Humanomics

Emerald Article: Bumiputera Commercial and Industrial Community in the Food-processing Industry: An Analysis of Institutional Support Faridah Shahadan

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To cite this document: Faridah Shahadan, (1993),"Bumiputera Commercial and Industrial Community in the Food-processing Industry: An Analysis of Institutional Support", Humanomics, Vol. 17 Iss: 1 pp. 86 - 98 Permanent link to this document: http://dx.doi.org/10.1108/eb018862 Downloaded on: 14-04-2012 To copy this document: permissions@emeraldinsight.com This document has been downloaded 464 times.

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Bumiputera Commercial and Industrial Community in the Food-processing Industry: An Analysis of Institutional Support
by Faridah Shahadan Abstract The economic crisis of 1997 necessitates a rethinking of the way Malaysia manages its economy. The call for a re-examination of the government's role in the economy necessitates an analysis of the government's past economic performance. This paper analyses the impact of a particular Malaysian government's policy, namely the creation of a Bumiputera Commercial and Industrial Community (BCIC). For purposes of analysis, this paper focuses on BCIC development in the food-processing industry. The government has provided various support (such as, marketing, skill-upgrading, technology) to Bumiputera in the food-processing industry. This study uses a discriminant analysis to distinguish the characteristics of institutional support beneficiaries from those of non-beneficiaries. The results of the study show that Bumiputera entrepreneurs who received and those who do not receive institutional supports, differ significantly in six characteristics. The six characteristics are entrepreneurs' level of education, their needfor-achievement, locus of control, communicative behaviour, firms' productivity, and level of process innovation. This study shows that those who have received institutional supports tend to have higher entrepreneurial qualities and firms that received institutional supports were more productive and innovative. Introduction The year 1997 marked the beginning of the Asian economic crisis. Malaysia was not sparred. The economic crisis necessitates a rethinking of the way Malaysia manages its economy. It calls for a re-examination of government policies and strategies. In the past, Malaysia's rapid economic growth was partly due to active government's involvement in economic development. The call for a re-examination of government's role in the economy necessitates an analysis of the government's past economic performance. The results of such analysis will enable us to evaluate the relevance of some of the government's policies and strategics, and its suitability in the current economic situation. Before one can answer whether a particular policy is relevant in the current economic situation, it is useful to examine its past performance. The objective of this paper is to analyse the impact of a particular Malaysian Government's policy, namely the creation of a Bumiputera Commercial and Industrial Community (BCIC). I recognise that there are a number of issues related to BCIC creation. For analytical purposes, I focus my discussion on government's support to BCIC development in small-scale food-processing industries. The main reasons for analysing BCIC development in this industry are due to: (a) the high concentration of Bumiputera involvement in the small-scale food-processing industries, (b) the industry providing an important source of income and employment for rural communities and marginalized groups, such as, women, elderly and children; and (c) the growing importance of food

