Indonesian Firms in Facing Globalization: Do Foreign Ownership and Export Matter?

The Indonesian firms need to prepare and be ready for the globalization and industrial revolution 4.0. The inward-looking strategy is no longer sufficient to face the world competition, rather the outward-looking strategy provides a significant benefit for the firms to survive and compete. In response to this globalization issue, the current study evaluates the outward looking strategy through examining three important external factors, besides inward looking factors, that contribute to Indonesian firms’ productivity. The outward-looking factors are foreign ownership, export, and import, whereas the inward-looking factors are material, labour, capital, and energy. Applying the augmented Cobb-Douglas production function on 8,589 manufacturing firms within seven years period, the findings of this current study show the importance of for-eign ownership, export, and import in significantly influence the productivity of the Indonesian firms. The re-sults are robust under four methods of analyses, namely Ordinary Least Squared (OLS), Generalized Least Squared (GLS), Maximum Likelihood (ML), and General Method of Moments(GMM). The findings suggest for the outward-looking strategy for Indonesian firms to increase their productivity