The Adoption And The Implementation Of Best Practice In Malaysia Biotech Manufacturing Industry.

-EKNIKAL MALAY'SIA MELAKA
FACULTY OF MANUFACTURING ENGINEERING

PSM THESIS
HTheAdoption and the Implementation of Best Practice in
Malaysia Biotech Manufacturing Industry"

Name
Matrix No.
Course
Year
Supervisor's Name

:WQNG PENG LIANG
:B050410311
:Manufacturing Engineering (Design)

:2007/2008
: Mr. ZULKEFLEE B. ABDULLAH (FKP)

UTeM: Library (Pi11d.1/2007)

UMIVERSITI TEKNIKAL MALAYSIA MELAKA

JUDUL: THE ADOPTION AND THE IMPLEMENTATION OF BEST PRACTICE IN
MALAYSIA BIOTECH MANUFACTURING INDUSTRY
SESl PENGAJIAN : 2007 / 2008
WONG PENG LIANG
Saya
(HURUF BESAR)
mengaku membenarkan tesis (PSM/SarjanalDoktor Falsafah) ini disimpan di
Perpustakaan Universiti Teknikal Malaysia Melaka (UTeM) dengan syarat-syarat
kegunaan seperti berikut:
1. Tesis adalah hak milik Universiti Teknikal Malaysia Melaka .
2. Perpustakaan Universiti Teknikal Malaysia Melaka dibenarkan membuat salinan
untuk tujuan pengajian sahaja.
3. Perpustakaan dibenarkan membuat salinan tesis ini sebagai bahan pertukaran
antara institusi pengajian tinggi.
4. "Sila tandakan (4)

SULIT

(Mengandungi maklumat yang berdarjah keselamatan
atau kepentingan Malaysia yang terrnaktub di dalam
AKTA RAHSIA RASMl 1972)

TERHAD

(Mengandungi maklumat TERHAD yang telah ditentukan
oleh organisasi/badan di mana penyelidikan dijalankan)

TIDAK TERHAD

$

(TANDATANGAN PENULIS)

Disahkan oleh:

$J!!7
(TANDA

GAN PENYELIA)
ZlkKEFLEE BIN ABDULLAH

Alamat Tetap:
764, Taman Saga 11,
Jalan Aor Mengkudu,
05400 Alor Star, Kedah.
Tarikh:

1 (t/5/3m%

Cop Rasmi:

Tarikh:

Pensyarah

Faktilli Kejurvteman Pembuatah
Unwersltl Tekn~kalMalays~aMelaka

Kmng Behunci
75450 1200
MelakaAyer Ke&

1 4 /s/''o %

* Tesis dimaksudkan sebagai tesis bagi ljazah Doktor Falsafah dan Sarjana secara penyelidikan, atau
disertasi bagi pengajian secara kerja kursus dan penyelidikan, atau Laporan Projek Sarjana Muda tPSM).
" Jika tesis ini SULIT atau TERHAD, siia lampit-kan surat daripada pihak berkuasa/organisasi berkenaan
densan menvatakan sekali sebab dan tempoh tesis ini perlu dikelaskan sebaqai SULIT atau TERHAD.

DECLARATION

I hereby, declared this thesis entitled "The Adoption and the Implementation of Best
Practice in Malaysia Biotech Manufacturing Industry" is the results of my own research
except as cited in references.

Author's Name
Date

.. ...... .. . ....... . .

