Using organization structure to buffer political ties in emerging markets: : A case study / Marleen Dieleman, Jean J. Boddewyn

We use and extend resource-dependence theory by analyzing how loosely coupled organizational structures facilitate the management of political ties by business groups in emerging economies. This topic is particularly salient because business groups are a prevalent organizational form in these countries, where they face both a high dependence on governments to secure key resources and a unique set of risks associated with political ties.

We identify and analyze four buffering mechanisms that enable loosely coupled business groups to protect themselves against the adverse effects of such ties. We ground and contextualize these mechanisms by relying on a longitudinal case study of the Salim Group—a very large and well-connected Indonesian business group under the Suharto regime.

This study is particularly relevant in the context of the renewed interest in firms’ organizational structure and contributes to understanding how organizational design can shape political strategy and resilience in volatile institutional environments.