Rising interest on entrepreneurship

1.0 INTRODUCTION

The rising interest on entrepreneurship has become a regular topics discussed among academician and politician and there are many evidence can be seen worldwide (Levenburg and Schwarz, 2008). In the U.S alone, for the past 10 years, on averaged 600,000 new businesses was incorporated each year (Kuratko, 2005). There is also a significant increase in endowment received by business schools in the U.S. for entrepreneurship activities. Since 1995 US$10 million had been contributed compared to an average US$500,000 to US$1 million in early 1990s (Katz, 2003). Studies on forty countries entrepreneurship activities by Global Entrepreneurship Monitor (GEM) have seen the sharp increased from 2 per cent to 29 per had confirm this fact (Levenburg and Schwarz, 2008).

There are many reasons for it and why it is becoming more important nowadays. Due to the advantages and attractiveness of entrepreneurship in the economy, Lambing and Kuehl (2007) noted a remarkable increase in new business in the U.S. for the past 10 – 15 years. The practice of downsizing by big firms also believed to contribute into the increasing number of people considering entrepreneurship as a career not only because of unemployment but also decreasing interest of people pursuing career in a big corporation. They feel that the organizations have no longer provided the job security and career opportunities that they once did. The use of technology in the working places had taking away many jobs in the organization and reduced the need for labor and manager in big firms. Due to these factors, many people deciding to become independent in pursuing their economic needs (Lambing and Kuehl, 2007).

Entrepreneurial firms had a crucial contribution into the economy as they become a part of renewal process of declining economies with its innovation which lead to technological change and growth in productivity. Not only that, they also become the main employment provider which enable all walk of life to access the economic accomplishment (Kuratko, 2005).

In Malaysia, the seriousness of the government in promoting entrepreneurship among Malaysian can be seen with various programs and incentives offered to the current and future entrepreneur. In 2007, Prime Minister of Malaysia, YAB Dato’ Seri Abdullah bin Hj. Ahmad Badawi had presented in the National budget a special agenda that cater to develop competitive Bumiputera entrepreneur. Several public and private agencies had also be formed such as the formation of Perbadanan Usahawan Nasional Berhad (PUNB) in 1991 which has successfully developed Bumiputera entrepreneurs in strategic industries and trade sectors such as in oil and gas, electrical and electronics and ICT (2007 Budget Speech by Prime Minister). In order to support this effort financially, financial institutions such as Bank Simpanan Malaysia and Amanah Ikhtiar Malaysia will providing micro credit facilities to Bumiputera entrepreneur and become one of the proof to the government effort to promote entrepreneurial quest among its citizens.

There is no doubt on the important of entrepreneurship for the nation’s economy as Ibrahim and Soufani (2002) found in their research. The small business sector in Canada plays a significant role in the economy. However, without proper training and guidance there is a likelihood that the entrepreneur will face the business failure as found out by Ibrahim and Soufani (2002). They had identified the major cause of the high failure rate in a new business venture is the entrepreneur’ lack of managerial skills and competencies and agreed that entrepreneurship training is a key strategy to reduce the high failure rate in the small business sector. This is supported by Sullivan (2000) who stated that entrepreneurial learning is of critical importance to the survival and growth of SMEs in most marketplaces.

Henry et al (2005) suggested that in order for entrepreneurial development programs to be effective, learning must be based in real work situations so that a person can implement what they have learnt better. The use of Kolb’s learning cycle that is involved in experiencing, reflecting, conceptualizing, and experimentation concept during the process of learning will help them to apply what they have learnt in the real organizational or business setting into their own venture. This is when the entrepreneurship education can play its role and becoming the instrument in creating more and more entrepreneur in the society. However it is crucial to understand who is entrepreneur and what are their traits so that the learning process can be programmed in such a way that benefit to the target audience and able to reach its objectives.

2.0 THE GENERAL CONCEPT OF ENTREPRENEURSHIP

To better understand the topic, this part will explain the theoretical concept of entrepreneurship, entrepreneurship traits, and motivation factors of entrepreneurs.

Entrepreneurship is a dynamic subject to discuss and there are many angles it can be viewed, critics, and studied and there is no one fixed definition for it (Zimmerer et al, 2008; Brooks, 2009; Barringer and Ireland, 2008). The definitions are different from one writer to another where most of it are derived from their readings or research they had conducted. Brooks (2009) viewed entrepreneurship from the classical economic model and defined entrepreneurship as a factor of production, or an input to production such as labor, physical capital, human capital, and land and entrepreneur is an individual who put the element of skills and risk that they add into the inputs.

