Subcontracting to the informal economy in East Java']Java, Indonesia

This article examines the subcontracting arrangements that apply to microenterprises operating in the informal economy in East Java, Indonesia. A qualitative study was carried out in which the snowball technique made it possible to obtain the details of both the formal and informal company owners, who were then interviewed with the purpose of gaining a deeper understanding of the subcontracting relations. Formal export companies outsource to micro family businesses in the subcontracting market as a way to optimise production. Our study highlights the fact that formal and informal companies are located in the same communities. Subcontracting relations are hence based on trust and cooperation, which are key to minimising production costs.