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industry in Malaysia's economic development, particularly now at a time when the country is reducing its dependence on food imports. The first section discusses the key issues involved in BCIC development in Malaysia. This will be followed by a discussion on the types of institutional support extended to Bumiputera small-scale entrepreneurs. Section 3 analyses the effectiveness of institutional support on Bumiputera entrepreneurs based on empirical data. Using a discriminant analysis, this study hopes to distinguish the characteristics of institutional support beneficiaries from those of non-beneficiaries. BCIC Development: Key Issues. Since the implementation of the New Economic Policy (NEP), the Malaysian government has continued to emphasise the creation of Bumiputera Commercial and Industrial Community (BCIC). It is part of NEP's strategy to increase Bumiputera participation in the modern sectors and reduces their income gap with the non-Bumiputera. Bumiputera participation in modem sectors is also part of the government's strategy to eliminate the identification of race with economic activities. The NEP targeted that by 1990, the Bumiputera would control 30 per cent of corporate equity. During NEP period, Bumiputera participation inmodernsectors has increased. However, it fell short of the 30 percent target. When the NEP ended in 1990, the Bumiputera have only succeeded in controlling 19 percent of equity share in Limited companies. The creation of BCIC continues to be emphasised in the National Development Plan (NDP). As a continuation of NEP, the NDP continues the efforts to create a strong viable BCIC by emphasising these two aspects: development of dynamic genuine entrepreneurs in the modem commercial and industrial sectors, and developing entrepreneurship through actual involvement in strategic sectors. As part of the BCIC creation strategy, the government has implemented various policies of which the major ones are skill-upgrading and financial support. Recognising the importance of entrepreneurship development, the government has created the Ministry of Entrepreneurial Development (KPU) in 1995. Both the NEP and NDP emphasised active/direct government support in BCIC creation. The government does not only provide the policy directions but also to create a conducive environment for BCIC creation through institutional support. The government extended various forms of support, such as, finance, skill-upgrading, training, marketing and technology. These supports wereextended through various ministries and agencies of which the key ones are KPU, MARA and MARDI. The effectiveness of these institutional supports is debatable. A study by UKM (1990) showed that Bumiputera entrepreneurs have benefited from these supports. On the other hand, Chee (1996) have argued that these supports have only benefited the few especially the large-scale, urban-based Bumiputera. Given this scenario, the objective of this paper is to analyse the impact of government's institutional support on BCIC creation. In writing this paper, I hope to extend the debate and provide a better understanding of the effectiveness of government support on BCIC creation. To provide a focus for my discussion, I have chosen the food-processing industry. One of the main reasons for choosing this industry is the high Bumiputera participation in it. Another factor is the active involvement of rural communities in the food-processing industry. This paper ad-

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dresses the following question: What is the effect of institutional support on Bumiputera entrepreneurship development in small-scale food-processing industry. The government has introduced various supports to assist Bumiputera entrepreneurs. Key supports are marketing, financing and skill-upgrading. In the following section, I will discuss briefly the different types of assistance. Marketing The government has designed an integrated marketing programme to assist Bumiputera entrepreneurs in marketing. Under the Sixth Malaysia Plan (1991-95:144) the government has introduced the konsep payung (umbrella concept) as part of its purchasing scheme. Bumiputera entrepreneurs participating in this scheme will be able to market their products through companies registered with this programme such as, Besta Distributor Sendirian Berhad, PERNAS Edar Sendirian Berhad including Guthrie Malaysia Trading Corporation. This umbrella concept was established to provide linkages through product sourcing and marketing in the food-processing industry. The government also established the Sub-Contract Exchange Unit to assist Bumiputera entrepreneurs to establish linkages. The unit serves as a meeting or a market place where buyers and sellers meet. Bumiputera entrepreneurs also receive advisory services from this unit. Among the key agencies participating in this scheme are Malaysian Industrial Development Authority (MIDA), National Productivity Centre (NPC), Malaysian Development Bank (BPMB). In 1980, the government established the Malaysian Export Trade Centre (MEXPO) to provide assistance such as, information on trade opportunities and international marketing, maintaining database of local exporters and foreign buyers, and providing space for exporters to exhibit their products. Financing The financial problems faced by the entrepreneurs' point strongly towards the need to supplement their existing sources of financial help. There are several private and public institutions that have been established to provide financial assistance to Bumiputera entrepreneurs. Among these institutions are, Bank Indnstri, Bank Pembangunan Malaysia Berhad, Credit Guarantee Corporation (CGC), Malaysian Industrial Development Finance (MIDF) and MARA. These agencies provide financing for new fixed assets and factory building undertaking modernisation and expansion. The government has also initiated the Tabling Bantuan Teknikal Industri (Industrial Technical Assistance Fund or ITAF), Skim Pembiayaan Usahawan Kecil (Small Entrepreneurs Finance Scheme), Bumiputera Entrepreneurs' Development Programme, New Entrepreneurs Fund, ASEAN Japan Development Fund Loan Scheme and Tabling Usahawan Industri Kecil Sederhana (Financing Fund for Entrepreneurs in Small- and Medium-scale Industries) to provide grants and finance to help small-scale firms conduct research and development, and upgrade their technological capacity. Bank Industri Malaysia Berhad has initiated an engineering financing facility to assist entrepreneurs in their new engineering projects and enable them to lease machinery and equipment. Bank Pembangunan Malaysia Berhad provides project loans to Bumiputera firms for the purchase of land, factories, warehousing, office building, and machinery and transport equipment. The ITAF was set up in 1990 with the purpose of providing grants to qualified SMIs to help them (a) engage consultants to conduct feasi-

