The determinants of technological innovation adoption among Bumiputera small scale food processing industries in Malaysia.

Bumiputera Small scale Food Processing Industry (FPI) need to modernise and adopt technological innovation to stay competitive. This will increase their efficiency, improve productivity and allow for the introduction of new products and services to satisfy existing market demand or expanding market share. By adopting new technology, Bumiputera small scale FPI will not only decrease cost and increase productivity, but they will also be enabled to increase their share in the domestic market and even export their products. The development of FPI is to ensure that Malaysia can produce adequate food and help to provide much needed employment and contribute to national income. Being small scale there are various factors that inhibit or influence Bumiputera small scale FPI ability to adopt a technological innovation. Hence, the main aim of this study is to identify the determinants of technological innovativeness among small-scale Bumiputera entrepreneurs in the food processing industry in Malaysia. The pertinent questions are: Why do some Bumiputera small scale FPI adopt technological innovation while others do not do the Bumiputera small scale FPI have the capabilities to introduce new technology; how does institutional support shape SSIs' response to technology adoption? The theoretical model developed in this study used five main theoretical approaches - adoption decision process, organisational buying behaviour, decision theory of firms, small firms decision process and the personality of entrepreneurs From this model the key factors influencing technology innovation decisions among Bumiputera small scale food processing firms were identified. Based on this model, we can show and quantify the inter-relationship between the various factors influencing technology adoption decisions. The researcher used a survey method to collect information from 197 Bumiputera entrepreneurs in small scale FPI. In the statistical analysis, as a way of solving the problem of multicollinearity among hypothesised factors, based on firms' size, the researcher stratified the respondents into two groups - tiny and small firms. Findings of this study showed that Bumiputera small scale FPI has a greater tendency to adopt an incremental type of innovation. The entrepreneurs' characteristics, communication, their perception of the buying situation, the objective characteristic of the innovation, institutional involvement and their firms' characteristics significantly influenced entrepreneurs in small and tiny firms to innovate. The entrepreneurs' perception of the innovation only influenced the decision to innovate of the entrepreneurs in tiny firms. In tiny and small firms, among the entrepreneurs' characteristics that influence the innovativeness are their personal demographics, personality traits and skill upgrading. Firms' performance and their financing problem are the characteristics of their firms that had significant influence on firms' innovativeness. Firms' age only has significant influence on tiny firms, while firms' size and structure have significant influence on small firms' decision to innovate.