Family Firm Sustainability: An Ethnographic Study of Change and Adaptation in the Traditional Batik Industry in Lasem, Indonesia
There is growing attention to the role of family firms in the global economy. In Indonesia, the family firm model is dominant, enhancing people’s lives through job creation, such as in Lasem’s traditional batik industry which is very labour intensive. The batik firms demonstrate the ability to sustain a business through generations, particularly those owned and managed by ethnic Chinese families. Surprisingly, quite a few have survived past the third generation, while previous research in a Western context proved only fourteen percent of family businesses survive to the third generation. Previous studies on business sustainability are mainly concerned with the macro-economic level. This study investigates family firm sustainability in a more comprehensive way considering the growth and survival process over periods of time by incorporating a mixed-embeddedness approach. This allows an analysis at different levels: the micro-level (the family and the firm), the meso-level (the market dynamics), and the macro-level (political and economic climate). In addition, the research compares two ethnic groups that play key roles in the traditional batik industry in Lasem: the ethnic Chinese, as the pioneers of batik Lasem and the ethnic Javanese who are newcomers. Ethnographic research was conducted in the Lasem area using a life-business history approach. This study offers several key findings. Firstly, at the micro level, the embeddedness of the owner-managers in their contexts (ethnic family background) provides a unique resource availability such as, knowledge, social capital, and financial capital. Further, knowledge possession (colouring formula in particular), the flexibility in responding to changing circumstances, succession, and emotional attachment to the firm and the family are important in determining business sustainability. Secondly, market dynamics such as fashion trends, technology development and competitive environment impact differently on the business sustainability of the two groups. Thirdly, at the macro level, politics and the economic climate can potentially encourage or threaten business sustainability. This study demonstrates that an appropriate strategy in response to the changing circumstances at the micro, meso and macro levels is crucial in determining business sustainability. The latter is closely related to a combination of mixed-embeddedness and the unique resources pertinent to each ethnic group
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