Joseph Schumpeter (an Austrian economist) describes entrepreneurship as an economic force that had droved capitalism in the western world which mainly characterize by the will to succeed, competitiveness and success in the economic activity (Brooks, 2009). Brooks (2009) adds that entrepreneurship success comes from the creativity and innovativeness of an individual or organization which gives enormous impact to the economy by creating of new jobs and employment opportunity.

According to Wenneker and Thurik (1999) entrepreneur can be divided “into three intellectual traditions according to the German, neo-classical, and Austrian”which summarized the function of entrepreneur as a leader to market stability through entrepreneurial activities, profitability opportunist, and “creator of instability through its creative destruction”. Based on this study Hebert and Link (1989) defined the entrepreneur as “someone who specializes in taking responsibility for and making judgmental decisions that affect the location, form, and the use of goods, resources, or institutions”(Wenneker and Thurik, 1999).

Entrepreneurship is made of entrepreneur that is an individual who creates new business in the face of risk and uncertainty for achieving profit and growth opportunities (Zimmerer et al, 2008). These individuals than assembles necessary resources to capitalize those opportunities in order to materialize its goals. There are different views on which entrepreneurship traits that really turn someone to become successful entrepreneur. Table 1 summarized some of the entrepreneurship traits in the view of different writers and researchers.

Table 1: The summarize entrepreneurship traits

What motivate individual to become an entrepreneur?

What motivate a person to become an entrepreneur? There are many authors or researchers that had conducted on such matter had varies in views from the aspect of psychology, sociology and economic anthropology. From the view of psychology, this research try to look into the mental model of an entrepreneur whether their motivation or behavior is based on thought that they see from surrounding which relate one part to another that finally have the consequences to their actions. For example, research by Autere and Autio (2000) had found that from their qualitative study on the small software firms in Finland, mimicking behavior of success businesses plays a role in creating new entrepreneur and their behavior orientation can be acquired through imitation. The mental model of the management in the big firms also influenced the behavior of new and small firms, and therefore can be learned through experience and external influences. The growth-oriented of the external model perceived by the new entrepreneur also influence their behavior toward advancement of their business. By exposing the growth-oriented mental models into the management of the new business, this will induce greater growth orientation among their managers. They also found that if the exposure to growth-oriented mental models is introduce earlier in the business life, this will instill a growth-oriented culture in the firm and lead to faster growth in the future.

There are also many questions on whether there are different motivating factors on individual from different culture. Many researchers try to explain this human economic behavior and this is what the economic anthropology comes into the picture. Economic anthropology is a description and analysis of economic life, using an anthropological perspective which approaches and locates aspects of people’s individual and collective lives (personal and society) and how it’s linking with one another (Carrier, 2005).  Durrenberger (2005) describe the economic anthropology as a system in which people produce, distribute, and consume goods in order to meet their material needs and this systems look into how  it was organized, operate, created, and connected to other systems.

Dalton (1968) mentioned that the economic anthropology is concerned with the organization of economy and its connection between economic and social organization and the results of economic process which relates to productivity. Because of this reasons, the entrepreneur exist due to the needs of the society that need to be filled and this existence benefit the society with systematically organized economy where the exchange of needs can be met.

What drive an entrepreneur can be said that human wants are no longer limited and LeClair Jr. (1962) mentioned that contemporary economist have long since adopted a broader view of human wants. A person has to deal with the fact that their aspirations always exceed their capabilities and they have to economize their capabilities with the significance of meeting their desires to the fullest extent possible (LeClair Jr., 1962). This can be filled with the association of economic process which described by LeClair Jr. (1962) as an event of producing goods or services for utilization or consumption of the produce goods or services for the satisfaction of human wants.

One of the major paradigms in economic anthropology is culturalism. One of the focus in this study would be trying to determine whether culture play an important role in encouraging the entrepreneurship behavior among member of its society. It is crucial to understand what culture is all about before we know what role it plays in the entrepreneurship. Schein (2004) defined culture as a pattern of shared basic assumptions that group learned as it solved its problems through external adaptation with the internal integrations. When this has worked well enough to be considered valid, therefore it is taught to new members as it is a correct way to perceive, think and feel in relation to the problems. Schein (2004) classified the level of culture from the surface to the deepest level based on the degree of visibility of the cultural phenomenon to the observer.

