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

Abstract

Sustainable development can only be achieved when jointly considering social, economic, and environmental dimensions. Social capital and local wisdom offer important contributions to the development process and the capabilities of individuals and groups as development actors. This study analyzes the role of social capital and local wisdom in managing business partnerships between farmers and palm oil plantation companies in North Konawe, Indonesia. This research was conducted in a palm oil plantation area by involving landowner farmers, palm oil companies, and other stakeholders such as the local government, NGOs, and academics. Data were collected through in-depth interviews, field observations, and focus group discussions (FGDs), totaling 320 respondents, and analyzed descriptively and qualitatively. The selection of informants for the in-depth interviews was determined by considering their involvement in and understanding of the partnership between farmers and companies in oil palm plantations; field observations were carried out to determine the field conditions of these plantations, while FGDs were held to obtain stakeholder information regarding problems and solutions in implementing farmer and company partnerships with the aim of having a positive impact on economic, social, and environmental welfare. The results underscore the importance of social capital and local wisdom in organizing institutional programs for strengthening palm oil business partnerships. Trust, social networks, and participation negatively affected the sustainability of these partnerships, whilst local wisdom and social solidarity positively influenced institutional strengthening. Company inconsistency and lack of openness can lead to a trust crisis that can threaten the sustainable operations of palm oil companies, while building 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.

1. Introduction

Palm oil manufacturing is one of the main industries driving Indonesian economic development. Besides shaping environmental sustainability [1,2], palm oil companies significantly contribute to people’s welfare through job opportunities and income increases [3,4]. However, they also negatively affect the environment [3,5], disrupt community water use [6], shape smallholders’ perceptions of land restoration activities [7], trigger land cover changes [8], generate CO₂ emissions [9], threaten biodiversity, and negatively affect other ecosystems [3].

To exert a positive impact, these companies should build harmonious relationships with local communities [10], organize training programs [11], and aim for economic empowerment [12]. Cooperation and mutual trust and support between parties are key indicators of social capital [13,14], promoting individual and group solidarity [13,14]. Putnam (1994) defines social capital as the features of social organizations, such as networks, norms, and trust, that facilitate coordination and cooperation to generate profit [15]. It is a valuable resource that facilitates collective action and supports a harmonious social life, important in building and maintaining a cooperative and mutually supportive society.

Jia et al. (2020) [16] state that social capital builds proactive and reactive organizational resilience by fostering knowledge collaboration [16], as well as self-confidence in taking action towards other parties. During the COVID-19 pandemic, social capital promoted public acceptance and adherence to control measures by building trust and norms at the individual level. It can also facilitate collective action and mobilize network resources at the neighborhood level [17]. High trust, community involvement, and personal relationships with others are also considered important in the agricultural sector [18].

In addition to social capital being important in supporting collaboration and relationships among individuals and groups trying to achieve common goals, local wisdom plays a crucial role in strengthening and sustaining sustainable partnerships. Asrial et al. (2021) explain that local wisdom is the knowledge and skills possessed by local communities, acquired through direct experience with their environment [19]. This wisdom is often more adaptive and relevant to the local context compared to outsider, imported knowledge. According to Geertz (1983), local knowledge is a system of knowledge maintained by local communities that distinguishes them from other communities, the result of a long process of adaptation to their surrounding environment and culture [20]. Shiell et al. (2020) explain that social capital is critical to solving community problems through its various environmental protection benefits [21]. Rahmah and Sulistyono (2024) explore the role of local wisdom as social capital in remote indigenous communities, demonstrating how it helps build strong social bonds and overcome potential conflicts [22]. Huynh and Grossmann (2020) explore how wisdom, including intellectual humility, contributes to improved leadership, sustainability, and civil discourse [23], while others have noted how it benefits cultural preservation and strengthens social relations [24].

Southeast Sulawesi has land suitable for palm oil manufacturing by companies such as North Konawe Regency, a central company with three palm oil plantations in one-roof and core–plasma partnerships with landowning farmers: PT Sultra Prima Lestari (PT.SPL), which includes Andowia, Asera, Langgikima, and Oheo, totaling 5950 ha of planting area; PT Damai Jaya Lestari (PT.DJL), which includes Landawe, Wiwirano, and Langgikima, totaling 6989 ha; and PT Perkebunan Nusantara XIV (Persero or PT.PN-14), which includes Wiwirano and Landawe, totaling 4455 ha.

As highlighted by Kilpatrick et al., (2021), fair and mutually beneficial partnerships in the agribusiness industry, providing clear and significant benefits to farmers, increasing their income and overall well-being, are crucial to improving farmer welfare [25]. This, however, has not been the case for the partnerships mentioned above.

Additionally, the farmers in question have not yet formed farmer groups or associations, a starting point for the institutional management of palm oil plantations and essential to enhancing farmers’ bargaining power, strengthening social networks, and improving their management capacities. Indeed, according to Ostrom (1990), establishing collective organizations can enhance the effectiveness of managing shared resources [26].

In these plantations, farmers are generally dissatisfied with the company’s performance in terms of developing institutions that can support their sustainability and well-being, requiring companies to be more proactive. Futemma et al. (2020) state that strong institutional development can help create more sustainable and beneficial partnerships for farmers [27]. While this is not currently the case, partnerships should be built on the principle of equality, where both parties have balanced rights and responsibilities. Santos-Larrazabal and Basterretxea (2023) state that fair and transparent partnerships can increase trust and cooperation between farmers and companies, enhancing their success [28].

Farmer social capital in North Konawe tends to be ignored by palm oil plantation managers and has not yet formed a basis for strengthening these farmers’ capacity to build partnerships with said plantations. Several obstacles continue to prevent institutional development from achieving community empowerment. The institutional formation of landowning farmers must be based on a full understanding of the variety and nature of their social capital [18]. A recent study shows that social capital is an important factor in community empowerment efforts, which could, therefore, be accelerated through its realization [29]. Social capital is an important factor for actors to consider to maintain their partnerships and obtain mutual benefits. Local wisdom—including generational knowledge, values, and practices developed by local communities to support their environmental, social, and economic sustainability—is equally important in establishing effective partnerships between farmers and palm oil plantations and empowering the former [30].

