International alliance strategies: A case study of the indonesian medical device industry

Abstract

This study aims to investigate how the multinational corporations form alliance strategies with local businesses under the dynamic institutional environment in the Indonesian context. We used a qualitative approach with a case study of the medical device industry to examine how the institutional environment affects the choice of the strategic alliance. By collecting the qualitative data, including interviews, observations and archival data, the interpretive approach was adopted to understand social worlds from the point of view of participants. We identified five types of alliance strategies: the wholly owned subsidiary with contractual collaboration, the wholly owned subsidiary with the licence agreement, the international trade with the licence agreement, joint venture and outsourcing. There are also two main issues of the institutional environments that determine the choice of alliance strategic: the restriction for foreign companies to carry out direct selling and the new policy that introduces the electronic procurement system. This study provides evidence of the role of the institutional environment on collaboration strategies between the multinational enterprises from the developed countries and the local distributors from Indonesia. The results extend the concept of international business in the Asian context.