New insights into the ‘Indonesian way’ of managing international business negotiations

Indonesia has enjoyed impressive economic growth since the early 2000s and consequently attracted significant business interest from western companies. Yet, the Indonesian business context has also been notoriously impacted by corruption, which presents a serious challenge for international business negotiations. Interestingly, in scholarly research little is known about the indigenous management practices within the Indonesian context. This study therefore investigates indigenous management practices during international business negotiations taking place in the emerging market of Indonesia, that may determine the success or failure of multinational corporations’ negotiations. We conduct an inductive analysis of rich and context-specific data generated through 55 in-depth interviews of Indonesian and non-Indonesian managers. We discover: (1) the importance of perantara as a third-party agent, specific to Indonesia, that operates as a backchannel conduit for communication between parties and is essential for progressing to the face-to-face negotiation stage; and (2) the unique relationship-building process essential for business negotiations in Indonesia, which moves from task orientation to relationship-building orientation. To the best of our knowledge, our study is one of the first to tackle such specific indigenous management behaviours during international business negotiation in Indonesia from a context-specific insider’s perspective. This study provides useful insights for managers of foreign multinational corporations on how to manage certain indigenous Indonesian management behaviours if they are to achieve successful investment outcomes.