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Law Reform from a Social Science Perspective

  • Haemala ThanasegaranEmail author
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Abstract

The previous chapters of this book undertook a detailed doctrinal analysis of the need for and type of legal reform of the law and practice governing insurance and takaful contracts in Malaysia. This penultimate chapter proposes additional justification for such reform, from a socio-cultural perspective. This is due to an appreciation of law reform as being part of the broader social sciences namely sociology, economics and political science and that an examination of this is necessary for any suitable law reform proposal. This chapter in focusing on the social aspects of law reform will pay particular attention to the law and society movement which is an amalgam of law, sociology, political science, anthropology and history, with lesser bits of economics and psychology. In doing so it will set out the relevant empirical studies in the field, with principal reference to Malaysia, to justify reform being undertaken in a holistic sense.

Keywords

Power Distance Uncertainty Avoidance Financial Mediation Legal Reform Legal Culture 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

6.1 Introduction

The previous chapters of this book have thus far been dedicated to a detailed doctrinal analysis of the need for and type of legal reform of the law and practice governing insurance and takaful contracts in Malaysia. This penultimate chapter aims to propose additional justification for such reform, from a socio-cultural perspective.

The starting point for this is the appreciation that law reform is a part of the broader social sciences namely sociology, economics and political science and that an examination of this is necessary for any suitable law reform proposal. This chapter will however be focusing on the social aspects of law reform and hence, will pay particular attention to the law and society movement which is an amalgam of law, sociology, political science, anthropology and history, with lesser bits of economics and psychology.

Lastly, it is important to note that the insurance and takaful industry also forms a key component of the financial services industry. This is because it provides an important social service to individual consumers and underlines most forms of economic activity. Therefore, the next and final chapter of this book will examine the role of law and economics in evaluating the law reform package undertaken by the Malaysian government via the Financial Services Act 2013 (Malaysia) and Islamic Financial Services Act 2013 (Malaysia) in regulating the duty of utmost good faith in insurance and takaful contracts, in order to determine if it strikes a fair and workable balance between the competing interests of insurers and insureds.1

The layout of this chapter is as follows. First, the role and place of law within the broader social sciences will be established. This will be followed by an examination of Lawrence Friedman’s proposition that for any legal system (and by analogy law) to be effective, there must be structure and substance, and the prevailing legal culture must support it.2 The structure and substance regulating utmost good faith in insurance and takaful contracts in Malaysia will then be briefly revisited. Finally, a detailed examination will be made of Malaysian legal culture, which is largely based on its national culture, to ascertain if it supports this existing structure and substance following the recent reforms introduced via the Financial Services Act 2013 (Malaysia) and Islamic Financial Services Act 2013 (Malaysia).

6.2 Legal Culture

It has been accepted since the 1920s and 1930s, that the law and the legal system was an integral part of the broader social sciences as opposed to an autonomous science of its own.3 Lawrence Friedman has in turn, since the late 1960s developed and fine-tuned this view by postulating that a legal system comprises three basic components: the structure and substance of a legal system, as well as legal culture.4 Legal structure refers to the institutions and processes within a legal system, for example the court system, alternative dispute resolution mechanisms and the legislature. Substance in turn, refers to the substantive and procedural laws and regulations in place in a given legal system; and ‘legal culture’ refers to ‘the attitudes, values and opinions held in society with regard to law, the legal system and its various parts.’ 5

Friedman, the acknowledged father of the term ‘legal culture’ is a firm believer of legal culture being the most important amongst the three components of a legal system, for ‘it is the legal culture which determines when, why and where people use the law, legal institutions or legal processes; and when they use other institutions or do nothing.’6 This view has been echoed by others.7

It should be noted that culture has been acknowledged by sociologists and anthropologists alike, to be one of those words which are ‘difficult to define and easy to abuse’8 and has been described as ‘one of the two or three most complicated words in the English language’.9 However, for our present purposes of evaluating the utility of the concept of ‘legal culture,’ the problem with definition does not become overwhelming if the term ‘culture’ is divided into cultural practices and cultural values.

As Geert Hofstede explains, cultural practices are ‘the rituals, symbols and heroes used within a particular society as part of its identity,’ which can change over a short period of time; whereas cultural values are the values of people within a society, whereby value systems are the core elements of culture and do not change easily.10 When anthropologists and sociologists like Geert Hofstede and Harry Triandis talk of culture, it is the latter ‘cultural values’ that they are referring to. This is in sync with Friedman’s definition of legal culture as being the ‘…ideas, attitudes, opinions, and expectations with regard to the legal system.’11 That it is very difficult to change the (internalized) values of a society in a short period of time has also been independently substantiated by the World Values Survey, which is an investigation of socio-cultural and political change carried out by an international network of social scientists.12

Legal culture is ‘the source of law …a kind of intervening variable’ between social forces which make or influence the law, and the law or legal system itself; ‘…in other words …[it] translates social change into legal change.’ It is also in principle measurable, ‘…either directly through questioning the public, indirectly by observing what people do and making inferences of their attitudes from that or both, in order to get a more accurate picture.’13

In this context, legal culture has been recognized to be an especially important concept for legal transplants with regard to ‘developing and transitional countries which often import laws or even entire legal systems from industrialized Western nations in attempting to modernize their domestic legal frameworks.’14 Others like Oscar Chase have highlighted the importance of culture in shaping legal institutions, namely dispute resolution institutions, which are a product of and reflect the culture from which they arise.15 It is important therefore, to appreciate the importance of legal culture in law reform, as ‘…law reform is doomed to failure if it does not take legal culture into account…[as] legal systems are products of society—more specifically, of legal culture; hence reform is a subtle and complex task. One has to take into account the limits imposed by culture; one has to re-examine whether the ‘failures’ of the law are real failures, or whether we are neglecting to cut with instead of against the grain.’16

Although this chapter does not propose to examine legal transplants as such,17 it is based on the premise that the legal culture in Malaysia does not support the existing legal structure in terms of the primary dispute resolution mechanism for the insurance and takaful industry being litigation, as well as some of the substantive reforms introduced that are limited to only consumer insurance and takaful contracts. There is thus, a need to review the effectiveness of the primary dispute resolution mechanisms supporting insurance and takaful in Malaysia, as well as some aspects of the recent reforms introduced via the Financial Services Act 2013 (Malaysia) and Islamic Financial Services Act 2013 (Malaysia), along the lines set out towards the end of this chapter.

This chapter will in evaluating Malaysian legal culture, also take stock of the sub-debate within legal culture circles on the appropriate unit or units of culture which ought to be evaluated, namely the national or state level; sub-national or ethnic level; individual levels; or even the impact of globalization.18 More recent commentators like Susan Silbey and David Nelken appear to place emphasis on some level; the former on micro-level social action she calls ‘legal consciousness’ which is ‘specifically the ways in which individuals interpret and mobilize legal meanings and signs’19 whilst the latter towards a more macro-level construct of culture in the aggregate.20

Neither author however, can nor tries to realistically exclude the other and Nelken in fact, goes on to say that ‘…there is much to be gained by inserting an investigation of legal consciousness into the larger framework of inquiries into legal culture’.21 Such analysis would perhaps come closest to truly measuring legal culture, which is why this chapter will analyze Malaysian legal culture from both a macro national/societal level as well as a more micro intra-national/ethnic sub-cultural level.

6.3 Legal Structure

Building on the premise set out above, that for any legal system and by analogy any law to be effective, there must be structure, substance and the prevailing legal culture must support it; the following paragraphs will briefly examine the legal structure and substance of the Malaysian insurance and takaful industry.

With respect to legal structure, the Malaysian insurance and takaful industry as set out in Chap.  1 of this book is essentially regulated by the Central Bank and the regulatory requirements of the Financial Services Act 2013 (Malaysia) and Islamic Financial Services Act 2013 (Malaysia). Insurance companies and takaful operators are licensed and regulated by the same. They are also required to be members of their respective trade associations, namely the Life Insurance Association of Malaysia (‘LIAM’), General Insurance Association of Malaysia (‘PIAM’) or the Malaysian Takaful Association (‘MTA’) .22 Insurance and takaful agents employed by them in turn, have to be registered with their respective trade associations and meet certain minimum entry requirements.23

As for insureds on the other hand, their rights and responsibilities arising under the insurance contract are regulated by the terms of the contract, the proposal form filled out by them prior to purchasing the policy and the provisions of the Financial Services Act 2013 (Malaysia) or Islamic Financial Services Act 2013 (Malaysia) respectively. In the event of a dispute or disagreement arising under the insurance or takaful policy, the insured’s first recourse is to raise it with the Complaints Unit within the insurance company or takaful operator concerned.

The insured is then left with one of three options should it fail to obtain a satisfactory resolution from the Complaints Unit concerned. The most popular of which would be to lodge a complaint with the Financial Mediation Bureau which is an effective alternative to litigation in dispensing justice.24 The way in which the Financial Mediation Bureau operates is that legal representation is not permitted in the mediation process; the Mediator is not bound solely by legal rules; the Mediator’s award is binding on the insurer and takaful operator whereas the complainant has a choice on whether to accept or reject the award; and there is no appeal procedure available within the Bureau.

The insured could alternatively, direct the more minor complaints and enquiries to the Customer Services Bureau of the Central Bank which was set up in 1998. The Customer Services Bureau’s function is to analyze complaints received and liaise with industry and relevant trade associations to resolve the same. It also has the additional task of identifying insurance and takaful practices that may require regulatory action by the Central Bank.