Artifacts such as architecture, language, technology, products, etc. are at the surface of cultural level which is the visible organizational structures and processes that can be sees, hears, and feels (Schein 2004). A person interpretation on others will be predictably being the projections of his feelings and reactions from his experienced. Related to this, a person motivation to become an entrepreneur can be from his experienced by looking what the benefits and rewards that entrepreneurship can offer from his surrounding. If he saw it as a positive experienced, there is a positive tendency that he will also motivated to do the same and vice versa.

The motivation to become an entrepreneur can also cause by the personality of different individual. Different culture does have different perception on how a person develops their personality. People from Asia are known as less focused on differentiating the individual from the group and put less emphasis on self-actualization compare to the westerners which have a strong concepts of the individualistic where being different from the group is not being seen as indifferent (Schein, 2004). Asian sees group opinion or values is more important than taking own actions and benefits to the group is more important than their own and always put their own interest last. For example, Asian Chinese entrepreneurs hold a strong belief in collective organization management and see challenges as a group endeavors rather than individual objectives (Zapalska and Edwards, 2001).

This is why some successful entrepreneur is found to come from a group or families. Berger (1991) explains that family entrepreneurship is directly responsible for Hong Kong’s extraordinary economic success. Paternalistic management style in the traditional Chinese family where the father in the family had the autocratic power is responsible for adding family wealth had become the reason of the family economic advancement. This creates competition among families and this style was brought into the business which finally creates vicious competition among firms. However because of this competition, researchers found that family based firm does not last long. Their estimation is between two and a half to three generations (Berger, 1991). The role of family as the most critical element in developing individual entrepreneurial character was also supported by Gupta (1991) from her interviews on Indian entrepreneurs.

The rise of economic success of Chinese businessmen in recent years also being said to be contributed by the solidarity, closeness and strong ties between family and clan that they had portrayed. Unlike their counterpart on the West which emphasized more on individualistic spirit, collectivism is being the core values that they hold in doing business. Rutten (2001) believed that combining with personal loyalty to family and group welfare, social and family environment with strong traditional values and practices, has contributed to the development of entrepreneurship in Asia.

However, a country advancement and progress do not take place in a single society as a whole but through the network of diversified collective of its social life. To flourish, small-scale entrepreneurs have to develop their technical and social skills. They have to build the external networks between suppliers, sellers, customers, entrepreneur and others and made them become part of the institutional structures that they had built (Berger, 1991). In order to success, network had become an element which play an important role in doing business (Gidsell, 1991).

This institutional structure is not only in the form of family relations but also in the ethnic group they belong. It is believed that entrepreneur from the same ethnic had the advantages and benefited from belonging to the group because of they shared same ethics and cultural norms. Landa (1991) found that the shared ethics and cultural norms had functioned as social capital where they can reduce cost of business by receiving low interest or even interest free loan from fellow ethnic entrepreneur. Gidsell (1991) found that entrepreneur from the same ethnic groups not only providing initial capital and stock but also the running the day-to-day operation of business. 

Social capital is not the only capital that this ethnic entrepreneur received. Godsell (1991) mentioned that network built in the ethnic groups did provide the entrepreneur with spiritual capital. This network becomes the way of their survival and as a result prospering the community. Tangible recognition in the form of honorary doctorates and other public awards (Godsell, 1991) and the structural factors such as religion, culture and socio-political conditions of community support (Gupta, 1991) would also help the entrepreneur to move forward.

The cultural aspect had become the interest of many researchers that study entrepreneurship and had emerged as study of ethnic entrepreneurship (Light, 2004; Greene and Chaganti, 2004; Iyer, 2004). This study had ranged from the entrepreneurial behavior into the financial aspect of the business. Light (2004) seen ethnic entrepreneurship as an economic activity that had result from the actions of minority ethnic group to reduce their disadvantage and exclusion from the labor market. Self-employment or entrepreneurship had played a major role in this community and as a result, ethnic entrepreneur are always seen as an employment provider to fellow co-ethnic when the employment opportunities is limited for them. 

3.0ENTREPRENEURSHIP EDUCATION

Because of the challenges and uncertain future face by the people today, there will be a greater need for them to have entrepreneurial skills and abilities so they can deal it with. Factors such as reduction of trade barriers due to the globalization of economy, technology advancement, privatisation of public service has created complexity and uncertainty in the society which cause changes in organisational management and even individual perception towards employment (Henry et al, 2005). The changing landscapes of economic environment give important role for entrepreneurship education to play.

