Towards a Knowledge Economy: Firm Competitiveness, Institutional Thickness, Localized Learning, and Value-Added Supply Chain Networks in Penang, Malaysia

University Of Kentucky Research Foundation, Lexington KY

Investigators

Abstract

The development of competitiveness through innovation, new technology, and localized learning has become a critical theme for research as regions attempt to carve out viable industrial niches. This theme is especially important in connection with the operational dynamics of multi-national enterprises (MNEs) and their continually changing global business strategies. Success in holding down the global (local embeddedness) and thereby generating self-reproducing growth cannot be reduced to a set of narrow technological or economic factors. Institutional thickness is important. Significant too is the knowledge production and sharing when economic agents work together. Firm resident knowledge as distinct from knowledge produced in everyday practice between actors both spatially proximate and non-spatially proximate also is important. Moreover, development of competitive advantage is clearly related to the process of creating value added through a supply chain in a global production framework. The overarching goal of the research project is to gain a deeper understanding of the ways in which multinational enterprises (MNEs) interact with suppliers and to generalize these behaviors. This is analyzed within the context of the learning and innovative process by examining the supply chain structure and distribution practices of a sample of multi-national enterprises and their supplier firms operating in Penang, Malaysia. The aim is to detail the nature of the growth of new practices associated with supply value chain development and management and show how this varies among firms in the technology sector. Corporate core values, ownership strategy, technological sophistication, logistical practices, complexity of actor interaction in the value chain, degree of capitalization, product form and life cycle and especially governance structures will be used as influencing variables in assessing the different ways in which firms interact and learning takes place. The research will be motivated by a series of questions. Among these are the ways in which learning and adaptation are expressed in supply chain structures and logistics. In addition how is tacit versus codified knowledge conveyed among and between MNEs and their supplier firms? Specifically how are issues of information sharing, communication, management and the adoption of new technologies in supply chain management and organization represented and codified? How do differing logistical structures perform in anchoring creative learning toward competitive advantage? The research will be conducted in collaboration with Universiti Sains Malaysia and will be carried out in two separate field phases. Data will be gathered from both MNEs and supplier firms through structured and unstructured interviews with supply chain and management personnel in the firms. The results will strengthen our understanding of the organization and learning dimensions of the theory of the firm. It also will aid in deepening our understanding of global production networks, specifically examining relations between MNEs and supplier firms in order to enhance conceptual frameworks which aim to understand the economic development prospects of regions, especially in Southeast Asia. It will show how MNEs network with and transfer new knowledge/information (both tacit and explicit) to SMEs in the technology sector of peripheral regions. Finally, the research will add to basic understanding of the learning process, the ubiquitous nature of technology, and how the dynamics of governance structures fit into and aid the capability of supply value chains to adapt to new, different, or changing requirements.