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9. Reluctant Internationalization: The Case of the Salim Group
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154 9 RELUCTANT INTERNATIONALIZATION: THE CASE OF THE SALIM GROUP Marleen Dieleman The late Wladimir Sachs Introduction Globalization has become a keyword for managers today, and many companiesclaimtobeglobalastheyincreasinglydobusinessacrossborders. Globalizationcanbeunderstoodasthephenomenonoccurringasaresultof theperceivedcontractionoftimeandspace.Companiesoftenstartactivities abroadbecauseitcanbringadvantagessuchasmoreeconomiesofscale, accesstoglobalnetworksandtechnologies,andlearningfromlocallydifferent productmarkets.Withinbusinesscirclesanimportantglobalizingtrendisthe break-upofthevaluechain,wheredifferentstepsintheproductionprocess takeplaceindifferentlocations.Westerncompanieshavetakentheleadin buildingupinternationalinvestmentsandsales,butinrecentyearscompanies fromemergingmarketshavestartedtofollowsuit. TheIndonesianeconomyunderPresidentSoekarnocouldbecharacterized asclosed,butunderPresidentSoeharto,Indonesiabecameincreasingly embeddedintheglobaleconomy.Exportsrosefromthe1980sonward,and foreigndirectinvestmentsurgedintheperioduptotheAsiancrisis.Soeharto 09Ethnic.indd154 9/9/084:45:17PM Reluctant Internationalization of the Salim Group 155 wasresponsibleforremarkableeconomicgrowthduringhispresidency,which madeIndonesiaasizeableconsumermarket.Theeconomicgrowthalso facilitatedtheparallelemergenceofmanyhome-grownbusinessgroups,the largestofwhichareoftenownedbyfamiliesofChinesedescent(Robison 1986).Businessgroups,orconglomerates,existaroundtheworld,butare particularlycommoninemergingmarkets,includinginSoutheastAsia(La Porta1998;Claessensetal.2000).Manyofthoseemergingmarketbusiness groupsconsistofnumerousseparatecompaniesactiveinarangeofindustries, oftenunderthecontrolofafamily,oracoalitionoffamilies(Granovetter 1995). WhileduringSoeharto’sNewOrdertheeconomywasrelativelyopen, manytradebarriersexistedtoprotectlocalindustries.Especiallywell-connected businessgroups,suchasthoseofSoeharto’schildrenandafewIndonesian Chinesegroupsbenefitedfromafavourableregulatoryenvironment.Inthe periodaftertheAsianCrisishowever,asaresultofIMFdemands,many oftheexistingprotectionistmeasuresbenefitingthosebusinessescloseto theSoehartoregimehavebeenabolished,therebymovingastepmorein thedirectionofanopenmarketeconomy.Inaneraofglobalizationand theintegrationofmarkets,onewouldalsoexpectthatIndonesianChinese businessgroupswouldfollowsuitandridethewavesofglobalization. TowhatextenthavetheseChineseIndonesianlargebusinessesinternationalized ,andhowglobalarethesecompanies?Theoriesofwhatis sometimescalledtheChineseFamilyFirm(CFB)mostlyassumethatthere issomethingparticularly“Chinese”aboutthesecompaniesthatmakes themsuccessful.ThedominantdiscourseisthatthisChinesenessstemsfrom Confucianvalueswhichexerciseinfluenceonthebusinessbehaviourof migrantChinesebusinessfamilies.Forexample,ethnicChineseareargued tobeparticularlydynamic(Kraar1994;Kao1993;Yeung2000)andare thoughttocreateveryflexibleorganizationalstructures(Redding1990,1995). Thediasporanatureofthesesuccessfulimmigrantenterprisesisarguedto facilitateahighdegreeofinternationalization(Granovetter1992;Rauchand Trindade2002).SomeauthorshavegoneasfarastocallethnicChinesefirms “transnational”enterprises(Douwetal.1999;Liu2001),orhavetermed them“ungroundedempires”(OngandNonini1997).Talkingmoregenerally aboutAsianbusinessgroups,Mathews(2006)arguedthatthesedomestically grown“dragonmultinationals”aremorelikelytobesuccessfulinaneraof globalizationthanWesternfirmsduetotheirnetwork-likeflexiblestructure andtheirfamiliaritywithallianceswithotherfirmsorgroups,andother authorsalsotalkedabouttheglobalizationofethnicChinesefirms(Yeung 2000;Carney2005). 09Ethnic.indd155 9/9/084:45:17PM [44.202.183.118] Project MUSE (2024-03-29 01:33 GMT) 156 Marleen Dieleman and the late Wladimir Sachs Thischaptercriticallyexaminestheexistingrhetoriconthetransnational ethnicChinesefirmsinIndonesia.UsingtheexampleoftheSalimGroup, oneofthelargestethnicChinesegroupsinIndonesia,thischaptershows howcompaniesstruggletobecomemoreinternationalduetovariousforms ofpathdependency.Itexaminestheinterplaybetweentheexplicitintentof corporateleaderstoshapeaglobalcompany,andtheinternalandexternal obstaclestoreachingthisgoal.Thechapterproceedsasfollows.Itfirst sketchesthebackgroundoftheglobalizationoflarge...