The important of entrepreneurship education can be seen as it becomes the political agenda and the priority for both industrially developed and developing countries. It is agree that the entrepreneurship education can increase the quality and quantity of graduate entrepreneurs which enter into the country economy. Education they received in the higher education institutions’ had absolutely influence their attitude towards entrepreneurship and equips them with necessary knowledge and skills for entrepreneurial activities (Matlay, 2006).

With the increasing demand for study of entrepreneurship, there have been seen the explosion of sudden increase in the number of entrepreneurship courses offered in the higher education institution where 2,200 courses had been offered at over 1,600 schools in the United States alone (Katz, 2003), and it also believed the same growth of interest had occurred in other countries as well such as in Europe and Asia. There are also a number of major academic institutions in the U.S which had developed programs in entrepreneurship research. With the research conducted combined with symposium and conference, it has become the means of acquiring for latest developments in entrepreneurship (Kuratko, 2005).

Even though the gaining popularity and interest of entrepreneurship education in higher education institutions, this field is said to be at its early life phase which debates are still continuing on conceptual and methodological issues. Henry et al (2005) said that previous research from various disciplines had been conducted without developing its theoretical framework had cause many different analyses and outcomes from the research conducted on the subject. Until now, the different views prolonged because each of researchers or experts involved do not use each other’s work and the huge knowledge generated on entrepreneurship research had cause the discipline to be fragmented and never been cumulated (Henry et al, 2005).

There are continuous debate (Henry et al, 2005) on entrepreneurship definition and interchangeable term use to describe entrepreneurship such as entrepreneur, enterprise and small business may not give advantage for the studies of entrepreneurship and as a result it is difficult to assess the current situation of entrepreneurship education.

Matlay (2006) suggested the need for better review for such programmes because of the existence of content difference and its quality among business schools that had offered such courses and had continuously creating debates among academician related to its appropriateness and effectiveness. In addition of the difficulties of conceptualizing and contextualizing the field of entrepreneurship education, will lead to a puzzle and mislead policy maker which cause the credibility of academician involves affected and questions the need for further funding in this field. However, the effort to centralize the studies on entrepreneurship for its excellence can be seen with the establishment of consortium of research center across the U.S. (Kuratko, 2005).

According Kurako (2005) among the sources of understanding on entrepreneurial activities are coming from academic research and publications, observation on entrepreneurs, speeches and presentations from conferences or seminars. Kuratko from literature reviewed had seen suggestion from various researchers regarding the entrepreneurship education pedagogy which among it is the important to deal with the ambiguous nature of business entry, developing skill-building courses such as negotiation, leadership, new product development, creative thinking, and exposure to technological innovation. Awareness programs such as entrepreneurship as employment choice, financial and legal aspects of business management, into out of the class approach such as field trips, consultation with practicing entrepreneurs and even competitions can also be seen as a good approach in educating future entrepreneurs.

There are also suggestions on the important of considering who the target audience is in designing such programs. There will be different learning needs of entrepreneur at different stages of business development they currently have. It is necessary to have different pedagogic approach for different target audience so the educators and trainer or training provider can improve their approach in entrepreneurial learning. And it is important to match and characterized between what are perceived by entrepreneurial characteristics and how to educate it (Henry et al, 2005). As illustrated by the following table, the framework of entrepreneurship education can be divided into three level.

Table 2 : The framework of entrepreneurship education

Role of academic entrepreneurship must orientated towards innovative and need to change rapidly in order to become the leader in creating entrepreneur effort (Kirby, 2004). He feels it is important for the business school to look into the process of developing entrepreneurial skills, attributes, and behaviours of its student in addition to their understanding on the business management by specifically designed the modules and courses and by changing the learning environment that can help to develop their awareness and strengthen their entrepreneurial characteristics and skills. He proposed that the traditional way of learning had to be shifted to more students oriented which gives “students’ ownership of their learning, more involvement in real word situation, encourages students to formulate decisions on incomplete data, immediate and dubious, and providing role models to them.”

Education is not the only factors that had motivate graduates to become entrepreneur  as Matlay (2006) found that other reasons for such as the current socio-economy and educational conditions together with personal, family and peer influences often affect their desires, motivation, and prospect.

