Still a family firm after knowledge transformation? Generational change and enterprise development of plastic manufacturing firms in Malaysia

Abstract

This article focuses the changes in the family firms following the development of knowledge transformation with innovation across generational changes, with specific attention given top plastic manufacturing. The case study method is used to examine the impact of generational tracing by tracing the changes in objective, 3Ms and innovation when the new generation attempts to transform the tacit knowledge of the founder by developing the quality products. The results provide an insight into key changes of 3Ms, concept developed by Alfred Chandler, which refers to a firm’s capacity to develop its manufacturing, management and marketing by codifying tacit knowledge and adopting professional management. The changes in the knowledge transformation indicate the cooperative ties with government and MNCs could serve to facilitate enterprise development of plastic manufacturing in Malaysia.

Keywords:

• Family firms
• knowledge transformation
• 3Ms
• generational change
• plastic
• Malaysia

Acknowledgement

I am deeply indebted to my supervisor Professor Edmund Terence Gomez for his continuous support and insightful suggestions throughout this project. His guidance helped me remain focused on how to structure this very intricate research project. Without his friendly, welcoming and supportive tutelage, this thesis would not have seen the light of day.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 Investment Climate Survey 2 is gleaned from Malaysia SME-level data, a nationally representative survey of 821 manufacturing firms in different sectors, a collaborative effort undertaken by the Prime Minister’s Department under Economic Planning Unit, the Malaysian Department of Statistics and the World Bank in 2007, with reference to the year 2006.

2 Family firms with less than 150 employees were classified as small and medium enterprises (SMEs).

3 Interviews were conducted with senior management or family members of plastics production firms. Lam Seng mentioned the growth in number of equipment and that it had managed to turn into high technology moulding (interview on 5.8.2011, 6-7pm). Lee Huat mentioned the growth in the number of its subsidiaries, established to cater to international MNCs by establishing sales office to promote LH innovative housewares (interview on 7.9.2011, 8-9pm).

4 Interview conducted (11.6.2012, 7-8pm) in Guppy Plastic Industries Sdn Bhd, Kuala Lumpur Plant.

5 During an interview conducted (23.9.2011, 4-6pm)with Tan’s daughters in their Malacca factory in Bukit Berendam, they mentioned that build on reputation by strengthening the knowledge specification to match with niche market is essential to enhance business efficiency. Therefore, the next generation would seek new opportunities, venturing into the cosmetic and beauty industry, a reason for establishing Clean & Beautiful Sdn Bhd and Y.L.I Sdn Bhd.

6 The active involvement of sibling partnerships in production led to greater effectiveness of tacit knowledge management, where numerous branded products were successfully introduced in the domestic and international markets.

7 For the study of family involvement in family firms, see Ward (1987), Harris, Martinez, and Ward (1994) and Gersick et al. (1997). For the case of Malaysia, see Gomez (2007).

Additional information

Notes on contributors

Kean Yew John Lee

Kean Yew John Lee owned a business consulting firm in Kuala Lumpur, Malaysia. He graduated from University Malaya with Master in Management and PhD major in economics and administration. He is assigned as a research assistant at Asia-Europe Institute, University of Malaya after the graduation. He published numerous articles in high impact journals such as Sage, MIT Press, Taylor and Francis and Taiwan SSCI. His research interests are Asian development studies, family business, knowledge management and Chinese studies.