APPROVAL

This PSM submitted to the senate of UTeM and has been as partial fulfillment of the
requirements for the degree of Bachelor of Manufacturing Engineering (Design). The
members of the supervisory committee are as follow:

(ENZ U L E K F I ~BIN
~ ~ABDULLAH)
(Official Stamp BDate)

Best practices are leadership, management, or operational methods or approaches
that lead to exceptional performance. Even though, there are a lot of researches and
findings show the success of benchmarking or best practice, but there are few- co~npanies
that not adopt or are not successfbl in the implementation of best practice. The purpose of
this study is to find the factors that most influence the manufacturers to adopt the best
practice in Malaysia biotech manufacturing industry. Therefore, focus could be paid on
these factors to find the right partner and avoid wasting resources while doing
benchmarking probct. Moreover, the relationship between implementation success of the

best practice that the organization had adopted and the performance improvement of the
organization as a result of implementation on these best practices is also to be found out.
The population of the study is 64 companies that were registered under Biotech Division,
Ministry of Science, Technology and Innovation and ONLY 8 QUESTIONNAIRES

R E m D from the respondents WERE analyzed USING SPSS .From this study, it
was found that the three major factors that would affect the decision making in best
practice adoption were the perceived benefits (increase quality and improve overall
operational performance) of the best practice itself, organizational culture (change is
viewed positively) of the company and perceived outside supports (availability of outside
training). On top of that, the relationship between implementation success level and
performance improvement level as a result of implementing the best practices was found
positively related.

ABSTRAK

Teknik terbaik adalah kepimpinan, pengurusan, cara-cara perjalanan yang
menyumbang kepada hasil keputusan yang baik. Walaupun terdapat banyak kajian dan
keputusan menunjukkan pengajian teknik terbaps yang berjaya, malah ia masih terdapat
syarikat-syarikat yang tidak mengamalkan pengajian teknik terbagus atau gaga1 dalam

melaksanakan teknik terbagus itu. Penyelidikan ini adalah bertujuan untuk mencari
faktor-faktor yang paling mempengaruhi para pen@lang untuk melaksanakan teknik
terbagus tersebut dalarn industri biotek Malaysia. Selain tu, perhatian juga diberi kepada
faktor-faktor tersebut untuk mencari syarikat sekerja yang betul dan setenisnya
menghalang syarikat daripada membazir sumber-sumber semasa menjalankan projek
pengajian teknik terbagus. Dalam penyelidikan ini juga, hubung kait antara kejayaan
perlaksanaan teknik terbagus dan peningkatan prestasi syarikat hasil daripada
perlaksanaan teknik terbagus itu DIKENALPASTI. Populasi penyelidikan ini adalah 64
buah syarikat yang didaftarkan di Bahagian Biotek, Kementerian Sains, Teknologi dan
Innovation, dan 8 soal selidik daripada 8 buah syarikat dikutip d m dianalisakan.
Keputusan yang didapati rnenunjukkan tiga faktor-faktor utama yang mempengaruhi
keputusan untuk melaksanakan teknik terbagus adalah kebaikan yang dirasai
(peningkatan kualiti dan pencapaian operasi syarikat) daripada teknik terbagus itu
sendiri, budaya syarikat (pengubahsuaian dianggap positif dalam syarikat) dan sokongan
luaran didapati (keuwjudan latihan luaran). Di sarnping itu, kejayaan perlaksanaan teknik
terbagus didapati BEIUXJBUNGKAIT dengan peningkatan pencapaian prestasi syarikat.

DEDICATION

To i11y father and 1110thel; teacl~ers,family's ~nembel-sand all iny friends who always

helped me when I was in the darkest coimer.

A number of people have contributed to the coinpletion of this study. First of all, I
an1 grateful to Madain Nor Ratna Masrom, who is my inail1 supe~visorand she has given
m e so inuch sup go^? and guidance througl~outthe entire process of this study. Her
inspirations and encouragement for excellence will permeate tllrougl~outmy life as well
as my career.
The endless support from my family's me~nbers,especially my parents plays an
important role in my continuous constant efforts in studying and contributing. Without
their physical and morale suppoi?, I might 11ave not enough energy to finish all illy
responsibilities. Their kindness will always b e lcept deep in my mind forever.
I11 perfoin~ingevery job, I can really feel the cooperation fi-om all the personnel
involved. Therefore, the fixlit of this study is not ,mine, but all the people that had
sacrificed times and efforts to succeed the 131-oject.Many thanlts to all of then1 and inay
their lives will always be filled with joys and health.
Finally, I also appreciate the manager, all the staffs and the paiticipants in this
study that gave full helping 11ands in the progress of the 111-oject.Without their helps, the
project nlust be in void. Thank you all vel-y IIIUC~I!

