indian-owned small and medium enterprises in malaysia jesrina ann xavier faculty of e

330 Pages·2017·1.87 MB·English

by  Jesrina Ann Xavier

ETHNIC ENTERPRISE AND GENERATIONAL CHANGE:
INDIAN-OWNED SMALL AND MEDIUM ENTERPRISES IN

MALAYSIA

JESRINA ANN XAVIER

FACULTY OF ECONOMICS AND ADMINISTRATION
UNIVERSITY OF MALAYA
KUALA LUMPUR

2017
ETHNIC ENTERPRISE AND GENERATIONAL
CHANGE: INDIAN-OWNED SMALL AND MEDIUM
ENTERPRISES IN MALAYSIA

JESRINA ANN XAVIER

THESIS SUBMITTED IN FULFILMENT OF THE
REQUIREMENTS FOR THE DEGREE OF DOCTOR OF
PHILOSOPHY

FACULTY OF ECONOMICS AND ADMINISTRATION
UNIVERSITY OF MALAYA
KUALA LUMPUR

2017
UNIVERSITY OF MALAYA
ORIGINAL LITERARY WORK DECLARATION
Name of Candidate: Jesrina Ann Xavier (I.C/Passport No: )
Matric No: EHA120004
Name of Degree: Doctor of Philosophy
Title of Project Paper/Research Report/Dissertation/Thesis (“this Work”): Ethnic
Enterprise and Generational Change: Indian SMEs in Malaysia
Field of Study: Development Economics
I do solemnly and sincerely declare that:
(1) I am the sole author/writer of this Work;
(2) This Work is original;
(3) Any use of any work in which copyright exists was done by way of fair dealing
and for permitted purposes and any excerpt or extract from, or reference to or
reproduction of any copyright work has been disclosed expressly and
sufficiently and the title of the Work and its authorship have been
acknowledged in this Work;
(4) I do not have any actual knowledge nor do I ought reasonably to know that the
making of this work constitutes an infringement of any copyright work;
(5) I hereby assign all and every rights in the copyright to this Work to the
University of Malaya (“UM”), who henceforth shall be owner of the copyright
in this Work and that any reproduction or use in any form or by any means
whatsoever is prohibited without the written consent of UM having been first
had and obtained;
(6) I am fully aware that if in the course of making this Work I have infringed any
copyright whether intentionally or otherwise, I may be subject to legal action
or any other action as may be determined by UM.
Candidate’s Signature Date:
Subscribed and solemnly declared before,
Witness’s Signature Date:
Name:
Designation:
ii
ABSTRACT
Theoretical perspectives regularly employed to analyse the growth of enterprises
owned by members of ethnic groups appear increasingly inapplicable. These theories
can no longer be considered applicable, especially in Malaysia, where ethnic-based
enterprises established by the first generation, has now been passed on to the second or
third generation. To provide a greater understanding of the evolution of Malaysian
Indian businesses, a variety of possible explanations was examined. This includes an
investigation on the changes in class and ethnic resources, the shift in market
conditions and state policies as well as the transformation in networks. This thesis pays
particular attention to how an ethnic enterprise functions, in terms of types of goods
and services produced and its targeted market, after a new generation of owners
emerges. An overall qualitative research methodology through a phenomenological
approach was employed towards this end. Due to the nature of this thesis which tracks
the generational change of Indian businesses in Malaysia, the case study method was
applied to eleven enterprises. The primary data collection method was an analysis of
the annual company reports followed by interviews with the founders as well as the
second or third generation owners of these businesses. The theoretical and empirical
evidence from this study provides key insights into the applicability of the concept of
ethnic enterprise in Malaysia following a generational transition.

