Business partnership
Business partnership
The basic principles and operational directives outlined by
President Soeharto for the National Business Partnership program
set up a strong foundation and provide economic viability for the
development of business ties between big companies and small
firms on a sustainable level.
The President asserted at the launching of the program on
Wednesday that business partnerships should run on the basis of
mutual benefit and equality. That means the driving force of big
companies to develop business tie-ups with small firms or
cooperatives should not be compassion. The compelling factor
should be the rationale that a broad-based economic growth is a
prerequisite for the political, social and economic
sustainability of conglomerates.
Mutually-beneficial business partnerships also mean the ties
between big and small enterprises will not exact unreasonable
costs on the partners. Otherwise the efficiency of the economy as
a whole will be affected and whatever benefits accrued from such
relations will be nullified.
The President's directives convey a clear but sensible message
of caution to small firms and cooperatives that they should not
expect preferential treatment from big companies, nor should they
expect an immediate injection of easy money. Small firms will be
given assistance under the partnership program, but the aid is
not in subsidies or grants but entrepreneurship and managerial
training through learning-by-doing business with big enterprises.
They will learn how to do business the hard way.
The message for big companies is that they should practice a
lot of patience in enhancing the skills and capacities of small
firms. However, they are not expected to accept lower-quality
products from their small-business partners. Accepting less from
small firms than they would from other medium-scale or big
suppliers would kill the spirit of entrepreneurship and business
competence. It would also instill an unrealistic sense of
acceptable business practices.
Moreover, as the President warned, since the products to be
made by the business partnerships will be sold to domestic and
international markets, the products should be competitive in
terms of both quality and price. Turning out inferior products
will not only edge the businesses out of the market, but also
will make the whole economy inefficient.
The experiences of countries which have succeeded in
developing a large base of reliable, competitive small
enterprises show that enhancing business ties with small firms
exacts a learning cost on big companies, although the eventual
payoff is quite big. Since the program involves training and
requires a change in attitude on the part of the managements of
small businesses, big companies should think long term.
However, to facilitate the smooth implementation of the
business partnership program, the government needs to issue rules
to protect the interests and rights of small firms from abuses by
large companies and to ensure fair transactions between partners.