findings 246
4.6 Ethical Consideration 247
4.7 Conclusion 247

CHAPTER 5: CROSS CASE ANALYSIS AND THEORETICAL DISCUSSION
5.1 Introduction 249
5.2 Partner Selection 251
5.2.1 Summary of Partner Selection Criteria in Malaysia 258
5.3 Contribution to the partnership 261
5.4 Relationship Management 268
5.5 Difficulties encountered 276
5.6 Trust Building 278
5.7 Underlying forces driving Malaysian companies into partnership 283
5.7.1 The Level of Uniqueness 286
5.7.2 The Level of Value 287
5.7.3 The Level of Transparency 288
5.7.4 The Level of Cultural Compatibility 291
5.7.5 The Level of Experience 293
5.8 Strategic Alliance Motives and Objectives in Malaysia 295
5.9 Conclusion 299

CHAPTER 6: CONCLUSIONS
6.1 Introduction 316
6.2 Conclusions to research questions 317
6.2.1 Research Question 1 317
6.2.2 Research Question 2 320
6.2.3 Research Question 3 322
6.2.4 Research Question 4 323
6.2.5 Research Question 5 324
6.2.6 Research Question 6 325
6.2.7 Research Question 7 327
6.3 Implications for Theory 329
6.4 Implications for Policy and Practice 352
6.5 Limitations 357
6.6 Implications for further research 359

REFERENCES 363

APPENDIX 1 390
APPENDIX 2 391
APPENDIX 3 393
APPENDIX 4 395
APPENDIX 5 397
APPENDIX 6 399
APPENDIX 7 400
APPENDIX 8 401
APPENDIX 9 402
APPENDIX 10 403
LIST OF FIGURES

Page

Figure 1.1 Conceptual Framework of Strategic Alliance Partner
Selections Model 7
Figure 2.1 Per Capita GNI for Malaysia, US$ Atlas method
1970-2002 26
Figure 2.2 GDP growth in Malaysia 28
Figure 2.3 Inflation Rate Malaysia, ASEAN 3 1970-2002 31
Figure 2.4 Exports of goods and services as a share of GDP,
Malaysia, ASEAN 3, 1970-2003 32
Figure 2.5 Malaysian industry output as a share of GDP,
1970-2003 33
Figure 2.6 Foreign Direct Investment Inflows as a share of GDP 35
Figure 2.7 Industrial Development and Major Policy Initiatives,
1958-2000 42
Figure 2.8 Strategies used by the Malaysian government to
minimise shocks in its economic system 48
Figure 2.9 Corruption Perception Index, 2002-2004 65
Figure 2.10 Software Piracy as a share of software use,
selected countries 2003 78
Figure 3.1 Organization of the Literature 88
Figure 3.2 Types and Characteristics of International Strategic
Alliances 97
Figure 3.3 Types of Collaborative Relationships 100
Figure 3.4 International structural stages model 109
Figure 3.5 Transnational corporations model 112
Figure 3.6 Previous Studies on national culture 144
Figure 3.7 The dual role of strategic alliances 164
Figure 3.8 Safeguards against opportunism 168
Figure 3.9 Partner Selection Process 181
Figure 4.1 Overview of Research Study Methodological Selection 197
Figure 4.2 Overview of Factors Influencing Research Methodology 199
Figure 4.3 A sketch of Soft System Methodology 224
Figure 4.4 Respondent codes 236
Figure 5.1 Partner Selection Criteria used by Malaysian companies 259
Figure 5.2 Relative rank of the Potential Contributions from the
local partner 267
Figure 5.3 Relative rank of Contributions from the foreign partner 268
Figure 5.4 Hofstede’s value index of five dimensions in selected
Developing countries 275
Figure 5.5 Strategic alliance drivers 285
Figure 5.6 Strategic motivation of Malaysian firms for strategic
alliance formation 297
Figure 5.7 Priorities in Selecting Alliance Partner by market type 305
Figure 6.1 Partner Attributes and Strategic Alliance Success 331

iv
LIST OF TABLES

Page

Table 2.1 Business and Growth Competitiveness Index, 2004 30
Table 2.2 Malaysia Key Economic Indicators 38
Table 2.3 Expenditure and researches in R&D,
Selected countries, 2002 41
Table 2.4 Total factor productivity and Malaysia growth, 1950-1990 44
Table 2.5 Malaysia and OECD public spending on education 45
Table 2.6 Incidence of poverty, Malaysia, 1970-1999 50
Table 2.7 Factors Associated With Malaysia’s Economic Success 53
Table 2.8 Factors Associated With Malaysia’s Export Success 53
Table 2.9 Gross Domestic Product by Sector,
Malaysia, 1955-2000 55
Table 2.10 Financial systems 1997, 1998 and 2003 73
Table 4.1 Assumption of the two key paradigms 203

v
ABBREVIATIONS AND ACRONYMS

ADB Asian Development Bank
AFTA Asean Free Trade Area
APEC Asia Pacific Economic Cooperation
ASEAN Association of South East Asian Nations
BNM Bank Negara Malaysia
EPU Economic Planning Unit
FDI Foreign Direct Investment
FIC Foreign Investment Committee
GDP Gross Domestic Product
GNI Gross National Income
GNP Gross National Product
IBRD International Bank for Reconstruction and Development
IMF International Monetary Fund
IMP Industrial Master Plan
KLSE Kuala Lumpur Stock Exchange
MATRADE Malaysian External Trade Development Corporation
MDC Multimedia Development Corporation
MIDA Malaysian Industrial Development Authority
MIER Malaysian Institute of Economic Research
MIMOS Malaysian Institute of Microelectronics Systems
MITI Ministry of International Trade and Industry
MNC Multinational Corporations
MOF Ministry of Finance
MSC Multimedia Super Corridor
NDP National Development Policy
NEAC National Economic Action Council
NEP New Economic Policy
NIC Newly Industrialized Countries
OECD Organization for Economic Cooperation and Development
OPP1 First Outline Perspective Plan
OPP2 Second Outline Perspective Plan
PETRONAS Petroleum National
PROTON Perusahaan Otomobil Nasional Berhad
R & D Research and Development
RM Ringgit Malaysia
SC Security Commission
SIRIM Standards and Industrial Research Institute of Malaysia
SMI Small and Medium Industries
SOE State owned enterprises
UNCTAD United Nations Conference on Trade and Development
WB World Bank
WTO World Trade Organization

vi