Engaging Diasporas: a Fledgling Role of ClusterOrganizations

Ibn-e Hassan & Noraini Abu Talib

# Springer Science+Business Media Dordrecht 2012

Abstract Malaysia is probably one of the most notable countries in Asia affected bythe talent mobility. In spite of important implications of the emigration, this issue isnot given the due deliberations. Diaspora has taken a central role in the recent talentmanagement policies of Malaysia. A large number of East Asian economies havebenefited from the diaspora employed in the large North American and Europeanclusters. This paper highlights the structural obstacles inhibiting brain circulation inMalaysian context. In the light of the review of successful diaspora stories of China,India, Korea, Philippines, and Taiwan, it elaborates what potential role Malaysia’sdiaspora can play in the national development. It is suggested that apart from thenational level policies, the industrial cluster organizations can assume the role ofnetworking with Malaysian diaspora abroad in order to leverage their skills, contacts,and finances for cluster challenges.

Keywords Malaysiandiaspora . Industrial clusters . Multimedia supercorridor . Braincirculation . Alumni network

Introduction

The far-reaching implications of “globalization” also manifested itself in the phe-nomenon of mass mobility of skilled workers, entrepreneurs, and professionalsamong nations (Chang 2006; Saxenian 2006; Xiang 2006; Aneesh 2006). Thismobility historically had been unidirectional flow of high-skilled labor from devel-oping to developed economies. However, at the present time, it has become reversiblephenomenon and the flow of high-skilled labor is multidirectional (Hsu 2004;Saxenian 2006). The “brain circulation” thesis claims the benefits of mobility forboth home and host country and it is observed that “brain circulation” contributes to

Int. Migration & IntegrationDOI 10.1007/s12134-012-0261-5

I.-e. Hassan (*) : N. A. TalibFaculty of Management and Human Resource Development, Universiti Teknologi Malaysia,81310 Skudai Johor, Malaysiae-mail: ihplanner@yahoo.com

international development. The seminal work of Saxenian claims that high-skilled migrants transfer skills and resources from firms in a mature industrycluster to firms in an emerging cluster (Saxenian and Hsu 2001; Saxenian 2005;Saxenian 2006). The study of Saxenian (2000a, b) in Silicon Valley on high-techstart-up firms between 1980 and 1998 described that 25 % of the senior executiveswere Chinese and Indian immigrants. Consequently, Taiwan (China) enjoyed thecompetitive edge of having skilled workers who were returnees of Silicon Valley.Therefore, 40 % of start-up companies in industrial park Hschinchu (Taiwan) wererun by the returned emigrants. Through the study of Saxenian (2000a, b) for the firsttime, the role of ethnic professional communities was vividly exhibited. She elabo-rated diaspora’s role as the providers of capital and promotional skills, identifiers ofpotential markets, and suppliers of marketing intelligence for start-ups. Consequently,“Brain circulation” theory as an alternative to “Brain drain thesis” was offered formitigating the effects of brain drain phenomenon. Brain circulation thesis inspires theemigrants to participate in the economic development of the home country. Diasporahas also become essential in the new debate pertaining to migration and economicdevelopment. Diaspora is seen to potentially play a key role in facilitating economicgrowth, development, and poverty reduction in the home country. While there islimited knowledge and understanding of the nature of this role, the major elementsare the sending of remittances, knowledge transfer, investment, social remittances,and return migration (GCIM 2005; United Nations 2006).

A large number of East Asian economies have benefited from the diasporaemployed in the large North American and European clusters. The diasporaacquired valuable skills, developed contacts, and financial wealth. Cluster devel-opment in Hong Kong, Singapore, and Taiwan owes to the contribution ofoverseas Chinese (Kutchiki and Tsuji 2005). Therefore mobilizing diaspora resour-ces for the economic development is being recommended as a helpful approach for alldeveloping countries.

