BUSINESS CULTURE IN INDONESIA

Mr. Mohammad Faisal S.Pd., M.Pd.

By :

ULFA NAFILLA 1920111899

SEKOLAH TINGGI ILMU EKONOMI INDONESIA (STIESIA)

SURABAYA

DECEMBER 27th, 2019

The Definition of Business Culture is model or style of business
operations within a company. The business culture determines how different
levels of staff communicate with one another as well as how employees deal with
clients and customers.
Indonesia is complex. That is hardly surprising given the fact that the
country spans thousands of islands, has over 300 languages and population of
about 243 million (which is rising rapidly.) Navigating your way around
Indonesia is both literally and figuratively difficult.
However, Indonesia is a country which has tremendous economic potential. The
Indonesian government is working hard to try to reduce the country’s dependence
on exports of (raw) commodities and to diversify into both the manufacturing and
service sectors. In addition to this, vast sums are being pumped into the basic
infrastructure of a nation which has suffered from some core infrastructure
weaknesses for decades.
Many observers believe that, provided some form of political stability can
be maintained, Indonesia represents a country with massive growth potential. If
Indonesia is to achieve its potential it needs a great deal of external stimulus and
support. It needs Foreign Direct Investment and it needs skills and expertise.
Indonesia probably needs your goods or services and you are advised to seriously
consider Indonesia as a future market if you are not already operating there.
However, Indonesia is a thoroughly Asian country with a rich and unique
business culture. The Indonesian approach to business is heavily relationship
focused. You need to take time to develop deep and lasting alliances and you need
to really understand Indonesian business culture if you are to avoid alienating
potential partners.
Citing a well-known Indonesian proverb: “Dimana bumi dipijak, disitu
langit dijunjung.” Hold up the sky of the land where you walk. This is similar to
When in Rome, do as the Romans. The same goes for doing business. People who
come to Indonesia with a clear vision yet a flexible mind have excellent chances
of blending in. Prejudice often leads foreigners into false expectations, therefore
follow these steps to shape your idea of how business works with Indonesians.
1. Relationship First, Then Business
The diverse cultural dynamics dominate Indonesian business culture.
There are a number of customs and traditions that need to be followed.
This is to the extent that the Indonesians sometimes feel burdened by their
culture code/ etiquette (tata krama). The same feeling of obligation and
burden applies for the kindness.
Nevertheless, Indonesians are very proud of both their cultural heritage as
well as they happily show kindness towards a foreigner. However, once
you are in Indonesia, you will understand how many customs actually
need to be followed. Also, how it affects doing business.
Tip for a foreigner is to observe and get to know local customs. This will
help you blend in better and it becomes simpler to emphasize on local’s
 dedication. Knowing when to move on from “building a relationship”
stage to doing business is what differentiates seasoned veterans from
foreigners new to doing business in Indonesia. That is why we advise
companies new to the market to take an experienced person with them to
business meetings.
2. Power and Hierarchy Influencing Indonesian Business Culture
Hierarchy principles here are similar to several other Asian countries.
Supported by Hofstede’s study, Indonesia still has high power distance
value. People are not equal in society and this also reflects in the
organisation. In other words, employees with less power in life expect and
accept to have less at a workplace as well.
Hierarchy concept is still commonly found, especially in older generations
and well-established companies. Being introduced to new people, try
greeting the eldest or most senior first. Title is a thing to boast around and
show your status in society. It is polite to refer to them with titles Mr/
Mrs (Bapak / Ibu) rather than direct name recognition.
3. “Yes, Boss” Phrase in Indonesian Business Culture
This phrase does mean “Yes”, but mostly to make a person happy, show
respect and satisfy the request of another. However, do not be fooled into
thinking it automatically confirms what is being discussed in between
partners.
It is often when foreign companies get the wrong idea, thinking that a deal
has already been agreed. When actually the Indonesian partner just wants
to please the other party. Once the foreign company goes back home, they
find that nothing happens. Thus, a one time “yes” does not mean an
Indonesian will do what is discussed or necessarily agrees with it. Make
sure to double check your proposal a couple of times.
4. Importance of Connections in Indonesia
Who you know is more important than what you know. This means,
connections are often more valuable than knowledge. It comes especially
heightened when dealing with governmental sector in
Indonesia. Therefore, it is wise to gather partners with wide circle of
connections, rather than have a few bright ones close to you who lack
connections on necessary levels.
Indonesians grow a strong bond with people they know. They follow up
on those close to them as well as on those of higher rank. New
acquaintances however are further behind in the list. Therefore, give it
time to bond and build relations while putting in a genuine interest.
Bragging about who you know is a common practice as well – everyone
you know claims they know someone important. Sometimes they do but
sometimes it’s just a marketing tactic they use for an improved reputation.
It is also easier to arrange a first meeting if you said you knew someone on
the loop. Only knowing the high rank name could be the key to your first
meeting.
 5. Avoid Agreements During First Contact With Indonesian Partner
While follow-ups to new connections are not prioritized, Indonesians feel
committed to relationships and keeping them on good terms. Saying “no”
is not a phrase that slips over the lips of a local easily. Thus, it is often that
they skip a meeting or contact if they feel it is about business and they are
not ready. Rather than saying no.
So, the tip is – do not put sales as an objective in the first
contact. Emphasize on starting a relationship or introducing your company
with no agreements or further binding proposals. Nowadays, it is best to
divide business culture based on who we are dealing with. Let’s discuss
one by one.
6. Making Mistakes is Acceptable While Doing Business in Indonesia
The occurrence of cultural mistakes amongst foreigners is not that
uncommon, especially in a rich culture such as Indonesia. However, locals
are understanding as long as you bring the right attitude and it is an honest
mistake. The key is showing respect towards their country and not
dismissing or belittling the cultural standards purposely.
Don’t be afraid if you made a mistake that was not as cultural etiquette
would require. People in Indonesia appreciate welcoming foreign
entrepreneurs who bring knowledge from a developed country while being
genuinely interested in the skills of locals. Recognizing that foreigners and
locals work well together by completing each other is a perfect starting
point and admitting your mistakes with the right attitude is where it all
begins.
Locals appreciate the effort you make and mistakes are not always taken
too seriously. In fact – Indonesians even consider mistakes to be common.
Despite that, make sure to say “maaf yah”, which translates to: “I am
sorry”.

