Indigenization Policies and Cooptation Strategies of Multinationals: Case of Indonesia

摘要

Examining the effectiveness of developing countries' indigenization policies toward the affiliates of multinational corporations (MNCs), this paper finds that the policies in general have some success in encourging local partners' participation in affiliate management. However, the difference in bargaining source and power among Pribumi, Non-Pribumi, and government partners generates different behavioral patterns and the MNCs' responses. The more partners possess legitimate business resources, the more indigenization takes place, while the stronger their political bargaining power, the more MNCs exercise informal cooptation strategies. Thus, the policies face clear limitations for partners with less business resources.