Various success stories related to diaspora’s economic contribution in China,India, Taiwan, and Scotland are being exemplified in the literature (Kuznetsov2005). For example, diaspora is considered as one of the most important factorstimulating brain circulation as well as economic development (Tung 2008; Teferra2004; Balaz et al. 2004). In the same vein, Kuznetsov and Sabel (2008) havehighlighted the significance of networks and diasporas. Similarly, it is observed thatethnic networks are effectual mean of tacit knowledge diffusion (Kerr 2008; Agrawalet al. 2007), are channels of assorted information (Täube 2007), and are credulousconduits of information (Burt 1992). The diasporas also help cluster by bridging thelack of local demand and structural holes through a large pool of knowledge andinformation (Nanda and Khanna 2010).

Malaysian Diaspora

In Asia, Malaysia can be considered as a country which is highly influencedby the migration (Hugo 2009). In spite of important implications of this mobilitythis topic is little explored by the scholars (Hugo 2011). According to The WorldBank statistics, Malaysia has a diaspora of 1.5 million nationals living abroad, which

I. Hassan, N.A. Talib

is equivalent to over 5 % of the resident population (Wong 2010). However, not muchis known about this group, as is indicated by the widely varying guesstimates aboutits size. According to Winters et al. (2007), approximately 785,000 Malaysians arelodging outside Malaysia, with estimated two out of every three are likely to beprofessionals. Almost 40 % are residing in Singapore, 30 % in member nations of theOrganization for Economic Cooperation and Development (OECD) and 20 % inASEAN countries. Malaysia’s Ministry of Human Resources has indicated that thereare 350,000 Malaysians working abroad, over half of whom have a tertiary education(Gyi 2010), while Kohilan Pillay, Malaysia’s, Deputy Foreign Affairs Ministerindicated that roughly 300,000 Malaysians emigrated between March 2008 andAugust 2009, double the amount of emigration in 2007 (Lim and Kulasagaran2010). Whereas the Malaysian Employers Federation says that there are 785,000Malaysians working in overseas countries (Arbee 2010).

In spite of production of thousands of engineers each year, according toPacific Bridge Inc, Malaysian engineers and technical workers are finding betteropportunities especially in Singapore, China, and the Middle East, thereforecausing a severe shortage in Malaysia. In the same way, a survey by theInstitute of Certified Public Accountants of Singapore, reported that majority(34 %) of the audit staff is hired from Malaysia. (http://www.channelnewsasia.com/cpasingapore/topchallenge.htm). State officials of Penang reported that amultibillion-dollar foreign investment was lost due to the lack of experiencedelectrical and electronic engineers (The New Straits Times 2009). According toGooch (2010), the World Bank cautioned that Malaysia’s inability to become a high-income economy mainly attributes to the lack of human capital. According toPacific Bridge Inc, a reputed human resource consulting firm, Malaysianskilled labor is attractive mainly due to professional qualification and poly-glotism (Lim and Kulasagaran 2010). An important element in the emigration outof Malaysia is the dominance of ethnic Chinese in that movement. According to the2006 Australian census, almost two thirds (62.7 %) of the Malaysia-born populationindicated that they had Chinese ancestry; 11.7 %, Malay; 5.7 %, Indian; and 4.7 %,English (Hugo 2011)

Signifying the importance of diaspora for the home country, Kuznetsov(2005) suggested that Malaysian expatriates can become important agents for stim-ulating knowledge-intensive ventures and initiatives. It is recommended that tapingsmall diaspora initially and strong institutional support can help leverage theexpatriates. For example, in Armenia, only 200 dedicated expatriates developeda critical mass sufficient to motivate all actors in the country to internationalize.Therefore, it is not the size of the diaspora that matters, it is how disciplined,committed, and visionary the members are that matters, for example, The IndusEntrepreneurs (TiE) in India is a classic example of disciplined and committednetwork (Sahay 2007).