The differences between Western cultural styles and Indonesian cultural

norms become very apparent in the business environment. Most Western cultures
believe that humanity is basically good. Most Western cultures believe that the
human-nature relationship is one of Mastery over Nature meaning that if nature
gets in the way you change it. Most Western cultures have a very strong future-
time sense with the belief that planning and scheduling today make it possible to
succeed tomorrow. Finally, most Western cultures have a strong belief in
individualism and equal rights meaning that if you work hard, you will be
rewarded.
Indonesian standard business culture is quite different. First of all, it
should be understood that there is no single Indonesian culture. Indonesia with its
17,000 islands and hundreds of different ethnic groups is a vast collection of
different peoples and cultures. Thus, you must always know who you are dealing
with. However, Javanese culture has long dominated the archipelago and is the
standard for Indonesian business culture today.
 Indonesians generally believe that people are a mixture of good and evil.
People are usually good especially when constrained by responsibilities to the
group. However, there is the potential for evil in all people. Normally constrained
individuals can perform irrational acts believed to be outside that person’s control.
There is a strong belief in subjugation to nature, meaning that nature
controls your life and there is little you can do as an individual to move yourself
ahead. One should accept one’s position in life. Most Indonesians tend to look
toward the past as an example for today. There is a strong belief in tradition but
also in rules and regulations that need to be followed regardless of practicality.
In Indonesia the proper aspect of humanity is to be expressive and
emotional although that expressiveness and emotionalism lives just under the
surface. This means that it can be difficult to determine the emotional state of
most Indonesian coworkers, but that strong emotions can surface in ways that may
be confusing to a Western supervisor.
Social relationships tend to be twofold in Indonesian culture. First there is
a strong authoritarian framework with natural born leaders and natural born
followers. These relationships are clearly defined. However, within each
particular group there is a strong belief that the community makes decisions in
order to avoid individual responsibility.
A change in management becomes a particularly difficult situation in
Indonesia. Often the corporate home office will not accept common practices and
procedures found in Indonesia as a best practice and requires Indonesian managers
and staff to adapt to the international corporate culture. A deep understanding of
the cultural traits found in Indonesian business is required before an action plan
can be completed to implement change. The home corporate office usually has
little understanding of the profound cultural complexity of implementing change
in Indonesian offices, factories, and businesses.
For these reasons and many others, it becomes critical that foreign
professionals working in Indonesia look past the elaborate subterfuge found in
Indonesian business and incorporate the correct cultural traits to manage
Indonesian personnel. Simultaneously, Indonesian managers must be instructed in
the expectations of their foreign superiors and coworkers. Without an
understanding of the cultural expectations of the other group, frustration and
confusion are the norm.

Source :
http://www.businessdictionary.com/definition/business-culture.html
https://www.worldbusinessculture.com/country-profiles/indonesia/culture/
https://emerhub.com/indonesia/understanding-indonesian-business-culture/
https://www.indonesia-investments.com/id/bisnis/tinggal-kerja/budaya-bisnis-
indonesia/item411?