iii
ABSTRAK
Teori yang kerap digunakan untuk menganalisa pertumbuhan perusahaan yang
dimiliki oleh kumpulan etnik semakin tidak berkenaan. Teori-teori ini tidak lagi boleh
dianggap relevan, terutamanya di Malaysia, di mana syarikat berasaskan etnik yang
ditubuhkan oleh generasi pertama, kini telah diturunkan kepada generasi kedua atau
ketiga. Pelbagai penjelasan telah dianalisis untuk memahami evolusi perniagaan India
di Malaysia dengan lebih mendalam. Ini termasuk siasatan ke atas perubahan dalam
sumber kelas dan etnik, perubahan dalam keadaan pasaran dan dasar negara serta
transformasi dalam perhubungan. Tesis ini telah memberi perhatian khusus kepada
fungsi perusahaan etnik, dari segi jenis barangan dan perkhidmatan yang dihasilkan
dan pasaran yang disasarkan, selepas generasi baru pemilik muncul. Satu kaedah
penyelidikan kualitatif melalui pendekatan fenomenologi telah digunakan. Tesis ini
telah mengunakan kaedah kajian kes pada sebelas firma untuk mengesan perubahan
generasi perniagaan India di Malaysia. Kaedah pengumpulan data utama adalah
analisis laporan syarikat tahunan diikuti dengan temu bual dengan pengasas serta
pemilik generasi kedua atau ketiga perniagaan ini. Tesis ini memberikan bukti teori
dan empirikal kepada aplikasi konsep perusahaan etnik di Malaysia berikutan
peralihan generasi.
iv
ACKNOWLEDGEMENTS
First and above all, I praise God, the Almighty for providing me with the opportunity
to undertake this course of study and for granting me the strength, patience and
capability to complete this doctoral thesis successfully. The process of earning a
doctorate is long and arduous, and it certainly cannot be completed singlehandedly. I
would like to offer my sincere gratitude to several key people who gave me guidance,
encouragement and support.
My deepest appreciation goes to Professor Dr. Edmund Terence Gomez for his
immense knowledge and guidance in my research and writing of this thesis. His advice
throughout this process has been invaluable. I could not have imagined having a better
mentor for my doctoral degree.
I would also like to thank the professors of the Faculty of Economics and
Administration, who provided their valuable suggestions and comments on my thesis.
Besides that, I would also like to appreciate my friends, for their motivation during
this journey.
I offer gratitude to my selfless parents, Xavier Francis and Helen Margaret, for their
faith in me. I thank you both for your love and sacrifice, and for shaping me into who
I am today. I would also like to thank my brother, Jerome Paul, for his moral support.
Last but not least, I would like to express my gratitude to my beloved husband, Michael
Anthony, for his unfailing love, support and understanding at every step in my pursuit
of this doctoral degree. I cannot thank you enough for your encouragement throughout
this journey.
My deepest gratitude to each and every one of you.
v
TABLE OF CONTENTS
Abstract ............................................................................................................................ iii
Abstrak ............................................................................................................................. iv
Acknowledgements ........................................................................................................... v
Table of Contents ............................................................................................................. vi
List of Figures .............................................................................................................. xivv
List of Tables................................................................................................................... xv
List of Symbols and Abbreviations ............................................................................... xvii
CHAPTER 1: INTRODUCTION .................................................................................. 1
1.1 Indians in Malaysian Business and Ethnic Entrepreneurship .................................. 1
1.2 Defining Ethnic Entrepreneurship ........................................................................... 6
1.3 Generational Change and the Concept of Ethnic Entrepreneurship ........................ 10
1.4 Role of the State..................................................................................................... 13
1.5 Malaysian Indians in Business............................................................................... 17
1.6 Problem Statement ................................................................................................. 19
1.6.1 Research Questions .................................................................................. 19
1.6.2 Research Objectives ................................................................................. 20
1.7 Methodology .......................................................................................................... 21
1.8 Siginificance of the Study ...................................................................................... 21
1.9 Structure of the Thesis ........................................................................................... 22
CHAPTER 2: HISTORICAL REVIEW OF INDIANS IN MALAYSIA ................ 24
2.1 Arrival of Indians in the Malay Archipelago ......................................................... 24
2.2 The Indentured System and Immigration Act 1959 .............................................. 25
2.3 Sub-Ethnic Indians in Malaya and their Contribution to the Economy................. 29
vi
2.3.1 Tamils ....................................................................................................... 30
2.3.2 Tamil Muslims ......................................................................................... 31
2.3.3 Telegus ..................................................................................................... 32
2.3.4 Chettiars .................................................................................................... 33
2.3.5 Ceylonese ................................................................................................. 34
2.3.6 Malayalees ................................................................................................ 35
2.3.7 Gujeratis ................................................................................................... 36
2.3.8 Sindhis ...................................................................................................... 36
2.3.9 Punjabis .................................................................................................... 38
2.4 Public Policies and Indian Businesses in Malaysia ............................................... 39
2.5 Malaysian Indian Businesses in the New Millennium .......................................... 44
2.6 Conclusion ............................................................................................................. 46