Pursuant to these developments, the Malaysian government launched a 10-year Consumer Education Programme in 2003. Its primary aim was to educate consumers of their rights and responsibilities that arose under insurance and takaful contracts. This was to enable them to make well informed decisions in selecting insurance and takaful products.25 There was also talk of plain language policies being used to complement this move in December 2005, but nothing concrete has been proposed thus far.26

The final alternative for aggrieved insureds is of course the civil courts, which handle both insurance and takaful matters.27 Although the civil courts have no issue with respect to a limitation on monetary jurisdiction like the Financial Mediation Bureau which has a limit of RM200,000 for motor, fire insurance and takaful matters; RM5000 for third party property damage and RM100,000 for other matters, the Financial Mediation Bureau has been the preferred choice of dispute resolution amongst complainants, as reported in the Bureau’s Annual Report 2005.28

The popularity of the Financial Mediation Bureau over the courts is apparent from the number of insurance and takaful complaints referred to them annually since the year 2000. The Financial Mediation Bureau has had an average of 1000 new cases referred to it each year from 2000 to 2014. Comparatively however, less than 100 reported cases on insurance and takaful have been decided by the Malaysian courts for the same period.29 The insuring public’s preference for alternative dispute resolution via the Financial Mediation Bureau has been due to it being free,30 convenient and efficient, as it has proven to be as independent as the courts. Furthermore, as it will be explored later, the fact that Malaysians are in general not a litigious society, also points to this.

Apart from this it appears that the Financial Mediation Bureau has an added appeal of the Mediators consistently demonstrating (in their mediation awards) their willingness to be flexible and pro-active and not to be strictly bound by legal rules alone, in dispensing justice. In fact, as the Mediator’s Case Review contained in the Annual Reports 20052014 bear proof,31 many of the decisions have been made by giving effect to the spirit of the Central Bank’s Guidelines on Claims Settlement Practices (‘Claims Settlement Guidelines’)32 in addition to the former (now repealed) Insurance Act 1996 (Malaysia) and Takaful Act 1984 (Malaysia), albeit the Claims Settlement Guidelines surprisingly lack formal sanctions for non-compliance. In contrast, the courts have been only strictly guided by the two pieces of legislation and policy terms.

6.4 Legal Substance

Having set out the legal structure of the Malaysian insurance and takaful industry, the following paragraphs shall briefly recap the shortcomings of the Financial Services Act 2013 (Malaysia) and Islamic Financial Services Act 2013 (Malaysia) that form the legal substance of the industry, pertaining to the requirement of utmost good faith.33 This will then enable an assessment to be made on whether the prevailing legal culture in Malaysia supports the recent reforms or requires further improvement to be effected instead.

The drawbacks of the two pieces of legislation pertaining to the duty of utmost good faith will be reiterated as it affects the various stages of the insurance and takaful contract, from the pre-contractual stage right through to claims settlement.

For a start, Paragraph 5 (9) of Schedule 9 to both the Financial Services Act 2013 (Malaysia) and the Islamic Financial Services Act 2013 (Malaysia), provides that both consumers and insurers or takaful operators shall exercise the duty of utmost good faith in their dealings with each other, including the making and paying of a claim, after a contract has been entered into, varied or renewed. Although the express pronouncement of a general duty of utmost good faith that covers claims handling and renewals is a positive step, the provisions would have been more effective had they been made applicable to all insurance and takaful contracts instead of just consumer contracts, and should have also addressed the remedy in the event of its breach by either party. This has resulted in unnecessary uncertainty for non-consumers and has failed to resolve the question of whether there remains any room for the common law remedy of avoidance to apply under the new regime or has it been abolished altogether.

With respect to the pre-contractual duty of disclosure, Paragraph 4 of Schedule 9 to both the Financial Services Act 2013 (Malaysia) and the Islamic Financial Services Act 2013 (Malaysia) essentially adopts the voluntary disclosure mechanism applicable in Australia for non-consumer insurance /takaful contracts that requires the insured/participant before the contract is entered into, to disclose matters he or she knows to be relevant to the insurer or takaful operator in accepting the risk or the rates and terms to be applied or that which ‘a reasonable person in the circumstances’ could be expected to know to be relevant. Paragraph 5 of Schedule 9 to the Acts in turn, which relates to consumer insurance/takaful contracts adopts the inquiry based disclosure mechanism applicable in the United Kingdom and in Australian-eligible contracts that require the insured/participant before the contract is entered into, to take reasonable care not to misrepresent to the insurer/takaful operator when answering specific questions posed by the insurer/takaful operator or when confirming or amending any matters previously disclosed as provided by the insurer/takaful operator in writing. The standard of care required in these cases is ‘what a reasonable consumer in the circumstances would have known.’

Although these provisions are fairly comprehensive, the drawback is that the remedies for breach of the duty have not been clearly set out. It may have been intended to be covered by the remedies appearing in Part 3 of Schedule 9 to the Acts which relate to misrepresentations. However, Part 3 only contains headings and provisions that make specific reference to remedies for misrepresentation and not non-disclosure.

With respect to pre-contractual misrepresentation by consumers, Paragraphs 7 (3)—7 (8) of Schedule 9 to both Acts classify it as being deliberate or reckless, careless and innocent, along with their consequences. Paragraph 13 (2) provides that misrepresentations made in life insurance/takaful contracts (whether consumer or non-consumer) in effect for more than 2 years cannot entitle the insurer/takaful operator to avoid the contract unless the ‘insurer/takaful operator shows that the statement was on a material matter or suppressed a material fact and that it was fraudulently made or omitted.’ Paragraphs 15 and 16 of Schedule 9 to both Acts in turn provide for remedies in the event of misrepresentations made in consumer life insurance/family takaful contracts in effect for 2 years or less or in consumer general insurance/general takaful contracts.

The express duty not to make pre-contractual misrepresentation coupled with a detailed set of remedies for its breach is indeed a step in the right direction. The provisions would have however, been more comprehensive had they applied to all insurance and takaful contracts instead of omitting non-consumer general insurance and takaful contracts and non-consumer life insurance and family takaful contracts in effect for 2 years or less. As a result, there are no residual remedies applicable in the event of misrepresentations arising in these contracts and hence, it is unclear whether there is still room for s20 of the Marine Insurance Act 1906 (UK) and the remedy of avoidance to apply to them, which would be an unsatisfactory state of affairs.

Paragraph 10 of Schedule 9 to both Acts addresses the major drawback in Malaysian insurance and takaful contracts with respect to the indiscriminate inclusion of ‘basis of contract’ clauses in proposal forms, by abolishing the use of such clauses in consumer insurance and takaful contracts. This provision should however have been made applicable to non-consumer insurance and takaful contracts as well, as there is no justifiable reason for non-consumers to have been disadvantaged in this manner.

The final aspect affecting utmost good faith in insurance and takaful contracts is the widespread use of exclusion clauses and strict construction of policy terms by insurers and takaful operators to defeat valid claims made by insureds and participants, as well as other claims settlement practices such as inordinate delay and reduced settlement of claims. In fact, an average of 57 % of the insurance and takaful cases referred to the Financial Mediation Bureau (and Insurance Mediation Bureau before it) annually from 2000 to 2014 related to delay in processing of claims, dissatisfaction with settlement sums, repudiation of liability and delay in responding to enquiries.34

Paragraph 5 (9) of Schedule 9 to both Acts addresses the issues pertaining to good faith in claims settlement in consumer insurance and takaful contracts by requiring a consumer and licensed insurer or takaful operator to exercise the duty of utmost good faith in their dealings with each other ‘including the making and paying of a claim’ after a contract of insurance or takaful has been entered into, varied or renewed. Although it is an improvement with respect to consumer insurance and takaful contracts, there remains an uncertainty however, with respect to non-consumer contracts, as well as the remedy available in the event of breach in either case. Paragraph 5 (9) of Schedule 9 would have been more complete had it been applicable to all insurance and takaful contracts instead, with the proportionate remedy of damages being expressly catered for in cases of breach of utmost good faith in claims settlement, so as not to unnecessarily disadvantage non-consumers.

Non-consumer insurance and takaful contracts should not be left out of these reforms. It is inadequate for these contracts to be addressed merely by the Central Bank’s Claims Settlement Guidelines which direct insurers and takaful operators to settle claims in a fair and reasonable manner and the Mediators of the Financial Mediation Bureau of Malaysia who have resolved disputes appearing before them in a flexible and pro-active way.35 This is because the courts which are the primary dispute resolution mechanism in Malaysia are strictly bound by legal rules and as a result, have not given effect to the Claims Settlement Guidelines in arriving at their decisions.36

Having set out the various shortcomings of the law and practice governing insurance and takaful contracts in Malaysia, with respect to its legal structure and substance; this chapter will go on to examine and measure Malaysian legal culture. This is done to ascertain whether the prevailing legal culture supports the current infrastructure and regulation in place or in fact calls for further reform of the same.

6.5 Measuring Legal Culture

In measuring Malaysian legal culture with respect to the appropriate structural and substantive reform to be adopted to adequately facilitate the insurance and takaful industry, it is important to note the different empirical studies conducted by academics and researchers like Hofstede, Triandis and the Global Leadership and Organizational Behaviour Effectiveness Research Programme (Project GLOBE) in identifying, explaining and measuring cultural values.

When cross-cultural researchers study or measure national or societal cultural values, what they are observing is in fact the common values apparent across different cultures of all the nations or societies within the study, albeit they are referred to in different terms, for example ‘dimensions’ of culture by Hofstede and ‘cultural constructs’ by Project GLOBE.

In this chapter, Malaysian legal culture will be assessed by analyzing data on Malaysian national culture, using Hofstede’s dimensions of culture as improved and refined by Project GLOBE, as well as ethnic or intra-national culture, so as to obtain as accurate an account possible of both the macro and micro perspectives. The importance and effect of this will in turn be examined, in relation to the legal structure and substance of the law and practice governing insurance and takaful contracts in Malaysia.

