The contradiction of entrepreneurship through affirmative action

Abstract

Malaysia’s affirmative action, introduced as the New Economic Policy (NEP) in 1971 to redress Malay economic setbacks, failed in its objective of acquiring for the Malay public companies the 30 percent equity of Malaysian public companies by 1991. The government believed that the NEP’s affirmative action, boosted by Malay political primacy, was a recipe for the creation of entrepreneurship. While not minimizing the role it justifiably plays for marginalized societies, affirmative action for the creation of entrepreneurs is questionable. This paper attempts to explain that state assistance to an economically-challenged society does little to create entrepreneurship, and because of its dependency ethos, is likely to inhibit the survival instincts and gumption necessary to face the challenges of entrepreneurship. It offers a proposition: in the context of Malaysia, selective assistance under affirmative action invites cronyism which non-Malay entrepreneurs resent and react with even higher competitive resilience by organizing themselves more collaboratively and optimizing their resources.