Local Politics and Business in Indonesia: A Non-market Strategy Approach

Type Working Paper
Title Local Politics and Business in Indonesia: A Non-market Strategy Approach
Publication (Day/Month/Year) 2013
URL http://impgroup.org/uploads/papers/8139.pdf
Studies on non-market strategies have traditionally been conducted in developed countries with a particular focus on large firms. Little has been done in this area in developing or emerging economies. This paper investigates how small firms implement non-market strategies in an emerging economy such as Indonesia. Non-market strategies include political actions of business players, political donation, lobbying, philanthropy and business owners turning into politicians themselves. The research aims to reveal the motives of business players behind the implementation of the nonmarket strategy. In-depth case studies were carried out in two small-firms in the region of South Sulawesi, Indonesia. The study documents the non-market environment in South Sulawesi, chosen as it is one of the main provinces in Indonesia undergoing high economic development. The result of this study echoed previous research that showed that in many developing countries, non-market strategies are implemented due to the low-quality of market-supporting institutions and low levels of law enforcement. The study also found that small firms are not just passive adopters of coercive initiatives. The study offers new insights on non-market strategies and contributes to the meagre literature in this area, particularly in understanding the non-market environment in Indonesia, the role of different forms of cooperation and the implications for dealing with stakeholders in today’s business environment in Indonesia.

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