This chapter will however, only examine two of the studies, namely Hofstede’s first study of 54 nations between 1967 and 1973 and the more recent Project GLOBE study of 62 nations conducted between 1992 and 2002, as both these studies have specific data on Malaysia. Despite some criticism leveled at Hofstede and other cross-cultural icons’ clustering of ‘national culture’ as perhaps being too simplistic, this chapter will be based on the dimensions of culture developed by Project GLOBE and Hofstede because thus far, such research has not been able to do away with reliance on them and more so, research on Malaysia is still heavily reliant on both models. 37

The reason for this two-fold macro-micro approach of assessing Malaysian culture is mainly due to its heterogeneous population of about 28.3 million, with 67.4 % of the population being ethnic Malays and indigenous peoples,38 24.6 % Chinese, 7.3 % Indians and 0.7 % made up of others.39 In this context, although individual differences will exist in any culture,40 there is no empirical data involving Malaysia at such a micro (individual) level of analysis. As such, this chapter will analyze intra-cultural differences at an ethnic level, as they would be more pronounced in a multi-ethnic society like Malaysia. It is hoped that this macro-micro assessment of culture would alleviate the common criticism that researchers tend to use nations as a surrogate for culture and in the process overlook differences that exist within a national boundary.41

Although Hofstede’s ground-breaking study was carried out at the macro-national level, he did acknowledge that cross-cultural issues could be viewed from a national, organizational or even individual level.42 Some researchers believe that it might make sense to use an ‘etic’ approach (which measures similarities between cultures) when comparing countries or societies and an ‘emic’ approach (which measures the differences within cultures) when evaluating individuals43 or even ethnic sub-cultures. However, both ‘etic and ‘emic’ approaches will be used in this chapter when analyzing national as well as intra-national culture or multiculturalism.44

Hofstede was the first to quantify the values held within different cultures by identifying several dimensions of culture in the process; which are used extensively till today. They are the dimensions of power distance , individualism versus collectivism, masculinity versus femininity, uncertainty avoidance and long term versus short term orientation. Although subsequent researchers, namely Project GLOBE, have developed more dimensions of culture, like power distance, institutional collectivism, in-group collectivism, assertiveness , uncertainty avoidance, gender egalitarianism, humane orientation, future orientation and performance orientation, they have their origins in Hofstede’s original dimensions.

Project GLOBE is a worldwide, multi-phase, multi-method project comprising an extensive quantitative and qualitative study of 62 societies on the effect of culture on leadership and organizational effectiveness. The researchers were however, first required to conduct an extensive in depth study of the cultures of the 62 participating nations; and it is this data on societal culture, which this chapter is based on. This project uncovered nine dimensions of culture common in all the nations studied; with six of them having their ‘origins in the dimensions of culture identified by Hofstede.’45 This study has to date, resulted in providing one of the best possible empirical data to determine cross-cultural values and practices.

The said nine dimensions of culture studied by Project GLOBE and their definitions are reproduced in Table 6.1.46
Table 6.1

Nine dimensions of culture studied by Project GLOBE

Cultural construct

Definition

Power distance

The degree to which members of a collective expect power to be distributed equally

Uncertainty avoidance

The extent to which a society or group relies on social norms, rules and procedures to alleviate unpredictability of future events

Humane orientation

The degree to which a collective encourages and rewards individuals for being fair, altruistic, generous, caring and kind to others

Institutional collectivism

The degree to which societal institutional practices encourage and reward collective distribution of resources and collective action

In-group collectivism

The degree to which individuals express pride, loyalty, cohesiveness in the families

Assertiveness

The degree to which individuals are assertive, confrontational and aggressive in their relationships with others

Gender egalitarianism

The degree to which a collective minimizes gender inequality

Future orientation

The extent to which individuals engage in future-oriented behaviours such as delaying gratification, planning and investing in the future

Performance orientation

The degree to which a collective encourages and rewards group members for performance improvement and excellence

As not all of the cultural dimensions set out above are relevant to this book, only the relevant constructs of power distance, collectivism, assertiveness and uncertainty avoidance will be discussed.

6.5.1 Power Distance

Project GLOBE’s definition of power distance set out above, is based on Hofstede’s definition and essentially concerns ‘human inequality’ which measures the interpersonal power or influence between the powerful and powerless or less powerful, as perceived by the less powerful.47

Many relationships in society mirror this inequality in power, including parent-child, teacher-student and boss-subordinate relationships. At a larger state or national level, high power distance countries tend to have relatively stable, authoritarian governments whereas those at the opposite spectrum have relatively stable pluralist systems.48 The former supports characteristics such as larger status disparity and special privileges associated with power and this appears true for Malaysia which has an authoritarian government.49

The Project GLOBE study recorded an average level of power distance for Malaysia with a practices score of 5.17 ranking it 34th amongst 61 nations.

In analyzing power distance, the researchers of Project GLOBE have identified four factors which have influenced power distance in cultures, mainly religion, democratic government, role of the middle class and a high proportion of immigrants in any given society.50 A powerful influence on power distance has been religion, with different religions having had differing impact on the level of power distance in a culture. Islam and Christianity, for instance, whilst preaching equality in terms of ideology, have in fact resulted in a strict hierarchical system instead, mainly due to the way in which they were organized. The Roman Catholic Church’s strict hierarchical system was broken by the Protestant movement led by Martin Luther in the 16th Century, thereby explaining the visibly lower levels of power distance in Western cultures with a Protestant tradition, as compared with a Roman Catholic tradition.51

Islam in turn, whilst having no hierarchy of leaders during the Prophet Muhammad’s time, nevertheless gave rise to one upon his death.52 Hinduism on the other hand, does not promote social inequality but the caste system was manipulated by the Brahmins during the post-Vedic times to maintain the social positions of the wealthy in the name of ensuring order in society.53 As for Confucianism which is more of a philosophical tradition, it embodies a patriarchal, hierarchical structure stressing on the reciprocal obligations between the five pivotal relationships of ruler-subject, father-son, husband-wife, elder-younger brother and senior-junior friend.54 Lastly, Buddhism instead endorses low power distance, owing to its central aim of bridging social castes and emphasis on spirituality.55 In modern times however, the major religions of the world, with the exception of Islam, do not stress on high power distance as such.

It is not clear whether the relatively high power distance practices in predominantly Muslim cultures, is due to religious dogma or its leadership. Amongst these, fundamentalist Muslim cultures tend to reflect higher power distance practices, even though the Project GLOBE study indicates that the general Muslim population in such cultures reflects lower power distance values.56

Power distance within a culture is also influenced by prevailing political practices, whereby cultures with a strong democratic tradition (like Western societies) have low power distance values. People in these cultures are less tolerant of social inequality as compared to Asian and African societies where such inequality is more acceptable.57

The third factor influencing power distance within a culture is the role of the middle class, predominantly due to the increased level of education and wealth in such societies.58 Members of the middle class generally believe that they are responsible for their own lives and thus, demand for their rights and to be heard. The fourth factor identified as bearing on power distance is the high proportion of immigrants within a culture, whereby it is believed that the high proportion in societies like the United States, Australia and Canada, is instrumental in breaking down traditional barriers laid down by the powerful.59 Although true for the United States, Australia and Canada which have a very low rate of power distance, this factor may not be completely substantiated, as the Nordic states of Sweden, Finland and Denmark which do not have a high proportion of immigrants, also have very low power distance practices scores.

The researchers of Project GLOBE however, believe that the existence of a democratic government is the most important factor influencing power distance in a culture. Endorsement for this can be found by looking at Malaysia for instance, where even though a strong middle class exists, there are relatively high levels of power distance. This is mainly due to the authoritarian form of democracy practiced, as well as the central role of Islam in government.

In this context, the Malaysian population of about 28.3 million with an ethnic mix of about 67.4 % Malays and indigenous peoples, 24.6 % Chinese, 7.3 % Indians and 0.7 % made up of others,60 has been aptly described as a ‘distinctive mix of Asian cultural values’ with the historical Malay social structure being ‘overlaid by Islamic principles and leavened with British colonial management philosophies and Chinese and Indian religious and cultural values’.61

In an interesting article using the findings of the Project GLOBE study on Malaysia, Jeffrey Kennedy has sought to identify the important values of Malays as being generally representative of Malaysian organizational outlook based on it being the overwhelming ethnic majority in the country.62 According to the said article,63 although the level of power distance practices in Malaysia is not as extreme as portrayed by Hofstede’s original work,64 Malay culture places a great deal of importance on clear recognition of status differences, emphasizes the correct use of titles and protocol, with honorifics widely used to indicate one’s social status and level of authority. Subordinates are also unlikely to argue with their superiors for it would be seen as a loss of face to the latter. There is loyalty to authority and deference and obedience towards elders, with authoritarian government or management being prevalent.65 Hence, there is tension between egalitarian Islamic values and the traditional Malay hierarchical social structure.66

In fact, political scientist Harold Crouch went so far as to coin the phrase ‘repressive-responsive regime’ to describe Malaysian political leadership, whereby the government is said to exert authoritarian control over the opposition to stay in power, whilst seemingly maintaining democratic structures to respond to societal pressures.67 This is not surprising if one considers certain facts about Malaysia. For example, that the country has been ruled by the United Malay National Organization as the major partner in a coalition of ethnic parties since independence in 1957. Until October 2003, the country has had Dr. Mahathir Mohammad as its prime minister, for 22 years.68 The Malaysian government’s aggressive social re-engineering policies like the New Economic Policy (NEP) is in essence an affirmative action policy69 to improve the majority ethnic Malay access to educational and job opportunities, as well as their share of the country’s wealth from 4 to 30 % equity ownership in the country. Lastly, the use of emergency orders under its Internal Security Act 1960 to incarcerate those whom the government calls dangerous militants and the opposition claims, are legitimate opponents.70

The link between power distance and legal reform is however, indirect. When the level of power distribution in a society is relatively high, so is the level of authoritarianism in that society, and vice versa. In such societies, the less powerful are not used to enforcing their rights and are more accepting of power making people unequal.71 They are therefore, more intimidated by formal court processes and tend to rely on clear consumer centric laws giving distinct rights to the (insuring) public, as they are unlikely to claim the same otherwise.

