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Empirical gaps exist in the literature about diverse forms of capitalism. The first is thematic, involving the incomplete institutional and political account of how the state can, through a series of policies, shape the development of domestic enterprises. The second gap is regional in nature: this literature does not deal with the historical development of firms that have played a central role in industrialising Southeast Asia. One reason for this is that since most existing theories are based on Western contexts, they are theoretically ill-equipped to deal with the concepts of power and state-business nexuses when the political system is not democratic in nature. But state-business ties, where politicians in power distribute government-generated rents on a selective basis, have resulted in diverse business systems such as highly diversified conglomerates, state-owned companies and small- and mediumscale enterprises. This article deals with these theoretical and empirical gaps. To better understand the nature and implications of evolving state-business ties in Southeast Asia, this topic is examined through the lens of regulation theory. To appreciate the complexity and implications of state-business configurations on the political system and forms of enterprise development, a case study of Malaysia is provided. [ABSTRACT FROM AUTHOR]