4.0RESEARCH QUESTIONS

The question now is whether entrepreneurship education can be developed based on the entrepreneurship traits? And is it possible to teach entrepreneurship to others? Zimmerer (2008) argues that entrepreneurship can not be taught to others but the necessary skills of small business management are teachable and as Kirby (2004) noted that “entrepreneurship is about possessing or acquiring a particular set of attributes, skills and behaviors” and this can be possessed by learning. The following will be the sub-questions for this research;

1. What is the motivation for an individual to become an entrepreneur based on cultural perspective?
2. Are there any differences in motivation factors between ethnic in Malaysia?
3. What are the required traits by the entrepreneur in the industry?
4. Can entrepreneurship traits be transferred?
5. Is the entrepreneurship program in the higher technical institutions address the requirements by the entrepreneur involve in the industries?
6. If the required traits are addressed by the higher technical institutions, what is the right way to transfer it to the students?

5.0EMPIRICAL STUDIES

The choice of research method depends on the nature of the research problems. It is proposed that the research will be using both qualitative and quantitative methods.  Based on the literature review and the theoretical concept of previous research, the researcher will use the deductive research approach for his research. Thus this approach will be used to test or verify a theory and also for a development of existing theories. The theory becomes a framework for the entire study, which will help to organize the research questions and the data collection procedure.

The main respondent for this research will be the entrepreneurs, teachers and the students. The entrepreneurs will help the researchers to shortlist or group the long-list of traits that can be found from the literature such as articles from journals and books and also help to identify the important traits that really needed by them. They will also suggest the best way of achieving this skills or knowledge from their own experienced. The teachers will give input on the important traits perceived by them, the traits that have been collaborated into the curriculum and taught to the students and the best methods on transferring this knowledge or traits to the students. Meanwhile, the students will help to confirm whether the objectives of the subject are accomplished and the traits or skills that they had grasped.

This research will begin with a preliminary questionnaire sent to entrepreneurs, students and teachers. The questionnaire is used because of its suitability where it does not required the present of the researcher at the location since the number of the respondent large and its is scattered around the country. The questionnaire should give a first indication of qualification and traits needed. The construction of the questionnaires will be based on the research conducted by other researchers which address the same idea on the entrepreneurial traits. The developed questionnaires will then be sent to the respondents where the results from the survey will assist the researcher in determining, grouping and limiting the entrepreneurial traits. The distribution of questionnaires can be done through personal visit, postal service, e-mail and others.

However, questionnaire from survey alone cannot give the true answers to the problems due to the difficulty to grasp the issues where tacit knowledge is present. There is also a possibility that the respondent will not be able to understand the issues and giving the right answer to the question due to their motivation to complete a long and time consuming questionnaire (Cohen, Manion, and Morrison, 2001, p. 109). Therefore, the findings from the preliminary survey are important because it will become the essence during the construction of questions for interviews which will follow later.

Qualitative method will also be used since the “researcher must go to the people, setting, site, institution (the field) in order to observe behavior in its natural setting” (Merriam, 1998, p. 7). Qualitative research procedures that will be used include interviews, observation and analysis of documents.

Interview which is one of the methods used in this research will go in depth with the traits which have been determined earlier through the surveys. Triangulation or the use of quantitative and qualitative method of research in studying the same research problem (Cohen, Manion, and Morrison, 2001, p. 112) is believed to increase the credibility of findings and researcher’s confidence.

Interviews and observations will be conducted on the entrepreneurs, students and teachers while analysis of document will be used in analyzing the information from syllabus or lesson plan of the entrepreneurship subject obtain from the relevant institutions. Interviews will be in the form of semi-structured and the main topics for the interview will be:

• Role of the teachers, students
• Role of the entrepreneurs
• Important trait important perceived by the entrepreneurs
• Important trait important perceived by the teachers, students
• The challenges in delivering the teaching
• The challenges in determining the traits
• External influence on transferring the traits

The empirical studies for this research will involve several ministries in Malaysia that run higher technical institutions such as Ministry of Education, Ministry of Human Resource, and Ministry of Entrepreneur & Cooperative Development. However, the respondents for this study will be selected from the institutions that offers program for school leavers (after their Malaysian Certificate of Education) and those who took courses in the area of automotive engineering. This study also involves entrepreneurs that registered with Companies Commission of Malaysia, listed in MARA entrepreneurship database, PUNB, SME Corporation and so on.

5.0 BRIEF INFORMATION ON MALAYSIAN EDUCATION SYSTEMS AND ENTREPRENEURSHIP HISTORY

Malaysian Education Systems

The Malaysian Education System can be divided into few levels; primary, lower secondary, higher secondary and post secondary level. The system is under a so called National Education Policy   under the Ministry of Education while the higher institutions are governed by the Ministry of Higher Education. According to the policy, it is compulsory for all children at the age of 7 years old to start schooling at the primary level. For every level, there will be an assessment in the form of examinations and the result will be used if the students would like to apply to be in boarding school and to enter the university level. To illustrate better the education systems in Malaysia, please refer to the following table.

