Technological Learning of Latecomer Firms: The Case of Auto Parts Industry in Malaysia

Automotive industry is taken by Malaysia as national strategic industry and Malaysia is the only nation in Southeast Asia having its own passenger car brands as well as holding technical autonomy in car manufacture process from design, research and development to mass production. However, compared to car assembly activities in Malaysia, auto parts manufacturing sector draws scarce attention in the past studies despite the fact that auto parts firms play a gradually important role and burdens responsibilities in value-added activities of car manufacturing. Hence, through in-depth interview, field observation and secondary data collection, this study mainly focuses on the case of auto parts industry in Malaysia, and discusses the certain factors and mechanisms as well as the roles of the state that influencing the development and technological learning process of auto parts firms. Furthermore, this study also points out the significances of auto parts industry development in Malaysia, as well as the interactions and influences played among the state and multinational firms in firms’ technological catching-up process. For policy application, this study takes Malaysia experience as an example on what learning strategies latecomer firms could implement on process of building their technological capabilities, as well as the role the state could act in order to serve as a reference for developing countries with interests in initiating pioneer industry. In other words, how the state can make use of the institutional mechanisms not only to attract but regulate multinational firms to embed in host country simultaneously, thus enabling firms from developing countries to obtain positive gains from investments and cooperation with multinational enterprises, as well as reaching the goal of technology transfer.