Int. J. Management Practice, Vol. 5, No.

3, 2012 287

Success strategies of SMEs in the creative sector

in Malaysia: a case study of Les Copaque

Hezlin Harris*, Kamarulzaman Ab Aziz

and Mariati Norhashim
Faculty of Management,
Multimedia University,
63100 Cyberjaya,
Selangor, Malaysia
Email: hezlin.harris@mmu.edu.my
Email: kamarulzaman.aziz@mmu.edu.my
Email: mariati.norhashim@mmu.edu.my
*Corresponding author

Abstract: The creative sector has been acknowledged by the Malaysian

government as a major driver in the transformation of economies. Although the
Malaysian government recognises the importance of nurturing the creative
sector and has provided a range of facilities, the onus is on the firms to take
advantage of these facilities. Hence, in this paper, a case study of a pioneer
animation production company Les Copaque is presented drawing insights on
their approach for sustaining performance in a challenging sector by leveraging
on government facilities and through effective Intellectual Property (IP)
management strategies. This paper looks at how the process Malaysian pioneering
animation production company, Les Copaque overcame the technological
and market challenges in the creative industries. Specifically, Les Copaque’s
strategies for managing its IP and resources by (a) leveraging on government
provided facilities specifically for financial assistance and distribution of its
products and (b) selective IP protection strategies.

Keywords: intellectual property management; case study; small-medium

enterprises; Malaysia.

Reference to this paper should be made as follows: Harris, H., Ab Aziz, K. and
Norhashim, M. (2012) ‘Success strategies of SMEs in the creative sector in
Malaysia: a case study of Les Copaque’, Int. J. Management Practice, Vol. 5,
No. 3, pp.287–299.

Biographical notes: Hezlin Harris currently teaches courses related to

Statistics from the basic to the advanced levels in the undergraduate and the
postgraduate programs. She received her first degree in Finance and Economics
(Summa Cum Laude) from Syracuse University, New York, USA and a second
degree from Multimedia University, Malaysia following which she became a
Lecturer of Statistics in the Faculty of Management, Multimedia University,
Malaysia. She is a Coordinator for the Innovation Management research cluster.
Her research interests include electronic business, innovation management and
intellectual property.

Kamarulzaman Ab Aziz is currently the Deputy Dean of the Faculty of

Management, Multimedia University and a member of the Centre for
Knowledge & Innovation Management (CEKIM) where he is the leader for the
Intellectual Property & Commercialization Program. He graduated with MSc in

Copyright © 2012 Inderscience Enterprises Ltd.

288 H. Harris, K. Ab Aziz and M. Norhashim

Technology Management from Manchester School of Management, University

of Manchester Institute of Science and Technology (UMIST), UK and BEng
(Hon) in Electronic Engineering from the University of Manchester, UK. His
doctoral studies focus on the dynamics of sustainable cluster development.

Mariati Norhashim is a Senior Lecturer with the Accounting Department in the

Faculty of Management, Multimedia University. She is currently pursuing her
PhD in Family Economics and Management from Universiti Putra Malaysia in
the field of financial gerontology. She holds a Masters and Bachelor (Hons) in
Accounting. She has also served as a resource person for leadership training,
educational and social service programs as well as dialogues. Her interests
include entrepreneurship education as well as financial management and
reporting.