Table3: The education system in Malaysia

Technical and Vocational Education (TVE) in Malaysia starts at the upper secondary level. After the Lower Secondary Assessment Examination, students have the choice to be in the academic, islamic or technical and vocational streams (UNESCO, 1995). Those who choose to be in the technical and vocational stream and have the minimum required qualifications will have to apply to be in the Technical Secondary School.[1]

In the technical stream, students are offered to choose one of the following courses; Mechanical Engineering, Civil Engineering, Electrical Engineering, Agriculture, Commerce, Food Management or Apparel Studies. While those who incline towards the vocational stream have to choose Engineering Craftsmanship, Home Economics, Commerce, Computer Science or Agriculture. Currently Malaysia has 90 Technical Secondary Schools with an enrolment of 62,155 pupils. After completed at Technical or Vocational School, students have the choice to continue their education at the polytechnics to undergo courses at certificate or diploma level or at the university level for first degree. Technical and vocational education at school and polytechnics are administered by the Technical and Vocational Education Division of the Ministry of Education.

Malaysian Technical Vocational Education was created due to the importance of industrial and manufacturing sectors in the economic growth of the country (Hee, 1994).  Its aims is preparing for the future workforce as Malaysia targets to be the industrialized nation in 2020. TVE was hoped to produce skilled manpower for the industries. A study done by Mustapha in 1999 however shown that employers in Malaysia were not satisfied with the quality of Malaysian technical and vocational graduates due to lacking of leadership, communication, interpersonal, critical thinking and entrepreneurial skills. In the same study, he did mention in his findings that the employers were concerned whether or not the VTE systems able to produce entrepreneurs and business/industry leaders. Mustapha also suggested that “the government especially Ministry of Education should seek input from numerous stakeholders,  such as, educators, business/industry personnel, parents, students, academicians, and other professionals before formulating major policy decisions regarding vocational and technical education and training”.  Mustapha and Abdullah suggested that “school systems at all level should include entrepreneurship in their curriculum” (2001).

The following table summarize the participant in the Higher Technical and Vocational Institutions in Malaysia (Ministry and their technical higher institutions) which will become the sample of respondent of this research.

Table 4: The participant in the Higher Technical and Vocational Institutions in Malaysia

Entrepreneurship in Malaysia

Entrepreneurship had gained its importance in Malaysia both in concept and activity. It can be seen with the various supporting mechanism and policies that exist from funding, the physical infrastructures to the consultation services initiated by the government. The seriousness of this field perceived by the government can be seen with the setting up of Ministry of Entrepreneur and Co-operative Development in 1995 to deal with entrepreneurship issues and its development.

To have a better understanding of the Malaysian economic, it is important to understand the history of the nation starting from the colonization of British (Malaysia was known as Malaya before independence in 1957). The segregation of economic activity regarding to race have been implemented by the British for the ease of administration and also the operations of its rubber plantations and tin mines (Malaya main economic activities during that time). To help the British to run the rubber plantation and tin mines, migrant form India and China was brought in during that time. Indian migrant workers work in the plantation while Chinese migrant workers work in the tin mines. The Malays dominated the agricultural sector and lived in the village. Chinese was allowed to do some trades and becoming the petty traders and shopkeepers in the towns. During this time, only members of the royal and upper-class families (all were Malays) were allowed to work into the bureaucracy, while the rest of Malays was restricted to work in a low-income agricultural sector as a farmer or fishermen. This resulted in a society that was very much multi-layered, segregated economically and racially with the majority of Malays at the bottom rung (Ariff and Abubakar, 2003).

In order to fix the economic imbalance between races that exist before the independence, it was agreed among representatives of three major ethnic groups (Malays, Chinese, and Indian) that upon independence, the Malays was granted certain privileges in the area of religion, economics, and politics. This was to rise up the Malays economic status which has been left out prior the independence by British. 

The New Economic Policy was introduced in 1970 as a growing dissatisfaction about inequalities between the Malays and the Chinese who were still gaining economic dominance. This two-pronged objectives was to eradicate poverty and to increase Bumiputera ownership and participation in the corporate sector, and high income occupations. The aim was to attain 30 percent effective Bumiputera equity ownership by 2000 but was extended to the year 2010 due to the unachieved target which is currently at 18.7% (2004).