Multinational Producer Services Firms in Indonesia, A Relational Perspective
Meraxa, Teuku Arckyansyah
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Indonesia is the largest economy in Southeast Asia, and over the past decade, the country has been experiencing rapid economic growth which surpasses its regional peers. As an emerging economy, Indonesia is a highly attractive market for multinational corporations as it provides vast business and growth opportunities. Multinational or foreign-owned producer services firms (PSFs) have significant presence in the country. They are considered as the market leaders in the industry. Yet, little is known on how they operate in Indonesia. This research investigates how multinational PSFs conduct business in Indonesia by understanding the ways they develop and maintain ties with the various types of private and government clients that exist within the country. Through the lens of relational economic geography and interpersonal communication, this research uses quantitative, qualitative and participant observation methods to examine the role communication in multinational PSFs' business conducts. The findings of this study indicate that mediated and non-mediated communication channels positively impact firm-client relationships, levels of trust, and performances. Communication is important for multinational PSFs to understand client and project related risks in an emerging market condition, where market data is scarce and legal enforcement is weak. Furthermore, the nature of communication and relationship dynamics exhibit variations when multinational PSFs are faced with different types of client (i.e., local, multinational and government clients). This study contributes to the economic geography and international business literature by providing an in-depth view on how multinational PSFs operate in Indonesia.