Negotiating Cluster Boundaries: Governance Shifts in the Palm Oil and Rubber Cluster in Malay(si)a (1945–1970 ca.)

Palm oil was introduced to Malay(si)a as an alternative to natural rubber, inheriting its cluster organizational structure. In the late 1960s, Malaysia became the world’s largest palm oil exporter. Based on archival material from British colonial institutions and agency houses, this paper focuses on the governance dynamics that drove institutional change within this cluster during decolonization. The analysis presents three main findings: (i) cluster boundaries are defined by continuous tug-of-war style negotiations between public and private actors; (ii) this interaction produces institutional change within the cluster, in the form of cumulative ‘institutional rounds’ – the correction or disruption of existing institutions or the creation of new ones; and (iii) this process leads to a broader inclusion of local actors in the original cluster configuration. The paper challenges the prevalent argument in the literature that minimal, indirect government influence is preferable for cluster development and explores the impact of different political regimes on cluster evolution.