The Patterns of Subcontracting arrangements In the Malaysian Automobile Industry
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Published
Sep 1, 2006
Abstract
This paper presents empirical insights into the patterns of subcontracting arrangements and management in the Malaysian automobile industry. Despite a small sample size, the empirical results contribute some knowledge to the subcontr acting-related patterns. This study found that two out of four proposals were consistent with the Japanese, but the results still show some distinctive patterns. Although outsourcing is a common practice among the three auto makers under investigation, its patterns are different from the Japanese average: the level of outsourcing was much higher for the production of commercial vehicles than passenger cars; and for functional parts than the general parts. Moreover, multi-sourcing instead of single sourcing as in the Japanese for most auto parts was adopted by the national auto makers. It is also agreeable that a mixed combination of market, hierarchy, and social capital factors were hand-in-hand responsible for managing and binding the auto maker-supplier relationship, but the absence of a full-fledged hierarchical configuration and distinct job specialisation has contributed to a less efficient management system in the subcontracting which would hinder the ability of the national auto makers to compete in the global market. Further research should give attention to global sourcing, subcontracting in services, and subcontracting in non-national auto makers.
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Keywords
Automobile Industry
References
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• Tham, S. Y. (1997). “Can the Malaysian Manufacturing Sector Survive the Asian Financial Crisis and Its Aftermath,” Malaysian Journal of Economic Studies, Vol.XXXIV, Special Issue, PP.143-163.
• Ueno, H. and Muto, H. (1980), “ The Automotive Industry of Japan,” Industry and Business in Japan, Kazuo Sato, ed. (New York: M.E Sharpe, Inc.), PP.139-190.
• UNIDO (1991), Malaysia: Sustaining the Industrial Investment Momentum. United Kingdom: Basil Blackwell Ltd.
• Ungku Ahmad, U.N and Abdul Majid, M.I. (1998), “Vendor Development Programme: A Study on Factors Affecting Its Performance,” Malaysian Management Review, Vol.33, No.1, PP.51-56.
• Venkatesan, R. (1992), “Sourcing: To Make or Not To Make,” Harvard Business Review, November-December, PP.98-107.
• Wada, K. (1994), “Inter-Firm Relationships between Toyota and Its Suppliers in a Historical Perspective,” Japanese Business Success: The Evolution of a Strategy, Yuzawa, T., ed. (London: Routledge), PP.25-38.
• Watanabe, S. (1971), “Subcontracting, Industrialisation and Employment Creation,” International Labour Review, Vol.104, No.1-2, PP.51-76.
• Yokokura, T. (1988). “Small and Medium Enterprises,” Industrial Policy of Japan, in Komiya, R., Okuno, M. and Suzumura, K., eds. (California: Academic Press Inc.), PP.513- 539
• Yoshimatsu, H. (1999), “The State, MNCs, and the Car Industry in ASEAN,” Journal of Contemporary Asia, Vol.29, No.4, PP.495-515.
• Young, S. M. (1992), “A Framework for Successful Adoption and Performance of Japanese Manufacturing Practices in the United States,” Academy of Management Review, Vol. 17, No. 4, PP. 677-700.
• Abdulsomad, K. (2003), “Building Technological Capabilities of Local Auto Parts Firms under Contrasting Industrial Policies: A Comparative Study of Malaysia and Thailand 1960-2000” Lund Studies in Economic History 27. Sweden: Lund University.
• Anazawa, M. (1997), “Technology Transfer in the Automobile Industry in Malaysia: PROTON and Vendors,” Economic Review, Vol. 47, No. 4, PP. 119-154.
• Asanuma, B. (1992), “Japanese Manufacturer-Supplier Relationships in International Perspective: The Automobile Case,” International Adjustment and the Japanese Firm, in Paul Sheard, ed. (New South Wales: Allen and Unwin in Association with the Australia-Japan Research Centre), PP.99-124.
• Best, M. H. (1990), The New Competition: Institutions of Industrial Restructuring. Cambridge, Mass.: Harvard University Press.
• Bradach, J. L. and Eccles, R. G. (1989), “Price, Authority and Trust: From Ideal Types to Plural Forms,” Annual Review of Sociology, Vol.15, PP. 97-118.
• Correa, H. L. and Miranda, N. G. M. (1998), “Supply Network Management in the Brazilian Automotive Industry,” Integrated Manufacturing Systems, Vol. 9, No. 5, PP. 261- 271.
• Corswant, F. V. and Fredriksson, P. (2002), “Sourcing trends in the car industry: A survey of car manufacturersʼ and suppliersʼ strategies and relations,” International Journal of Operation and Production Management, Vol.22, No.7, PP.741-758.
• Inaba, F. S. and Tabeta, N. (1995), “The Structure of Vertical Relationships and Transaction Costs: Evidence from Japanese Automobile Manufacturing”, NTU-Sabre Centre, Working Paper Series 29-96, Singapore.
• Jarillo, J. C. (1988), “On Strategic Networks”, Strategic Management Journal, Vol. 9, PP.31- 41.
• Jones, C. (1990), “Strategic Supply Network Management,” paper presented at the Fifth International Conference of the Operations Management Association, U.K., June 26-27.
• MIDA (2004), Report on the Automotive Industry in Malaysia, the Malaysian Industrial Development Authority, Kuala Lumpur.
• MITI (1997), The Ministry of International Trade and Industry Report 1996/1997. Kuala Lumpur: Ministry of International Trade and Industry.