Malaysian Government Programs

In order to enhance the economic development, several countries have implementedstrategies to develop and leverage talent (OECD 2002; Kapur and McHale 2005;

Engaging Diasporas: a Fledgling Role of Cluster Organizations

Solimano 2002). In the same context, the Malaysian government in order to attracttalent introduced two programs, namely the Returning Scientists Program and theReturning Malaysian Experts Program administered by Ministry of Science,Technology and Innovation (MOSTI) and Ministry of Human Resources (MOHR),respectively.

Scheme administered by MOSTI targeted skilled Malaysians residing abroadas well as foreign scientists in selected R&D fields. Target group was attractedby the gorgeous remuneration package including education for children. On theother hand, a scheme administered by MOHR targeted skilled Malaysiansresiding abroad for wide range of fields of expertise including science andtechnology. Major incentives in MOHR-administered scheme were: incomerepatriation within 2 years is exempted from income tax; all personal belong-ings, including two cars are given import duty exemption; and spouse ofMalaysians and children who are not Malaysians will be given permanentresident status within 6 months (Thiruchelvam et al. 2003)

A comprehensive review on these programs concluded that both programs wereineffective and could not develop and implement significant initiatives to contactMalaysian diaspora. MOSTI implemented the programs ineffectively with ad hocmindset and without designated formation to attract foreign scientist. Diaspora whichintended to take part in ventures or intended to return back to the country faced avariety of obstacles, broadly categorized as professional and personal factors, forexample, intellectual environment in the country, customized compensation packagesand fringe benefits, research infrastructure, and immigration policies. The reviewrecommended that the brain gain programs should be rationalized and strengthenedthrough fresh initiatives like supportive immigration policies, lucrative financialincentives, responsive administrative procedures, and other work related and non-work related incentives. The review endorsed the importance of national researchinfrastructure and overall research environment in order to entice the diaspora as wellas other talent (Thiruchelvam and Ahmad 2008)

TalentCorp Initiative

Malaysian government has learnt from the previous policy mistakes and has recentlydeveloped a comprehensive framework and action plan for national talent manage-ment. TalentCorp’s initiatives are based on three strategic thrusts: (1) enhance theeffectiveness of Malaysian talent; (2) attract and facilitate global talent; and (3) buildnetworks of top talent.

As shown in the Table 1, Malaysian diaspora with requisite experience andexpertise in the priority sector is the target of talent corps policy. Diaspora networkingpolicy of TalentCorp has two dimensions. Firstly, create awareness about the jobopportunities in Malaysia and secondly to promote the opportunities of collaborationwhile living abroad. TalentCorp is also developing the directories of the top talentabroad for networking, exchange of knowledge and idea and partnership opportuni-ties. Similarly, “Talent ambassadors” are being discovered to “symbolize” Malaysiain their respective countries, the purpose is to raise awareness about the variousopportunities to invest, live, and work in Malaysia.

I. Hassan, N.A. Talib

Structural Holes Inhibiting Brain Circulation: Evidence from MalaysianClusters

Chen (2008) advised that four key structural factors must be considered beforeadopting brain circulation policy panacea. These factors are: (1) industrial arrange-ment in home and host countries; (2) trust, learning, and entrepreneurship; (3) thestatus of financial infrastructure for start-ups; and (4) the role of the state. In thefollowing lines, the relevance of these four factors in the context of Malaysianindustrial cluster is examined.

Industrial Arrangement: Networked vs. Non-Networked

It is argued that without the strong networks of suppliers and interfirm relations, newstart-ups like “returnees” will face huge start-up cost (Chen 2008). Hsinchu industrialcluster imitated Silicon Valley model successfully in terms of decentralized industrialsystem, division of labor, and innovation because of the strong social network ofTaiwanese transnational technological communities, suppliers, and firms (Hsu 2004).The literature on Malaysian industrial cluster shows that interfirm linkages andnetworking is weak in electronic (Penang) and information and communicationstechnology (ICT; Multimedia Super Corridor) clusters (Rasiah 2005); weak linkagesare observed among the cluster actors in Malaysia (Onoparatvibool 2011). Similarly,there are lack of linkages among the firms and public agencies in small and medium

Table 1 Three strategic thrusts of TalentCorps

Source: TalentCorp, 2012

Engaging Diasporas: a Fledgling Role of Cluster Organizations

industries (SMI) like food processing companies in Malaysia (Burhanuddin et al. 2009)and the private and public collaboration is not mature in Malaysia (National Surveyof Research and Development, 2008; available at: http://www.mastic.gov.my).