1 Introduction

One of the main thrusts of the National Economic Model (NEM) in the Tenth Malaysia
Plan (10MP) is to transform Malaysia into a high-income nation by year 2020 through
innovation-led growth. To support the transformation, the Malaysia’s National Innovation
Model (NIM) which serves as the over-arching principle states categorically that there
must be a shift from a resource-based economy to an innovation-based economy. A vital
aspect of this innovation-based economy is Intellectual Property (IP) and the ancillary
issues that arise from it, such as the creation, protection, management and commercialisation
aspects. These factors play an important role in the National Intellectual Property
Policy’s ultimate aim of which is to develop an IP industry as a driver for innovation and
creativity that is vital to sustain Malaysian’s economic growth.
The term ‘creative industry’ which was first coined in the UK in 1994, refers to the
segment of the economy that is involved either directly or indirectly in the creation,
manufacture, production, broadcast and distribution of copyright protected materials
(Borneo Post, 2010). The creative sector has been acknowledged by the Malaysian
government as a major driver in the transformation of economies. Malaysia adopts the
UNCTAD model in defining creative industries.
“Creative industries are those involved in the creation, production or
distribution of goods and services that use creativity and intellectual capital as
primary inputs. The creative industries constitute a set of knowledge-based
activities, focused on but not limited to arts, potentially generating revenues
from trade and IP rights. They comprise tangible products and intangible
intellectual or artistic services with creative content, economic value and
market objectives. They range from traditional arts and crafts, publishing,
music, and visual and performing arts to more technology-intensive and
service-oriented activities such as film, television and radio broadcasting, new
media and design”. (UNIK, 2011)
Statistics by World Intellectual Property Organisation (WIPO) and Malaysian Intellectual
Property Office (MyIPO) survey in 2009 revealed that the creative industry in Malaysia
is one of the fastest growing sectors in the economy. According to the national studies
done by WIPO (2011), the creative industry’s annual growth rate is reported to average at
11% over the last five years exceeding the national growth rate of 6.6%. Not only that,
the industry contributes about 5.8% of the country’s Gross Domestic Product (GDP).
However, the figure is still putting Malaysia behind benchmark countries in terms of
 Success strategies of SMEs in the creative sector in Malaysia 289

creative industry contribution to GDP (PEMANDU, 2010a). The industry has also
recorded a notable human capital growth of 10.7% which is three times higher than the
national human capital growth of 3.3% (WIPO, 2011). Year 2010 was also marked as the
Malaysia’s ‘Year of Innovation’ which clearly demonstrates the growing significance of
the creative industry.
This paper begins by describing the background of creative sector in Malaysia
followed by the challenges faced by the Small-Medium Enterprises (SMEs) in the sector.
This is followed by the research methodology used in this study. This paper highlights
the strategic decisions which SMEs may make in order to ensure success in the sector via
a case study of Les Copaque Productions Sdn. Bhd. The company is one of the pioneer
animation production company in the country that has achieved significance successes,
pushing them to the level of a national benchmark. Specifically, the management
strategies employed by Les Copaque in developing and managing their products,
Intellectual Property Rights (IPRs) were presented. The paper ends by drawing some key
lessons from the case study that can serve as best practice for other Malaysian SMEs in
the sector to emulate.

2 Creative sector in Malaysia

The Economic Transformation Programme (ETP) is a holistic framework that will

deliver the NEM’s aspiration in transforming Malaysia into a high-income society by
2020. ETP is established under the Malaysian Government’s Performance Management
and Delivery Unit (PEMANDU) whose mission is to oversee the delivery of the ETP.
ETP has identified that the creative industry as one of the sub-segments of business
services that has the highest potential to elevate the Gross National Income (GNI) with
differentiated products and services which are able to capture global market shares. The
sub-segments are displayed in Figure 1.

Figure 1 High-potential business services sub-segments (see online version for colours)

Source: PEMANDU (2010b)