6.5.2 Individualism Versus Collectivism

Collectivism as defined by Hofstede ‘stands for a preference for a tightly knit social framework in which individuals can expect their relatives, clan, or other in-group to look after them, in exchange for unquestioning loyalty’.72 In contrast, he describes individualism as ‘…a preference for a loosely knit social framework in a society in which individuals are supposed to take care of themselves and their immediate families only’.73 The general distinction is the emphasis on self- interest in individualistic cultures and group interests in collectivist cultures.74 Triandis like Hofstede believes that individualism and collectivism is probably the most important distinction amongst different cultures, as the behaviour of people in individualistic societies differs substantially from collectivist societies.

Hazel Markus and Shinobu Kitayama75 point out that at the individual level, people in collectivist societies are more socio centric and have an interdependent view of the self, being more inclined to sacrifice their personal gain for the greater welfare of the group. Individualistic societies on the other hand, are egocentric, autonomous, separate and self-contained and have an independent view of the self. According to Triandis, each person has a concept of the self which could be the private self focusing on the concept of ‘I am…’ which he calls ‘idiocentric’; or public self-focusing on what people think of a person; or collective self which is like the public self but is concerned with what a particular in-group thinks, both of which he calls ‘allocentric’.76

It is not surprising therefore, that in interdependent collectivist cultures, it is important ‘to belong’ to an in-group where loyalty to the group is paramount; conflicts are often ‘swept under the carpet’ as criticism and face to face confrontation is not valued. This is viewed as a ‘loss of face’ and as such, members are not used to enforcing their individual rights.77 In independent individualistic cultures on the other hand, people value personal goals and are encouraged to be independent in their thinking and relationships. They have less tolerance for in-group demands and are more likely to take proactive steps in resolving conflicts even if it involves direct confrontation or even legal action.78

Generally, Asian, Latin American and African cultures tend to be collectivist, whilst Western cultures are more individualistic.79 Collectivist societies may therefore prefer less direct methods of confrontation like mediation and conciliation rather than adversarial dispute resolution processes like the courts in individualistic societies.

The researchers of Project GLOBE have divided the individualism vs collectivism dimension into ‘institutional collectivism’ and ‘in-group collectivism’. The former measures the degree to which societal institutional practices encourage and reward collective distribution of resources and collective action. The latter on the other hand, which has its roots in research conducted by Triandis and Hofstede measures the degree to which individuals express pride, loyalty and cohesiveness in their groups or families,80 and is the dimension that is relevant to this chapter.

Malaysia was ranked 13th amongst 61 nations measured for institutional collectivism practices with a score of 4.61, where the average score was 4.25; and more importantly, was placed 26th out of 62 countries in terms of in-group collective practices with a score of 5.51 which is well above the average score of 5.13. Interestingly, Malaysia has an even higher values score of 5.85 which places it at 18th position overall and shows that Malaysians in general exude pride and loyalty towards their families and in-group members and would like to invest more in it.81

These results go to show in Triandis’s terms, that Malaysia is allocentric and collectivist as compared to Australia for example, which is idiocentric and individualist.82 Hence, Malaysians work well in a team environment as they have a strong sense of belonging, with the ‘we’ orientation or collective spirit reigning over individuality. They prefer compromise to confrontation and avoid open public criticism and outspokenness for fear of undermining harmonious relationships.83

Apart from this, Hofstede, Triandis and the Project GLOBE researchers have all acknowledged a link between collectivism and power distance.84 This is supported by a cultural insider, Asma Abdullah who notes that Malaysians are in general group oriented, respect elders and hierarchy, emphasize loyalty and consensus and place importance on harmony in relationships.85 This positive correlation between relatively high power distance and collectivism is supported by the Project GLOBE researchers, specifically with respect to their in-group collectivism dimension.86

Another indirect link to this would be the general unwillingness of Malaysians to be assertive and enforce their rights. Using Project GLOBE’s data on in-group collectivism and power distance scores, along with observations of the value placed on paternalistic and patronage relationships in Malaysia, Malays who make up more than 65 % of the Malaysian population are generally unwilling to challenge superiors and are less likely to assertively promote their achievements.87

Furthermore, there is a correlation between Project GLOBE’s in-group collectivism practices and values scores and the World Economic Forum’s Competitiveness Rankings (‘WEFCR’) , the United Nations Human Development Report (‘UNHDR’) and the World Values Survey (‘WVS’),88 which lend strength to Project GLOBE’s results. This reflects a positive correlation between politics and in-group collectivism, whereby high in-group collective practices are linked to passiveness and a lack of voice when dealing with the government.

In high in-group collectivist cultures like Malaysia, paternalistic and patronage relationships are also common, with decisions often being based more on connections than on merit.89 A typical example of this in Malaysia is where large companies (known as ‘ Ali Baba’ companies) may have well connected Malays as figure-heads on their boards, with the business actually being run by a Chinese or Indian partner.90

Also, the lack of individualism and assertiveness amongst the public translates into a preference for alternative mediation and conciliatory means to enforce their rights, as opposed to more confrontational legal action in court. In the insurance and takaful context, this is apparent from an average of more than 1000 new cases being referred to the Financial Mediation Bureau, annually from 2000 to 2014, as compared to less than 100 reported cases being decided in the courts for the same period.91

The link between collectivism or lack of individualism and legal reform is also indirect, in that high in-group collectivism is compounded by the existence of a relatively high power distance culture, resulting in a vertical collectivist society. This in turn transcends into lack of assertiveness, hence, a greater preference for alternative mediation or conciliation methods of dispute resolution over the strict enforcement of legal rights through the court system.

6.5.3 Assertiveness

The researchers of Project GLOBE made a major contribution to the study of cross-cultural research when they identified and developed assertiveness as a dimension of culture. They define assertiveness as ‘the degree to which individuals are assertive, confrontational and aggressive in their relationships with others’.92

Until then, assertiveness had only been studied as a personality trait at an individual level, that is a person is either assertive or not. Hofstede in his seminal work on cross-cultural empirical research had identified assertiveness but as just one of the aspects of societies that were masculine, under his masculinity versus femininity index.93 His research showed that masculine societies valued tough competition, achievement and assertiveness more than feminine societies. The researchers of Project GLOBE however, found Hofstede’s masculinity index to be confounded by many items and felt it best to develop two distinct dimensions of ‘assertiveness’ and ‘gender egalitarianism’ instead.94 They believe assertiveness is a dimension of culture, as it reflects a society’s shared belief on whether people should be tough and assertive or tender and unassertive instead.95

Independent validation for this view can be found in Fons Trompenaars and Charles Hampden-Turner’s study of various societies’ adaptability to their surroundings.96 They found that societies in general have two orientations towards nature. They are either ‘inner directed’ believing that they can control and subjugate their surrounding environment; or ‘outer directed’ believing in the need to maintain harmony with and even sometimes subjugating themselves to their surrounding environment.

Project GLOBE’s score for assertiveness societal practices in Malaysia is 3.87, ranking 46th in a survey of 61 countries, well below the average score of 4.14.97 Malaysians however, recorded one of the highest scores for assertiveness values at 4.81, where the average was a much lower 3.82.98 Although in general, most societies surveyed valued lower assertiveness than currently practiced, Malaysia like most of the Asian societies wanted more assertiveness. This is presumably due to the general below average practices scores found amongst them.99 Western societies on the other hand, in general had high assertiveness practices scores and valued lower assertiveness instead.100

The above results broadly support Trompenaars and Hampden-Turner’s research which concludes that Western societies are more assertive, aggressive and competitive than Eastern or Asian societies, except for Japan.101 This is because Eastern or Asian societies, unlike the West, do not focus on the ‘self’ as much and place importance on compromise and maintaining the peace as the way to lead life. Chan, Gelfand, Triandis and Tzeng have also pointed out that in collectivist Southeast Asia where basic Confucianism is often adhered to individuals believe more in common interests and social harmony than self-interest and enjoyment, therefore, again leaning towards non-assertive behaviour.102

It is not surprising therefore, that Malaysia’s score on assertiveness practices is below average, as the Malays who form its ethnic majority comprising more than 65 % of the population, originally evolved from a history of communal living, where individual displays of assertion and confrontational behavior was discouraged.103 Their attitude towards life is to accept everything that comes their way, albeit good or bad, even death and illness as the will of Allah. Further proof of the Malay culture being non-assertive is the use of polite and non-aggressive language so as not to upset others and preferring to refer to them-selves in the third person, instead of using the pronoun ‘I’.104 Compromise is preferred to confrontation, with open public criticism and outspokenness being avoided at all costs, for fear of undermining harmonious relationships. Also, overt displays of anger and aggressive behaviour are shunned upon, with ‘go-getting’ and ‘take charge’ methods of dealing with people being perceived as brash, rough and insensitive.105

Malaysia’s ethnic Chinese on the other hand, who make up 24.6 % of the population and are the most successful at commerce, in turn believe that success is attained and maintained by maintaining harmony with nature through the practice of Feng Shui.

