Absorptive Capacity and Innovative Behavior among Engineers in Malaysia

Introduction The existence of global business organization requires a pool of talented people from various nationality backgrounds to work together in a specific organizational setting to achieve specific goals. Prior to any goal achievement in any organization, learning activities will take place as a first step to strengthen the foundation of performing specific tasks. Learning activities that involves interaction between individual personal factors and organizational environment that produce changes in individual behavior can be explained by social cognitive theory (SCT). This theory views the organization as a collective social system made of individual members of that organization who process information and develop knowledge within a specific organizational setting (Albino, Garavelli, & Schiuma, 1999). The theory also explains that the influence of environmental factors in stimulating a person’s personal factors such as attitude, learning capability and individual abilities will result in behavioral changes of a person such as the behavior of being innovative and acquiring useful knowledge (Bandura, 1986). In Malaysia, the organizational culture of MNCs is different from one to another since they originate from different countries and thus, they are strongly influenced by the home country culture. Therefore, local workers who are employed within these organizations are indirectly exposed to the new cultural setting that will affect their capability to absorb knowledge or also known as personal absorptive capacity (Kwantes & Boglarsky, 2007) that will also affect their behavior of acquiring knowledge and level of innovativeness. This chain of events reflects the learning process of local workers or host-country national (HCN) workers in MNCs. The learning process in MNCs is perceived as one of the most important factors that contribute towards the human capital development in Malaysia since MNCs are well-known for providing the technological imprint that introduces recent technology to the HCNs. In addition to the learning activities, MNCs also contribute to significant FDI inflow into this country and has been recognized as one of the important drivers to accelerate the economic growth in Malaysia (Bank Negara Malaysia, 2011). The involvement of MNCs in world’s economic development especially among developing nations is obviously important as the recent fact shows that there are 82,000 MNCs worldwide, with 810,000 affiliates and actively operates globally with more than 77 million workers (UNCTAD, 2009). The recent MNCs’ global FDI has reached USD 1.7 trillion and projected to swing higher in 2011 after the economic recovery in the US and Europe (UNCTAD, 2009). The projected amount is expected to hit for at least USD 1.8 trillion by 2011 (UNCTAD, 2009). Majority of MNCs expand business overseas to gain the localization of economies and expanding the product market (Hill, 2008). Of all the approaches undertaken in international penetration, foreign direct investment (FDI) is the most preferred method due to the cost utilization benefits and strategic market development purposes. The acceleration of FDI in host country will also benefit the receiving countries by providing more jobs to locals, increase opportunities to local vendor, increase the currency exchange value, and stimulates the GDP increase of the host country (Bank Negara Malaysia, 2011). The FDI activities in host country also help to accelerate the human capital development and nation’s economic growth (Rasiah, 2002). The cost that the government spends to attract the investment from foreign firms is expected to give something in return to the nation. It is expected to contribute to the human capital development that benefits local workers in the long run. The investment made by MNCs is also expected to make locals to have better access to recent technologies, good managerial expertise, and to improve their skills to a higher level, in addition to enhance their capabilities and competencies to perform better tasks in their daily professions besides fostering the country’s human capital development. Owing to that reason, MNCs have been determined as a short-cut for national human capital development (Ranis & Stewart, 2000). This opportunity