Saleh (2022) investigates social capital’s role in promoting farmer welfare—especially that of rice farmers—and finds that showing respect and mutual appreciation, responsibility, and support increases community competence and improves farming skills, whilst promoting agricultural diversity can ultimately increase farming income [31]. Rocca and Zielinski (2022) state that social capital contributes to human development and welfare, highlighting the importance of social and human capital and environmental factors [32].

In the context of institutional strengthening, trust, good relationships, and social networks serve not only as determinants of institutional goals’ sustainability but also as manifestations of social capital implementation [33,34,35,36]. Societies with low mutual trust are products of cultural patterns in a very limited environment [37], tend to have a weak social capital, and continue to adhere to traditional ways of living.

Based on the phenomenon of the partnership relationships between farmers and companies discussed above, it is very important to obtain information to analyze and understand the social capital characteristics of the landowning farmers who are business partners with palm oil plantations in North Konawe, including how social networks, trust, and social norms influence said partnerships. In addition, it is essential to evaluate how social capital and local wisdom contribute to landowning farmers’ institutional management capabilities in their business partnerships with palm oil plantations, which includes analyzing the role of traditional values and local practices in strengthening or weakening these partnerships.

This study focuses on the social capital and local wisdom factors that strengthen landowning farmers’ institutional management capability in their business partnerships with palm oil plantations, with the following aims: (1) to analyze the social capital characteristics of landowning farmers as business partners of palm oil plantations in North Konawe and (2) analyze the role of social capital and local wisdom in managing these partnerships.

Thus, this study’s research questions are as follows: (1) What are the social capital characteristics of landowning farmers who are business partners of palm oil plantations in North Konawe? (2) What is social capital’s role in managing the business partnerships between landowning farmers and palm oil plantations in North Konawe? (3) What is local wisdom’s role in managing the business partnerships between landowning farmers and palm oil plantations in North Konawe?

This study’s hypotheses are the following: (1) landowning farmers’ social capital characteristics include strong social networks, high levels of trust among farmers, and social norms that support collaboration and cooperation; (2) social capital plays a crucial role in enhancing the effectiveness of managing business partnerships between landowning farmers and palm oil plantations through improved trust and better communication; and (3) local wisdom contributes to managing business partnerships by providing traditional values and local practices that strengthen solidarity and cooperation among farmers and between farmers and companies.

2. Materials and Methods

This research focused on three North Konawe Regency palm oil plantations—namely, PT.SPL, PT.DJL, and PT.PN-14—all privately owned by local farmers. The respondents were selected via purposive sampling, only considering farmers who owned land for palm oil manufacturing, selecting 320 respondents to evaluate the business partnerships in the area. Several respondents were also recruited from local communities, NGOs, farmer groups, companies, the Plantation Service, academics, regional legislative members, and Farmer Youth (young generation of farmers). Their opinions on palm oil plantations’ role or contribution were collected through focus group discussions (FGDs) and interviews, and their profiles are shown in

Table 1. Profile of informants/respondents during data collection.

No	Stakeholders/Informants		Number of Informants (People/Respondents)	Data Collection
1	Company	PT.PN-14	2	Interview, FGD
		PT.DJL	2	Interview, FGD
		PT.SPL	2	Interview, FGD
2	Government	North Konawe People’s Representative Council		Interview, FGD
		Head of the North Konawe Plantation and Horticulture Service	1	Interview, FGD
		Village Heads	11	Interview, FGD
3	Academics	Higher Education	2	FGD
4	Community (Landowners)	Landowner Representatives	5	Interview, FGD
5	NGO	LEPMIL	1	FGD
6	Media/NGO	Executive Director WALHI Sultra	1	FGD
7	Communities Surrounding Oil Palm Plantations	Palm Farmers (Owners, Managers, and Workers)	321	Survey

.

The criterion for selecting respondent farmer partners was a minimum partnership duration of 5 years. The focus group discussion (FGD) activities and in-depth interviews involved competent stakeholders connected to the decision-making process regarding the plantations or palm oil industry in the Konawe Utara Regency, encompassing social, economic, and environmental aspects, who ranged from village heads who were also partner farmers to representatives from palm oil companies or the regional government, academics, NGOs, and members of the Regional House of Representatives (DPRD).

The specific roles of the respondents and rationale for their inclusion are elaborated upon below:

• Palm oil plantation companies play a vital role in supporting agricultural development through various initiatives. Firstly, they provide essential agricultural inputs and technological support. Kansiime et al. (2021) highlight that the provision of high-quality seeds, fertilizers, and pest control methods by these companies significantly boosts crop yields and farmer incomes [38]. Additionally, these companies invest in infrastructure that benefits both their operations and local communities, with a direct impact on economic development by facilitating the production process, reducing transaction costs, improving competition, and creating employment opportunities [39]. Furthermore, palm oil companies facilitate farmer access to larger markets. Ismail et al. (2024) note that, by integrating farmers into their supply chains, these companies help ensure that their products reach broader and more profitable markets, increasing their income and economic stability [40].
• Academia plays a crucial role in driving agricultural innovation and policy analysis within the palm oil industry. Research conducted by Sarip et al. (2020) highlights the development of new technology in the form of a hydraulically operated palm oil loader system, showcasing how higher education institutions contribute to technological advancements in agriculture [41]. Furthermore, the involvement of academia is evident in the research by Nain et al. (2022), which delves into the use of artificial intelligence frameworks for palm oil prediction, demonstrating how cutting-edge technologies are being integrated into the industry [42]. This not only revolutionizes processes within the palm oil sector but also underscores the role of academia in driving technological advancements that enhance productivity and decision making.
• Non-governmental organizations (NGOs) play a crucial role in various aspects of sustainable agricultural development, being instrumental in promoting sustainable farming practices, enhancing agricultural productivity, and contributing to the overall welfare of farming communities [43]. Research by Kabiru (2020) has shown that NGOs not only focus on farm implements but also extend their reach into areas such as research, extension services, technology transfer, institutional capacity development, innovation, and effective policy implementation mechanisms [44]. NGOs’ involvement in agricultural projects has been linked to the mitigation, adaptation, and food security dimensions of climate-smart agriculture, showcasing their significant impact on sustainable agricultural practices [45]. The government plays a key role in ensuring the success of partnerships between farmers and palm oil companies through various important functions. According to Hasan et al. (2022), the government establishes regulations and policies governing the palm oil industry to ensure partnership sustainability and fairness [46]. Effective policies promote practices that support farmers’ welfare and environmental sustainability, including government incentives such as subsidies and soft loans to encourage companies to invest in sustainable practices, ensuring fair farmer benefits.