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bility studies to modernise and upgrade their existing plants, and improve quality and productivity, (b) improve local product development and design, build up indigenous technological know-how to develop new products and improve existing products, (c) improve the quality of their product to meet the standard requirements as outlined by SIRIM, and (d) enter the export market and develop export marketing expertise. New or existing entrepreneurs who face financial difficulties can also apply to the New Entrepreneurs Fund to obtain loans to purchase fixed assets and for working capital. A nursery factory scheme has been provided to Bumiputera entrepreneurs under the Bumiputera Entrepreneur Development Programme. Under the scheme, Bumiputera entrepreneurs are provided with factory complexes for a specific period at a special rental rate. Another source of finance for Bumiputera entrepreneurs is the New Entrepreneurs Fund, which provides funds to new entrepreneurs to acquire fixed assets. Bumiputera entrepreneurs can also obtain loans from the Malaysian Industrial Development Finance to finance new fixed assets, undertake new industrial ventures or undertake modernisation and expansion. The majority of all these institutions however, require some forms of collateral such as, fixed assets, life insurance, marketable securities, Amanah Saham Bumiputera shares, negotiable certificate of deposits, treasury bills, government securities, corporate guarantee, joint- and several directors/shareholders guarantee or assignment of contract proceeds including debentures on fixed and floating assets. In most cases, tiny and small-scale firms are prevented from benefiting from these sources of support, due to their inability to provide the required security or collateral. Skill-upgrading and Technology There are also a number of agencies involved in providing training to entrepreneurs. Among the most common ones are the Centre for Instructor and Advanced Skill Training (CIAST), Industrial Training Institute (ITI), MARDI, MARA, National Productivity Centre (NPC), Forest Research Institute Malaysia and Penang Skills Development Centre. These agencies provided different types of courses to entrepreneurs such as, courses on technical aspects, improving management standards, efficiency and productivity in industrial operation, development of entrepreneurial skills, industrial training and foodprocessing technology. MARDI has one of the most comprehensive programmes on food technology, encompassing a variety of areas such as, Food Information Development, Food Project Development, Food Industrial Development, Food Extension Services, and Training for Food Industry and Food Quality Control Service. MARDI's Food Information Development programme documents information on Malaysia's food-processing industry, food research information and food industry information systems. The purpose is to update information such as, technology, manufacturing, trade, economy, policy and market relevant to the food-processing industry. Small-scale food producers can also obtain information regarding the latest technology on food production under the MARDI Food Project Development which is a programme concerned with producing packaged technologies which have been tested. Under its Food Project Development, MARDI designs and develops commercially viable systems for production of food products from research prototypes and other available machineries and equipments, design post-harvest handling systems for food, con-

