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Year: 2016
Published in: ICSEM Project
Cited as: Pratono, A. H., Pramudija, P. & Sutanti, A. (2016) “Social Enterprise in Indonesia: Emerging Models under Transition Government”, No. 36.

Abstract

Indonesia has been witnessing the development of the role of the third sector through the emergence of social enterprises. These initiatives aim to respond to various social problems, including mass unemployment, the great deficit of the public budget and fear of national disintegration, caused by the 1998 financial crisis. In fact, social enterprises—and more particularly the cooperative model—have played a pivotal role in the last decades in the country (Chaniago 1979; Baswir 2010). The Indonesian Constitution underlines the fact that the economy is required to adopt the cooperative principles, and the emerging concept of social enterprise has raised attention for the Indonesian third sector. However, a precise view of the social enterprise concept is still lacking in Indonesia, for several reasons. First, the existing literature has relied so far only on cases presenting social activities or policy studies (Dacanay 2004; Idris and Hati 2013; Pratono et al. 2014). Secondly, there is no specific legal form for social enterprises in Indonesia, which implies an ambiguity in the implementation of social enterprise activities. The definition of social enterprise varies a lot according to the context as well as among the different schools of thought (Defourny and Nyssens 2010), and the Asian landscape of the social enterprise phenomenon is complex (Defourny and Kim 2011). Hence, more in-depth analysis is required to understand social enterprise models in Indonesia and move forward in the comparative analysis. This study aims to put forward a tentative typology of social enterprise models in the Indonesian context to overcome this research gap. With a view to achieving this goal and to exploring the social movement in the Indonesian context, we decided to adopt a qualitative method. Beside our main research question, on what the typical social enterprise models in Indonesia are, we also analyzed (1) the way in which the economic activities support the social mission and (2) the decision-making process in the “social enterprise practices” of the observed organizations. The present working paper consists of seven major sections, beside the present introduction. The first one (section 2) presents the existing literature, highlighting the EMES school of thought and typologies of social enterprise in which this study is anchored. Section 3 describes the research method, which is based on an exploratory approach. Section 4 discusses the historical context influencing social enterprises, while section 5 presents the current business context. Data collected about a sample of social enterprises is analyzed in section 6. In section 7, we put forward a tentative typology of SE models in the Indonesian context. Finally, the last section presents conclusions and discusses possible orientations for future studies.