This study specifically focused on (1) farmer social capital’s characteristics and practices and (2) its dimensions in palm oil business partnerships, (3) the role of social capital and local wisdom in these partnerships, and (4) social capital’s role and contributions to sustaining these partnerships. The data were analyzed via qualitative descriptive analysis.

3. Results

3.1. Profile of Palm Oil Plantations in the Study Area

3.1.1. A Brief History of Palm Oil Companies

This research identified three palm oil plantations operating in Southeast Sulawesi, whose locations, initial year of operation, planting area, and palm oil production (in tons) are shown in

Table 2. State of palm oil production based on the size of company operations in the study area.

Company Name	Initial Year of Operation	Location	Area (Ha)	Production (Tonnes)
				2020	2021	2022
PT. Sultra Prima Lestari (factory available)	2006	Andowia, Asera, Langgikima, Oheo	6.900	32.000	41.000	47.000
PT. Damai Jaya Lestari (factory available)	2006	Landawe, Wiwirano	6.989	28.000	42.000	48.000
PT. Perkebunan Nusantara XIV (no factory)	1994	Wawontoaho, Wiwirano,	6.500	51.870	84.435	87.425

Source: primary data, 2022.

.

Despite the fluctuating trend between 2020 and 2022, as shown in Table 2, PT.SPL reached its highest palm oil production during these years. Amongst the three plantations, PT.PN14 reported the highest production value of 87,425 tonnes in 2022, followed by PT.DJL (48,000 tonnes) and PT.SPL (47,000 tonnes). The differences in these production figures may be attributed to the soil fertility and natural factors in the locations of these plantations [47,48], their cultivation treatments [49], and sociopolitical factors [30,50].

Other factors also influence the differences in production in our study area, such as company management and the characteristics of farmers, including their knowledge and experience. The operations of PT Perkebunan Nusantara XIV began in 1994. From the time they first established themselves in the region, the choice of location for the oil palm plantation was very strategic, especially compared to the other two companies that started in 2006. The topography of the land in the PT.PN area is relatively less hilly and flat, with no swampy areas, which also affects plant production. Although the same cultivation practices have been applied, such as the use of fertilizers and pest control, the results differ. Additionally, because the farmers have been around for a long time and possess considerable knowledge and experience, the management of the oil palm plantations is more advanced compared to the farmers working for DJL and SPL companies. Studies by Ahmad and Nasir (2020); Awang et al. (2021); Rodthong et al. (2020) report that farmers with practical knowledge and experience in oil palm cultivation have a significant impact on increasing production and improving the farmers’ welfare [51,52,53].

3.1.2. Partner Institutions

Cooperative institutions aim to develop the potential and abilities of both their members and society, as they exist to improve the societal economic level. Cooperatives also contribute to the realization of an economic life characterized by togetherness, kinship, and openness and serve as media for economic transformation, accelerating information and innovation transfer [54]. In our study, the FGD results show that the company has established a cooperative to increase capacity and empower its members. However, this cooperative faced some operational problems associated with the management of the company and its members (i.e., farmers) that were not resolved properly, eventually leading to the ceasing of its operation. The other problems mentioned in the FGD include a lack of transparency in the reported TBS production and the mismatch between the total price of TBS and the actual field conditions. Some landowners claimed that farmers were selling palm oil products elsewhere, which violated the agreed commitments. The company and landowners also did not trust each other, discouraging participation from some members. Saz-Gil et al. (2021) define trust as a fundamental component of social capital, which plays an important role in building relationships and fostering cooperative institutions [35]. Trust is closely related to member participation, which plays a major role in cooperative institutions.

The FGDs carried out at the sub-district level were attended by farmers/landowners, company elements, academics, governments, the People’s Representative Council/DPR, media, and NGOs. They resulted in proposals to reactivate the cooperatives, establish village-owned business entities (BUMDES) in the village as effective communication channels for increasing landowning farmer capacity [55,56], and optimize the role of extension workers in building said capacity.

3.1.3. Managing Business Partnerships between Plantations and Farmers/Landowners

PT.SPL and PT.DJL engage in a “one-roof management” partnership with landowners. In terms of profit sharing, PT.PN-14 divides its profits as 20% for the company and 80% for the landowners. Given that PT.PN-14 does not have a factory, the harvested Tandang Buah Segar (TBS) is sold directly to the company that owns the factory. The terms of agreement governing the partnerships between these companies and farmers/landowners are tabulated in

Table 3. Terms of agreement between company and farmer/landowner.

Terms of Agreement between Company and Farmer/Landowner
PT.SPL	PT.DJL	PT.PN XIV
The landowner hands over the land/soil and the growing plants without compensating the company. During the term of this agreement, the company will manage the entire land area that has been handed over entirely.		PT.PN XIV has a nucleus and plasma plantations on farmers’ land with a credit system.
For farmers/landowners who lend land to the company, 60% (sixty percent) is used for the company’s interests, and 40% (forty percent) is returned to the landowner in the form of oil palm plantation products during one oil palm production cycle (±30 years).	Farmers who own land lend it to the company; the landowner obtains a profit share of 20 percent from the company while the company takes 80 percent.	Capital assistance is provided to plasma farmers, which is returned in the form of business credit.
The land handed over by the landowner to the company is not in dispute or guaranteed to other parties and has complete legality. The landowner states the ability not to withdraw land that has been handed over during one oil palm production cycle (±30 years). If there is a sale and purchase of land or a change in ownership of land that has been handed over by one party to another party, then this agreement remains valid and binding on both parties. Companies are required to process fresh palm fruit bunches or Tandan Buah Segar (TBS) or build a palm oil factory. The company empowers local workers in plantation areas through provisions or regulations from the company with wages above the provincial minimum wage.

.

