High technology small and medium sized enterprises (HTSMEs): an assessment of the determinants of growth and constraints faced by HTSMEs in Malaysia

The industrial development of Malaysia has moved towards capital-intensive, hightechnology and high value-added industries. The development of high technologyindustries is an important element in the country's industrialisation process. Hightechnology small and medium-sized enterprises (HTSMEs) are considered a key featureof growth in the high technology sphere in Malaysia - the creation and development ofindigenous HTSMEs is vital.The primary aim of this research is to examine the growth of HTSMEs and providepolicy makers, owner-managers (OMs) and academics with a greater understanding ofthe factors affecting the growth of such firms in Malaysia. This study also identifies themain constraints faced by HTSMEs and explores ways in which these constraints mightbe overcome. The programme of research builds upon past studies, but it adds to existingknowledge in an area that is ripe for research.After a literature review, and the development of an overarching theoretical framework, anumber of hypotheses are put forward. The methodological approach combines aquestionnaire survey with case studies based on interviews with selected HTSMEs andkey informants. The questionnaire is principally concerned with identifying the factorsthat contribute to growth in HTSMEs, whereas the case studies and interviewsconcentrate on exploring the constraints identified in the questionnaire survey. Thequestionnaires were distributed to firms in databases maintained by a number ofGovernment bodies. All the sample firms are considered high technology, as defined bytile Promotion of Investment Act 1986. The sample includes firms involved in a varietyof activities, from the manufacture of high technology products to the processing ofresource-based products. Firms were randomly selected to reflect the size and racialcomposition of firms in the underlying population of HTSMEs. The questionnaire datawere supplemented by 15 in-depth case studies.Two major findings emerge from this study. First, a number of detenninants did have asignificant effect on growth of HTSMEs: age of OM; age and size of firm; processinnovation and R&D. However, most the hypotheses relating to business strategy wererejected; the researcher offers some explanations for these rejections. Second, tile casestudies demonstrate that labour constraints among HTSMEs are prevalent, whereas otherpropositions were not substantiated. In particular, the case studies raise a number ofquestions about the effectiveness of Government support programmes.On tile basis of tile research findings, the researcher is able to put forward a series ofrecommendations to enhance the growth of HTSMEs in Malaysia.