The evolution of the electronics industry on Batam Island (Riau Islands Province, Indonesia): an evolutionary trajectory contributing to regional resilience?

Abstract

While extensively studied in the 1990s, research on the electrical and electronics (E&E) industry in Singapore and the proximate areas of Indonesia has dwindled. Focusing on the E&E sector in the island of Batam (Riau Islands Province, Indonesia), we examine the industry’s recent evolution, in particular its ‘robustness’—its durability and capacity to adapt to adverse events. As to the explanatory factors accounting for its robustness, we evaluate the role of agency as opposed to conventional approaches that focus on structure. Our findings show that, in Batam, the E&E industry’s robustness has started to suffer. While there is evidence that structural factors are at work, we argue that agency in the form of institutionally-embedded perspectives and behaviour of actors at the sub-national level also plays a role. Because the promotion of economic diversification through investment in new sectors is easier and more lucrative than upgrading and deepening of firm capabilities in existing sectors, agents privilege the former at the cost of the latter. At the end of the day, regional resilience is undermined, rather than reinforced as evinced by the recent atrophy of Batam’s E&E industry.