Trust and Learning Tradition: Collaboration vs. Lock-in

Another salient feature of Hsinchu and the Silicon Valley is the presence of entre-preneurship culture and knowledge sharing among the firms (Saxenian and Hsu2001). Malaysia is a multi-ethnic place (Ghee et al. 2009) and for past four decadesgovernment policies like the New Economic Policy and the New Development Policyadvocated the preferential treatment for Malays in order to achieve a more equitabledistribution of wealth between ethnic groups. However, this treatment is perceived asmarginalization of non-bumiputra groups: the Chinese and the Indians (Hugo 2011).Its implication can be observed in the business environment for example in MalaysianMultimedia Super Corridor (MSC) cluster, tacit knowledge flow through humaninteraction is not existent (Richardson et al. 2010). There is lack of trust and sharingin MSC (Wahab 2003). In the clusters of Johor state, interfirm collaboration andlearning is weaker (Oyelaran-Oyeyinka and Rasiah 2009). These findings suggestthat more aggressive steps should be taken to develop trust and learning environmentwhich could in return facilitate the diasporas to play its role.

Venture Capital for Start-ups: Established vs. Weak

Transnational venture capitalists played instrumental role in the high-tech develop-ment in both Silicon Valley and Hsinchu. They not only provided the necessary fundsbut also were source of knowledge and learning. They tutored start-ups in makingviable business plans, introduced potential partners for collaboration and facilitated inthe commercialization of technologies developed by the start-ups in Taiwan (Chen2008). In comparison to this, Malaysian MSC cluster is weaker on the venturecapitalist role (Wang 2000; Fleming and Søborg 2002) and the connection betweenthe investors and venture capitalists in Malaysia is weaker (Oyelaran-Oyeyinka andRasiah 2009)

The Role of the State: Technology Facilitator vs. Technology Seeker

Taiwanese government’s sectoral focus on computer and component products andTaiwanese Industrial Technical Research Institute (ITRI) are regarded as a model ofhigh-tech development for transition and developing countries. Through the effectivemanagement of Electronics Research and Service Organization and excellent coordina-tion between the sophisticated infrastructure and firms, Taiwan became a major producerand exporter of computer and related accessories by 1980s (Chen 2008). According toRasiah (2005), Malaysia enjoyed early stream of foreign direct investment (FDI)inflows in the period 1971–1974, but subsequently, the Export Processing Zones losttheir performance due to various reasons including the failure of government coor-dination with the EPZ’s firms and lack of appropriate policy measures for promotingdifferentiation and division of labor. Due to government’s ad hoc administration, novital institution and networking could be developed; this in turn hampered learning

I. Hassan, N.A. Talib

and innovation. Swayed by the Japanese and Korean models and following the“Look East Policy” of 1980s, government strengthened domestic firms as wellas deepened linkages internationally. Consequently, in 1986 first IndustrialMaster Plan (IMP) was launched that emphasized the role of ExportProcessing Zones. First Industrial Master Plan 1986–1995 (IMP) had threebroad objectives (MITI 1996, p. 7) firstly, to safeguard the continual growth ofthe economy by means of enhanced growth of the industrial sector. Secondly, toencourage the best and efficient utilization of the nation’s natural resources usingvalue-added manufacturing, and finally, to lay the base for the development of localtechnological competencies.

