SMALL and medium-size industries (SMIs) are recognised as                                                                                             
an important component of any nation's economy. It is more                                                                                            
so in Malaysia, a developing nation.                                                                                                                  
                                                                                                                                                      
The majority of the SMIs in Malaysia are patterned around                                                                                             
the traditional way of developing and keeping business                                                                                                
within the family and usually run by family members or                                                                                                
relatives.                                                                                                                                            
                                                                                                                                                      
The recent survey on family-run business jointly conducted                                                                                            
by the Malaysian Institute of Management and Shamsir Jasani                                                                                           
Grant Thornton revealed that about 60 per cent of the                                                                                                 
small-scale industries (SSI) consider themselves to, be                                                                                               
family-run. As such, most of the SSIs did not think it                                                                                                
necessary to address the issue of improving the process and                                                                                           
product technology. This could hinder their ability to meet                                                                                           
the demands of globalisation and modernisation.                                                                                                       
                                                                                                                                                      
A definitive systematic approach to help the SSI meet these                                                                                           
challenges is training and education on entrepreneurship,                                                                                             
technology and human resource development. It can transform                                                                                           
the SSI into vibrant entities to better face the demands of                                                                                           
globalisation.                                                                                                                                        
                                                                                                                                                      
The recent survey found that 20 per cent of the SSI                                                                                                   
respondents were not taking steps to build on their skills                                                                                            
in entrepreneurship, but made assumptions that                                                                                                        
entrepreneurship and innovation would come naturally with                                                                                             
time and experience.                                                                                                                                  
                                                                                                                                                      
A report on recent business trends in Malaysia shows that                                                                                             
SSIs face not only rapid changes but also unique problems,                                                                                            
and that SSIs need to be guided to respond and be highly                                                                                              
innovative. It is now evident that SSIs must undergo                                                                                                  
education or training on the importance of entrepreneurship                                                                                           
and be vigilant on the opportunities and threats posed by                                                                                             
today's, brutally competitive market place if they are to                                                                                             
continue to exist and operate profitably.                                                                                                             
                                                                                                                                                      
According to management guru Peter F. Drucker,                                                                                                        
"entrepreneurship has to be organised and it involves                                                                                                 
managing growth and innovation, as it is crucial for                                                                                                  
success".                                                                                                                                             
                                                                                                                                                      
Having, the innate skills is not enough as the knowledge                                                                                              
and skills of entrepreneurship and innovation need to be                                                                                              
further developed. This knowledge and skill gap was                                                                                                   
identified in the 1990 survey of management practices                                                                                                 
conducted by Dart, Ng and Sarker (Asean Economic Bulletin,                                                                                            
July 1990) and confirmed that the SMIs in Malaysia had very                                                                                           
limited knowledge of the overall spectrum of managerial                                                                                               
practices, marketing and human resource management.                                                                                                   
                                                                                                                                                      
The recent family business survey reconfirms this, as most                                                                                            
of the SMIs are not taking any steps to enhance, these                                                                                                
skills and knowledge either by training or other means.                                                                                               
                                                                                                                                                      
The success of the SMIs does not rest solely on excellent                                                                                             
entrepreneurship; equally necessary is incorporating                                                                                                  
technology and human resource development. To have one and                                                                                            
not the other is like having a car without a driver.                                                                                                  
                                                                                                                                                      
Technological development is about incorporating new                                                                                                  
innovative ideas into the process or the product. This                                                                                                
could also mean modifying or upgrading the existing                                                                                                   
technology a business already possesses.                                                                                                              
                                                                                                                                                      
The positive note about the survey, is that 70 per cent of                                                                                            
the respondents indicated they had taken steps to upgrade                                                                                             
the facilities to meet the demands of globalisation.                                                                                                  
                                                                                                                                                      
Today's SSI are classified into two groups: those with                                                                                                
traditional technology, and those using high technology.                                                                                              
                                                                                                                                                      
The high technology group is mostly involved in research                                                                                              
and development.                                                                                                                                      
                                                                                                                                                      
The raison d'etre of traditional SSI is to focus on process                                                                                           
innovation while that of the high technology SSI is on the                                                                                            
product technology.                                                                                                                                   
                                                                                                                                                      
Based on the country re t by Wan Mohd Salleh of Mimos, the                                                                                            
SMI performance thus far has not been satisfactory and the                                                                                            
sector's contribution in terms of output and value added is                                                                                           
still, relatively small.                                                                                                                              
                                                                                                                                                      
Both the product technology and process innovation                                                                                                    
require1echnological ability on the part, of SMIs. This is                                                                                            
quite different from having superior engineers and                                                                                                    
researchers, who incidentally may not be able to generate                                                                                             
good technological results.                                                                                                                           
                                                                                                                                                      
Therefore, the SMIs must adopt a good system, of                                                                                                      
controlling the technological direction and as a result                                                                                               
develop a few good new products.                                                                                                                      
                                                                                                                                                      
Process technology has to look into issues of efficiency,                                                                                             
quality, on-time delivery and, above all, a technology that                                                                                           
cannot be easily obtained by the competitor.                                                                                                          
                                                                                                                                                      
Technology development for the small to medium-size                                                                                                   
enterprises (SMES) must harness automation and information                                                                                            
technology to increase the speed of production (process)                                                                                              
and a high degree of creativity and innovation (product) in                                                                                           
order to meet the demands of globalisation.                                                                                                           
                                                                                                                                                      
Human resource development is also very important for the                                                                                             
SMEs as it must attract and retain skilled workers if it is                                                                                           
to be technology savvy.                                                                                                                               
                                                                                                                                                      
High technology SSI need more skilled human resources than                                                                                            
the traditional firms. Generally, traditional SSIs will-                                                                                              
have a large number of unskilled human resources than the                                                                                             
high technology SSIs.                                                                                                                                 
                                                                                                                                                      
It is a fact that SMEs are often at .a disadvantage in                                                                                                
terms of employment of talented people as compared with                                                                                               
large-scale industries.                                                                                                                               
                                                                                                                                                      
One sure way to overcome this with the SSIs is to develop                                                                                             
its own pool, of talented people by carrying out a training                                                                                           
needs assessment to identify the skills and knowledge gap                                                                                             
of the employees and arrange for them to attend training                                                                                              
courses to close the gap.                                                                                                                             
                                                                                                                                                      
Finally, the Government must build up a good basic                                                                                                    
infrastructure to assist SMEs to meet the challenges of                                                                                               
globalisation. In Malaysia, SMIDEC (Small and Medium                                                                                                  
Industry Development Corporation), the OPP3 (The 3rd                                                                                                  
Outline Perspective Plan), and the 8th Malaysia Plan                                                                                                  
emphasise the necessity of SMIs' development in their                                                                                                 
programmes and plans.                                                                                                                                 
                                                                                                                                                      
SMIDEC provides 50 per cent grant for designated training                                                                                             
programmes, and SMIs contributing to the HRD Fund can draw                                                                                            
down from the training fund allocation for the training of                                                                                            
their employees.                                                                                                                                      
                                                                                                                                                      
However, there is an inadequate flow of information about                                                                                             
these government agencies' support to the SMIs and the                                                                                                
less-than-efficient implementation of government support                                                                                              
schemes such as the processing of applications from them                                                                                              
could be the major hurdle for SMI development in the                                                                                                  
country.                                                                                                                                              
                                                                                                                                                      
If action is not taken to address these issues, SMIs will                                                                                             
continue to be ignorant of all the support they can avail                                                                                             
themselves of.