Indonesian Business Culture

In common with most societies, Indonesia’s cultural norms are to a large extent mirrored in its business culture. Hence, knowledge of various aspects of Indonesian culture will provide great insights into the way business is conducted, and can be a distinct advantage when dealing with Indonesians. And despite the great ethnic, religious and other cultural diversity across Indonesia, it is a nation that holds many shared values.

Three distinct elements – the family, social harmony and religion – underpin Indonesia’s national culture, and are therefore pervasive in its business culture. Foreign businesses that want to succeed in Indonesia should not just seek to cope with these cultural influences, they should aim to understand and embrace them.

The primary social group in Indonesia is the family. The head of the family is generally the eldest male, with the rest of the family hierarchy usually determined by age, and sometimes gender. Being part of an extended family brings both security and responsibilities. Parents expect to be cared for by their children to the end of their lives. And there is also a strong communal ethos in the Indonesian family unit, with an emphasis on shared wealth and possessions.

Indonesians, in common with many other Asian cultures, place a high value on social harmony and consensus. Maintaining “face” in public situations is paramount. All parties expect to be treated respectfully. Open displays of aggression or rudeness are considered unacceptable. In situations requiring negotiation or decision-making, it is important to achieve a consensus that maintains face for all parties. In practice this can result in longer, more protracted dealings than some outsiders might be used to. Negotiations may be slowed by indirect expressions of any differences in opinion, and a typical reluctance among Indonesians to use direct words like “no” – even when that’s what they mean. Musyawarah (the mutual exchange of views avoiding the loss of face) and gotong royong (mutual co-operation) are generally considered essential to the attainment of mufakat (consensus).

Religion is an important part of everyday life in Indonesia. About 85 per cent of the population is Muslim, but there are also significant Christian and Hindu populations. The diversity of faith across the archipelago has engendered a culture of religious tolerance, with the state motto, Bhinneka Tunggal Ika, translating to “unity in diversity”.

The vast majority of Indonesian Muslims observe a moderate form of Islam, with a very small minority advocating stricter observance.

Christianity is the second most common religion in Indonesia, with its followers based mainly in Maluku, Sulawesi and Kalimantan. The Balinese are predominantly Hindu.

Australian businesses should develop and adapt their management styles to accommodate local preferences and to be as appropriate for the local context as possible. Social hierarchy and loss of face are key issues for Australian managers to be aware of. They should also encourage social interaction in the workplace. Management techniques that are confrontational and assertive – such as public reprimands or criticisms – should be avoided as they can easily lead to disrespect and uncooperative work practices, which in turn negatively impact employee commitment.

Want to learn more? Explore our other Indonesia information categories or download the Indonesia Country Starter Pack.