Organizing the Indonesian Clothing Industry in the Global Economy: The Role of Business Networks

Abstract

In a relatively short period of time, Indonesia has become a significant centre of clothing production within the global economy. Its overall growth can be explained primarily by the intersection between two sets of political-economic processes: those operating at the global level of the industry in general and those specific to Indonesia itself. Within these general processes, we explore the particular organizational mechanisms through which this growth has occurred. Detailed field evidence shows how the Indonesian clothing industry is deeply embedded in production networks which connect domestic producers with international networks of production and distribution, notably those organized by Korean, Taiwanese, US, and European firms. Although such networks are generally consistent with Gereffi's concept of the buyer-driven global commodity chain, we show that the precise shape and the driver of the company-specific production networks in Indonesia are highly dependent on the specific market being served. Finally, brief attention is given to the potential impact of the current East Asian economic crisis on Indonesian clothing firms.

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