Creating relational rents: The effect of business groups on affiliated firms’ performance in Indonesia
- 451 Downloads
This research attempts to extend the discussion of business groups in emerging economies by treating business groups as a form of interorganizational network that generates relational rents among affiliated firms by creating technological and managerial capabilities. Based on the relational view, this research investigates whether value created by business groups depends upon sharing, combining, and exchanging unique and specific resources or assets among affiliated firms. Results show that technological capabilities contribute to create relational rents in terms of affiliated firms’ investment in R&D and human capital. Managerial capabilities also contributed to generating relational rents through investment in managerial knowledge acquisition for affiliated firms without R&D units and in training for affiliated firms with R&D units. However, learning by exporting and learning from imported input do not yield relational rents within business groups. Overall, these findings reveal that business groups as interorganizational networks are contingent on their internal, unique, and specific capabilities, as social capital theory argues.
KeywordsBusiness groups Relational rents Capabilities Indonesian firms
- Astra International. (http://www.astra.co.id/page.asp?c=2.40000).
- Blalock, G., & Veloso, F. 2003. Trade, technology transfer and productivity growth: The neglected role of imports. Working paper, Cornell University. http://www.aem.cornell.edu/faculty_sites/gb78/hfdi.pdf.
- Capanelli, G. 1997. Industry-wide relocation and technology transfer by Japanese electronics firms: A study on buyer–supplier relations in Malaysia. Unpublished dissertation, Graduate School of Economics, Hitotsubashi University, Tokyo.Google Scholar
- Caves, R. & Uekusa, M. 1976. Industrial organization in Japan. Washington, DC: Brookings Institution.Google Scholar
- Chua, C. 2005. The conglomerates in crisis: Indonesia, 1997–1998. Paper presented at Asia Pacific Journal of Management Special Issue Conference, Singapore.Google Scholar
- Dieleman, M., & Sachs, W. 2005. The Salim Group: Oscillating between a relationship-based and a market-based model. Paper presented at Asia Pacific Journal of Management Special Issue Conference, Singapore.Google Scholar
- Ernst, D., Mytelka, L., & Ganiatsos, T. (Eds). 1998. Technological capabilities and export success in Asia. London: Routledge.Google Scholar
- Field, A. 2000. Discovering statistics: Using SPSS for Windows. London: Sage.Google Scholar
- Hobday, M. 1995. Innovation in East Asia: The challenge to Japan. Aldershot: Elgar.Google Scholar
- Mowery, D. C., Oxley, J. E., & Silverman, B. S. 1996. Strategic alliances and interfirm knowledge transfer. Strategic Management Journal, 17: 77–91.Google Scholar
- Mursitama, T. N. 2005. An empirical study on technological capability of Indonesian firms: Lessons from Japan and NIEs. NIPPON, Center for Japanese Studies University of Indonesia, Publication Series, 5: 23–51.Google Scholar
- North, D. C. 1990. Institutions, institutions change, and economic performance. Cambridge and New York: Cambridge University Press.Google Scholar
- Rasiah, R., & Tamale, H. 2004. Productivity, exports, skills and technological capabilities: A study of foreign and local manufacturing firms in Uganda. Discussion paper series INTECH, 2004-1, United Nations University, The Netherlands.Google Scholar
- Rosser, A. 2002. The politics of economic liberalization in Indonesia: State, market, and power. Surrey: Curzon.Google Scholar
- Sato, Y. 1994. The development of business groups in Indonesia: 1967–1989. In Shiraishi, T. (Ed.), Approaching Suharto’s Indonesia from the margins: 101–153, Ithaca: Cornell University.Google Scholar
- Sato, Y. 2003a. Post-crisis economic reform in Indonesia: Policy for intervening in ownership in historical perspective. IDE Research Paper, 4: 1–52.Google Scholar
- Sato, Y. 2003b. Corporate governance in Indonesia: A study on governance of business groups. In Y. Shimomura (Ed.) The role of governance in Asia: 88–136, Singapore: ISEAS.Google Scholar
- Sato, Y. 2004. Corporate ownership and management in Indonesia: Does it change? In Basri, M. C., & Van de Eng, P (Eds.) Business in Indonesia: New challenges, old problems: 158–177, Singapore: ISEAS.Google Scholar
- Szulanski, G. 1996. Exploring internal stickiness: Impediments to the transfer of best practice within the firm. Strategic Management Journal, 17: 27–43.Google Scholar
- Thee, K. W. 2001. Channels of international technology transfer in Indonesia: A brief survey. Working paper, 2001-32, ICSEAD, Kitakyushu, Japan.Google Scholar
- Thee, K. W. 2006. Technology and Indonesia’s industrial competitiveness. Discussion paper No. 43, ADB Institute, Tokyo, Japan.Google Scholar
- Warta Ekonomi. 2005. Perusahaan Idaman 2005 (Ideal Companies 2005). December, 29. http://www.wartaekonomi.com).