As indicated above, there is a link between the cultural dimensions of power distance, institutional and in-group collectivism and assertiveness, and the operation of this can be seen with respect to Malaysia. Malaysia has a high institutional and in-group collectivism practices score and an average power distance practices score. Not surprisingly, it has a very low assertiveness practices score. This translates into Malaysian society valuing loyalty to family and other in-groups, whereby the interests of in-groups take priority over individual interests. This lack of individualism, coupled with average power distance practices and an authoritarian government, contribute to Malaysians in general being non-assertive.

Examples of this are a plenty in the Malaysian context. Malaysia’s multi-ethnic mix of Malays, Chinese and Indians have on the whole lived together in relative harmony since independence from British colonial rule in 1957, save for a bloody clash between the ethnic Malays and Chinese in 1969. Tough government action through affirmative action policies, provide preferential treatment for the Malay majority in terms of preferential access to tertiary education, loans, financial aid and other benefits.106 This has for the most part been grudgingly accepted by the Chinese and Indians, without overt displays of challenge, as the price they must pay for stability in the country.107

Further incidents bearing proof of the lack of assertiveness amongst Malaysians is the relatively unchallenged suspension of the 61-year old daily newspaper the ‘Sarawak Tribune’ in February 2006, following the publication of an article accompanied by a caricature of the Prophet Muhammad which was circulating in the European press at the time.108 In January 2006, a memorandum was submitted to the Prime Minister by nine non-Muslim Cabinet members calling for a review of laws affecting the rights of non-Muslims, following a decision by the Sharia Court on the conversion to Islam of an ethnic Indian (who was deceased at the time of the ruling). This caused such a stir amongst the rest of the Cabinet, that the memorandum was retracted at the request of the Prime Minister, in order to preserve the peace so to speak.109 Finally, the detention without trial of five ethnic Indian civil rights leaders of the group Hindu Rights Action Force (‘HINDRAF’) in November 2007 for questioning the alleged systematic marginalization of the ethnic Indian minority in Malaysia, under the charge of having links to terrorism has also been largely unopposed.110

The link between non-assertiveness and legal reform is more direct, although linked to the foregoing dimensions of high in-group collectivism and average power distance coupled with an authoritarian government. The insuring public is as a result, less likely to resort to confrontational legal action in the courts to enforce their rights, preferring instead the less formal mediation or investigative processes like that offered by the Financial Mediation Bureau. Also, being generally non-assertive, the (insuring) public is unlikely to fight for rights which have not been clearly legislated upon. Hence, legislation according clear rights to the insuring public is required, without any unnecessary distinction being made on the duty of utmost good faith, abolition of basis of contract clauses and fair and timely claims settlement, between consumers and non-consumers that places the latter at a disadvantage.

6.5.4 Uncertainty Avoidance

Uncertainty avoidance has long been a part of organizational behaviour literature and was identified as an attribute of organizational behaviour by Richard Cyert and James March in 1963.111 It was Hofstede however, who subsequently conceptualized it as a dimension of societal culture, defining it as ‘the extent to which the members of a culture feel threatened by uncertain or unknown situations’.112 Uncertainty avoidance essentially measures the tolerance or intolerance for ambiguity in a society.

According to Hofstede, extreme ambiguity leads to intolerable anxiety and as a result, societies have come to develop ways to manage this, namely through the three mechanisms of technology, religion and law.113 Technology is used to deal with uncertainty caused by nature, whereas laws are relied on to maintain social order and religion in turn, as a means of handling uncertainties beyond one’s control. Of the mechanisms identified, only law however, is important to the discussion of legal reform of the structure and substance of the law and practice governing insurance and takaful contracts.

The value of uncertainty avoidance as a cultural dimension is clear, finding validation in the independent works of others such as Triandis and Shalom Schwartz. Triandis divides cultures into those which are ‘loose and tight’, with tight cultures having many rules and norms for people to follow whilst discouraging deviation, compared to loose cultures which have less rules to formally regulate society.114

Schwartz on the other hand, describes this dimension as ‘autonomy versus embeddedness’ whereby autonomous cultures encourage individuals to use their intellect and explore personal creativity while being positive about life. Embedded cultures on the other hand, focus on more orderly lifestyles where individuals are expected to respect tradition and rely on their in-groups.115 Still others have described it in terms of ‘neuroticism versus emotional stability’116 and ‘traditional versus secular-rational authority’117 covering much the same ground.

The researchers of Project GLOBE have also identified uncertainty avoidance as a dimension of societal culture, endorsing Hofstede’s claim. They however, disagree with Hofstede’s survey methodology and analysis, questioning his conclusions which were based merely from analyzing the results of three questions which related to job stress, attitude towards rules and long-term career goals as experienced by IBM employees.118 They in turn, have defined uncertainty avoidance as ‘the extent to which a society, organization or group relies on social norms, rules and procedures to alleviate the unpredictability of future events’.119

Hofstede in his study had identified Malaysia as being very low on the uncertainty avoidance index, ranking 46th in a scale of 53 countries surveyed, thereby, indicating that Malaysians have a high tolerance for the uncertainties of life.120 The researchers of Project GLOBE meanwhile, have found Malaysia to have very high uncertainty avoidance practices. In fact, amongst the highest in the list of countries surveyed, with a practices score of 4.78 where the average was only 4.16. Malaysia was in fact (apart from China), the only country surveyed that had a high uncertainty avoidance practices score and an even higher values score of 4.88.121 All the other countries with high uncertainty avoidance practices generally had a lower values score and vice versa. This result shows that Malaysians are very rule oriented and want even more rules and mechanisms to cope with the anxiety of uncertainty and to promote the predictability of behaviour.122

Although it is difficult to determine which of the two studies is accurate, the fact that the Project GLOBE surveys were conducted in the late 1990s against Hofstede’s survey done more than 40 years ago; and being aware of the concerns regarding Hofstede’s methodology, the researchers of Project GLOBE designed their questionnaire so as to test Hofstede’s views; it is more likely that the Project GLOBE results are more accurate than Hofstede’s.

Apart from that, the researchers of Project GLOBE agree with Hofstede that technology and law are the main methods of dealing with uncertainty avoidance. They felt that although there is a connection between religion as a coping mechanism and high uncertainty avoidance, it is not as clear and simple as Hofstede’s postulation. In fact, they found a clearer link between law and uncertainty avoidance, with societies high on the uncertainty avoidance practices scale, like Malaysia, having more laws and rules to deal with the anxiety of uncertainty.123 This is supported by the finding that in terms of societal uncertainty avoidance practices, Malaysia is the most rule oriented country in the Southern Asian cluster of nations surveyed.124

The link between uncertainty avoidance and legal reform is rather direct. The only anomaly is that despite having a high uncertainty avoidance practices score indicating that Malaysians have a strong desire for laws and rules to regulate the predictability of behaviour, they are not known for steadfastly enforcing their legal rights in court. This however, may be mainly due to the fact that Malaysians are on the whole non-assertive, lack individualism, practice high in-group collectivism, reflect average power distance and have long been subjected to an authoritarian form of government.

As such, the lack of enforcement by the public of their strict legal rights does not translate into there being no need for clearer laws regulating utmost good faith in insurance and takaful contracts that accord rights to all segments of the insuring public. On the contrary, the culture of high uncertainty avoidance practices and even higher values supports this.

What it does mean is that the legal infrastructure along with the substantive legal provisions with respect to the law and practice governing insurance and takaful contracts needs to be looked at. The fact that the Insurance Mediation Bureau and its successor, the Financial Mediation Bureau have from 2000 to 2014 been the preferred choice amongst complainants, as opposed to the civil courts, bears out this argument.125

Therefore, attention should be focused on enhancing the alternative means of dispute resolution in place, by for instance, increasing the monetary jurisdiction, terms of reference and profile of the Financial Mediation Bureau. The Customer Services Bureau should in turn be retained as a parallel, less formal avenue dealing with enquiries and minor grievances, as well as monitoring industry conduct and compliance.

At this point, it is useful to note that the Guidelines issued by the Central Bank on industry regulation, especially the Claims Settlement Guidelines, should have clearly defined sanctions in place to regulate compliance, in order for it to have any real effect. This way, the courts and the Customer Services Bureau will be more effective in being able to enforce breaches of the Guidelines, as opposed to merely relying on the Financial Mediation Bureau’s pro-active enforcement of it in the cases brought before it.126

6.6 Intra-National or Ethnic Culture

Having measured Malaysian legal culture at a macro national or societal level, it is necessary to evaluate the more micro sub-national or ethnic culture within Malaysia, so as to get an accurate reflection of Malaysian legal culture, given the constraints of empirical data available. Although such a macro-micro analysis of culture is necessary for any society examined, it is more so in the Malaysian context.127 This is because ‘while Malaysia is fully engaged in the international economy, it retains a distinctive mix of Asian cultural values’.128

Although Hofstede’s seminal work on national culture which included an analysis of Malaysia, was conducted without segregating the three major ethnic groups comprising Malays, Chinese and Indians, he nevertheless proposed that Malaysia’s ethnic groups ‘may really be culturally not so different’.129

In testing this assumption, this latter part of the chapter shall examine the literature and empirical research available on Malaysian intra-national culture. This will be done by starting with Lrong Lim’s review and synthesis of the current literature on the cultural attributes of Malays and Malaysian Chinese;130 followed by an evaluation of two separate empirical studies conducted on the Malay, Chinese and Indian sub-cultures in Malaysia by Lim and Abdullah131 and a group of academics from Malaysian universities.132

Lim reviewed and synthesized the literature on the cultural attributes of the Malays and Malaysian Chinese by examining the empirical works available. He used Hofstede’s framework with respect to the definition of culture and cultural dimensions, on the basis of it having the strongest research thrust. Lim argues that although the Malays and Malaysian Chinese share some similar cultural attributes, there exist fundamental differences between them which should not be ignored in cross-cultural research or implicitly overlooked in favour of cultural homogeneity.

