How powerful political ties appropriate resources and how weaker organizations protect themselves: A case study from Indonesia

Marleen Dieleman,Henky Widjaja

doi:10.1007/s10490-018-9563-2

Marleen Dieleman, Henky Widjaja

Open Access

https://doi.org/10.1007/s10490-018-9563-2

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Abstract

We advance the resource dependence literature on appropriation of organizational resources by powerful partners, focusing on political ties. Using a unique emerging market case of a venture with political ties, we advance theory by unpacking how political connections can hurt the organization by increasing the permeability of organizational boundaries. Our extensions highlight the crucial role of control mechanisms for politically connected organizations.

Highlights

Organizations commonly seek to create linkages with external parties to access key resources and opportunities (Hitt, Ahlstrom, Dacin, Levitas, & Svobodina, 2004), especially in emerging economies (Ahlstrom, Young, Nair, & Law, 2003)
Based on our case study, we suggest that when political ties are co-opted, these ties may use purposeful boundary-blurring as a mechanism of appropriation
In the context of co-opted political ties, we suggest process-based controls are especially important in regulating the interaction between a tie and other stakeholders beyond the organization boundary to prevent the escalation of undesired interference

Summary

Introduction

Organizations commonly seek to create linkages with external parties to access key resources and opportunities (Hitt, Ahlstrom, Dacin, Levitas, & Svobodina, 2004), especially in emerging economies (Ahlstrom, Young, Nair, & Law, 2003). Insights on how powerful political partners go about appropriating resources are still limited, especially in new ventures Extant research in this emerging area is still insufficient to achieve an integrated perspective on protecting organizations from their powerful co-opted political ties (Mellahi et al, 2016; Sun et al, 2016). Our longitudinal design and in-depth ethnographic method allowed us to identify several key risks of engaging politically active directors It illuminates a mechanism of appropriation whereby the political tie purposely obscured the organizational boundary to gain power, which subsequently enabled full use of the organization’s resources for private and political gain. Our study allowed us to observe defense mechanisms and reflect on their (limited) effectiveness

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Conclusion