Abstract
The Malaysian palm oil industry has become a major and diversified industrial sector over a period of forty years. Several palm oil firms have expanded internationally by establishing oil palm plantations in other developing countries, as well as by acquiring firms in developed countries. In addition, the Malaysian palm oil industry had managed to develop new technologies to improve production yields and create new products for consumers. Our study aims to analyze the role of an institutional network in the palm oil industry in the generation and sharing of new knowledge. It is suggested that this institutional network creates industry competitive advantages through the development and application of industry best-practices. A qualitative approach was used to have an in-depth understanding of the institutions involved in the institutional network and the types of interactions that take place among the key institutions for knowledge generation and sharing. The study involved gathering of primary data through in-depth interviews of key managers of palm oil palms, representatives of industry associations, government officials and senior staff in an industry-funded R&D institute. The main result of our findings shows that new knowledge is generated by on-going research activities of an industry R&D institute, which is managed as a government entity. The R&D institute is required to share the new knowledge with firms in the palm oil industry. It is found that the R&D institute tapped the knowledge of a global network of experts to search for new information and technology directions, which we call expert informational network (EIN). The institutional network is further reinforced by informal linkages among institutions and executives in the Malaysian palm oil industry. These relationships have been propagated by several generations of industry executives, industry leaders and heads of governmental units.
Highlights
As compared to manufacturing firms from developing countries, agro-industrial firms are rarely studied
Agro-industrial firms are distinguished from manufacturing firms by the agricultural origins of most of their material inputs, which are perishable in nature
The informants interviewed comprised a diverse number of individuals, which we have identified from their institutions that form the palm oil institutional network
Summary
As compared to manufacturing firms from developing countries, agro-industrial firms are rarely studied. Very few studies have been undertaken, with the exception of Rama [2], to understand these agro-industrial firms in international business, and their competitive advantages. There is an incentive for agro-industrial firms to engage in primary production themselves or to develop long-term supply relations with agro-producers. Agro-industrial firms must develop close relationships with other institutions, such as government research institutes, universities, and agricultural governmental bodies, to avoid calamities, such as diseases, which can destroy an entire agro-industry with substantial economic consequences. The Malaysian palm oil has been recognized as a successful agro-industry and contributes to substantial earnings of exports of processed products. The study aims to identify focal institutions that drive the enduring relationships in the palm oil industry
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