Entrepreneurship in rural Malaysia: an investigation of handicraft producers in Sabah Region

This research investigates the commercialisation processes of handicraft producers in Sabah, Malaysia, and the factors influencing their development and performance. The Malaysian government encourages handicraft production as a full-time activity in dedicated workshops, but the vast majority of producers stay part-time and home-based. The aim of this research is to understand why so few producers switch to a greater level of commercialisation, despite government support. From the literature review, it is found that a combination of person-related and contextual factors influences small enterprise development and performance, but handicraft producers in a developing country context have different characteristics to the firms usually studied in entrepreneurship, so they may follow different development paths. Therefore, qualitative research was carried out (in-depth interviews with 16 handicraft producers), which aimed to understand deeply from the producers’ point of view how they made choices about their enterprises, and the factors that encouraged or inhibited their move to full-time status or workshop premises. It was found that interviewees perceived part-time domestic production to be convenient and flexible, and workshop production to be a big commitment, although factors such as level of perseverance and social networking were influential to these. In the interviews, a complicated relationship between status, premises and enterprise performance was also found. A face-to-face survey was then conducted of 210 handicraft producers in Sabah region, which aimed to test quantitatively the factors that influence producers’ status, premises and performance, and the relationships between them. Through cluster analysis, three groups of producers were identified: (i) ‘high performance full-timers’, (ii)‘part-time professionals’ and (iii) ‘part-time home workers’. The first group contained both domestic and workshop-based producers, all full-time status, and showed highest levels of sales and profits. It was interesting to find that part-time professionals had lower profit levels than part-time home workers, even though almost all part-time professionals produced in workshops, half of them in government assisted workshops. One way ANOVA tests found significant differences between the clusters on thirteen person-related and contextual factors, including producers’ (i)education level, attendance in craft incubator, previous income activity, (ii)self-confidence, perseverance, (iii)skills relating to production, organising and networking, (iv)income maximisation motivation and (v)access to government supports, financial resources and reliable workers. The evidence from the research shows that handicraft producers in Sabah region see many advantages in domestic production, and profit levels can be higher than in workshops. By identifying the different profiles of handicraft producers in Sabah, and the person-related and contextual factors that influence them, this research may help the Malaysian government to develop effective support policies for different types of handicraft producer, including how to encourage more individuals to become ‘high performing full-timers’