290 H. Harris, K. Ab Aziz and M. Norhashim

ETP forecasts that the creative industry in Malaysia will lead to a gradual boost of
RM35.7 billion and reach RM58 billion by year 2020. The revenue generated from the
creative sector in Malaysia is RM9.4 billion in 2008 which contributed to 1.27% of GDP.
This is projected to grow by a Compound Annual Growth Rate (CAGR) of 11.4% to
achieve RM20 billion in 2013. However, the creative industry in Malaysia is still
considered as in the infancy stage within the Asia Pacific region. Hence, it is imperative
for Malaysia to lay the foundations to capture market share (PEMANDU, 2010b).
The government support for local creative industry was strengthened with provisions
of RM200 millions for the Creative Industry Fund under the Ministry of Communications,
Information and Culture (MCIC). Another RM100 millions were allocated for the
Technopreneur Fund under the auspices of Malaysian Technology Development
Corporation (MTDC). A further RM50 millions are given to fund the production of local
documentary films which to be aired over Discovery and National Geographic channels.
The fund is managed by Malaysian Communications and Multimedia Commission
(MCMC) and another RM3 millions to the Arts Activist Welfare Fund.
To spearhead the expansion of the creative sector in Malaysia, the Multimedia Super
Corridor (MSC) Malaysia Creative Multimedia Initiative (M-CMCI) was launched. The
main objective is to develop the Malaysian creative multimedia industry into becoming a
key growth engine for the nation. According to Nicholas Shariff Collins, Senior Manager
of the Creative Multimedia Department, Multimedia Development Corporation (MDeC),
the strategy is to drive initiatives to spur the sectors growth with focus being on
sustainable content i.e. IP and talent creation. The new focus will also help to bridge
digital divide, enhance the use of technology within the wider creative industry
specifically and the nation in general, to develop local expertise capable of producing
‘global’ Malaysian content as well as driving creative IP creation in the country. The
implementation framework was based on the M-CMCI. The initiatives were designed to
provide both the infrastructure and support systems (including financial) needed for all
three main stages of the creative multimedia industry, namely; pre-production,
production and post-production. Specifically, the five thrusts of the initiatives are:
• Talent – to develop the education system and enable industry to produce enough
quality creative talent to fill the entire content supply chain.
• Funding – to facilitate adequate funding mechanisms to ensure quality creative
works with market potential may be developed.
• Market access – to develop programmes in place to enable and facilitate companies
to access high growth markets and to seek collaboration to achieve sales.
• Be as open as possible – through the Bill of guarantee moving towards self-
regulation and ‘no censorship of the internet’.
• Convergence of the regulatory environment – assist various government agencies
transform and change mindsets.
As the creative sector in Malaysia has yet to mature, the implementation stage faces
challenges particularly in view that the majority of the creative sector is made up of
SMEs. It can be seen that approximately 70% of the 257 MSC-status companies listed
within the creative cluster are SMEs (as of January 2012).
 Success strategies of SMEs in the creative sector in Malaysia 291

3 Challenges faced by SMEs in the creative sector

The Malaysian business landscape is dominated with SMEs which accounts to 99.2%
of total business establishments and contributes about 32% of GDP and 59% of total
employment (SME Corp, 2011). The landscape is not uncommon for a developing
country like Malaysia. The creative sector is often populated by mainly small-scale
businesses that are too small to make the large investments needed to develop their
products or services and to go to the international markets (Ratzenbock, 2004).
SME Corporation Malaysia is the Central Coordination Agency that formulates
overall policies and strategies for SMEs and organises programmes across all associated
Ministries and Agencies. According to the SME Corporation Malaysia, the definition of
SME is shown in Table 1. As reported in the SME Annual Report 2010–2011, SMEs in
Malaysia mainly consist of services which accounts for 86.6% share of total SMEs in
Malaysia. The remaining 7.2% and 6.2% shares of total SMEs in Malaysia come from
the manufacturing and agriculture sectors.
Table 1 Definition of SME in Malaysia
Micro Enterprise Small Enterprise Medium Enterprise
Manufacturing, Sales turnover of less Sales turnover between Sales turnover between
Manufacturing- than RM250,000 or RM250000 and less than RM10 million and
Related Services and full time employees RM10 million or RM25 million or full time
Agro-based industries less than 5 full time employees employees between 51
between 5 and 50 and 150
Services, Primary Sales turnover of less Sales turnover between Sales turnover between
Agriculture and than RM200,000 or RM200,000 and less thanRM1 million and
Information & full time employees RM1 million or RM5 million or full time
Communication less than 5 full time employees employees between 20
Technology (ICT) between 5 and 19 and 50
Source: SME annual report 2010–2011
Not only does the SMEs in the creative sector face the above challenges, protection of
the IPRs is also one of the major challenges (refer Table 2). Another major challenge for
the SMEs in the creative sector is that they are often plagued by the costly access to latest
technologies. This can be seen in the national survey conducted by the World Bank in
2010. The National Innovation Survey of 2005–2008 revealed that 43% of innovating
firms in Malaysia consider access to finance resources as an obstacle that should be
addressed (World Bank, 2010).
Table 2 Key challenges faced by the creative sector in Malaysia
Low level of industry exposure, profile and reputation: This results in companies having limited
access to funding and investment for production, marketing and expansion.
Lack of awareness and enforcement of policies and regulations: There is currently a lack of
awareness and understanding of intellectual property rights for creative industries as well as
methodologies to evaluate and protect intellectual property.
Lack of access to global market: Malaysian content creators currently generate most of their
revenues from the domestic market. To ensure sustainable growth there is a need for the local
content creation companies to reach out to the global market.
Lack of competency and capacity: Malaysian content creators are unable to effectively secure
international deals due to internal structural issues such as the lack of high quality talent on the pre-
production side (writers and storyboard artists) and production managers. We will need to enhance
the quality and competency of our human capital as we step up to service the needs of the global
market.
Source: ETP Report by PEMANDU
292 H. Harris, K. Ab Aziz and M. Norhashim

