Power relationships and capacity building in the informal economy

Bridging the literature on power relationships in networks in the context of the informal economy in Indonesia, this chapter sheds light on what capacities are required to sustain business networks in business relationships that are not governed by formal institutions and have no obligations of businesses. The key capacities of firms are identified in this chapter: namely, the agile decision-making in shifting from business partners, the capacity of regular product adjustments in response to the external factors and the capacity to manage business relationships around power imbalance. The study extends the knowledge of the informal economies and their impact on the sustainability and resilience of national economies. The chapter informs managers and policy makers about managing business relationship when informal economic activities have to be included in more formal, traditional value chains.