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duct commercial feasibility studies on food manufacturing projects and produce consumer acceptance reports on food products. This programme not only conducts technical and financial studies on all new products and technologies, but also is able to disseminate viable projects to interested producers. Under its Food Industrial Development programme, MARDI provides technical and consultancy services to firms to develop new food manufacturing industries, or to existing industries to improve their quality and productivity, and to conduct research with selected industries in the development and testing of new ingredients, products, machinery and systems. MARDI also has special programmes for the development and improvement of small-scale food-processing firms in selected industries. MARDI assists potential entrepreneurs, set up new small-scale industries and transfer technologies and provides comprehensive guidance services on existing small-scale enterprises with respect to proper production technology, quality control systems and presentation of products. These programmes only focus on technical consultancy services and their purpose is to assist existing small-scale firms to operate efficiently, produce products of high quality and improve the marketing of products. These programmes are complemented by MARDI. MARDI's Food Extension Senvices provides advisory and consultancy services such as, including food technology, quality control, machinery layout, product diversification, labelling, packaging, food regulation and hygiene and sanitation to local food manufacturers. MARDI conducts training programmes not only for potential and existing entrepreneurs but also for extension officers from government agencies on aspects of food-processing and quality control. It also organises seminars, forums, workshops and technical attachment training to assist food manufacturers. Under its Food Quality Control Services, MARDI provides information on analytical services (chemical, nutritional, physical, microbiological and specialised services) and expertise on Muslim dietary laws to the food industry, either directly or through its extension programmes. The following section, I will discuss the effectiveness of institutional support on Bumiputera entrepreneurs. Institutional Supports and BCIC Creation: A Theoretical Framework The following theoretical framework will guide my discussion. From the theoretical perspective, one can discuss BCIC development based on an analysis of entrepreneurship development. Entrepreneurs have certain personality traits that set them apart from other groups of individuals. We gather that entrepreneurs are individuals who are high achievers, confident, pro-active, risk-takers and have internal locus of control. In most studies of small-scale entrepreneurs, the personality of entrepreneurs is analysed in association with firms' performances (Keats and Bracker 1988) and management constraints or barriers (Cainarca et al. 1990). Their personality influences their management style, business strategies, communication behaviour, perception and search for business opportunities. Entrepreneurs' personality is greatly affected by their background, such as, family, education and social status. Personality traits can be inculcated through socialisation and training (Chell 1986, 1985). According to her, training courses designed to develop achievement motivation have improved small business performance significantly in term of increased sales, profits and numbers employed. Hence, the effectiveness

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of institutional programme could be known if there is relationship between institutional involvement and entrepreneurs' personality traits. Among the personality traits of entrepreneurs are internal locus of control, need for high achievement and propensity to take risks. Gilad (1982) theorised that locus of control influences the ability of entrepreneurs to see opportunities in their environment. People with internal locus of control are those who believe they can control their destiny. In contrast, people with external locus of control are those who believe in fate; they are unable to control the situation or events around them. High achievers are individuals who favour situations where they can take personal responsibility for finding solutions to problems. They evaluate their performance and search the environment, for opportunities to improve themselves. Entrepreneurs with a high need for achievement are more ambitious and have the desire to have as much control over their environment as possible. In a decision-making process, the choice of alternative involves a trade-off between risk and expected return. Risk adverse individuals prefer an alternative with low risk while risk seekers would prefer a relatively high risk. Entrepreneurs usually have higher propensity to take risks. March (1994) stated that the amount and source of information influence decisionmaking of entrepreneurs. The amount of information about the innovation is determined by the entrepreneurs' communicative behaviour, that is, the frequency of communication between the entrepreneurs and sources of information (Ebadi and Utterback, 1984). Entrepreneurs' contacts with external sources of information occur through various communication channels. Among them are business associations, subscribing to business magazines, and attending seminars or expositions. It is hypothesised that entrepreneurs with institutional involvement are more communicative. Institutional supports also assist entrepreneurs in managing their firms. This can be done through providing training to entrepreneurs. Effectiveness of such courses can be observed if there is significant difference in term of performance between firms' with and without institutional support. This study hypotheses that firms with institutional support should perform than those without institutional support. Firms' performance can be analysed through their fixed asset turnover, labour productivity and return on investment. Effectiveness of institutional involvement can be seen if firms with institutional involvement are more innovative than firms without institutional involvement. There are two types of innovations existing in manufacturing firms, namely process and product innovation. Process innovation involves the introduction of new elements into a firms' production and product innovation are involved in producing new product to the firms. Theoretically, one can say that entrepreneurs with institutional support should have more entrepreneur personality traits and perform better compared to those who did not received institutional support. Hypothctically, there should be a significant difference in entrepreneurship personality traits between institutional support beneficiaries and nonbeneficiaries because the institutional support is intended to develop entrepreneurship qualities in the beneficiaries. Having discussed the framework for this discussion, the next section analyses the impact of institutional support on BCIC. This analysis is based on results of a case study conducted on Bumiputera in small-scale food-processing industry.

