University of Wollongong Research Online University of Wollongong Thesis Collection University of Wollongong Thesis Collections 2011 Enhancing human capital for technological development: a comparative study of a selected public university, a large local corporation and an industry-public sector initiative in Malaysia Suzana Ariff Azizan University of Wollongong Recommended Citation Azizan, Suzana Ariff, Enhancing human capital for technological development: a comparative study of a selected public university, a large local corporation and an industry-public sector initiative in Malaysia, Doctor of Philosophy thesis, Faculty of Arts, University of Wollongong, 2011. http://ro.uow.edu.au/theses/3562 Research Online is the open access institutional repository for the University of Wollongong. For further information contact Manager Repository Services: [email protected]. ENHANCING HUMAN CAPITAL FOR TECHNOLOGICAL DEVELOPMENT: A COMPARATIVE STUDY OF A SELECTED PUBLIC UNIVERSITY, A LARGE LOCAL CORPORATION AND AN INDUSTRY-PUBLIC SECTOR INITIATIVE IN MALAYSIA A thesis submitted in fulfilment of the requirements for the awards of the degree DOCTOR OF PHILOSOPHY from UNIVERSITY OF WOLLONGONG by SUZANA ARIFF AZIZAN BSc (Hons) (Science and Technology Studies), University of Malaya, Malaysia MSc, University of Malaya, Malaysia FACULTY OF ARTS UNIVERSITY OF WOLLONGONG 2011 CERTIFICATION I, Suzana Ariff Azizan, declare that this thesis submitted in fulfilment of the requirements for the award of Doctor of Philosophy, in the Faculty of Arts, University of Wollongong, is wholly my own work unless otherwise referenced or acknowledged. The document has not been submitted for qualifications at any other academic institution. Suzana Ariff Azizan 15 August 2011 TABLE OF CONTENTS TABLE OF CONTENTS 1 LIST OF BOXES, FIGURES AND TABLES 5 LIST OF ABBREVIATIONS 9 ABSTRACT 13 PAPERS 15 ACKNOWLEDGEMENTS 16 CHAPTER 1: INTRODUCTION 1.1 Introduction 17 CHAPTER 2: LITERATURE REVIEW 2.1 Introduction 21 Part 1 Technological Development and Managing Innovation 21 2.2 Technological Development 21 2.3 Managing Innovation 30 Part 2 Human Capital and Skills Development 39 2.4 Human Capital Skill and Innovation 40 2.5 Human Capital Development Strategy 52 Part 3 Skill Acquisition Modes: Formal and Non-formal Education 57 2.6 Changing Role of University: The University in Human Capital Formation and Innovation System 62 2.7 The Firm’s Role in Enhancing Human Capital Skills 70 2.8 Chapter Overview 78 CHAPTER 3: OVERVIEW OF MALAYSIA’S HISTORY, POLITICS, ECONOMY AND INNOVATION 3.1 Introduction 81 3.2 Managing Ethnic Diversity and Malaysia’s Political History 81 3.3 Malaysia’s Changing Economic Profile 90 1 3.4 Development Planning in Malaysia 98 3.5 Specific Science and Technology Policies 104 3.6 The Government’s Role in Technological Development 106 3.7 The Malaysian Innovation Systems 118 3.8 Overview of Science and Technology in Malaysia 136 3.8.1 Education in Science and Technology 136 3.8.2 Human Capital for Science and Technology 138 3.8.3 Research and Development Activities 140 3.8.4 Innovation in the Industrial Sector 142 3.8.5 Scientific Publications and Patent Grants 143 3.9 Human Capital Development in Malaysian Context 145 3.10 Skills Development 147 3.11 The Challenge in Malaysia’s Skilled Human Capital Development 160 3.12 The Brain Drain 170 3.13 Higher Education in Malaysia 178 3.14 Chapter Overview 192 CHAPTER 4: RESEARCH METHODOLOGY 4.1 Objectives of Research 193 4.2 Research Methodology 194 4.3 Rationale for Selection of the Three Key Institutions 197 4.4 Research Strategy 199 4.4.1 Fieldwork 199 4.4.2 Interviews 200 4.4.2 Document Review 202 4.5 Challenges Faced in Research 205 CHAPTER 5: THE CASE STUDIES OF INSTITUTIONS: PROFILE OF ORGANIZATIONS 5.1 Introduction 207 2 5.2 Public University: University of Malaya (UM) 208 5.2.1 Corporate Profile and Historical Background 212 5.2.2 The National Innovation System and the University 222 5.2.3 Role in Skilled Human Capital Development 231 5.3 Large Local Corporation: Tenaga Nasional Berhad (TNB) 239 5.3.1 Corporate Profile and Historical Background 239 5.3.2 National Innovation System and TNB 241 5.3.3 Human Capital Development and Performance 247 5.4 Industry – Public Sector Initiative: Penang Skills Development Centre (PSDC) 251 5.4.1 Corporate Profile and Historical Background 253 5.4.2 National Innovation System and PSDC 256 5.4.3 Role in Skilled Human Capital Development and National Policy 259 CHAPTER 6: ANALYSES AND FINDINGS 6.1 Introduction 268 6.2 Analysis and Findings 268 6.2.1 Managing Ethnic Diversity 268 6.2.2 Collaboration and Networking between Different Sectors 274 6.2.3 Role of Government Institutional Support 284 6.2.4 Monitoring Issues 293 6.2.5 Sustaining Improvement 301 