Following the above-mentioned objectives, The Human ResourceDevelopment Fund was established in 1993, the Malaysian TechnologyDevelopment Corporation (MTDC) was launched in 1992, and the MalaysiaIndustry Government High Technology was instituted in 1993. The NationalElectricity Board, the Telecommunications Corporation, and the MalaysianMicroelectronics Systems (MIMOS) were incorporated in the early 1990s;The Private Universities Bill was enacted in 1995 for making up the deficien-cies of skilled human resource. According to Rasiah (2005), IMP2 beheldcluster as “Regional Entity” whereby industries need employment concentration,buyer/supplier linkages, specialized services, access to technology, and sourcesof innovation. To get maximum advantages from this regional entity followinginitiatives were taken:

(a) Setting up of special division for electronic industry under The MalaysianIndustrial Development Authority (MIDA) for providing assistance throughincentives, information diffusion, and distinctive assistance to investors for swiftproject approval, technical advice on location issues, and liaison with respectivestate governments.

(b) Government developed various technology parks like MSC, Cyberjaya, andKulim Hi-Tech Park, for the promotion of the electronics industry as wellas for R&D. An exclusive organizational setup (Multimedia DevelopmentCorporation) takes initiatives for firms that get MSC status.

(c) Another initiative by the government is MIMOS, an agency setup involvedin forming various start-ups in the electronics industry. MIMOS is locatedin the MSC area and government agencies consult it for the futureplanning of electronics industry of Malaysia. It is expected that MIMOSwith the assistance of the MTDC, will enable indigenous electronics sectorto flourish.

(d) Provision for some financial incentives in the form of funds like IndustrialTechnical Assistance Fund and the Intensification of Research in PriorityAreas were made. Funds could be obtained through MITI, MIDA, andSmall- and Medium-Scale Industry Development Corporation.

(e) The multibillion project of Multimedia Super Corridor (MSC) is an additionalinitiative to spur the development and modernization of the ICT industry inMalaysia. The MSC is likely to generate spin-off effects, R&D, and innovations.The purpose was to develop a regional cluster with strong networking andnumerous complementarities.

Engaging Diasporas: a Fledgling Role of Cluster Organizations

(f) RM100 million allocations for a Multimedia Grant Scheme were initiated byMSC. The aim of the scheme is to help SMI companies to join MSC. SMIs areentitled for up to 50 % funding if they qualify for MSC status. The funding isprincipally intended for SMI electronics firms to conduct research.

(g) Development of various high-tech industrial parks for R&D. These were envi-sioned to be the incubators for creating an information technology cluster.

In continuation with the previous policies, National Economic AdvisoryCouncil of Malaysia, in year 2010, indicated that firms are losing up to15 % of their output due to skill constraints. In National Economic Model(NEM), inflexibility and bureaucratic policies were thought out to be the mainimpediments for talent attraction, retention, and dispora’s return. NEM identifiesthat diaspora is the principal source of talent and Malaysia should learn fromthe Models of Ireland and Singapore (Table 2).

Challenges Faced by Malaysian Clusters

The above review of main steps taken by the Malaysian government forcluster development revealed the honesty and sincerity of the government toestablish clusters and support institutions with in the country. The intent of thepolicy makers was to provide the enabling environment to SMEs, to becomeviable and competitive. However, researchers indicated various challenges tothese development efforts, for example Rasiah (2005) warned that electronicsfirms in Malaysia are facing the challenges of: (1) multinational corporations (MNCs)hegemony due to local electronics firm’s deficiency in technological absorptioncapacity and the linkages to move up the value chain, (2) lack of critical mass forstronger integrated production system, (3) lack of local innovation, (4) lack of skilledhuman capital, and (5) lack of market development capabilities. Similarly,Onoparatvibool (2011) has done a comparative study on the clusters of Taiwan,Thailand, and Malaysia. The interview respondents identified that generally theMalaysian electronics industry does not qualify the academic term of “cluster”particularly with regard to networking and linkages between firms and non-firmactors. The interaction is restricted only based on normal production-related linkages;joint efforts geared towards common goal of cluster development are exceptional.Nevertheless, the electronics industry in Penang exhibits some features of a cluster.Other key competitive challenges faced by Penang Electronic Cluster are: firstly,human resource and skill development is still a key competitive challenge facedby the cluster. Secondly, present process of cluster development does notinvolve all stakeholders and there is lack of shared vision. Thirdly, lack oflong-term commitment/ownership of key actors and finally, local universitycooperation for cluster development is weaker. A recent perceptive work byRichardson et al. (2010) on Multimedia Super Corridor Malaysia highlighted thatthis policy-driven cluster does not provide the benefits of availability of pool ofknowledgeable workers within the clusters, there is less visibility of the clusterinduced benefits, less entrepreneurial spirit within the firms, and low academiccollaboration.