Meanwhile, PT.TBS divides its profits as 40% for landowners and 60% for the company, whilst PT.DJL allocates 20% of its profits to landowners and keeps the rest. These profit-sharing patterns are discussed in detail below:

• The produced TBS, which belongs to the landowner and the company, is sold to the company’s commitment at market price, and the proceeds from this sale are called “gross income”.
• A total of 40% of the TBS sale price, called “operational costs”, is deducted from the gross income, and the difference is called “operating results”.
• In PT.SPL, the landowner and the company will jointly return investment costs by deducting 30% of their operating results in the first year, 40% in the second year, 50% in the third year, and so on. The remaining profit, called “net income”, will be divided between the landowner (40%) and the company (60%).
• PT.DJL divides its investment and operational costs as 60% for the company and 40% for the landowners. As for the net income, the landowner receives 20%, whilst the company receives 80%. PT.SPL decides its profit-sharing pattern based only on land area and not on land productivity. By contrast, PT.DJL takes land productivity into consideration when dividing its profits.
• After paying off the cost of building the plantations (investment cost), the operating results described in point 3 will no longer be deducted by 50%. Therefore, the operating results become the net income of each party.
• The following rules that govern investment costs are regulated in Article 3 of the agreement:
  • The company agrees that building the plantations costs IDR 35,000,000,00 per hectare.
  • The landowner bears 40% of this cost (IDR 14,000,000,00 per hectare), whilst the company bears 60% (IDR 21,000,000,00 per hectare).
  • The investment costs use the financial facilities of the company at an annual interest of 12%.
  • The repayment period for the investment costs will be determined based on the production results of the plantation, which will be monitored. The remaining debt for each party will also be calculated every month.

However, these terms and conditions fail to explain the responsibilities of each party towards the environment and determine which facilities the company will provide to landowners aside from profit sharing, such as coaching or counseling on palm oil cultivation, which are critical to the sustainability of plantations because landowners are expected to help during development as local workers. The results show that the respondents had not received any counseling regarding palm oil development. Whilst the investment cost was specified as IDR 35,000,000,00, no further details were given, including the expenses and the investment costs, for which the landowners were charged an interest of 12% per year. These costs only increase the financial burden for landowners, especially during the first year, when palm oil is yet to be produced after being planted. After four years, the landowners continue to receive small profits because larger profits correspond to larger incurred costs, and the accumulated interest on investment costs increases every year.

Communication is critical in partnerships, especially under the one-roof management pattern. The respondents commented that the intensity of communication between the company and landowners should be improved by increasing their meeting frequency. Over the three months prior to this study, 72.88% of the respondents claimed that they had never met with the company. Most of them also complained that the company never helped landowners or farmers with their plantation problems. Some respondents also claimed that landowners and companies never communicated with each other.

Based on case examples from the field, the investment cost is estimated to be IDR 25 million per hectare so far. Partner farmers strongly desire for the value of their land to be considered part of the investment value and need to know the operational costs per hectare. Currently, partner farmers are not fully aware of the exact investment and operational costs and only receive 40% of the net profit from CPO sales, an amount determined unilaterally by the company. According to field data, the operational costs range from IDR 7 to 10 million per hectare, but it is unclear how much of these costs are borne by the partner farmers. Independent farmers in Konawe Regency can earn an income of IDR 6–7 million per hectare per year, whereas partner farmers only receive around IDR 300,000 per hectare per year under the current 60:40% profit-sharing system based on land area. Therefore, partner farmers are seeking a change to the 60:40% profit-sharing system based on the productivity of palm oil per hectare, a change crucial to ensuring that the partnership with the company remains sustainable and fair for both parties.

Regarding differences in profit-sharing models, two main models can be applied: profit-sharing based on land area or productivity. The former tends to be simpler to implement but can lead to unfairness for farmers who work harder or have more fertile and productive land. Meanwhile, the latter encourages farmers to improve their efficiency and productivity, as they will receive rewards more in line with their efforts and work results. However, this model requires more complex measurement and reporting systems as well as training and support for farmers to enhance their land management capacities.

The implications of these differences on the relationship between farmers and companies and sustainability need to be more explicitly articulated. Fair and transparent profit-sharing models are crucial for building trust and long-term mutually beneficial farmer–company relationships. If farmers feel that their contributions are valued and that they receive a fair profit share, they will be more motivated to cooperate and invest in sustainable farming practices. Conversely, unfair profit sharing can lead to dissatisfaction, reduce farmer motivation, and damage the relationship between farmers and companies.

To achieve sustainability, it is important for companies to not only focus on short-term profits but also consider the long-term impacts of their profit-sharing models. By adopting productivity-based profit-sharing models, companies can encourage more sustainable agricultural practices and improve farmer welfare. Research by Soyombo et al. (2024) notes how precision farming techniques, agroforestry, and innovative cropping systems can optimize land use, enhance resource efficiency, and reduce environmental impacts, leading to increased productivity and contributing to sustainable agricultural practices which benefit both the environment and the economy [57]. Additionally, offering partial land use rights or profit-sharing arrangements through tenancy reform can provide farmers with autonomy to make decisions aligning with sustainable practices, addressing incentive issues with landlords and promoting long-term environmental stewardship [58].

Partnerships supported by regulations that establish equity sharing mechanisms between farmers and companies, including shares in palm oil processing plants, will create a sense of joint ownership and increase both parties’ commitment to the success and sustainability of the partnership. Research by Adisa et al. (2024) reveals that, by ensuring fair treatment, inclusivity, and the equitable distribution of benefits and burdens among all stakeholders, including farmers and rural communities, social equity in sustainable agriculture can be achieved [59]. Furthermore, Song et al. (2024) found that, by encouraging collaboration prioritizing fairness and inclusivity, regulations such as those supporting equity-based partnerships can lead to more sustainable and mutually beneficial deals [60]. In the long term, this model will not only increase productivity and profits but also strengthen the social and economic relationships between farmers and companies, ultimately supporting the overall sustainability of the palm oil industry. A study by Shulla et al. (2020) emphasizes that inclusive partnerships are key to achieving sustainable development goals [61]. Partnerships involving a wide range of stakeholders from the public, private, and non-profit sectors can create synergies and creative resource use as well as tolerance of diverse interests and power imbalances between partners. Therefore, by adopting productivity-based profit-sharing models and supporting equity-sharing mechanisms, companies can create a strong foundation for economic, social, and environmental sustainability in the palm oil industry.