CHAPTER 7: SUMMARY AND CONCLUSIONS: ENHANCING HUMAN CAPITAL FOR TECHNOLOGICAL DEVELOPMENT 7.1 Introduction 308 7.2 Summary of the Chapters 308 7.3 Key Findings and Conclusions 311 7.4 Managerial and Policy Implications of Findings 316 7.5 Towards Enhancing Human Capital for Technological Development 321 3 7.6 Further Research REFERENCES 326 4 LIST OF BOXES, FIGURES AND TABLES List of Boxes Box 2.1 National Innovation Systems 32 Box 2.2 Technology and Unemployment: A Classical Debate 49 Box 3.1 Sources of Policy Initiatives 102 Box 3.2 The History of R&D Funding in Malaysia 113 Box 3.3 Key Factors for Successful University –Industry Collaboration 129 Box 3.4 Complementarities between Skills and Technology: Training Interventions to Boost Firm Productivity in Malaysia 132 Box 3.5 Governance Structure: The State of Penang 134 Box 3.6 Do Skills Attract FDI or Does FDI Create Skills? 169 Box 3.7 Brain Drain Can Erode Skill Base and Depress Innovation 172 Box 3.8 The Changing Academic Profession in Malaysia 190 List of Figures Figure 2.1 Conceptual framework 80 Figure 3.1 The Components of Malaysian System of Innovation 119 Figure 3.2 The Framework of Malaysian Innovation System 121 Figure 3.3 Agencies Linked to Science and Technology Development in Malaysia 123 Figure 5.1 Time line of Penang‘s economic transformation (1957–2010) 254 Figure 7.1 The Relationship between Three Key Institutions 316 List of Tables Table 2.1 Approaches to the Study of National Innovation System 33 Table 2.2 The Technology-Culture Interrelationship 35 Table 2.3 Comparison of Human Capital and Screening/Signalling Theories 43 Table 2.4 Types of Skill Mismatch 54 Table 2.5 Distinction between Mode 1 and Mode 2 69 Table 2.6 Human Capital and Industrial Development Level 73 5 Table 3.1 Peninsular Malaysia: Households in Poverty by Race, 1970 95 Table 3.2 Peninsular Malaysia: Means Household Incomes, 1970 95 Table 3.3 Development Planning in Malaysia 98 Table 3.4 An Overview on Malaysian Development Planning Documents 99 Table 3.5 Major Policy Support with Respect to Industrial Technology Development 108 Table 3.6 Financial Incentives for R&D Provided by Government 111 Table 3.7 Government’s Incentives for Commercialization and Technology Upgrading 112 Table 3.8 The Transition of Malaysian Economic and National Innovation System 122 Table 3.9 Enrolment for First Degree, Diploma and Certificate in Science and Technical Courses from Local Public Higher Educational Institutes, 1995-2005 137 Table 3.10 Enrolment For Science And Technical Courses At Certificate And Diploma Level By Type of Institution in Public Higher Educational Institutes, 2002-2008 138 Table 3.11 Researcher and Engineer (Headcount) per 10,000 Labour Force 139 Table 3.12 Distribution of R&D Investment in Malaysia by Sector (RM million), 2000-2008 141 Table 3.13 Gross R&D Expenditure in GDP, 2000-2010 (%) 142 Table 3.14 Malaysia’s Innovation Capacities in Global Ranking 143 Table 3.15 Scientific Publication, 2000-2010 144 Table 3.16 Patent and Utility Innovations Applied and Granted from 2000 Until 2005 145 Table 3.17 Vacancies and Occupational Category, August to November 2008 146 Table 3.18 Skill Levels of Human Capital 147 Table 3.19 The Ministry of Human Resources Administrative System 148 Table 3.20 Training Schemes Provide by the Ministry of Human Resources 150 Table 3.21 Main Streams of the Education and Training System in Malaysia 154 6 Table 3.22 Development Expenditure and Allocation for Education and Training, 2001-2010 (RM million) 155 Table 3.23 Enrolment in Tertiary Education Institutions by Level of Study, 2000-2010 156 Table 3.24 Tertiary Education Institutions, 2000-2005 157 Table 3.25 Gross enrolment ratio in Higher Education Institution, 2000-2008 159 Table 3.26 Output of Skilled and Semi-Skilled Human Capital by Course, 2000-2010 159 Table 3.27 Employment by Major Occupational Group, 2000-2010 (‘000 persons) 160 Table 3.28 Malaysian Residents Abroad 174 Table 3.29 Number of Malaysian Migrants with Tertiary Education in OECD Countries 174 Table 3.30 The Malaysian brain drain, 2000 and 2010 175 Table 3.31 Differences between Schemes Operated by the Ministry of Science, Technology, and Innovation (MOSTI) and the Ministry of Human Resources (MOHR) 177 Table 3.32 Malaysian Higher education Development Phases 181 Table 3.33 Enrolment at Universities in Malaysia by Ethnic Group in Percentage 186 Table 4.1 Example of Documentations 204 Table 5.1 Main Features of Key Organizations 207 Table 5.2 UM - Research University 212 Table 5.3 Establishment of Faculties in UM 215 Table 5.4 Enrolment of Students (with Their Racial Breakdown) in UM From 1962 to 1970 216 Table 5.5 Enrolment in UM by Racial Background, 1975 – 1985 217 Table 5.6 Undergraduate Enrolment 2000-2010 219 Table