• MITI (1999), Malaysiaʼs Implementation of the WTO Agreement on Trade Related Investment Measures (unpublished).
• Nassimbeni, G. (1998), “Network Structures and Co-ordination Mechanism: A Taxonomy,” International Journal of Operations & Production Management, Vol.18, No.6. Available at. http://www. emerald. library. com.
• Nishiguchi, T. (1994). Strategic Industrial Sourcing: The Japanese Advantage. New York: Oxford University Press.
• Pires, S.R.I. (1988), “Managerial Implications of the Modular Consortium Model,” International Journal of Operations and Production Management, Vol.18, No.3.
• Quinn, J. B. and Hilmer, F.G. (1994), “Strategic outsourcing,” Sloan Management Review, Summer, PP.43-55.
• Rawlinson, M. (1991), “Subcontracting in the Motor Industry: A Case Study in Coventry,” Restructuring the Global Automobile Industry: National and Regional Impacts, Christopher M. L., ed. (London: Routledge), PP.215-230.
• Richardson, J. (1993), “Parallel Sourcing and Supplier Performance in the Japanese Automobile Industry,” Strategic Management Journal, Vol.14, No.5, PP.339-350.
• Rosli, M. (2004), Entrepreneurship, Economic Organisation and the Automobile Industry: A Study of the Asian Model and Malaysian Experience, PhD thesis, Institute of Postgraduate Studies, University of Malaya, Kuala Lumpur, Malaysia.
• Rosli, M. (2006), “The Automobile Industry and Performance of Malaysian Auto Production”, Journal of Economic Cooperation, Vol. 27, No. 1, PP. 89-114.
• Schmitz, J. and Platts, K.W. (2003), “Role of Supplier Performance Measurement: Indication from a Study in the Automotive Industry,” Management Decision, Vol.41, No.8, PP.711-721.
• Seetharaman, A., Khatibi A. A. and Wu, S.T (2004), “Vendor Development and Control: Its Linkage with Demand Change,” International Journal of Physical Distribution & Logistic Management, Vol.34, No.3/4, PP.269-285.
• Sheard, P. (1983), “Auto-Production System in Japan: Organisational and Locational Features,” Australian Geographical Studies, Vol.21, No.1, PP.49-68.
• Simpson, M., Sykes, G. and Abdullah, A. (1997), “Transitory JIT at Proton Cars, Malaysia,” Management Research News, Vol.20, No.2/3, PP.46-47.
• Singh, R. K., Garg, S. and Deshmukh, S. G. (2004), “Competitiveness of Small and Medium Enterprises: Case of an Indian Auto Component Manufacturing Organisation,” IIMB Management Review, December, PP.94-102.
• Smitka, M. J. (1991). Competitive Ties: Subcontracting in the Japanese Automotive Industry. New York: Columbia University Press.
• Tabeta, N. (1995), “The Kigyo Keiretsu and the Supplier-Switching-Costs in the Japanese Automobile Industry,” NTU-Sabre Centre, Working Paper Series 18-95, Singapore.
• Tabeta, N. and Shahidur R. (1996), “The Risk Sharing Mechanism in Japanʼs Auto Industry: The Keiretsu vs, independent-Parts Suppliers,” NTU-Sabre Centre, Working Paper Series 22-96, Singapore.
• Tham, S. Y. (1997). “Can the Malaysian Manufacturing Sector Survive the Asian Financial Crisis and Its Aftermath,” Malaysian Journal of Economic Studies, Vol.XXXIV, Special Issue, PP.143-163.
• Ueno, H. and Muto, H. (1980), “ The Automotive Industry of Japan,” Industry and Business in Japan, Kazuo Sato, ed. (New York: M.E Sharpe, Inc.), PP.139-190.
• UNIDO (1991), Malaysia: Sustaining the Industrial Investment Momentum. United Kingdom: Basil Blackwell Ltd.
• Ungku Ahmad, U.N and Abdul Majid, M.I. (1998), “Vendor Development Programme: A Study on Factors Affecting Its Performance,” Malaysian Management Review, Vol.33, No.1, PP.51-56.
• Venkatesan, R. (1992), “Sourcing: To Make or Not To Make,” Harvard Business Review, November-December, PP.98-107.
• Wada, K. (1994), “Inter-Firm Relationships between Toyota and Its Suppliers in a Historical Perspective,” Japanese Business Success: The Evolution of a Strategy, Yuzawa, T., ed. (London: Routledge), PP.25-38.
• Watanabe, S. (1971), “Subcontracting, Industrialisation and Employment Creation,” International Labour Review, Vol.104, No.1-2, PP.51-76.
• Yokokura, T. (1988). “Small and Medium Enterprises,” Industrial Policy of Japan, in Komiya, R., Okuno, M. and Suzumura, K., eds. (California: Academic Press Inc.), PP.513- 539
• Yoshimatsu, H. (1999), “The State, MNCs, and the Car Industry in ASEAN,” Journal of Contemporary Asia, Vol.29, No.4, PP.495-515.
• Young, S. M. (1992), “A Framework for Successful Adoption and Performance of Japanese Manufacturing Practices in the United States,” Academy of Management Review, Vol. 17, No. 4, PP. 677-700.
How to Cite
Rosly, Mohammed. 2006. “The Patterns of Subcontracting Arrangements In the Malaysian Automobile Industry”. Studies in Business and Economics 12 (2). https://doi.org/10.29117/sbe.2006.0021.
Section
Articles