3.2. Social Capital Practice

Social capital refers to the amalgamation of potential resources related to the ownership of a network of institutional relationships based on mutual acquaintance and recognition [62,63]. Landowners and palm oil plantations should maintain a good relationship to realize their expectations. A good social capital corresponds to a favorable relationship quality, trust, norms, and networks [64]. This dimension also contributes to the construction of high-quality relationships between individuals and groups [65].

3.2.1. Trust

The lack of landowner trust towards the company may be due to the lack of communication between these parties. Communication plays a key role in achieving the goals of both parties. The relationship between landowners/farmers and the company needs to be improved by promoting openness or communication. One landowner commented,

“In the past, when the company started clearing land and planting palm oil, it always engaged in socialisation with the local community. However, the company stopped socialising with the community after it started producing palm. The company was not open, and the production results did not meet the conditions agreed upon by both parties”.

Most landowners (73%) believe that they have the same partnership goals. Whilst most of them no longer trust the company, a small percentage (27%) still shows confidence. Due to their dissatisfaction, some farmers have started staging demonstrations, reflecting the lack of community trust towards the company. The local government acts as a facilitator in resolving this matter. One respondent shared,

“The community often reports to the government, but the government only listens and accepts the concerns of the community. The community waits for a response from the government, but the government takes no action. So, the community immediately went to the field to demonstrate at the company and shut down is operations. The company only responded to the community after the demonstration. But now, people must wait for the results from the company because they are tired of reporting to the government and holding demonstrations”.

Communication breakdown and weakened mutual trust have a reciprocal relationship: a lack of communication weakens mutual trust, and a weakened mutual trust creates communication barriers. In other words, minimal or interrupted communication leads to minimal trust, which, in turn, hinders social network formation and affects community participation. Therefore, the company should create a space to communicate with landowners and openly discuss their problems. As partners, landowners should also participate in company activities, especially those related to land productivity. Brogan and Smith (2020) and Koch et al. (2023) describe trust as a bridge that transforms people into leaders whose success greatly relies on communication, also confirming that transformational leadership and transparent communication are positively related to organizational trust, which, in turn, influences openness [66,67].

Trust also determines leadership success and business agility [68]. Akkaya and Bagieńska (2022) and Kolot et al. (2020) find that trust, as a dominant structure of social wealth, is significantly related to socioeconomic development [68,69].

Farmers’ low level of trust towards the company may be ascribed to their lack of communication and education regarding the technical and economic aspects of palm oil manufacturing. However, the company communicates with landowners from time to time, such as at the beginning of palm oil production and when informing landowners that they still owe money to the company. Landowning farmers should be able to measure their land productivity, and the company should prioritize its business whilst improving landowning farmers’ knowledge and skills. Improving such capacity can also enhance farmers’ capabilities to achieve equality with the company and the government. Having rich resources also promotes farmer trust in their partner company. Besley and Dray (2022) argue that trust in a government leads to greater policy compliance, thereby increasing state capacity [70], whilst Manoj et al. (2020) emphasize the importance of trust within and between institutions in capacity building [71]. In sum, trust is one of the keys to enhancing community and institutional capacity.

3.2.2. Social Networking and Participation

Crossley (2022) states that a social network is a social structure of actors tied by specific relationships or interdependencies. Trust is an important component of close friendships on social networking sites that are established through similar activities and signals [72]. An approach for building trust in social networks that highlights the importance of gathering information and opinions from friends to build trust towards new acquaintances has been proposed [66].

Farmers have very weak social networks for managing palm oil business partnerships, especially those adopting the profit-sharing model. The FGD data show that the weakness of these social networks and farmers’ participation is due to economic, social, and institutional dimensions. Regarding the economic dimension, farmers do not have the power to market their palm oil production given their contractual obligations with the company, and they accumulate debt from investment and operational costs. In the social dimension, landowners/farmers do not have a strong social network to work together with individuals and groups and no leader to whom they can turn whenever they have a problem. Their individual capacity also influences how they build networks amongst themselves. With respect to the institutional dimension, community leaders and village heads do not function optimally given the absence of farmer groups or combinations of farmer groups, village-owned enterprises, or cooperatives.

Palm oil farmers also do not have good relationships with their fellow farmers: they tend to go their own way, discouraging collaborative actions against the company. They are also not informed about the amount of palm oil being produced and the presence or absence of any assistance.

“There are no farmer groups, so we have no one to talk to if there is a problem. We have no leader or chairperson, and the village government is unreliable. We hope that a farmer group will be formed to help its members. We are unable to communicate with the company when we have a problem”.

A good social network is characterized by good interaction, communication, and community [73]. Oyewobi et al. (2023) highlight the social network benefits for small and medium-sized businesses and emphasize the ease of accessing information and their marketing potential [74].

Table 4. Respondent assessment of social networks and stakeholder participation in the sustainability of partnership-model palm oil plantation businesses.

Respondents’ Social Networks and Participation	Respondents’ Assessments (Score = 1–5)
	SPL DJL (N = 100)	DJL (N = 109)	PT.PN 14 (N = 111)
Economics	Score/(N)	Score/(N)	Score/(N)
Access to companies related to employment opportunities	4 (95)	4 (105)	4 (80)
Productivity transparency of plasma/community palm oil plantations	3 (100)	3 (43)	2 (77)
Access market price information	2 (85)	2 (60)	2 (55)
Family participation in savings and loan cooperatives	2 (50)	2 (15)	2 (35)
Ecology	Score/(N)	Score/(N)	Score/(N)
Involvement of environmental NGOs	4 (81)	4 (89)	3 (50)
Government attention to the environment	3 (83)	3 (92)	3 (90)
Farmer participation in protecting environmental pollution	3 (75)	3 (105)	3 (75)
Cooperation in preventing land damage	3 (97)	3 (87)	3 (93)
Social	Score/(N)	Score/(N)	Score/(N)
The education level of farmer families increases	4 (85)	4 (60)	4 (60)
Intensity of agricultural extension	3 (72)	2 (68)	3 (70)
Communication between farmers	3 (85)	3 (78)	4 (82)
Communication between the community and the company	2 (70)	2 (39)	2 (41)
Communication between farmers and community leaders	4 (98)	4 (92)	4 (90)

Source: data from research results after processing, Description: value 1 (bad); score 2 (not good); score 3 (fairly good); value 4 (good); score 5 (very good); and N = total respondents.

presents the respondents’ assessment of social networks and stakeholder participation in the sustainability of the partnership model for palm oil plantation businesses. The indicators are derived from the interview and FGD findings with various stakeholders, processed into sub-themes, and then become statement items in the survey, such as respondents’ assessments of social networks and participation in the palm oil plantation business partnership.