Figure 2 highlights the key challenges faced by SMEs in Malaysia (SME Corp, 2011).

Figure 2 Key issues faced by SMEs (see online version for colours)

SMEs in the creative sector in Malaysia also suffer from the poor awareness of the
enforcements of IPRs, limited market access and talent pool. This is particularly difficult
for SMEs due to poor access to resources and lack of ability to market effectively. The
national studies by WIPO (2011) also revealed that there is an apparent lack of awareness
of the importance of copyright among consumers as well as producers of copyright
works.
According to the report by the ETP in 2011, there are four key challenges
encountered by the creative sector in Malaysia. The key challenges are shown in Table 2.
The value chain for the creative sector is at the mercy of pirates particularly in these
days of torrents (peer-to-peer networks for sharing files). Also, SMEs as highlighted by
Petit et al. (2010) “are not always aware of the IP created in house and, as a consequence,
often underestimate their capacities of being active in producing IP”. They further
pointed that the SMEs are also often unaware of the IP system. Aba et al. (2010) found
that SMEs “do not use formal IP protection as a competitive strategy, and adapt to threat
of imitation by using informal methods such as trade secrets, maintaining product quality
and constant innovation”.
Policymakers on the other hand, often believe that SMEs need the IP system in order
for them to be competitive (Macdonald and Turpin, 2008). However, Macdonald and
Turpin (2008) concluded that the key is to incorporate IPR into the SMEs’ business
strategy and having IPRs framework alone is not the answer.
Although the Malaysian government recognises the importance of nurturing the
creative sector and has provided a range of facilities, the onus is on the firms to take
advantage of these facilities. Hence, in this paper, a case study of a pioneer animation
production company Les Copaque is presented drawing insights on their approach for
sustaining performance in a challenging sector by leveraging on government facilities
and through an innovative philosophy towards piracy.
 Success strategies of SMEs in the creative sector in Malaysia 293

