Abstract/Summary

The ASEAN Economic Community (AEC) initiative poses both significant opportunities and difficult challenges to the Malaysian small and medium-sized enterprises (SME) communities. This research sets out to study the preparedness of local SMEs for the impact of the AEC implementation and their capabilities to capitalize on the opportunities. The manufacturing sector has been selected for study and the research efforts focus on the procurement function in the organizations. Procurement competences are gauged from four key perspectives: supplier relationship building, supply optimization, supplier capability auditing and purchasing integration. SMEs’ preparedness in this critical business function to compete and exploit opportunities in a post-AEC era, is investigated. Using a mixed research strategy approach, the study explores SME procurement practices in the two biggest manufacturing sub-sectors in Malaysia: Resource-based (RB) and Electrical and Electronics (E&E). The study also compares and contrasts locally-owned and foreign-owned SME manufacturing operations in these two sub-sectors. It investigates possible differences in the extent of SME preparedness in different industrial and organizational context. The results of the study provide an understanding of the key factors which have contributed to variations in SME’s attitude towards policy awareness. The findings also highlight the procurement competencies that Malaysian SMEs in the manufacturing sector could improve in order to compete effectively post-AEC.