Sustainability of Palm Oil Business Partnerships through the Role of Social Capital and Local Wisdom: Evidence from Palm Oil Plantations in Indonesia

Abstract

Sustainable development can only be realised when the social, economic and environmental dimensions are considered altogether. Social capital and local wisdom offer important contributions to the development process and the capabilities of individuals and groups as development actors. This study analyses the role of social capital and local wisdom in managing business partnerships between farmers and palm oil plantation companies in North Konawe, Indonesia. Data were collected via in-depth interviews, field observations and focus group discussions and were analysed descriptively and qualitatively. Results underscore the importance of social capital and local wisdom in organising institutional programmes for strengthening palm oil business partnerships. Trust, social networks and participation negatively affect the sustainability of these partnerships, whilst local wisdom and social solidarity positively influence institutional strengthening. Inconsistency and lack of openness by companies can lead to a trust crisis that can threaten the sustainable operations of palm oil companies. Building a good cooperative commitment and maintaining collaboration play key roles in enhancing community welfare and increasing company profits. The social capital and local wisdom of farmer institutions in villages are expected to significantly contribute to the establishment of sustainable palm oil business partnerships.