The influence of foreign investment on Malaysian Bumiputera technology firms: 1957-2016

Purpose: The purpose of this paper is to identify the historical influences and chronological development of foreign investors on Malaysian Bumiputera (indigenous) new technology-based small firms (NTBSFs). Design/methodology/approach: Weick’s (1989) conceptual theory building approach is used to conduct a critical historical documentary analysis of the international, local, academic and government inward foreign investments literature from prior Malaysia’s independence (1957) through to 2016. Findings: Increased foreign investment between 1957 and 2016 proved to be effective for Malaysia to transform its economy from a reliance on primary production to a focus on innovation and value-added industries such as the biotechnology and the information and communication and technology sectors. Research limitations/implications: Local and international literature addressing inward foreign investments towards host countries yielded four key research implications: employment effects, strategic alliances, technology transfer and knowledge transfer. Creation of firm-specific resources in addition to government assistance, particularly through grants and advisory services, significantly contribute to the sustainability of Bumiputera NTBSFs. Practical implications: Inward foreign investment through subsidiary multi-national companies (MNCs) leads to the formation of strategic alliances between MNCs and Bumiputera NTBSFs, generating employment opportunities, contributing to Malaysia’s development aims. Social implications: Charting the chronological development and historical influence of foreign investment from a Malay-Bumiputera perspective provides an in-depth understanding of the evolution of what is now a multi-cultural Malaysian society. Originality/value: This study provides a chronological development and discussion of the historical influences and implications of foreign investment towards the evolution and sustainability of Malaysian Bumiputera NTBSFs.