I. Hassan, N.A. Talib

Tab

le2

Com

parisonof

structural

elem

entsof

Taiwan

Hsinchu

andMalaysian

MSC

Taiwan

Hsinchu

MSCMalaysia

Industrial

structure

Networks

Decentralized

networks

ofspecialized

producers.(1)

Spin-offs

ofITRI;(2)localmanufacturing

networks;

(3)firm

sestablishedby

Taiwanesereturnees

Fragm

entedandweaknetworks

consistin

gof

ICT

firm

s:(1)localstart-upsand(2)MNCs

Ownershipstructure

Privately

ownedfirm

s.Allfirm

shave

clearprivate

ownership.

Mixed

ownership.

Amix

ofwholly

owned/joint-

ventureMNCsandsm

allprivatelyow

nedfirm

s.

Trustandlearning

Trust-based

transnationalcollaboratio

nlearning

bycollaboratio

nin

theglobal

productio

nnetworks.

Learningislim

ited

Transnatio

naltechnological

networks

Connectionwith

SiliconValley

Strong“transnatio

nalism,”

dueto

maturediaspora

and

studentsandalum

ni,continuous

industrial

developm

ent

Weak“transnatio

nalism”,overseas

studentshave

shorterhistoryanddiaspora

issm

allas

wellas

unheeded.

Embeddedness

Taiwaneseentrepreneursarehighly

embedded

inboth

regionsthroughalum

ni,professional,andindustrial

networks.Consequently

unfold

the

opportunities

fornew

start-ups.

Unknown

Relationwith

otherclusters

The

comparativ

eadvantagemodel:in-house

financial

andinfrastructure

supportandtechnicalskillsacquired

throughnetworking

with

otherclusters

likeSiliconValley.

The

dependency

model:MSCdependson

technology

transfer

from

abroad

(MNCs)

and

dependson

FDIandstateinvestments.

Infrastructure

forstart-ups

Roleof

state

From

technology

provider

totechnology

transfer

facilitator.

From

technology

provider

totechnology

seekers

Venture

capital

Venture

capitalisvery

establishedin

theTaiwan

High-tech

industry.

Venture

capitalisalmostnon-existent.

Technology

developm

ent

Firm

strategy

Specialized

producerstargetingglobal

nichemarkets.

Internationalizationof

thefirm

sisbulgingand

firm

sareexporting

Technology

focus

Productioninnovatio

n:OEM

manufacturing

technology;IC

design

isbeginningto

breaknew

ground

inproduct

innovatio

n.

Product

innovatio

nandweakon

productio

ninnovatio

n

Technology

upgrading

Upgrading

alongthecommodity

chain;

highly

sensitive

tomarketabletechnologies.

Product

innovatio

nandlocalizationstrategy.