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This study is based on a study of 102 Bumiputera entrepreneurs conducted between 1994 and 1996. This study uses a simple random sampling technique to select the sampling unit. The selection was based on sampling frame, which was developed from two main sources; the Association of Bumiputera Manufacturers and a list of Bumiputera entrepreneurs provided by MARA. This survey was conducted to analyse the entrepreneurship qualities between those who received institutional support and those who did not. Measurement In this analysis, institutional involvement was measured based on (i) the kind of assistance received by entrepreneurs (such as, financial or subsidy) from government agencies, (ii) participation in any government agencies, activities such as, attending courses, and (iii) number of visits to government agencies for consultations. For analytical purposes, entrepreneurs were divided into two categories based on their involvement. The first category comprises of entrepreneurs who are not involved and the second category was those who are involved in at least one of the items mentioned above. Entrepreneurs' communication index was measured by four items, namely: (i) membership of associations, (ii) frequency of attending seminars, (iii) frequency of attending trade fairs and (iv) subscribing to business magazines. The higher the value of communication index means the entrepreneurs were more communicative. Entrepreneurs' traits were measured by developing several items describing behaviour that reflected the need for achievement, locus of control and attitude toward risk. Entrepreneurs who are higher achievers, with internal locus of control and higher propensity to take risk reflected high scores in the respective measurement of the traits. Process innovation was measured by whether entrepreneurs introduced new or modified raw materials in their production process in the last three years over which the survey was conducted. On the other hand, production innovation was measured by whether entrepreneurs introduce new product in the last three years over which the survey was conducted. Empirical Analysis A study hypothesises that institutional involvement has some impact on entrepreneurship development. What do the results of this study show? To answer this question requires an analysis of the types of support received and their impact on entrepreneurship development. Table 18 shows the percentage distribution of entrepreneurs who had consulted at least one institution. About 69 per cent of entrepreneurs had consulted at least one institution, on one occasion. MARDI, MARA and KEMAS were the most popular institutions visited frequently by entrepreneurs from small and tiny firms. MARDI was consulted by 41.5 per cent of the entrepreneurs. Their main purposes in these visits were to obtain advice on appropriate processing methods and quality control. Entrepreneurs in the bakery business, tomato and chilli sauce-making used MARDI as their main source of information on production techniques. In fact, MARDI has a bakery factory, which operates daily and uses this factory as a laboratory for its course participants. The factory

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is considered to represent a model that can be appropriately adapted by small and medium-scale producers. Entrepreneurs who produced noodles, spices and drinks used MARDI to obtain advice on quality control and product analysis. For new entrepreneurs or entrepreneurs who wanted to innovate, the majority consulted MARDI to obtain information on appropriate machinery for their production.
Table 18: Percentage Distribution of Entrepreneurs on their Number of Consultations with Selected Institutions INSTITUTIONS MARDI Frequency of Consultation 5 or less >5 Percentage of Entrepreneurs 33.3 15.8 Purpose of consultations Processing method Quality control Product analysis Appropriate machines Management Loan Marketing Machine assistance Processing methods Processing methods

MARA

5 or less >5

16.3 8.8 8.2 3.5 3.5 4.1

KEMAS

5 or less >5

Agriculture Department, RISDA Ministry of Youth and sport Others (LPP,MIDF,SIRIM) Source: Survey 1994

