Absorptive capacity and implementation of new technology in Malaysian small and medium sized construction companies

The construction industry is a very important part of the Malaysian economy. The government's aim is to make the industry more productive, efficient and safe. Small and medium sized enterprises (SMEs) are at the core of the Malaysian construction industry and account for about 90% of companies undertaking construction work. One of the main challenges faced by the Malaysian construction industry is its ability to absorb new knowledge and technology and to implement it in the construction phase. This research investigates how the Malaysian SME construction companies in rural areas can absorb and benefit from the new technology available and implement it on the projects. The research was conducted in three stages: (1) understanding the Malaysian construction industry through a literature review and discussions with the Construction Industry Development Board (CIDB); (2) a literature review on the issues related to absorptive capacity and interviews with the CIDB to develop a model of absorptive capacity for rural construction SMEs; and (3) multiple case studies of five construction SMEs operating in rural areas to validate the model and the factors influencing absorptive capacity. Through the case studies, seven important characteristics and ten key factors influencing absorptive capacity were identified. These were: (1) cost and affordability; (2) availability and supply; (3) infrastructure; (4) Government's policy; (5) demand; (6) labour readiness; (7) communication and sources of new knowledge; (8) organisation's policy; (9) workforce attitude and motivation; and (10) culture. The model developed serve two functions: Firstly, to help rural construction SMEs to understand the issues and process related to absorptive capacity and implementation of new technology in order for them to use the technology. Secondly, to provide a mechanism for policy makers and the CIDB to transfer new technology to the rural contractors. This research contributes to the body of knowledge of absorptive capacity by highlighting issues related to absorptive capacity and implementation of new technology in the context of rural SMEs.