Abstract/Summary

The AEC initiative poses both significant opportunities and difficult challenges to the Malaysian SME communities. This study sets out to investigate the preparedness of the local SMEs to compete and exploit opportunities in a post-AEC era. The aim is to contribute to existing literature and knowledge base on SMEs’ practices in the ASEAN region.The manufacturing sector has been selected for study, and the research efforts focus on procurement competencies. SME procurement practices in the two largest manufacturing sub-sectors in Malaysia: resource-based (RB) and electrical & electronics (E&E) are explored. Preparedness for AEC is gauged from four key performance areas summarized from literature review:strategic alignment of procurement function; strategic supplier relationship management; managing global supply chain risks; and global sourcing and supply base optimization. Sixkey research activities are also identified for each performance area from the findings of previous works. Data was collected using a survey instrument and face-to-face interviews.Research methodology is primarily qualitative with quantitative data for robustness check. The underlying assumptions of SMEs’ operations for the performance areas are studied.The findings reveal peculiar procurement practices in Malaysian SME manufacturers that have significant implications on their preparedness to compete effectively post-AEC. The study also categorizes and compares findings from different industrial and ownership contexts. The results provide an understanding of the key influences that have contributed to variations in Malaysian SMEs’ attitude towards trade liberalization challenges and business process improvements in comparison with practices in foreign firms and more advanced economies.