The transformation of human resource management in Indonesian state-owned enterprises since the Asian Crisis

Abstract

Indonesia is facing a rapid institutional change arising from the 1997 Asian Crisis, and state-owned enterprises (SOEs) were forced to undertake a transformation to survive in the increasing market competition and to revive their roles as the engine of economic growth. This included measures to tackle the increasingly vital human-related issues, namely human resource management (HRM). This research focuses on the dynamic relationships between the SOEs and their internal and external stakeholders in the post-1997 Asian Crisis. It addresses three main issues. First is to investigate the change within the Indonesian institutions and the influence on the firms. Second is to examine the response of the firms as captured in their firms' transformation initiatives in the area of HRM. Third is to elaborate the implications for theory and practices regarding transitional economy in general and HRM changes in particular. The results indicate that the transformation of SOEs has been determined by the firms' relationships with both their internal and external stakeholders. Following the Asian Crisis, Indonesia witnesses a drastic change of the HR practices toward greater market orientation and the pervasiveness of ‘best practices’.