5 or less >5 5 or less >5 5 or less >5

Loan

Loan, Product analysis, Appropriate machine

MARDI is actively involved in organising training programmes related to production, quality, packaging and food analysis for small-scale producers (Table 19) 24.6 per cent of entrepreneurs previously attended courses organised by MARDI. The majority of entrepreneurs had attended courses related to food-processing techniques. MARA is the next most popular institution consulted by the entrepreneurs. Twentythree per cent of entrepreneurs have consulted MARA for advisory services or loans, or

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Table 19: Percentage Distribution of Previous Participants of MARDI's Training Program COURSES Production Management Processing techniques Packaging Food analysis and Quality Control Total Source: Survey 1994. Percentage of Entrepreneurs 1.8 14.0 3.5 5.3 24.6 Duration Of Courses 1 week 1 month 3-5 days 1-2 weeks 1 week 3 days

to discuss management problems. Table 20 shows that some of them visited MARA to obtain advice on marketing. Among entrepreneurs, the most popular courses were marketing and entrepreneurship. This reflects the overriding concern of entrepreneurs to improve their entrepreneurial skill. Furthermore, MARA is well known for its entrepreneurship training programmes.
Table 20: Percentage Distribution of Previous Participants of MARA's Training Program TYPES OF COURSES Entrepreneurship Management/ Organisational management Production management Financial management Marketing Processing technique Motivation Export Source: Survey 1994 Percentage of Entrepreneurs 8.8 8.8 3.5 7.0 12.3 1.7 1.7 Duration of courses 1-2 weeks 1 month 5 days 1-2 weeks 3 days - 2 weeks 3 days -2 weeks 2 days 3 days - 1 week 1 day 1 week

KEMAS is another agency that has provided services to Bumiputera entrepreneurs. KEMAS is more concerned with improving the socio-economic position of rural communities. About 8.5 per cent of entrepreneurs had consulted KEMAS. KEMAS is more popular among entrepreneurs of tiny firms (have full time workers less than 5) compared to small one because it mainly caters for tiny firms in the rural areas. The majority of en-

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trepreneurs who consulted KEMAS did so to obtain machines. Twenty per cent of the entrepreneurs admitted they acquired production machinery because of the assistance they received from this institution. Besides providing machines, KEMAS also provide advisory services to rural producers. The survey result shows that three agencies (MARDI, MARA and KEMAS) have been the major source of support for small-scale Bumiputera entrepreneurs. Have these courses succeeded in instilling entrepreneurship qualities among the participants? To answer this question, I conducted a discriminant analysis to differentiate the entrepreneurial qualities based on whether they have received institutional support5. As mentioned this study assumes that differences in entrepreneurship qualities are due to institutional support (training, capital, skill-upgrading) they received from the respective agencies. For purposes of analysis, I have considered eleven entrepreneurial and firms-specific characteristic such as, educational background, need for achievement, locus of control, risk attitude, communicative behaviour, firms' performances and innovation. Table 21 shows the standardised Canonical Discriminant Function Coefficients.
Table 21: Standardised Canonical Discriminant Function Coefficients Variables Entrepreneurs' Characteristics: Years of education Need for achievement Locus of control Risk attitude of entrepreneur Age of entrepreneur Index of Communicative behaviour Firm Characteristics: Performances: Return on investment (year 1992 Productivity (year 1992) Fixed asset turnover (year 1992) Innovation: Process (improving Raw material) Product (introducing new product) 0.119* -0.140 0.076 0.253* -0.131 0.065* 0.056* 0.258* -0.019 -0.191 0.849* Coefficients

Note * - At 85% confident level, there are significant difference between the means of the two groups of entrepreneur
5 The entrepreneurs were divided into two groups based on whether they had received institutional support or had not received. The entrepreneurs fall into the first group if they had received any form assistance from government agencies, or participating in any government agency activities or had visited any government agencies for consultation.