CHAPTER 3: LITERATURE REVIEW .................................................................... 47
3.1 Review of Indian Businesses Worldwide .............................................................. 47
3.1.1 Indian Businesses in the United States ..................................................... 47
3.1.2 Indian Businesses in the United Kingdom ............................................... 49
3.1.3 Indian Businesses in Africa ...................................................................... 51
3.1.4 Indian Businesses in New Zealand ........................................................... 54
3.1.5 Indian Businesses in Phillipines .............................................................. 55
3.1.6 Indian Businesses in Singapore ................................................................ 57
3.1.7 Indian Businesses in Brunei .................................................................... 57
3.1.8 Indian Businesses in Indonesia ................................................................. 58
3.2 Reviewing Key Concepts of Ethnic Entrepreneurship ............................................ 58
3.3 Resources ............................................................................................................... 60
3.3.1 Class Resources ........................................................................................ 61
3.3.2 Ethnic Resources ...................................................................................... 63
vii
3.3.3 Predisposing Factors ................................................................................. 66
3.3.4 Networks .................................................................................................. 67
3.4 Opportunity Structure ............................................................................................ 72
3.4.1 Market Condition ..................................................................................... 72
3.4.2 Role of the State ...................................................................................... 75
3.5 Indian Family Businesses ..................................................................................... 77
3.6 Small and Medium Enterprises: The Malaysian Dimension ................................. 78
3.7 Small and Medium Enterprises Growth Model ..................................................... 81
CHAPTER 4: CONCEPTUAL FRAMEWORK AND METHODOLOGY ........... 84
4.1 Conceptual Framework .......................................................................................... 84
4.1.1 Delineation of Conceptual Framework .................................................... 86
4.2 Methodology .......................................................................................................... 89
4.2.1 Phenomenological Research ..................................................................... 89
4.2.2 Qualitative Research ................................................................................. 91
4.2.3 Case Study Method .................................................................................. 92
4.2.4 Unit of Analysis ........................................................................................ 93
4.3 Sampling Method................................................................................................... 94
4.3.1 Criterion Sampling ................................................................................... 94
4.3.2 Snowball Sampling ................................................................................... 95
4.4 Selected Cases ....................................................................................................... 95
4.5 Data Sources and Triangulation............................................................................. 97
4.5.1 Primary Data ............................................................................................. 97
4.5.2 Secondary Data ......................................................................................... 98
4.6 Design of Interview Guide..................................................................................... 99
4.7 Data Analysis ....................................................................................................... 101
4.7.1 Content Analysis .................................................................................... 101
viii
4.7.2 Explanation Building .............................................................................. 102
4.7.3 Cross-case Analysis ................................................................................ 102
4.8 Limitation ............................................................................................................ 103
4.9 Conclusion ........................................................................................................... 104
CHAPTER 5: INDIAN BUSINESSES IN THE FOOD INDUSTRY ..................... 105
5.1 Industry Background ........................................................................................... 105
5.2 Case Study One: Santha Store Flour Mill Sdn. Bhd. ........................................... 108
5.2.1 Product Innovation Based on Market Trends ......................................... 109
5.2.2 Expanding Beyond the Indian Market .................................................... 110
5.2.3 Gaining International Recognition ......................................................... 111
5.2.4 Changes in Share Capital, Revenue and Ownership Pattern .................. 113
5.2.5 Summary ................................................................................................ 116
5.3 Case Study Two: Gemini Flour Mills Sdn. Bhd. ................................................. 117
5.3.1 Scaling Back from Wholesaling to Retailing ......................................... 119
5.3.2 Greater Confidence in Foreign Markets ................................................. 120
5.3.3 Going Halal Does Not Guarantee Higher Revenue ................................ 121
5.3.4 Changes in Share Capital, Revenue and Ownership Pattern .................. 123
5.3.5 Summary ................................................................................................ 125
5.4 Case Study Three: M. P. Lingam & Sons Sdn. Bhd. ........................................... 127
5.4.1 Product that Defined the Business .......................................................... 127
5.4.2 Targeting a Wider Market ...................................................................... 128
5.4.3 Third Generation Entrepreneurs ............................................................. 130
5.4.4 Changes in Share Capital, Revenue and Ownership Pattern .................. 131
5.4.5 Summary ................................................................................................ 132
5.5 Case Study Four: The Big Rajah Caterers Sdn. Bhd. .......................................... 134
5.5.1 Diversifying the Business ....................................................................... 135
ix