Respondents’ participation in social networks showed varying values in terms of economic sustainability: generally, the farmers’ assessment was quite good, with the respondents generally agreeing that the presence of the company introduced employment opportunities in the community. However, the company showed poor transparency in disclosing prices and its production results to landowners. The participation of landowners in cooperatives was also low. Regarding ecological sustainability, social networks and farmer participation could be ranked as good, with farmers always participating and collaborating in protecting the environment. NGOs also positively contributed to environmental issues. With regard to social sustainability, the existence of the company benefitted farming families by increasing their access to education and income and the availability of employment opportunities.

The results surrounding communication between farmers and companies and among landowners, the government, and community leaders were all positive. However, the three sustainability aspects still warrant improvement to contribute to social capital implementation.

Susanti et al. (2021) identify several factors that influence palm oil farmers’ social networks and participation, among which is access to information [75]. Palm oil farmers generally access the latest information about cultivation techniques, market prices, and innovation technology from their social networks. Improving their access to information can thus increase their production efficiency and support their economic sustainability. Social networks also provide farmers with better access to financial services, including credit and insurance, essential for their investment in innovation and risk mitigation. Peng et al. (2021) and Rizal and Nordin (2022) argue that leadership, organization, and communication technology all influence the social networks and participation of palm oil farmers in economic sustainability [76,77]. These results highlight the importance of the centrality of communication networks and aspects such as individual perception, political engagement, involvement in affiliations, and sustainable natural resource use [78,79].

3.2.3. Social Solidarity

Social solidarity refers to the reciprocal relationship amongst individuals [80], often observed in groups characterized by respect, reciprocal feelings, trust, selflessness, pride, and suffering from loss or betrayal [81]. In other words, social solidarity refers to an act of cooperation based on a mutually beneficial relationship. The establishment of the company in the study area did not change the habits of the local community: residents remained open and continued helping one another and working together in their local language. The

Table 5. Stakeholder statements expected to receive a good company response.

No	Stakeholder	Stakeholder Statement of Solidarity in Palm Oil Plantation Business
1	Landowners (Farmers)	Landowners/farmers hope for support or facilities from companies, facilitated by the government.
2	NGOs	NGOs hope that the role of palm oil companies can protect the environment and ensure fair landowner/farmer welfare.
3	The Government	The Government of the Regent of North Konawe, through the Plantation and Horticulture Service, instructed the company to commit to fulfilling permits as a condition for building the factory. The parties need to help investors continue to operate.
4	Academics	Academics provide support to ensure that companies are committed to partner farmer/landowner welfare while still paying attention to institutional strengthening and improving cultivation technology and waste management for the benefit of increasing palm oil productivity. They have a role in managing palm oil processing factories, providing labor wages and capacity-building training to farmers/landowners. Moreover, the sustainability aspect should not be ignored from an ecological perspective. They recommend that the government strengthen farmers’ position, especially in terms of implementing regional minimum wages for workers, disclosing information on palm oil prices, and launching Regional Regulations on Sustainable Palm Oil Management.
	Regional Legislative Member	They increase awareness of environmental issues and strengthen institutions. The existence of a palm oil plantation company shows its commitment to realizing the welfare of partner farmers, utilizing palm oil products from the North Konawe Regency.
	Youth Farmers (Young Generation)	The younger generations (landowning families) specifically want their parents to improve their skills in managing oil palm plantations.

Source: data from research results after processing FGD meetings.

show the form of social solidarity is called “pepekoaso/meronga-meronga”, particularly evident at times of natural disasters, deaths, and marriages. The palm oil company offered many favorably received contributions to the community, showing that companies which respect and maintain the culture and norms of indigenous communities receive favorable treatment in return and can sustainably engage in their business. The results show public openness to what is expected from the company, which will be an input in making future operational decisions.

Stakeholder statements refer to stakeholder commitment towards working together to achieve their goals, such as improving community welfare and protecting the environment. Maintaining the environment is a duty for all stakeholders [82,83,84]. Through CSR, the company can contribute to improving the local economy and ensuring environmental sustainability [85,86].

3.2.4. Reciprocal Benefits

As a social construct of the agrarian society in North Konawe, reciprocal benefits involve the provision of mutual benefits and the building of intimate relationships, a concept which has been equated to the main cooperation principle (“medulu-medulu” in the local language). The partnerships between the company, plantations, and landowners/farmers are expected to produce reciprocal benefits. Christiawan and Limaho (2020) state that palm oil companies provide new insights and skills for the community [85], whilst Snashall and Poulos (2023) suggest that these companies’ social responsibility is proving reciprocal benefit for the community [87].

The interview and FGD in the

Table 6. Record of FGD results related to the mutual benefits of farmers/landowners and palm oil plantation companies in North Konawe.