TABLE OF CONTENTS

..
Declaration.. ..................................................................................... ..II

...

Approval.. ......................................................................................... .III
Abstract.. ............................................................................................. .iv
Absti-ak.. ............................................................................................... v
Dedicatioli ......................................................................................... .vi

..

Aclcnowledge~i~ents..
............................................................................ .vii

...

Table Of Contents.. ............................................................................ .VIII
List Of Figures.. .................................................................................. xi

List Of Tables.. .................................................................................

..

.XII

...

List Of Abbreviations, Sylllbols, Specialized Nomenclature. ............................ .xm
CHAPTER 1 :INTRODUCTION
1.1

Baclcground of the Study.. ................................................................. 1

1.2

Statement of the Problem ..................................................................3

I .3

Objective of the Study...................................................................... 4

1.4

Framework of the Study.. ................................................................ ..5

1.5

Scope of the Study.. .........................................................................6

. .

CHAPTER 2 : LITERATURE W V I E W
2.1

Definition.. .................................................................................. .7
2.1.1

Biotechnology.. .....................................................................7

2.1.2 Process and Practice.. ............................................................ .7
2.1.3
2.2

Bencl~~narking
and Best Practices.. .............................................. 8

Best Practice Factors.. ......................................................................9
2.2.1

Codification.. .........................................'. .............................9

2.2.2

Complexity.. ........................................................................9

2.2.3

Compatibility.. ......................................................................9

2.2.4

Perceived Benefits.. .............................................................-10

2.2.5

Cost .................................................................................
I1
...
Vlll

Organization Factors .......................................................................12

2.3

2.3.1 Top Managemeilt Support.......................................................12
2.3.2 Absoi-ptive Capacity .............................................................. 12
2.3.3

Satisfaction wit11 t l ~ eExisting Practice ........................................... 13

2.3.4 Innovativeness of Organization Culture .......................................13
2.3.5

Organization Resource Availability ............................................14

2.3.6

Existence of a Charnpion.............................................:..........14

2.3.7

Size ................................................................................. 14

Envirolm~entFactors ......................................................................-16

2.4

2.4.1 Enviromnental Bal-riers ........................................................... 16
2.4.2 Vertical Linltages..................................................................16
2.4.3 Perceived Outside Support ...................................................... 16
2.4.4 Exte~nalPressures .................................................................17
2.5

Best Practice Adoption .................................................................... 18

2.6

Iinplementation Success of Best P~.actice............................................... 19

CHAPTER 3 :HYPOTHESES
Hypotheses ................................................................................ -21

3.1

CllAPTER 4 :R'IETHODOLOGY
4.1

...............................................................23
Methodology's Framewol.1~

4.2

Sampling...................................................................................-25

4.3

Co~~struct
Measurement ..................................................................-26

4.4

The Questionnaire .......................................................................... 27

4.5

.....................................................................28
Survey Ad~nl~listration

4.6

Analysis ....................................................................................-29

..

CI-IAPTER 5 :RESULTS
General hlfor~llatioi~
About Respondents ...............................................30

5.1
5.2

.

Best Practice Factors ......................................................................32

5.3

Otganizatioll Factors .......................................................................35

5.4

External Factors ...........................................................................-39

5.5

Impleinentation Success and Perfonllance Improvement ............................. 41

CHAPTER G : DlSCUSSION
6.1

Factors Affecting Best Practice Adoption Decision.. .............................. ..43

6.2

Implei~~entation
Success of Best Practice and Performance Improveinent.. ......45

CHAPTER 7 : CONCLUSlON
7.1

Conclusion.. .............................................................................. -50

7.2

Co~ltributionand Limitation.. ............................................................51

7.3

Suggestion.. ................................................................................52

REFERENCES
APPENDICES

A

Cover Page of questionnaire.