4 Research methodology

This paper adopts a case study methodology and a structured interview questions as the
research instrument. Case study methodology usage can be traced back to the early
1900’s when it was popularly used by the Department of Sociology, University of
Chicago. Tellis (1997) and Zonabend (1992) stated that case study is done by giving
special attention to completeness in observation, reconstruction and analysis of the cases
under study. Case study is done in a way that incorporates the views of the ‘actors’ in the
case under study.
A case study is a research strategy used when attempting to understand complex
organisation problems; in essence allowing one to focus on something which is sufficiently
manageable and can be understood in all its complexity. Moore (1987) and Yin (1994)
also proposes that case study method is useful in describing a phenomenon in its own
context and to explore an issue or a question.
As the objective of this study is to examine Les Copaque and identify the IP
management factors that contributed to its success, the case study method will allow us to
describe the IP management strategies that Les Copaque used to secure its competitive
advantage.
In this study, 35 questions were asked to obtain information on the background of the
company, its production and marketing strategy as well as information regarding the
innovation and IP strategy of the company. The person interviewed were a representative
from the legal department, the international sales and marketing manager and the
managing director of LCP.
The research used semi-structured interviews where the questions were designed to
gather information regarding the background of the company such as the nature of the
business, main products and services, year of establishment, total assets (in RM), total
number of employees and ownership structure.
The second part was to gauge the company’s level of awareness with respect to IP.
The level of awareness and knowledge encompassed questions on the company’s
knowledge and awareness with regards to the IP, Intangible Assets (IA) and government
funding and support.
The third part was to obtain information with regards to how the company developed
its IP and how they perceived the importance of IP in giving their company its
competitive advantage.
The respondents were also asked if they had any Standard Operating Procedures
(SOPs) within the company in managing their IP in part four. Various questions were
asked such as if the company had any SOPs in detecting which IP assets that should be
protected or generate income, maintaining an inventory of all registered IP, implementing
IP management software or database, valuing IP, deciding the best method of IP rights
and monitoring and auditing the use of IP.
The company was also asked about their method of valuing their IP such as whether
income, cost, market or option based was used and the reasons for choosing the method.
Whether IP valuation was done internally or externally, the duration and cost of valuing
an IP were also asked.
Lastly, since Les Copaque indicated that they purposely did not use formal IP
protection; further questions were asked to explore their rationales of not doing so.
294 H. Harris, K. Ab Aziz and M. Norhashim

5 Company overview

Les Copaque Production Sdn Bhd (LCP) is a Malaysian company set up in 2005. It was
most famous for its animation creation of Upin and Ipin which were the main characters
of a children’s show. The Upin and Ipin brand began as a series of short movies, which
were later developed into a television series that was taken up by a local television
station. In 2009 Upin and Ipin were developed into a full-length animated 3D feature. By
2010, Upin and Ipin were into three seasons. They have won numerous awards for both
creative content (seven) and business achievements (two) between the years 2007 to
2009.
LCP was set up by young graduates of a creative multimedia school who were
backed by an experienced mentor who provided the funding and advice for them to
launch their first product. The mentor and his wife now act as the Managing Director and
Content Director, respectively. The creative direction comes from the Creative Director
and then executed by the strong production team comprised of more than 50 skilled
talents from the local institutions. The production team is organised into eight divisions,
namely; Scripts and Idea Development, Concepts and Designs, Layout and Storyboard,
Audio and Music, 3D Modelling, 3D Animation, Lighting and Rendering and Compositing
and Special Effects. Their mission was to do something daring and innovative while
at the same time showcasing the Malaysian culture unique local flavour. This was
represented by their name which was based on a local slang meaning ‘last chance or all-
out’ while their mascot of a frog on top of coconut shell was an inversion of the local
proverb referring to resistance to change.
LCP sources of income stemmed from broadcast royalties, sponsorships and licensing
activities. The show is broadcasted in both Malaysia and Indonesia. They have also
received offers from other foreign television stations, foreign film distributors and
production houses. The company also licensed out to various manufacturers the right to
make merchandise based on their characters but controlled the distribution of the
merchandise through Multimedia Development Corporation Market Access Programme.
Ancillary businesses were spun out from the main company such as the LCP
Animation Training Centre which applies the same training system used with the
production team in LCP, LC Merchandising Sdn Bhd which handles the production of
merchandises and manages the licensing in manufacturing and distribution of products
based on their IP such as the Upin and Ipin and Geng characters and story lines.
LCP also worked on several non-profit, public service announcements. This could be
to reciprocate the support given by the government as well as to create and sustain
investors’ and the public interest in the local animation industry.

