Marleen Dieleman

Coevolution of Institutions and Corporations in Emerging Economies: How the Salim Group Morphed into an Institution of Suharto's Crony Regime

We investigate whether large family groups in emerging economies can proactively change their environment. We use a coevolutionary approach, which accounts for the influence of context on the entrepreneur and for the freedom of the latter to modify it. We find that entrepreneurs can shape institutions to their advantage, illustrated by the Salim Group, which achieved growth by aligning with and influencing politicians, eventually morphing into an institution. We unravel unique coevolutionary patterns, which we use to extend existing theories. Our first contribution is to initiate a new line of inquiry in coevolution theory, focusing on individual companies coevolving with institutions. Secondly, we document factors that increase and decrease strategic choice for family groups in emerging economies. Thirdly, we find that the Salim Group became part of the crony Suharto regime. The group became both an institutional entrepreneur and an entrepreneurial institution, demonstrating that companies and institutions are not necessarily mutually exclusive.

Using Organization Structure to Buffer Political Ties in Emerging Markets: A Case Study

We use and extend resource-dependence theory by analyzing how loosely-coupled organizational structures facilitate the management of political ties by business groups in emerging economies. This topic is particularly salient because business groups are a prevalent organizational form in these countries where they face both a high dependence on governments to secure key resources and a unique set of risks associated with political ties. We identify and analyze four buffering mechanisms that enable loosely-coupled business groups to protect themselves against the adverse effects of such ties. We ground and contextualize these mechanisms by relying on a longitudinal case study of the Salim Group – a very large and well-connected Indonesian business group under the Suharto regime. This study is particularly relevant in the context of the renewed interest in the study of firms’ organizational structure.

New town development in Indonesia: Renegotiating, shaping and replacing institutions

This article explores how private sector players in new town development in Indonesia have worked around, shaped and replaced urban governance and planning institutions, effectively re-negotiating the boundaries between public and private sector. While most literature views urban development from the perspective of the state, this article complements this with a study of a prominent private sector player, the Ciputra Group. The results of the study suggest that private sector players have appropriated a much larger role in areas such as urban planning, constructing public infrastructure and urban governance than previously acknowledged. This could happen because public institutions were weak and unable to provide basic infrastructure and services to an increasing middle class. While most literature points at the lack of alignment of private developers with national priorities, this article suggests that a more nuanced view of the respective roles of public and private players in urban development in Indonesia is necessary.

The Rhythm of Strategy : A Corporate Biography of the Salim Group of Indonesia

Contents[-] - 6[-]Preface[-] - 10[-]List of Tables[-] - 12[-]List of Figures[-] - 13[-]Ch1. Introduction[-] - 16[-]Ch. 2: The Birth of a Conglomerate[-] - 40[-]Ch. 3: The Midas Touch[-] - 60[-]Ch. 4: Fire-Fighting[-] - 84[-]Ch. 5: Axis of Opportunity[-] - 106[-]Ch. 6: Evolution of the Salim Group Strategy[-] - 122[-]Ch. 7: Conclusions[-] - 140[-]Annex 1: Sources[-] - 152[-]Annex 2: Time Series Analysis of Business Events[-] - 155[-]Annex 3: Overview of Salim Group Activities[-] - 161[-]Annex 4: Salim Group Executives[-] - 166[-]Notes[-] - 168[-]Glossary[-] - 184[-]Abbreviations[-] - 185[-]References[-] - 186[-]Index[-] - 200

INDONESIA'S MISSING MULTINATIONALS: BUSINESS GROUPS AND OUTWARD DIRECT INVESTMENT

Abstract Some countries produce more multinational enterprises (MNEs) than others. India and China, in particular, have produced a number of dynamic MNEs whose success abroad generates important economic benefits for the home economy. Motivated by this observation, we describe the internationalisation record of Indonesias major business groups. Using an archival analysis method, we find that, with a few exceptions, Indonesias largest business groupings focus predominantly upon the domestic market. We advance two explanations for this investment pattern. The first suggests that the apparent absence of Indonesian MNEs is an accounting error, because firms’ outward investment is under-reported in official statistics. The second suggests that Indonesian outward foreign direct investment is impeded by a combination of institutional and firm-level factors that arrest the internationalisation of all but the largest firms. We discuss the policy implications of these findings and reflect on their theoretical implications.