B

Questionnaire.

LIST OF FIGURES

1.1

Framewol-k of the Study

4.1

Flow Chart of Metl~odology

24

6.1

Gi-al)l~of Iinple~nel~tation
Success Variable Versus Perforllla~~ce

49

I m y r o v e ~ n eVariable
~~t

5

LIST OF TABLES

General Info~-~nation
about Companies and Best Practices Adopted
General Information Companies' Size and Employees
Best Practice Factors - Coclification
Best Practice Factors - Coinplexity
Best Practice Factors - Coinpatibility
Best Practice Factors - Cost
Best Practice Factors - Perceived Benefits
Organization Factors - Manageinent Support
Organization Factors - Organizational Cultlire
Organization Factors - Absorptive Capacity
Organization Factors - Satisfaction with Existing Practice
Organization Factors - Available Resource
Organization Factors - Existence of Leader
External Factors - External Pressures
Barriers
Extellla1 Factors - Envirom~~ental
External Factors - Perceived Outside Support
External Factors - Vertical Linkages
Imylen~entatioiSuccess
Peifos~llanceIml.~rovanent

6.1

Suinmaiy of High Selected Best Practice Factors' Results

6.2

Suini~~aly
of Hi g11 Selected Orga~lizatiollFactors' Results

6.3

Surnlnaiy of High Selected Extellla1 Factors' Results

6.4

Sull~n~aiy
of Hidl Selected lmplanel~tationSuccess and

Performance Iinprove~nent'sResults

xii

LIST OF ABBRIEVIATIONS, SYMBOLS, SPECIALIZED
NOR/BENCLATTURE

APQC

-

American Productivity and Quality Center

et al.

-

and other people

etc

etcetera (and so on)

FDI

Foreign Direct Investment

FMM

-

Federation of Malaysian Manufacturers

ICT

Info]-nlation and Communication Teknology

IS 0

International Standardization Organization

RMIC 9

-

SMI

-

MOST1

Malaysian 9IhPlan, 2006-2010
Sn~alland Medium Industries
Total Quality Managenlent

TQM
UTeM

Ministry of Science, Tecl~nologiesand Innovations

-

Univeriti Telcniltal Malaysia Melalta

CHAPTER 1
INTRODUCTION

1.1

BACICGROUND OF THE STUDY
As the world recognizes that Malaysia nowadays is a developing countsy and the

nlanufactu~ing sectors contlibute a huge poi-tion of the econoiny of the count~y.
Therefore, Malaysians are in an industlial society, focusing in the production of goods.
However the enlelsion of neigl~bouringcountiies, such as China, Thailand and Vietnam
where have the privilege of lower labour costs compared to Malaysia. Malaysian
gove~nlnenthas foreseen the problem and struggled to remain the foreign direct
investment (FDI) in Malaysia. On of the possible ways to maintain the conlpetency of
Malaysia's products is through efficient production and ligh quality products. W li i le
bc~ildi~ig
i~poliestablished clusters of i~idustriesto produce next generation products,
efforts \\;ill

be ~iiadeto enliance the clevelopme~itof new sources of 91-owth,largely

science-based and innovation-basecl activities, especially bioteclinology and ICT
industries to diversify and bsoaclen tlie ~iia.nufactusingbase. (liMI< 0: 2006;)
According to Ungan, M.C.(2002), one of the potentially efficient ways to
improve a process is to identify and adopt best practices that were developed elsewhere
and have produced superior results. This al~proach, cornlnonly referred to as
benchmasking, has been widely sclutinizecl by practitioners since the early 1990's.
However, in Malaysia alone, Inany research-based studies were done, but the adoption
of best practices is not as ligh as might be expected, especially in small and nlediutn

industries (SMI). Althougl~there is enough research evidence that scores of conlpanies
are involved in bencl~marl~ingto identify best practices, these organizations are
generally not willing to adopt or are not successful in implementing their findings (The
Benchmarking Exchange, 200 1, Davies and I