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The result in Table 21 shows that the two groups of entrepreneurs differ significantly in six characteristics namely entrepreneurs' level of education, their need for achievement, locus of control, communicative behaviour, productivity of firms and process innovation of firms. The significance of these six characteristics to differentiate the two groups of entrepreneurs is shown by the value of the value of Wilks' Lamda and their ability to classify entrepreneurs correctly. The discriminant function gives Wilks' Lamda = 0.635, Chi-square=42.958 and it is significant at 99 per cent confidence level. It indicates that the selected variables have the ability to classify 85.3 per cent of original grouped cases correctly. Table 22 shows the difference in means of the selected characteristics.
Table 22: Classification Results Classification Results Received Institutional Support No Yes Percentage No Yes Predicted Group Membership Total

No Original Count 25 9 80.645 12.676

Yes 6 62 19.355 87.324 31 71 100 100

Source: Survey 1994 Note: 85.3% of original grouped cases correctly classified.

A closer examination of the six differentiating characteristics (Table 23) shows that entrepreneurs receiving institutional support had higher level of education. Those who received institutional support had an average of ten years of education (=0.103). Education appears to have a positive influence on entrepreneurship qualities. Another entrepreneurship criteria used in this study is the need for achievement. It measures the entrepreneurs' ability to seek business opportunities. Table 23 shows that entrepreneurs who had received institutional support have a higher need for achievement compared to their counterparts (F-statistic = 6.050, =0.016). This study also shows that those who received institutional support had a higher tendency toward internal locus of control. This is reflected by their higher score for locus of control variables (Fstatistics=2.554, =0.113). One of the key characteristics of entrepreneurs is their high willingness to take risk. This study shows that no significant difference exists between the two groups of entrepreneurs in term of their willingness to take risk. This study also shows that there is no significance difference between the two groups of entrepreneurs in terms of their age. Among the characteristics of the entrepreneurs, communicative behaviour appears to have a strong influence in term of differentiating the two groups of entrepreneurs. Entrepreneurs with institutional support were more communicative than their counterpart. An examination of firms' characteristics reveal

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Table 23: Tests of Equality of Group Means Received Institutional Support Variables No Yes Walks' Lambda F Statistics df1 df2

97

Sig.

Entrepreneurs' characteristics: Years of education Score of need of achievement Locus of control Risk attitude of entrepreneur Age of entrepreneur Index of Communicative behaviour 9.032 3.750 3.760 3.667 42.355 0.258 10.324 4.000 3.918 3.709 39.732 2.831 0.974 0.943 0.975 0.999 0.982 0.682 2.710 6.050 2.554 0.137 1.794 46.696 1 1 1 1 1 1 100 100 100 100 100 100 0.103 0.016 0.113 0.712 0.183 0.000

The characteristics of firms: Performances: Return on investment (year 1992 Productivity (year 1992) Fixed asset turnover (year 1992) Innovation: Process (Improving Raw material) Product innovation (introducing new product) Source: Survey 1994 0.194 0.423 0.951 5.105 1 100 0.026 3.392 3.325 1.000 0.010 1 100 0.922

4.533 5.688

14.310 5.535

0.913 1.000

9.564 0.011

1 1

100 100

0.003 0.917

0.645

0.620

0.999

0.059

100

0.809

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those firms, which have received institutional support, are more productive and innovative. The results of this study show that entrepreneurs with institutional support tend to have more entrepreneurial qualities compared to those without support. Based on the theoretical argument, one can say that institutional support, is partly the factor, which differentiates the two groups of Bumiputera entrepreneurs. In terms of policy implication, it appears that the support extended to Bumiputera entrepreneurs has (to some extent) enabled them to develop entrepreneurial traits such as, locus of control and need for achievement. In a way, this paper argues that the government should continue to provide support to Bumiputera entrepreneurs. Conclusion The results of this study show that the government has played a very important role in BCIC creation. Through its various assistance programme, the government was able to instil entrepreneurial qualities among Bumiputera entrepreneurs. This study shows that those who have received institutional supports tend to have higher entrepreneurs' qualities and firms that received institutional supports were more productive and innovative. The institutional support can help to develop the Bumiputera who are dynamic, progressive and competitive. Bumiputera entrepreneurs need these qualities to survive in the present economic crisis and a globalised environment.