Internationalization as Co-Evolution of Market – And Non-market Strategies: The Case of Vale

Abstract Purpose The purpose of this chapter is to explore the role of the home country government in the internationalization of multinationals from emerging markets. This is an important topic because governments play a greater role in BRIC countries. We build upon the literature on non-market strategy, extending this to emerging market multinationals. Methodology/approach We ground our arguments based on a multimethod case study of Vale, a Brazilian mining multinational. Findings Our study suggests that the role of home country governments is crucial for internationalization of firms from emerging markets, but also that it changes over time, is complex, and context-specific. We suggest that non-market strategy development is a process of co-evolution that is intricately linked to both external and internal factors. Practical Implications These findings are of relevance to emerging markets where governments are less constrained and perhaps more inclined to intervene in the private sector due to a legacy of state-led growth. Originality/value We tease out unique links between market shifts, government tactics, and firm strategies. Our study shows the need to shift our attention to home country non-market pressures as an explanatory factor for internationalization trajectories.

Expropriation of Minority Shareholders or Social Dividend? Beware of Good Corporate Citizens

What is the role of international business in this dilemma? How and why do international corporations maximize value beyond core strategy and partners through corporate responsibility? This informative and accessible resource expands the readers’ understanding of the ways in which profit maximization, value creation and community benefit interconnect. How to respect the wider business settings and communities, the environment and encourage peace? Is this just another dream? This book clearly provides a starting point for upstream mitigation, in which collective action allows disruption to be avoided at its very roots. It shows the way into responsible business, as a downright condition for an enlightened self-interest for all parties to pursue.

Punctuations in Emerging Markets: Regime Change and Family Firm Responses in lndonesia

We investigate organizational change in family firms under conditions away from equilibrium, and look at family firm strategy in the face of external shocks. To better understand how organizations behave under such conditions, we carried out two longitudinal studies of family firms in Indonesia, in which we investigate the effects of violent regime change on family business strategy. Interpreting our results within the framework of punctuated equilibrium, we explicate 1) the positive effect of social capital on family firm governance during periods of equilibrium and its negative effects during periods of regime change; and 2) internal factors facilitating or impeding survival in the face of regime change such as generational change in leadership and alignment with new regime ideology. Our results show that internal factors are interdependent with external conditions, but both matter for survival or demise.

Chinese Indonesians and regime change: Alternative perspectives

This chapter discusses religious conversion among Chinese Indonesians during the turbulent times of the late 1990s, in which Indonesia witnessed a political regime change. It explores conversion to Pentecostal-charismatic Christianity of a group of Chinese Indonesian business people in the city of Yogyakarta. The chapter discusses the empirical data gathering process. This is followed by a brief outline, in a contextual manner, of the socio-political and socio-economic position of Chinese Indonesians as well as the major characteristics of Pentecostal-charismatic Christianity. Next, the chapter presents three cases that show how the converted Chinese Indonesians relate their newfound religion to their personal, business, and nation-state positions. It analyzes these narratives for their role and meaning among Chinese Indonesians in the most recent period of regime change in Indonesia. Keywords:Chinese Indonesians; Pentecostal-charismatic Christianity; Yogyakarta

Book Review: Christian CHUA, Chinese Big Business in Indonesia:The State of Capital. London and New York: Routledge, 2008.xvi + 176 pp.,with figures,tables, notes, and index. ISBN: 978-0-415-45074-4 (hc). Price: £75.00

Chinese government launched a series of reforms in order to establish a new welfare system that was compatible with its socialist market economy. Examiningwelfare development in five key areas has clearly revealed that the present Chinese welfare system does not match the features of a socialist welfare state. Instead, China’s welfare system has been moving towards a more socially divided and market-oriented welfare model” (p. 196). Chan et al. sum up six key features of the Chinese welfare system after the economic reforms, including minimal levels of welfare provision; urbanand labormarket-orientedwelfare provision; collective surveillance and social segregation contributing to a cycle of deprivation among poor families; gradually introducing laid-off workers to the open labor market; administrative absorption of welfare dissatisfaction; and a gap in policy implementation (p. 195). These concluding remarks reveal negative impacts of rapid economic growth and privatization of welfare provisions on social harmony in China. Regarding the analyses on the well-being of Chinese society, in my view future policy reforms need to focus on the following issues: (1) how to enforce the implementation of rule of law and political accountability among government officials; (2) how to ensure fiscal capacity of local governments; (3) how to ensure a more equal distribution and equal opportunity for all citizens (i.e., welfare provisions should be based on “citizenship,” not on the “place of household registration”) (p. 199); and (4) how to enhance citizen participation. To sum up, the book analyzes the latest social policy development in China with reference to various sources (such as government documents and research studies). This book is a useful introductory text for those who are interested in studying social policy and social development in China. MAGGIE LAU, Public and Social Administration, City University of Hong Kong, China