Partly

adaptedfrom

Chen(200

8)

Engaging Diasporas: a Fledgling Role of Cluster Organizations

Recommendation to Cluster Organizations

Sölvell et al. (2003) proposed that the main aim of any cluster organization is todevelop cluster initiatives (CIs). CIs are the organized actions to enhance thecompetitiveness of cluster, involving key cluster actors. Well-crafted clusterprograms and initiatives can work like a “turbo” on mature clusters. Butusually, cluster initiatives begin as a project to address explicit problem. Overthe passing time, it takes a permanent organizational form. CIs are the “lubri-cants” that smooth the engine of cluster dynamics to function at higher speed.These initiatives contribute to the improvement of regional outlook by improv-ing the image of entire sector, by attracting new suppliers and creating newjobs. In the same vein, Andersson et al. (2004) suggested four key tasks of thecluster organization: establishment of R&D capability centers, internationalization,promotion of endogenous development of companies, and well-targeted establish-ment of companies. These tasks comprise the core objectives of the common projectsundertaken through the initiative.

From the aforementioned literature on Malaysia we can witness that R&D,collaborative initiatives, internationalization of firms, and innovations are lack-ing in the clusters with exception to E&E cluster of Penang. Similarly, clustersdepend on MNCs for technology transfer and FDI. An extensive review ofliterature on diaspora programs of Argentina, Colombia, South Africa, China,India, Israel, Taiwan, Mexico, and Armenia offers solutions to above-mentionedcluster issues. For example, a comprehensive review on the India’s BangaloreIT cluster by Sonderegger and Täube (2010) showed that diaspora was beneficialfor mediating the capital necessary for the rapid growth, managerial and specializedlabor, and helped renew the cluster from lock-in risks. ICT cluster of Bangaloreemployed knowledge workers having foreign exposure mostly of USA’s market. Forexample Infosys, an Indian IT outsourcing giant, claimed that one third of itsknowledge workers have foreign experience of working on projects ranging forperiods of several weeks to several months. This mobility of workers betweenIndia and the USA allows tacit knowledge of emerging technologies, best workpractices, and promising new markets, to diffuse quickly between locations.Bangalore’s IT industry enjoyed the benefits of tacit knowledge flows from the densesocial and professional networks of the IT community located in Silicon Valley andethnic networks of scientists and engineers spread across various locations. Indianemployees in US-based companies provided links and support that led to outsourcingdeals with Indian firms (Saxenian 2006). These employees’ experience of manage-ment was also translated in setting up R&D firms in India. For example, many of theresearch and development centers of MNCs in Bangalore were managed by Indianmanagers working in the USA, or many were set up by returnees employed in MNCand had managed similar projects for other MNCs. Some of the R&D centers inBangalore employed US-trained PhD graduates, most of them Indian returnees.Similarly, Indians who worked in Silicon Valley or had experience of investmentbanking arranged venture capitals (VCs) for firms in Bangalore. In late 2007, therewere 22 VC companies that had been active in India since year 2000. Thus Indiandiaspora brought with them their experience, relationships, and the specific SiliconValley culture of entrepreneurship and venture capitalism.

I. Hassan, N.A. Talib

From the review of diaspora’s success stories, this paper recommends that clustermanagement should take independent initiatives to identify, contact, and enticeMalaysian diaspora for training, knowledge sharing, and investment. A modest startby the cluster organization can be taken in the form of following two initiatives.

