The Call to Shift from the Narrow Legalistic to the Broader Moral and Legal Stakeholder Model in Indonesian State-Owned Enterprises: Its Implications and Challenges

This article aims to elaborate on the narrow legalistic stakeholder model and the need to apply a new revised moral and legal stakeholder model in Indonesian state-owned enterprises (SOEs) with its implications and challenges. Studies on the narrow legalistic stakeholder model in Indonesian SOEs are still uncommon, despite the rising awareness of the model. This study expects to initiate discourse on the ideal stakeholder model in the industry. This study combined doctrinal and empirical legal research methods. The SOE laws and the Minister of SOEs’ regulations were examined aside from the investigation of empirical data on the accusation of SOEs breaching their obligations to their legitimate stakeholders as indicated in court decisions and mass media publications. This study shows that the Minister of SOEs’ Regulation on Implementing Corporate Governance Implementation has promoted a narrow legalistic approach to the stakeholder model. As a result, only those who have a written contract with SOEs can be considered as the legitimate direct stakeholders. This approach has led to the expropriation of other indirect legitimate stakeholders of the SOEs. This study can be used to revise the narrow legalistic stakeholder model and to strengthen research on the stakeholder model in SOEs and corporate governance.