Globalisation and Ethnic Integration in Corporate Malaysia: the Case of Public-Listed Companies in the Klang Valley and Penang R
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UGIVERS- ' ■■ .F ! ONDOiv MAGFT S T B tf- LONDON WC:F - Globalisation and Ethnic Integration in Corporate Malaysia: The case of public-listed companies in the Klang Valley and Penang Reevany BUSTAMI London School of Economics and Political Science, University of London A thesis submitted for the degree of Doctorate of Philosophy (Ph.D.) UMI Number: U615837 All rights reserved INFORMATION TO ALL USERS The quality of this reproduction is dependent upon the quality of the copy submitted. In the unlikely event that the author did not send a complete manuscript and there are missing pages, these will be noted. Also, if material had to be removed, a note will indicate the deletion. Dissertation Publishing UMI U615837 Published by ProQuest LLC 2014. Copyright in the Dissertation held by the Author. Microform Edition © ProQuest LLC. All rights reserved. This work is protected against unauthorized copying under Title 17, United States Code. ProQuest LLC 789 East Eisenhower Parkway P.O. Box 1346 Ann Arbor, Ml 48106-1346 OF . \ pOtfTICAL 1 ^ AND #/ Th SO 2 Globalisation and Ethnic Integration in Corporate Malaysia: The Case of Public-listed Companies in the Klang Valley and Penang Abstract This thesis offers a critique of the present literature on development in Malaysia. It argues that the present analyses have generally revolved around a state-centric perspective; hence, neglecting companies as a vital unit of analysis or even a foci of societal transformation. Although numerous studies have focused on ethnicity, few have examined ethnicity within companies, much less the impact of globalisation on companies' practices vis-a-vis ethnicity. Therefore, the objectives of the present research are four-fold: (1) to assess the general state of globalisation and ethnic integration among public-listed companies in the Klang Valley and Penang; (2) to examine the perceptions of executives with regards to globalisation and ethnic integration; (3) to examine the possible connection between globalisation and ethnic integration; and (4) to explore the underlying social dynamics of the connection between globalisation and ethnic integration. Companies are classified into foreign transnational corporations, Malaysian transnational corporations and local corporations, followed by comparative analyses of their globalising tendencies and ethnic integration practices. The thesis employs Granovetter's social embeddedness argument as a basis in formulating its analytical framework. The research findings show that most of these companies and their managers support globalisation and most of them have formal plans to go global. The research also found that most of these corporations show low degree of ethnic integration. However, when globalising tendencies are factored in, it is revealed that the companies scoring high on globalising tendencies also scored high on ethnic integration and vice-versa, with few exceptions. Finally, the qualitative findings strongly suggest company embedded relationships play a pivotal role in shaping the paradigms and practices of ethnic integration within the company. By showing the relevance and significance of ethnic elements in companies' embedded relationships, the findings call into question the assertions about the thinning of ethnic preference among managers and companies. 3 Table of Contents Chapter One: INTRODUCTION 1.1. Background and Research Obj ectives 10 1.2. Significance of the Study 11 1.3. Conceptual and Empirical Considerations 22 1.4. Ethnic Integration and Globalisation 23 1.5. The Conceptual Framework 30 1.6. Overview of Chapters 34 Chapter Two: LITERATURE REVIEW AND CRITIQUE Introduction 40 2.1. Literature on Malaysia Political Economic Evolution 41 2.1.1. The coming of the British 43 2.1.2. Waves of immigrant workers 43 2.1.3. Divide and rule 44 2.1.4. The main players 45 2.1.5. Segregating superstructure 46 2.1.6. Independence and the Bargain of 1957 49 2.1.7. Post-Colonial Experience 50 2.1.8. The May 13th 1969 Riot 52 2.1.9. Resolution for Development: Two Opposing Rationales 54 2.1.10. Malaysia’s New Economic Policy 55 2.2. Assessing the NEP 58 2.2.1. Major Areas of Inequality 59 2.2.2. Evaluating the Strengths of the NEP 67 2.3. Review of Malaysian Development Literature 75 2.3.1. First Key Area: Ethnicity 75 2.3.2. Second Key Area: Economic Development 88 2.3.3. Critique: Vital Issues and Gaps in the Development Literature 102 Ethnic Issue 102 Global factors 106 4 State-centred paradigm 107 Main Theoretical Thrusts 109 2.4. Conclusion: Four Points of Contention for a New Type of Theorising 109 Chapter Three: RESEARCH METHODOLOGY Introduction 131 3.1. Outlining the Research Methodology 132 3.2 The Mail Survey and Sampling Frame 136 3.3. The Pilot Study and Improving the Response 142 3.4 The Unstructured Interviews 148 3.5. Document Analys is 153 3.6. Conclusion 155 Chapter Four: COMPANY GLOBALISING TENDENCIES AND THEIR CONNECTION WITH ETHNICITY Introduction 