Develop Virtual, Relationship-Based Networks with the Diaspora

Our review revealed that since1990s, Indian diaspora is visible and vivacious in theUSA. Experienced Indian engineers who had relocated to the USA in 1960s laterbecame the entrepreneurs, venture capitalists, or high-level executives in variouscompanies. They conjoined in the form of nonprofit associations with the IT compa-nies in India. Similarly, mature venture capital companies like Westbridge Capital,Kleiner Perkins Caulfield & Byers, and Norwest Venture Group in the USA, arevigorously funding Indian companies to support the production of intellectual prop-erty and innovative products in ICT industry. The Indus Entrepreneur and the SiliconValley Bank have enticed venture capital companies to invest in India. According toEvalueserve, by March 2004, more than 150 start-ups had some form of their backend in India and front end in the USA, and the number is progressively increasing(Sahay 2007). In the same vein, Malaysian cluster organizations should identify anddevelop relation with the Malaysian high-tech professionals of specified niches.Cluster organizations should introduce a comprehensive awareness and promotionprogram to encourage Malaysians diaspora to contribute to the development ofclusters through various approaches. Success stories of diaspora’s involvement andimpact of their collaboration should be published in the annual reports and shown onthe websites of cluster organizations. For example, Multimedia DevelopmentCorporation (MDeC) website should indicate the opportunities available inMalaysia, communicate the transformation success of country, and communicatethe areas of development where diaspora can contribute via conferences and virtualplatforms. TalentCorp has recently developed MyWorkLife portal providing neces-sary information about career opportunities and relocation opportunities forMalaysians, which is a good start in this direction. In the same manner, physicaloutreach to meet wider spectrum of diaspora on various trade events and conferencesmust be tapped through cluster organizations.

Alumni Networks

According to Sahay (2007), Indian Institutes of Technology alumni, over the last50 years, are residing in the USA. Around 25,000 professionals have sparkled India’sprestige as a nation and as a highly skilled human resource available for outsourcingpurposes. It is suggested that cluster organizations should appeal universities tocontact university alumni overseas and develop their database for future correspon-dence. Cluster organizations should extensively collaborate with universities throughincentives of financing, internship, and recruitment programs and should supportgraduate training abroad. It should also support visiting fellows and research scholarsin order to tap into specialized knowledge networks. In October 2011, TalentCorp–MDeC–Silicon Valley Workshop was held in MSC Cyberjaya. This event saw agathering of the best Malaysian talent from Silicon Valley who shared their

Engaging Diasporas: a Fledgling Role of Cluster Organizations

experiences and guided MSC-status companies regarding the market access, interna-tionalization, and entrepreneurship. Contribution from these professionals can also befacilitated by setting up global offices, virtual forums, and social networking media.

Conclusion

Malaysian economic growth is significantly attributed to the immigration of low-skilled workers. However, Malaysia has lost its high-skilled talent due to the braindrain forces operating in the globalization. It is increasingly being realized that toachieve its vision for 2020 whereby it should be transformed in to a high-incomedeveloped country, a significant increase in the skill level and productivity is needed.To achieve this, there is need of array of initiatives. Among these initiatives isdiaspora engagement, which can contribute directly or indirectly in stirring theproductivity, innovation, FDI, and entrepreneurship challenges in Malaysia.However, every country has different combination of structural factors and diasporahistory, therefore success of diaspora program in China, Taiwan, and India does notguarantee that imitation of these programs will result a success in Malaysia. Saxenianherself is cautious of the direct application of Chinese, Taiwanese, and Indian uniquecases to other countries (Saxenian 2005). Beyond the difficulties faced by other Asiancountries, Malaysia is facing a unique problem of multi ethnicity. Among theMalaysians overseas, majority belongs to non-bumiputra background and the race-based structuring of opportunities in their native soil remains an important blockadeto them returning to or engaging with their homeland as explained by Hugo (2011).This paper therefore argues that cluster organizations should take a modest step tonetwork with these diaspora due to its non-political outlook. Above all, Chineseethnic group is dominant in business activities of Malaysia; therefore, these ethnicgroups can network with the respective ethnic diaspora. Cluster organization likeMultimedia Development Corporation hosts various networking events and mar-ket the MSC brand abroad. This organization apart from its traditional role canbecome the platform for engaging these diasporas. MSC status companies canup-skill their knowledge workers through cross-assignment programs in MNCswith the help of these diaspora networks. Account managers in the clustersshould profile their firms and identify the challenges. Cluster organizationsshould develop database of professionals in diasporas and seek solutions of thesechallenges. This paper suggests the quick fix of the problems of skill shortage,training, innovation capacity building, and venture capital funding for the clus-ter’s management through the diaspora networking.

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