On the question of power distance, he refers to a survey conducted on 83 Malay and 89 Malaysian Chinese university students which found the Malay students surveyed to possess stronger societal-oriented values and a greater deference to hierarchy than the Malaysian Chinese students surveyed.133 Based on this, Lim argues that although conceptually the two ethnic groups reflect fairly high power distance, ‘the direction and strength’ of it appears to be different.134

With respect to collectivism, he refers to the works of Hamzah Sendut, John Madsen and Gregory Thong in arguing that although the overall culture is collectivist, the two groups differ in content and orientation.135 A strong community spirit and deep sense of responsibility to help their in-group in the name of gotong-royong or mutual co-operation is prevalent amongst the Malays and stems from their history of communal living. The Malaysian Chinese on the other hand, have traditionally formed alliances to provide mutual help and security for their in-group by engaging the business community.136

Since Lim’s review was based on Hofstede’s framework, he refers to the masculinity versus femininity dimension, which is broadly representative of the assertiveness aspect of culture.137 Here, he refers to a survey conducted on 180 Malay, 137 Malaysian Chinese and 133 Malaysian Indian school children which found the Malaysian Chinese school children to possess a higher achievement motivation than the Malays.138 He uses this to submit that Malays are comparatively more feminine or less assertive and relationship oriented than the Malaysian Chinese, who are in turn more masculine or assertive and career-success oriented.

On the aspect of uncertainty avoidance, Lim suggests that Malaysian Chinese are less uncertainty avoiding than Malays, based on their respective views on religion.139 The Malaysian Chinese who are more comfortable with the acceptance of multiple religions and teachings, as reflected in the concurrent practice of Confucianism, Buddhism and Taoism, exhibit more flexibility towards uncertainty than the Malays, who are required to practice the Islamic faith which on the other hand searches for the one ‘truth’.

In an empirical study investigating the cultural similarities and differences amongst Anglos, Australians and Malaysians in general, data was collected from 168 managers representative of the groups studied who attended executive cross-cultural training courses conducted by the lead author.140 The questionnaire was developed based on eight concepts commonly used in cross-cultural management literature, namely relationships, harmony, shame, group orientation, belief in God, respect for elders, polychronic time orientation and high context form of communication.141

The results of the study reveal that the Anglos and Australians differed substantially from the Malaysians in six dimensions with the most significant pertaining to relationships, collectivism and religiosity. What is more interesting, however, is that among the Malaysian ethnic sub-cultures, there was only one significant difference, being the religiosity dimension, where the Malays differed substantially from both the Malaysian Chinese and Indians.142 This is probably due to the fact that Malays place a great deal of importance on the fulfillment of religious obligations and do not separate the teachings of their religion from all aspects of life, including their work.143 On all other score, there was no significant difference amongst the three ethnic sub-cultures in the management dimensions forming the equivalent of the societal cultural constructs of power distance, collectivism and assertiveness. Collectively as a nation however, Malaysians in general differed substantially from the Anglos and Australians.144

Another study on Malaysian ethnic sub-cultures which is of interest is a survey conducted on 142 Malaysian managers, representative of all three sub-cultures from both the government and private sector companies.145 This was in part, to measure how the Malays, Chinese and Indians fared on Hofstede’s cultural dimensions of power distance, collectivism, masculinity versus femininity146 and uncertainty avoidance. In short, all four of Hofstede’s cultural dimensions which are central to this chapter were used to measure how the ethnic Malay, Chinese and Indian sub-cultures within Malaysia rank.

In general, the results of this study show that there is no significant difference in the masculinity versus femininity dimension, in that all three races were generally found to be non-assertive.147 The Malays and Indians however, were found to exhibit higher levels of power distance and uncertainty avoidance and were less individualistic than the Chinese.148 This result supports Abdullah’s contention that Malays and Indians in general place more value on cooperation and teamwork, whereas the Chinese value entrepreneurship, perseverance and hard work instead.149 Therefore, despite having distinct cultural and religious backgrounds, recent research points toward the work related values of the three major races in Malaysia, namely the Malays, Chinese and Indians, as being similar in many respects, except for the religiosity dimension.150

That such intra-national or ethnic sub-cultural differences exist but are relative (except for the religiosity dimension) between the three races is supported by the independent quantitative research of Lim and Abdullah151 and Mohd Yusoff Zainun Hamzah and associates.152 In general, the consensus seems to be that except for the issue of religiosity, the Malays and Indians exhibit a ‘relatively’ higher level of power distance, uncertainty avoidance and collectivism whereas the Chinese are ‘relatively’ more individualistic, assertive and materialistic.

That this might be the more accurate reflection of the sub-cultural state of affairs in Malaysia is further endorsed by the independent quantitative study on the three races conducted by Rodrigue Fontaine and Stanley Richardson,153 using Schwartz’s SVS Model of 57 cultural values representing 10 dimensions at the individual level and seven dimensions at the cultural level.154 The researchers based their findings on 324 completed usable questionnaires from individuals of different levels of education and responsibility (mainly managers and non-managers) and from different industries in various locations within the country.

The outcome of the survey showed that 91 % of the values in Schwartz’s SVS Model at the individual level and 82 % of the values at the cultural level were shared by all three ethnic groups without significant differences.155 The researchers found the key difference between the three groups to be the rating of the ‘devout’ value which is a component of Schwartz’s ‘embeddedness’ dimension. This therefore, broadly confirms the findings of Abdullah and Lim who found the only significant difference between the three races to be in the ‘religiosity’ dimension, thereby cross validating both instruments.156

Based on the qualitative and quantitative evidence available, it appears that despite their distinct cultural heritage, ‘Malaysians of various races have more converging cultural values than diverging cultural values’.157 As suggested by some, this may perhaps be as a result of the three ethnic races having ‘streamlined their values under a shared wider socio-cultural environment’.158

6.7 Effect of Legal Culture on Structure and Substance

The main aim of this chapter has been to ascertain Malaysian legal culture in the firm belief that ‘every law reform proposal to change some substantive law or legal institution should include an analysis of what aspects of the local legal culture would support or inhibit such change’159 and not merely be based on doctrinal justification for reform.

From the foregoing analysis, it can be summarized that both from a macro-national or societal level as well as a more micro-ethnic sub-cultural level, Malaysians are essentially non-assertive; collectivist (exhibiting high institutional as well as in-group collectivism); have an average power distance orientation which is compounded by years of authoritarian government; and reflect a very high level of uncertainty avoidance.

Also, ‘religiosity’ is the only dimension on which the three Malaysian ethnic sub-cultures differ substantially, with the Malaysian Chinese and Indians showing a much lower propensity for it than the Malays. However, this dimension is not relevant to the question of legal reform of the law and practice governing insurance and takaful contracts which is essentially a commercial-consumer related matter. Therefore, it can be assumed that the above said converging societal and ethnic culture is reflective of Malaysian legal culture. Nevertheless, the greater propensity for ‘religiosity’ on the part of the Malays would point towards takaful (Islamic insurance) being more appealing to them than conventional insurance as the preferred mode of protection and investment.160

That being the case, it can be concluded that the prevailing Malaysian legal culture in fact, supports this book’s proposal for further improvement to be made to the recent substantive reforms introduced via the Financial Services Act 2013 (Malaysia) and Islamic Financial Services Act 2013 (Malaysia), as well as structural improvement of the law and practice governing insurance and takaful contracts by providing greater emphasis to and increasing the jurisdiction of the Financial Mediation Bureau along the lines set out in the next chapter.

6.8 Conclusion

The importance and effect of Malaysian legal culture on the proposed legal reform of the substance and structure of the law and practice governing insurance and takaful contracts can be summarized as follows. The average to relatively high level of power distance in a society coupled with years of subjugation to an authoritarian style of government would result in the less powerful members of society, namely the general (and in this case, the insuring) public not being used to enforcing their rights. They instead expect the government to take the initiative when matters of public concern arise. This coupled with low individualism and especially, a high level of in-group collectivism would result in vertical collectivism. This in turn translates into a lack of assertiveness amongst the (insuring) public, which is in fact empirically substantiated.

As a result, the (insuring) public is less likely to resort to confrontational legal action in the courts to enforce their legal rights, preferring instead to resort to less formal mediation and investigative processes like that offered by the Financial Mediation Bureau which is hugely popular amongst individual complainants.161

A very high level of uncertainty avoidance practices coupled with an even higher value placed on it, is reflective of Malaysians in general having a strong desire for laws and rules to regulate most aspects of their lives, which would include insurance and takaful matters. As such, clearer and more balanced legislative provisions regulating utmost good faith that do not unnecessarily discriminate against non-consumers would be welcome, in improving the recent provisions of the Financial Services Act 2013 (Malaysia) and Islamic Financial Services Act 2013 (Malaysia).

As explained earlier in this chapter, the fact that Malaysians are not known for steadfastly enforcing their strict legal rights despite having a propensity for laws is not surprising nor is it a reason against a case for improvement of the industry’s recent legislative provisions. The former has not much to do with the importance placed on laws but everything to do with the fact that Malaysians, being generally non-assertive, would rather not seek to enforce their strict legal rights in a confrontational court setting. This yet again lends support to the need for enhancing and improving the role of the Financial Mediation Bureau.