6 Les Copaque’s strategies

This case study outlines Les Copaque’s strategies for managing its IP and resources by
(a) leveraging on government provided facilities specifically for financial assistance and
distribution of its products and (b) selective IP protection strategies.
 Success strategies of SMEs in the creative sector in Malaysia 295

6.1 Resource management

There were two major issues that were critical to Les Copaque (LCP) namely, product
development and access to funding. Their strategy in developing products was two
pronged, firstly to come up with innovative designs and secondly in sustaining capacity.
The goal for innovative product development is to produce designs distinctly different
from the generally accessible television and internet images. The designs were produced
for a niche market as limited edition collectibles. LCP’s core IP are the animation
characters Upin and Ipin, five year old Malay twin brothers and their family and friends.
These characters had been produced into a number of 3D animation TV series, a feature
film, merchandise and short public service announcements.
It can also be said that LCP’s capacity management include aspects of capacity
development. This is seen when LCP recruit talents among the participants at the LCP
Animation Training Centre. There was no formal system for generating and capturing
ideas. Rather, LCP focused on promoting an environment of open communication and
high morale to encourage sharing of ideas. Training of 3D animation was given for free.
LCP ensured continuity of ideas and product development was by instilling an
organisational culture where staff was encouraged to have an attitude of ‘constantly
refreshing’ and keeping to the deadlines. Sources of ideas stemmed from local
inspirations such as superstitions and folklore. Current events were also used as a source
of ideas. The training centre proved to be a key advantage when the initial founding
members – the creative multimedia graduates – left LCP to set up their own studio. LCP
were able to continue with minimal negative impact.
The second issue to be managed strategically was access to funding for production
and marketing purposes. Rather than relying on equity investment or borrowings, LCP
benefited from various facilities made available by the government. They are one of
roughly only a third of SMEs who benefited from government financing facilities
(SME Corp, 2011). Figure 3 shows the percentage of SMEs benefited from government
programmes as reported in the SME Annual Report 2010–2011.

Figure 3 Percentage of SMEs benefited from government (see online version for colours)

Their early financing and logistic support came from not only the individual investors but
also from the use of pioneer incentives through Multimedia Development Corporation
(MDeC), a government linked corporation tasked with the development of Multimedia
296 H. Harris, K. Ab Aziz and M. Norhashim

Super Corridor (MSC). The MSC was a government initiative to develop the knowledge
economy. From MDeC, LCP received tax incentives as well as market access. Their
pioneering effort as the producer of the first Malaysian 3D animation movie was made
possible by low cost, high quality computing technology also made accessible to them
through the Creative Multimedia Initiative. Doing so allowed LCP to reduce the
rendering time for the 3D effect much more quickly than the one year that it would
normally take. Their quality was equivalent to Hollywood film animation but cost much
cheaper than it would have been had it been done in the United States. The movie was
made with a RM1 million e-Content grant from the government and they put up RM3
millions of their own funding.
Furthermore, the philosophy of the LCP is to ‘think big, but start small’. As the
managing director said “We like to test the waters with small projects like Upin and Ipin
before jumping in. Many have made the mistake of making the jump without testing the
market first to gain feedback. It is a matter of calculating the risks involved”.

6.2 Intellectual property management

Through the interviews with the LCP representatives, they indicated a high level of
awareness and understanding of the IP system. This had been translated into a number of
SOPs for; Identifying IP to protect, Identifying high value/potential IP, Maintaining the
inventory of all IP and Valuing IP. The management’s IP awareness has helped them to
avoid losses due to copyright infringement or misuse of their trademarks by irresponsible
organisations.
LCP main IP are in trademarks and copyrights. The copyrights were cheap and easy
as they only require a statutory declaration while trademarks on the other hand, requires
registration with the MyIPO. MyIPO is the organisation responsible for the development
and management of the intellectual property system including patent, trademarks,
industrial designs, copyright and IC Layout designs protection in Malaysia. Previously,
the registration process took two years for LCP but now it takes one year. LCP
considered the trademark registration to be expensive which drives them to fully utilise
the characters. The IP protection strategy is targeted. LCP admits that it would be
impossible to control cheap knock-off items in the mass market which supplies petty
traders. In fact, the managing director considered this type of infringement ‘free
marketing’ that increases the awareness of the brand. LCP instead chose to focus on
fighting piracy at the big suppliers such as hypermarkets and big merchandising outlets.
It can be concluded that LCP employs a combination of both legal and non-legal
protection strategies for their IP. The legal protection were especially critical when
protecting their interest when it was found that certain organisations were misusing their
assets – the Upin and Ipin characters – and selling the merchandises at various outlets.
However, there were times when the management knowingly turned a blind eye to
infringement of their rights as it was deemed as aiding them. Specifically, when asked
about the problem of content piracy the LCP management admitted that they were aware
of the flood of pirated copies of their DVDs and other merchandises.
They viewed it as aiding in establishing the brand and widen their products’ (the
Upin and Ipin animated series and feature film) reach to their target markets and beyond.
Furthermore, they pointed that chasing after the tangled web of piracy problem will be
too costly both in time and money. This differs from chasing a particular company that
manufactures merchandise using their IP without permission.
 Success strategies of SMEs in the creative sector in Malaysia 297

