Networking and Innovation in the Malaysian Palm Oil Industry : Past, Present and Future

Abstract

This paper encourages leaders in the oil palm and palm oil industry to think deeply about networking and to form both informal and formal networking groups so that more innovation can be achieved. It introduces ideas from a range of leading strategic management theorists about the links between three main kinds of networking and three corresponding stages of the process of innovation. Different kinds of networking groups are helpful at different stages of the innovation process. Open and informal social networking within “creative networks” and “transformation networks” supports the development of radically new technologies and new ways of thinking about how to apply them to the challenges faced by businesses in a fast-changing global economy. In contrast, once firms reach the final stage of creating new products and markets based on groundbreaking technologies, it makes sense to share ideas less freely. More secretive and closed “process networks”, in which the partners are bound by formal contracts, tend to be useful at this stage. The argument is supported by practical examples from the Malaysian palm oil industry, which has a long and successful record of both networking and innovation. The paper concludes with recommendations for applying these ideas to a range of challenges currently faced by the industry. Different challenges require different approaches, so that managers will need to engage in both co-operative and competitive behavior at the same time. This can create uncomfortable tensions between the need to share puzzling technical information, and the need to keep commercial secrets. Such tensions can be managed more easily when it is clearly understood what kind of networking people need to engage in for each of the various challenges they are dealing with.