The next and final chapter will conclude this book by setting out the details of the proposed reform and addressing the viability of the said reform from a law and economics perspective, so as to ensure that legal reform of the duty of utmost good faith in insurance and takaful contracts in Malaysia is undertaken in a balanced and comprehensive fashion.

Footnotes

  1. 1.

    The reason law and society and law and economics are addressed separately in this chapter and Chap.  7 of this book is because the former is used to provide additional justification for reform (alongside the doctrinal reasons set out in Chaps.  2 5) whereas the latter is used to evaluate the viability or economic efficiency of the reforms undertaken.

  2. 2.

    Lawrence Friedman is both America’s leading legal historian and main proponent of the law and society movement. See: Friedman (1975, p. 2).

  3. 3.

    Huffman (1984, p. 579).

  4. 4.

    Friedman’s earliest exposition of this concept appears in Friedman (1969); Friedman, above n 2, and continues to form the basis of his more current work found in Friedman (1994, 2006, pp. 185–199).

  5. 5.

    Friedman, above n 2, 15–16.

  6. 6.

    Friedman (1977, p. 76).

  7. 7.

    See: Yngvesson (1998), Macaulay (1998).

  8. 8.

    See: Kuper (1999).

  9. 9.

    Williams (1983, p. 87).

  10. 10.

    Hofstede and Jan (2005, pp. 2–5).

  11. 11.

    Friedman, ‘The Place of Legal Culture in the Sociology of Law’, above n 4, 189.

  12. 12.

    Inglehart and Baker (2000).

  13. 13.

    Ibid. 19.

  14. 14.

    Tabalujan (2002).

  15. 15.

    Chase (1997). Still others who have used the concept of legal culture in a similar vein include Lev (1972, p. 247), who in fact acknowledged the work of Friedman on legal culture; Former Indonesian Minister of Justice Kusumaatmadja (1982, p. 6); Lindsey (2000, p. 284), who refers to ‘hard law’ which can be equated with Friedman’s legal structure and substantive law and ‘soft law’ with Friedman’s legal culture; Tabalujan (2001).

  16. 16.

    Friedman, ‘Is there a Modern Legal Culture?’ above n 4, 130.

  17. 17.

    For legal transplants, see: Watson (1993, p. 108).

  18. 18.

    Nelken (2004, p. 1).

  19. 19.

    Silbey (2001, p. 8623).

  20. 20.

    Nelken (2006).

  21. 21.

    Ibid. 223. Also see: Webber (2004, p. 32).

  22. 22.

    Insurance brokers and loss adjusters on the other hand, are members of the Insurance Brokers’ Association of Malaysia (‘IBAM’) and Association of Malaysian Loss Adjusters (‘AMLA’) respectively.

  23. 23.

    They need to pass a Pre-Contract Examination for Insurance Agents set by the Malaysian Insurance Institute (‘MII’), the Malaysian Certificate of Examination and satisfy the requisite number of hours of continuous professional development (annually) set by the Central Bank: Central Bank of Malaysia (2006, p. 2). A similar requirement applies to takaful agents as well. Insurance brokers and loss adjusters who on the contrary, are viewed as independent contractors (as opposed to employees of the insurer) have to meet the requisite paid-up capital and solvency criteria, instead.

  24. 24.

    The Financial Mediation Bureau is an amalgamation of the Insurance Mediation Bureau and the Banking Mediation Bureau and started operations on 20 January 2005. It was set up by the 90 member financial institutions including commercial banks, merchant banks, Islamic banks, insurance companies, takaful operators and credit or charge card issuers: Financial Mediation Bureau (2006, p. 8): and is in line with the Central Bank of Malaysia, Financial Sector Master Plan, Kuala Lumpur, 2001.

  25. 25.

    This was done through bilingual booklets called InsuransInfo made available at all banks, financial institutions, insurance companies, takaful operators, the Financial Mediation Bureau, as well as posting the same on an interactive website.

  26. 26.

    The Central Bank called for insurance firms to make their policies and cover notes simple and consumer friendly: The Star (Kuala Lumpur) (2005, p. 10).

  27. 27.

    As explained in Chap.  5 of this book, takaful in Malaysia is treated as part of general mercantile law as opposed to Sharia law, and has therefore, been subject to compliance with the specific Sharia based requirements of the now repealed Takaful Act 1984 and its successor, the Islamic Financial Services Act 2013. See: Articles 73, 74, 75, 121 (1), 121 (1A) and the Ninth Schedule of the Federal Constitution of Malaysia.

  28. 28.

    See: Financial Mediation Bureau (2006, p. 19).

  29. 29.

    See: Table of Cases Referred to the Financial Mediation Bureau from 2000 to 2014 in the Appendix. This section draws on research appearing in: Thanasegaran (2011, pp. 198–199), but the statistics herein have been updated from 2009 up until 2014.

  30. 30.

    The operational costs of the Financial Mediation Bureau (and its predecessor, the Insurance Mediation Bureau) are funded through levies on individual insurance companies and takaful operators. The Bureau’s independence however, is maintained by its structure comprising the Board of Directors and Director of Operations being separate from the Mediators.

  31. 31.

    See: Financial Mediation Bureau (2006–2014, 2015); This is a continuation of the trend initiated by the Mediator of the Insurance Mediation Bureau before it, from 2000 to 2004 as reflected in the Insurance Mediation Bureau (2001–2005).

  32. 32.

    It was issued on 25 February 1995 and revised with effect from 16 September 2003, regulating insurance companies and takaful operators (and loss adjusters as to general insurance); with the purpose of further enhancing the minimum standards to be observed in claims processing and settlement, including fraud control and risk management measures. This section draws on research appearing in: Thanasegaran, above n 29, 198–199.

  33. 33.

    This has been examined in depth in Chaps.  2 5.

  34. 34.

    See: Table of Cases Referred to the Financial Mediation Bureau from 2000 to 2014 in the Appendix. The breakdown of the number of insurance and takaful cases according to the type of complaints made is however, no longer available in the Financial Mediation Bureau’s Annual Reports since 2012.

  35. 35.

    See: Clause 3.4 of the Claims Settlement Guidelines 1995 @ 2003. A major drawback is that the Guidelines have no clear sanctions set out as being applicable in the event of non-compliance. Also see: The Financial Mediation Bureau (2009, p. 20). This is because their Terms of Reference do not bind them strictly to legal rules alone.

  36. 36.

    This section draws on research appearing in: Thanasegaran and Shaiban (2014, pp. 338–343).

  37. 37.

    See: Abdullah (1992, pp. 3–15).

  38. 38.

    The indigenous peoples are called ‘bumiputra’ which literally translated, means ‘sons of the soil’.

  39. 39.

    This is according to the last official population and housing census conducted in 2010: Department of Statistics Malaysia (2010).

  40. 40.

    Maruyama (1985).

  41. 41.

    Schollhammer (1969).

  42. 42.

    Hofstede (2001, p. 15).

  43. 43.

    Fontaine and Richardson (2003, p. 76).

  44. 44.

    The meaning imputed to the term ‘multiculturalism’ generally takes into account the notion of a national culture being the sum total of several sub-cultures: See: Magala (2005).

  45. 45.

    House et al. (eds) (2004, p. 3).

  46. 46.

    This is adapted from Table 1 in House et al. (2002, p. 6).

  47. 47.

    See: Hofstede, above n 42, 79; Hofstede and Jan Hofstede, above n 10, 46.

  48. 48.

    Hofstede, above n 42, 111.

  49. 49.

    See: Kennedy (2004, p. 20).

  50. 50.

    House et al. (eds), above n 45, 518.

  51. 51.

    Ibid. 520.

  52. 52.

    Ibid. 521.

  53. 53.

    Ibid. 522.

  54. 54.

    Ibid. 523.

  55. 55.

    Ibid.

  56. 56.

    Ibid. 539–540.

  57. 57.

    Ibid. 523–525.

  58. 58.

    Ibid 525; See also: Hofstede, above n 42, 93–96.

  59. 59.

    House et al. (eds), above n 45, 525–526.

  60. 60.

    The figures are derived from the last official population and housing census conducted in 2010: Department of Statistics Malaysia (2010).

  61. 61.

    Kennedy, above n 49, 15.

  62. 62.

    Ibid.

  63. 63.

    Ibid. 17.

  64. 64.

    Support for this is also available in a study using Hofstede’s Value Survey Module by Lim (2001).

  65. 65.

    Abdullah, ‘The Influence of Ethnic Values on Managerial Practices in Malaysia’, above n 37, 11–12.

  66. 66.

    Mansor and Ali (1998).

  67. 67.

    Crouch (1996, p. 96).

  68. 68.

    This is far longer than any democratically elected leader anywhere in the world. See: The Economist (London) (2003, p. 5).

  69. 69.

    This is despite the fact that human rights and employment legislation in many Western countries makes preferential treatment based on ethnicity illegal and affirmative action programmes address minority rather than majority rights: Kennedy, above n 49, 23.

  70. 70.

    The Economist (London) (2003, p. 5). For example, in November 2007, five leaders of an ethnic Indian civil rights movement, the Hindu Rights Action Force (‘HINDRAF’) were detained under the said Act without trial, on the ruling government’s charge of it having links to Sri Lanka’s Liberation Tigers of Tamil Eelam (‘LTTE’): The Economist (London) (2008, p. 32). In February 2006, the Sarawak Tribune, a 61-year old daily newspaper in the state was indefinitely suspended by the Internal Security Ministry under the Printing Presses and Publications Act 1984 following the publication of an article by the daily entitled ‘Cartoon not much impact here’ which was accompanied by a caricature of the Prophet Muhammad which was circulating in the European press at the time: The Star (Kuala Lumpur) (2006a, b, c, p. 4). The Internal Security Act 1960 has since been repealed and replaced by the Security Offences (Special Measures) Act 2012 (Malaysia).