161 4.1. The Overview 163 4.1.1. FTNCs, MTNCs and LCs 163 4.1.2. Ethnic Integration 166 4.1.3. Ethnic Integration and TNC status 167 4.2. Detailed Analysis of the Quantitative Findings: The Connection between Ethnic Integration and Globalization variables of Foreign Equity, TNC status and Forward Linkages 168 4.2.1 Foreign Equity 169 4.2.2 TNC Status 170 4.2.3. Forward Linkages 172 4.3. Qualitative Findings on Foreign Equity, TNC status and Forward Linkages 173 Reintroducing the Four Embedded Relationships 174 5 Issues Pertaining to the Nature of Qualitative Findings 175 4.3.1. Interaction between Company-Government Relationships and Company- Company Relationships 177 4.3.2. Interaction between Company-Company Relationship and Company-Market Relationships 181 4.3.3. Dynamics of company-internal-community relationship 187 4.4. Detailed Analysis of the Quantitative Findings: The Connection between Ethnic Integration and Globalization variables of Corporate Mission/Vision, Planning and Strategies, International Certification and Benchmarking 196 4.4.1 Corporate Mission/Vision 196 4.4.2. Planning and Strategies 197 4.4.3. International Certification 198 4.4.4. Benchmarking 200 4.4.5. Influence of Ownership Structure 203 4.5. Qualitative Findings: Mission, Planning, International Certification and Benchmarking 220 4.5.1. Interaction between Company-Government Relationship and Company- Intemal-Community Relationship 220 4.5.2. Interaction between Company-Company relationships and Company-Market Relationships 226 4.6. Variables of Ethnic Integration 229 4.6.1. Company—internal-community relationship and Ethnic Integration 229 4.6.2. Company-Government relationship and Ethnic Integration 23 5 4.7. Conclusion: Summing up the Findings of Companies’ Practices and the Four Imperatives 242 Chapter Five: MANAGERS' VIEWS ON GLOBALIZATION AND ETHNIC INTEGRATION Introduction 248 5.1. Descriptive statistics of managers' views249 The overall view 249 Analyses based on TNC status 250 Connection between managers’ views on globalization and ethnic quotas 253 6 Views and Opinions of Globalization 255 5.2. Three Dominant Paradigms ofEconomic Globalization 256 Collaboration Paradigm 256 Domination Paradigm 260 Competition Paradigm 263 5.3 Views on Ethnic Integration 269 The Fair Share Paradigm 270 Fair Play Paradigm 274 Competition-cum-conflict paradigm 277 Complementarity Paradigm 279 Irrelevance or Obsolescence of Ethnic Quotas/ Ethnic Integration 283 5.4. Conclusion and Further Vital Reflections 286 Chapter Six: CONCLUSION AND FURTHER CONSIDERATIONS Introduction 297 6.1. Summary of Findings 299 6.2. Connecting the Findings with Theoretical Background 304 (1). What is the implication of the findings on the importance of ethnicity?304 (2). Does globalisation lead to ethnic integration? 306 (3). What is the implication of company's globalisation agenda(s)? 308 (4). What is the implication of the analysis of companies and their embedded relationships? 309 (5). What is the significance of the analysis of foreign versus local actors? 311 (6). What is the implication on ethnic integration vis-a-vis NEP? 312 6.3. Limitations of the Research 313 6.4. Further Research and Projects 315 References 320 Appendix 1 332 Appendix 2 340 7 List of Tables and Figures Figure 1.1. Variables of Globalisation 32 Figure 1.2. Variables of Ethnic Integration 32 Figure 1.3. Conceptual Frame work of the Research 3 3 Table 2.1. Ownership Pattern of Modem Agriculture and Industry (1970) 52 Table 2.2. Restructuring Targets and Achievements: Employment Restructuring 60 Table 2.3. Distribution of Ethnic Employment in Selected Sectors of the Economy 61 Table 2.4. Employment by Occupation & Ethnic Membership of Professional 62 Table 2.5. Mean Monthly Household Income (in current prices) 64 Table 2.6. Ownership Restructuring (% of corporate equity) 65 Table 2.7. Incidence of Poverty 73 Table 3.1. Mail Questionnaire Survey Method: Strengths and Limitations 134 Table 3.2. Interviews: Strengths and Limitations 135 Table 3.3. Document Analysis: Strengths and Limitations 135 Figure 4.1 Overall Percentages of FTNCs, MTNCs and LCs 163 Table 4.1. Percentages High Scores on Globalisation Variables based on TNC Status 164 Figure 4.2. Percentages Scoring High on Ethnic Integration Variables 166 Table 4.2. Percentages Scoring High on Ethnic Integration Variable and TNC Status 167 Figure 4.3 Percentages of Scores on Foreign Equity and Ethnic Integration 170 Figure 4.4. Percentage of FTNC, MTNC & LC and on Ownership Structure 171 Figure 4.5. Percentage of FTNC, MTNC & LC scoring High on Ethnic Composition 171 Figure 4.6. Percentage of FTNC, MTNC & LC scoring High on Promotion Patterns 172 Figure 4.7. Comparison between Companies Scores on Forward Linkages and Ethnic Integration 172 Table 4.3. Qualitative Data on Foreign Equity, TNC status and Forward Linkages: Summary of Excerpts for Globalizing Tendencies 192 -193 Figure 4.7. Comparison Companies' Scores on GLOBAL MISSION and the Three Variables of ETHNIC INTEGRATION 196 Figure 4.8. Comparison of Companies' Scores on PLANS/ STRATEGIES and ETHNIC INTEGRATION 198 Figure 4.9.