No.	Stakeholder	Informant Statement
1	Landowner 01	I feel that from the first year to 2019, almost the same results, or there is no increase in results. There are still fewer employees in companies who get BPJS for employment.
2	Landowner 02	Company PT.SPL and PT.DJL operate because of the kindness of the landowners, in this case, the farmers, who do not own the core land until now. Care or maintenance of oil palm plants should be done seriously. Improvement of garden roads to facilitate the transportation of palm oil. Not consistent in revenue sharing and should be by the agreement.
3	Landowner 03 (Land in Wiwirano Village)	The oil palm industry promised a factory, but so far, it has not been realized. The workforce is a concern for the Company. Forming BUMDES as a medium for increasing the capacity of farmers.
4	Village Head in Mantasole Village	The price is the first point we should pay attention to; far from what is expected. The price is not negotiable. There is a need for training for farmers by companies and extension workers.
5	Landowner 04	I am very grateful to the PTPN XIV oil palm company because my son’s school, which was stopped for a while, can return to school again. By reactivating cooperatives, farmers can help each other overcome existing problems.
6	PT.PN Nusantara XIV Kebun Asera Unit	There is no factory yet for the sale of Tandang Buah Segar (TBS) from farmers; we work with partner companies SPL and DJL to buy TBS from us, but there are farmers who jointly do not sell to their partner companies, and as a result, credit instalments are not smooth.
8	Public Relation PT.SPL	The system used is for profit. Another problem with the Company is that this community freely cuts palm oil on the ground to be used as a vegetable at the festival. Even though the palm oil they cut is still productive. The Company PT.SPL is about to share a small yield from year to year due to natural factors or a large harvest in the rainy season, but the road is damaged, so it cannot be reached, and the fruit rots.
9	Public Relation PT.DJL	a. There is no core garden yet. b. The soil is not fertile, so production is low.
10	Head of North Konawe Horticulture and Horticulture Department	The need for consistency on both sides (businesses and farmers) related to the MOU that was agreed upon. The Company must transparently convey related costs, namely (a) investment costs, (b) general costs, and (c) operational costs. Optimizing the role of agricultural extension.
11	Executive Director of WALHI Sultra	The flood was caused by the impact of plantations and mining. The good Company will follow the process by the existing provisions and rules. There is injustice and a lack of transparency in the Company. In developed countries, farmers are respected. We are here; being a farm labourer has no honour. Entrepreneurs use the centralized autonomy of this region to invest in stakeholders and those stakeholders to exploit the region.
12	Lepmil/NGO	If the regulations are not changed, the community’s well-being will remain unchanged. Why did mines dare to change the regulations? Why didn’t oil palm plantations issue a revision of the law so that they could no longer send CPOs abroad? Why don’t we make the industry in Indonesia? Should Southeast Sulawesi farmers send to their own industry, or should they send to India or Malaysia? We are laborer’s forever. There is no government control over fertilizers and prices. No government controls the community and always loses in negotiations. The principle is that if the old paradigm is still used and the method used is still a dream, it will not be achieved.
13	North Konawe DPRD Member	In the House of Representatives, the people are devising regional regulations regarding recognizing territories elsewhere. If in Konawe Utara’s “Customary rights to land”, it is true that he is almost marginalized in North Konawe as a whole because his land is handed over to companies whose contracts will dominate for 30 years. So, this society needs to be in a stronger position. Companies that invest in North Konawe to be cooperative with the regional government.
14	North Konawe DPRD Member	There is a need for proper socialization because Malaysia can develop its country with oil palm, so why not us? We must encourage the birth of a regional regulation, especially in North Konawe. There is no clear legal basis that provides protection to oil palm companies and farmers so that they both benefit equally. I have had many discussions with farmers. They desire to plant oil palm, but they are thinking about where our oil palm products will be marketed. Farmer institutions at the level of BUMDES have become a media source of information and capacity-building for farmers.
15	Academic from North Konawe	The benefits of palm oil for the community include: The openness of the community’s vision and mindset so that many sons and daughters are sent out of the district for school. It used to be a remote region (difficult access). Now the access is better. Dormant land (unproductive) becomes cultivated/open. The community obtains a permanent job (as an employee) who previously cultivates the fields (suitable for cash crops and long-term crops) and searches for rattan (locally called pa ratan) and hunts jong (deer). Farmers’ institutions are needed to increase farmers’ capacity.

results show that the company and the landowners/farmers need to improve their understanding of the importance of maintaining equal position and justice to receive benefits. These parties need to show their concrete efforts and commitment towards achieving open and equal communication patterns based on transparency and accountability, especially regarding production costs, results, and prices. Data from the FGDs highlight the importance of mediators, who also act as independent supervisors and auditors. Relying on the government may lead to biased perceptions for both parties. Stakeholders have different opinions regarding palm oil plantations in North Konawe and generally hold favorable perceptions towards the community benefits they offer. Some stakeholder statements revealed during the FGDs are shown in Table 1.

3.3. Local Wisdom Practices

Parameswara and Wulandari (2020) [88] discuss globalization’s impact on local wisdom in the built environment and highlight the need to adapt local knowledge whilst maintaining its meaning and connection with local character. Local wisdom values are very important in protecting and managing the environment and can solve related problems in the community [88]. Shiell et al. (2020) explore the role of local wisdom as social capital in remote indigenous communities and show how local wisdom helps build strong social bonds and overcome potential conflict. Intellectual humility [21], defined by Porter et al., (2022) as the meta-cognitive ability to recognize the limitations of one’s knowledge, has been associated with improved decision making, relationships, and social outcomes [89].

The population of North Konawe generally comprises the Tolaki tribe, a society with an agricultural typology. People of the Tolaki tribe are very harmonious with nature or forest areas and have a very close tradition of cooperation amongst communities (Tolaki language: medulu-medulu). Before the establishment of the palm oil company in North Konawe, the local populace earned their living by harvesting rattan or cutting wood in forest areas and selling these resources to collectors, which would require them to leave their families behind in the village for several days or months. Some people would hunt deer/jonga or buffalo in the forest area and sell them either alive or as meat. Some people engaged in farming food crops, whilst others would focus on plantation crops (e.g., cocoa, cashew nuts, and coconuts) without intensive maintenance. Others would hunt for freshwater fish in the Lasolo and Lalindu rivers or engage in contractual work, constructing roads and other government infrastructure. However, farming and gardening activities eventually faded in North Konawe as people started working for the palm oil company. In developing societies, the term “retire as a farmer” indicates an employee waiting for their profit share as a form of pension.

Based on this livelihood pattern, new norms emerged in North Konawe related to the control of natural resources, such as “Ulayat Rights to Land”, based on sub-ethnic ownership (Sambadete, Hialu, Walandawe, and Landawe), as well as various forms of local wisdom, including buffalo grazing fields or cows (Tolaki language: rano), a staple food source, especially sago plants, and the jonga deer conservation area as a hunting ground.