  71. 71.

    Hofstede, above n 42, 29.

  72. 72.

    Hofstede (1985, pp. 347–348).

  73. 73.

    Ibid.

  74. 74.

    Erez and Early (1993).

  75. 75.

    Markus and Kitayama (1991).

  76. 76.

    Triandis (1990).

  77. 77.

    Triandis (1988).

  78. 78.

    Bhagat et al. (2002).

  79. 79.

    Hofstede and Jan Hofstede, above n 10, 78–79.

  80. 80.

    Gelfand et al. (2004, pp. 463–464).

  81. 81.

    In contrast, although Australia also has a high values score of 5.75, their in-group collectivism practices score is well below average at only 4.17, placing it 52nd overall.

  82. 82.

    See: Bochner (1994).

  83. 83.

    Abdullah, above n 37, 12.

  84. 84.

    See: Hofstede (1991).

  85. 85.

    See: Abdullah (1996); Abdullah, above n 37. See also: Schermerhorn and Bond (1997, p. 188).

  86. 86.

    Kennedy, above n 49, 20.

  87. 87.

    Kennedy, above n 49, 23.

  88. 88.

    Gelfand et al., above n 80, 481–490.

  89. 89.

    Javidan and House (2002).

  90. 90.

    The Economist (London) (2001, p. 38).

  91. 91.

    See: Table of Cases Referred to the Financial Mediation Bureau from 2000 to 2014 in the Appendix.

  92. 92.

    House et al., above n 46, 6.

  93. 93.

    Hofstede, above n 42, 280.

  94. 94.

    House and Javidan (2004, p. 13).

  95. 95.

    Den Hartog (2004).

  96. 96.

    Trompenaars and Hampden-Turner (1997).

  97. 97.

    This data was used in an article identifying important values of Malays in relating them to preferred organizational leadership styles, by Kennedy, above n 49, 22.

  98. 98.

    Den Hartog, above n 95, 410–411.

  99. 99.

    Hong Kong and Singapore however, were the only exceptions, valuing even higher societal assertiveness despite already having high assertiveness practices scores.

  100. 100.

    An example of this is Australia, which has an above average 4.28 practices score and a slightly below average 3.81 values score. Switzerland, New Zealand and the Nordic states however, had low practices scores and with the exception of New Zealand and Sweden which reflected slightly higher assertiveness values scores, valued even lower assertiveness in their society. Not surprisingly, they were all described as ‘feminine societies’ under Hofstede’s cultural construct.

  101. 101.

    Trompenaars and Hampden-Turner, above n 96, 141–156.

  102. 102.

    Chan et al. (1996).

  103. 103.

    Kennedy, above n 49, 16–17.

  104. 104.

    Ibid.

  105. 105.

    Abdullah, above n 37, 12–13.

  106. 106.

    Kennedy, above n 49, 24.

  107. 107.

    The Economist (London) (2004, p. 44).

  108. 108.

    The Star (Kuala Lumpur) (2006a, b, c, p. 4).

  109. 109.

    The Star (Kuala Lumpur) (2006a, b, c, p. 3).

  110. 110.

    The Economist (London) (2008, p. 32).

  111. 111.

    Cyert and March (1963) cited by House et al. (eds), above n 45, 13.

  112. 112.

    Hofstede, above n 42, 161.

  113. 113.

    Ibid. 145.

  114. 114.

    Triandis (1989).

  115. 115.

    Schwartz (1999).

  116. 116.

    Lynn and Martin (1995), cited in deLuque and Javidan (2004, pp. 611–612).

  117. 117.

    Inglehart and Baker, above n 12.

  118. 118.

    deLuque and Javidan, above n 116, 609–610.

  119. 119.

    House et al., above n 46, 5.

  120. 120.

    Hofstede, above n 42, 151.

  121. 121.

    deLuque and Javidan, above n 116, 622–623. However, the values score for Malaysia was in itself not amongst the highest.

  122. 122.

    This can be distinguished from Australia for instance, which has an above average uncertainty avoidance practices score of 4.39 but a values score of 3.98 which is well below the average score of 4.62, indicating the society’s preference for fewer laws and more flexibility.

  123. 123.

    deLuque and Javidan, above n 116, 623.

  124. 124.

    Gupta et al. (2002, p. 21).

  125. 125.

    See: Table of Cases Referred to the Financial Mediation Bureau from 2000 to 2014 in the Appendix.

  126. 126.

    This section draws on research appearing in: Thanasegaran, above n 29, 199.

  127. 127.

    Failure to account for the ethnic factor may be an enormous source of error in cross-cultural studies: Ronen and Shenkar (1985, p. 441).

  128. 128.

    Kennedy, above n 49, 15.

  129. 129.

    Hofstede, above n 84, 7.

  130. 130.

    Lim (1998).

  131. 131.

    Lim and Asma (2001).

  132. 132.

    Ahmad Saufi et al. (2002).

  133. 133.

    Ng et al. (1982).

  134. 134.

    Lim, above n 130, 83.

  135. 135.

    Sendut et al. (1990).

  136. 136.

    Ibid. 128.

  137. 137.

    This is based on the fact that Hoftede’s cross-cultural empirical research had identified assertiveness as one of the aspects of societies that were masculine.

  138. 138.

    Rahman (1988). This is supported by the views of two other works, namely Sendut et al., above n 135, 132; Ismail (1988) p. 104, who describe the Malaysian Chinese as exhibiting a strong security motivation which translates into the acquisition of wealth and ambitiousness to achieve high recognition and status, respectively.

  139. 139.

    He refers broadly to Hofstede and Bond (1988).

  140. 140.

    See: Lim and Abdullah, above n 131.

  141. 141.

    Ibid. 3.

  142. 142.

    This result supports previous research conducted by Hussin (1997), Yusof and Amin (1999).

  143. 143.

    Lim and Abdullah, above n 131, 7. In fact, in October 2008, a defamation suit was lodged by one Teresa Kok (an ethnic Chinese Member of Parliament for the Opposition ‘People’s Justice Party’) against a local Malay daily (Utusan Melayu Sdn Bhd) and its columnist for publishing that she had instructed a mosque in Kuala Lumpur to reduce the volume of its loud-speakers during prayer (a fact which she has denied and has also been denied by the mosque in question). This suit was in turn, construed by a division of the ruling coalition limb of the United Malay National Organization as ‘challenging the honour of Malays by suing Utusan Melayu as it is a newspaper owned by Malays’: The Star (Kuala Lumpur) (2008, p. 8). All ethnic Malays in Malaysia are Muslims by religion.

  144. 144.

    This broadly supports the results of Abdullah’s earlier research on the values of the three ethnic groups based on a series of workshops and dialogues with more than 200 Malaysian and foreign managers working in Malaysian organizations, where the common values of the three ethnic groups were recorded to be in the ‘we’ orientation, with emphasis on face, modesty and harmony, whereas the values correlating with the ‘I’ orientation, emphasizing self-esteem, assertiveness and achievement were labeled as being Western: Abdullah, above n 37, 7. There was however, no equivalent of the uncertainty avoidance dimension in the study.

  145. 145.

    Ahmad Saufi et al., above n 132. It should be noted however, that only part of this study was dedicated to measuring Malaysian intra-national culture using Hofstede’s dimensions. The other part which is not relevant to this chapter was to measure the preference of leadership styles of Malaysian managers.

  146. 146.

    This dimension is again used as being broadly representative of the assertiveness construct.

  147. 147.

    Most Malaysians however, generally view the ethnic Chinese to be more masculine, assertive and materialistic than the Malays and Indians.

  148. 148.

    Ahmad Saufi et al., above n 132, 7–8.

  149. 149.

    Abdullah, above n 85.

  150. 150.

    Kennedy, above n 49, 16, in referring to the works of Lim and Abdullah, above n 131; Lim (2001).

  151. 151.

    Lim and Abdullah, above n 131.

  152. 152.

    Ahmad Saufi, Wafa and Zainun Hamzah, above n 132.

  153. 153.

    Fontaine and Richardson (2005).

  154. 154.

    The 10 dimensions at the individual level being: power, achievement, hedonism, stimulating, self-direction, universalism, benevolence, tradition, conformity and security; and the seven dimensions at the cultural level being: embeddedness, hierarchy, mastery, affective autonomy, intellectual autonomy, egalitarianism and harmony: Schwartz (1994).

  155. 155.

    Fontaine and Richardson, above n 153, 69–70.

  156. 156.

    Lim and Abdullah, above n 131.

  157. 157.

    Fontaine and Richardson, above n 153, 64.

  158. 158.

    Lim and Abdullah, above n 131, 6.

  159. 159.

    Tabalujan, above n 15, 42.

  160. 160.

    Having said that however, as at June 2013 the ratio of the market penetration of family takaful in Malaysia (which has a population of more than 60 % (Muslim) Malays) to conventional life insurance was only 13–55 %: Abdullah (2013, p. 1). This is presumably because of the relative infancy of takaful and more importantly, because takaful in Malaysia is offered as part of mainstream mercantile law alongside conventional insurance in a dual system: (Kadir and Razif 2007, pp. 3–4).

  161. 161.

    It is not doubted that other reasons for this could be the fact that recourse to the Financial Mediation Bureau is free and the Mediators are more pro-active than the courts in resolving disputes brought before them. See: The Table of Cases Referred to the Financial Mediation Bureau from 2000 to 2014 in the Appendix.

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Copyright information

© Springer Science+Business Media Singapore 2016

Authors and Affiliations

  1. 1.Monash UniversityMelbourneAustralia

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