JOBNAME: No Job Name PAGE: 1 SESS: 11 OUTPUT: Tue Jan 22 01:59:16 2013 /v2503/blackwell/journals/ecge_v0_i0/ecge_12007 The In situ Upgrading of Japanese Electronics Firms in Malaysian Industrial Clusters David Edgington Department of Geography University of British Columbia 1984 West Mall Vancouver, BC V6T 1Z2 Canada david.edgington@ubc.ca Roger Hayter Department of Geography Simon Fraser University 8888 University Drive Burnaby, BC V5A 1S6 Canada hayter@sfu.ca Key words: Japanese multinational corporations electronics sector industrial clusters Malaysia abstract The ability of clusters generated by direct foreign investment (DFI) in emerging economies to generate sustained, value-added growth is a matter of contro- versy. This article assesses this debate with reference to the role of Japanese electronics multinational cor- porations (MNCs) in the development of clusters in Malaysia. Conceptually, we present a typology of DFI-generated industrial clusters that represent increasing degrees of commitment to local value cre- ation and upgrading. Empirically, we conducted a survey of 10 Japanese firms in Malaysia that exam- ined whether or not their factories increased techno- logical upgrading, increasingly embedded their operations through using local skilled labor and supply firms, and responded positively to national policies and cluster-governance measures supporting the electronics industry. We found that Japanese firms had clearly moved beyond simple assembly- based to embedded clustering, but had not pro- gressed further to technology-intensive behavior because of the poor technological environment in Malaysia, as well as Japanese MNCs’ strategies that depend on technology from headquarters. Nonethe- less, Japanese MNCs were sufficiently embedded in Malaysia to upgrade production to digital consumer products, and semiconductor assembly has flour- ished, warding off competition from China and low- cost locations in the Association of Southeast Asian Nations. At the end of the study period, Malaysia remained an attractive location for Japanese electron- ics MNCs. Toppan Best-set Premedia Limited Journal Code: ECGE Proofreader: Elsie Article No: ECGE12007 Delivery date: 21 Jan 2013 Page Extent: 33 1 ECONOMIC GEOGRAPHY ••(••):••–••. © 2013 Clark University. www.economicgeography.org 1 2 3 4 5 67 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56