The management also found the valuation process to be key when they get involved
in litigation cases and when filing their taxes. The methods of choice are ‘Cost-based’
and ‘Income-based’ valuation methods. According to the management, following are the
key aspects taken into consideration when IP valuation is conducted.
• Estimated income stream over the IP’s useful life.
• Estimate of the IP’s useful life.
• Risks associated with the IP.
• Comparable market value.
• IP development cost.
• Cost of re-constructing the IP at present value of money.
• Cost of constructing a replica/similar IP.
• Uniqueness of the IP.
• Expected rate of return of the IP.
• The IP/product characteristics/features and functions.
• Creative value of the IP.
• Level of protection accorded to the IP.
• Level of coded knowledge available relating to the IP.

7 Future research

Due to the nature of this paper which adheres to the case study approach, some
limitations are inevitable. The generalisation of the findings must be done with caution.
The findings can be further enhanced by incorporating more case studies of Malaysian
SMEs in the creative sector. A comparison study between Malaysia and Singapore can
also be carried out. As Gwee (2009) describes how the creative industries started in the
small city of Singapore and its national policy which is critical to the development of the
innovation system of its creative cluster. Future studies are recommended to investigate
the key factors in spurring the development of the creative industries between the two
neighbouring countries or more Asian countries as what has been done by Kong et al.
(2006).

8 Conclusion

Nevertheless, the findings of this paper have revealed the following factors. One of the
factors most relevant to LCP’s success was through regulatory and financial support as
well as firm and HEI linkage. LCP focuses on the animation market especially using
high-end 3D technology. They clearly saw that high quality production was necessary to
reach their target market. The conception of the company was based on local talent and
subsequent sustainability of the company was based on local HEI talent pool. LCP then
only needed to train the talents on the specific technology.
298 H. Harris, K. Ab Aziz and M. Norhashim

Their knowledge on IP also enabled them to do their own IP valuation on their

assets in order to decide whether to protect them using formal/legal protection, to
commercialise the assets, to license the asset out to others or to sell the products.
Another key lesson to be learnt from LCP is their intentional ‘letting loose’ the mass
market which were inundated by pirated merchandise. Not pursuing that segment
allowed their brand to flourish while actively protecting their higher end niche market
where the benefits greatly outweigh the IP protection cost.
This case study of LCP confirms many of the findings of the literature. The
importance of industry policy to support innovation policy as noted by WIPO (2007) and
Potts (2009) can be seen in the way that LCP leveraged on resources and tax incentives
provided by the government. Their strategy to fully utilise their IP (i.e. trademarked
characters) through a multitude of products shows a focus that is highly value added and
very profitable.
Lastly, it can be concluded, the creative sector has the potential to play a leading role
in driving Malaysian economy towards realising the vision 2020. Thus, it is imperative
that the strategies of the players are aligned with the bearing of an innovation-led
economy. Especially, the SMEs in the sector should be encouraged to give paramount
importance to the creation, management and the valuation aspects of their IP. The
numerous government incentives made available for the sector should be effectively
leveraged by the SMEs as illustrated by Les Copaque. Through this, the establishment of
the sector as a new engine for growth and enhancement of economic prosperity of the
country will be realised.

Acknowledgements

This research was funded by the Special Funding for Social Sciences Research of year
2010 (SFSCR2010), Research Management Center, Multimedia University, Malaysia.

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