Human resource management as competitive advantage in the new millennium

Abstract

One strand of conventional wisdom is the urgent need for human resource management in Indonesia to improve to world standards so that the Indonesian corporate sector can survive in a globalized economy. Another strand accepts the need to improve to international standards but argues that such improvements should be based on Indonesian conditions. Indonesian management is traditional, patrimonial and hierarchically oriented, and international practices like empowerment, participation and incentive orientation are irrelevant or, at best, need to be adjusted to and are secondary to Indonesian indigenous characteristics. There is a dearth of empirical research in Indonesia that could support either strand. This article presents three mini‐cases to argue that human resource management in Indonesia is a complex process with both national and international influences. The cases suggest national conditions need not hinder the adoption of international best HRM practices focusing on participation, empowerment and incentives leading to competitive behavior.