The social relations among farmers established through mutual cooperation activities also started to fade, especially in agricultural activities. Before the construction of the oil palm plantations, farming activities in North Konawe were always carried out jointly among farming families, while, currently, these forms of cooperation can only be observed in weddings and funerals. The construction of oil palm plantations in North Konawe changed the habits, ways of thinking, and living behavior of the local people. Some of them considered working for the company to increase their family income whilst continuing their usual work, such as gardening and harvesting rattan in the forest. Some scholars also observe how the presence of palm oil companies hurts local livelihoods and biodiversity. While Santika et al. (2020) find that the expansion of palm oil plantations does not significantly impact local livelihood strategies [90], Obie and Pakaya (2020) believe that palm oil plantations expose the vulnerability of rural communities’ livelihoods, and the development of these plantations also leads to deforestation, land conflicts, and other negative environmental impacts [91]. Putri et al. (2022) discuss how the governance of palm oil production networks influences local outcomes and the ability to overcome other related problems [92]. In sum, the presence of palm oil companies impacts local wisdom and livelihoods [93].

Local people’s social habits helped the company interact or socialize with the community, as approaching village leaders and respecting local customs allowed the company to operate smoothly. The company also carried out cooperation activities targeting environmental preservation, with positive consequences for both the company and the community. In other words, showing respect for community customs and norms also supports the company’s goals. Therefore, local wisdom and community engagement contribute to the well-being of palm oil companies and local communities [79]. One landowner commented the following:

“The local community is enthusiastic about working together on environmental issues, and this has been their habit since ancient times”.

3.4. Social Capital in the Sustainability Dimension of Palm Oil Plantations

The agricultural community in North Konawe shows distinctive characteristics that still apply today. Firstly, kinship relations in North Konawe remained strong and intimate after the establishment of the company because the heads of the families were related by blood and marriage even though they came from different ethnicities, such as Tolaki, Bugis/Makassar, Java/Bali, and Muna/Buton, meaning that the residents in each village know one another very well. Secondly, the livelihoods of people in the local community are similar, including farmers (e.g., sedentary farmers, agriculturalists, forest product gatherers, and laborers), and their work is greatly influenced by nature (e.g., weather and climate). Thirdly, these people have a harmonious relationship with nature (e.g., forests, rivers, and seas) and depend on their natural surroundings to support their economy. They often use technology or simple agricultural equipment to adapt to natural conditions, which starkly contrasts with what has been observed in industrial societies (including the plantation industry, with the use of advanced (modern) technology). Fourthly, given the small population, the settlements in North Konawe are not dense. Lastly, the village community is homogeneous, where people have similar livelihoods, religions, and customs even though they are of different ethnicities. However, acculturation is also observed in the community due to co-residence relationships and interethnic marriages. As previously explained, people in North Konawe represent a type of agricultural society.

Based on the information presented in

Table 7. Social capital in the sustainability dimension attributes of partnership-model palm oil plantation businesses.

Variables	Social Capital Indicator	Information Related to the Sustainability Dimensions of Palm Oil Management Partnership Models	Information Source
Social Capital		Economic
	Trust	Transparency of palm oil TBS prices Management of oil palm land Palm oil production	Farmers (landowners) Company
	Social Networks and Participation	Productivity of plasma/community palm oil plantations Farmer participation in cooperatives Influence of external information on palm oil TBS	Farmers (landowners) Company
	Local Wisdom	Employment recruitment Community and government cooperation Involvement of community leaders	Farmers (landowners) Company Local government
	Social Solidarity	Determination of profit sharing Maintain good communication with the company Support company programs Help fellow farmers	Farmers (landowners) Company
	Reciprocity	Job opportunities TBS payments on time Farmer income level	Farmers (landowners) Company
		Ecology
	Trust	River water quality management CSR environmental care program The company continues to maintain the fertility of the land	Local government Farmers (landowners)
	Social Networks and Farmer Participation	There is involvement of environmental NGOs Farmer participation in environmentally friendly farming Cooperation between farmers is lacking in the management of palm oil	NGOs Local government Farmers (landowners)
	Local Wisdom	Soil fertility treatment Proportion of forest area to plantation land Tradition of maintaining plantation and food crops, animal husbandry, and fisheries	Farmers (landowners) Local government
	Social Solidarity	Help preserve river borders Help each other in dealing with flood disasters Support company environmental programs	Department of Agriculture Farmers Academics
	Mutual Benefits	Reduced negative environmental impacts Public health and environmental sustainability	NGOs Local government Academics
		Social
	Trust	Institutional management of farmers Landowner status Company leadership	Farmers (landowners) Company
	Social Networks and Participation	Farmer education level Participation of agricultural extension workers Participation in farming management of armers (landowners)	Farmers (landowners)
	Local Wisdom	Livelihood Farmer cooperation	Farmers (landowners)
	Social Solidarity	Protection of farmers and environmental issues Attention of government agencies Implementation of CSR	Farmers (landowners) Government
	Reciprocal	Availability of labor Assistance with public facilities Social assistance	Farmers (landowners) Company Local government

Source: research results data after processing, 2023.

, the social capital practices of the community in North Konawe serve as important attributes in each sustainability dimension as a characteristic of the social capital inherent to business partnerships between farmers/landowners and the company.

The base of Table 7 shows the local wisdom in the community is reflected in the positive cooperation between farmers and the company and the support of the former for the latter’s programs. Community members’ involvement as company employees shows good performance and motivation derived from traditional habits of maintaining plantation and food crops, animal husbandry, and fisheries; this is one of the factors driving locals to help and collaborate with companies, providing positive and reciprocal benefit.

Social solidarity in the community is reflected in people’s actions and governmental support of environmental protection and supervision of company compliance with existing regulations. Given the many concerns for the community and various environmental issues, the company organized various activities focused on environmental aspects. One way for the company to demonstrate its commitment to social, economic, and environmental responsibility and carry out environmental management practices is by arranging CSR programming involving different stakeholders, including the community, the government, and NGOs. The success of these programs is generally determined by current production profits and company commitment, benefits which, albeit not optimal, are also enjoyed by local communities. When engaging in CSR, companies introduce job opportunities, commit to timely payments, and increase farmer income. This shows that the positive impact obtained by local communities from farmer solidarity actions greatly benefits both the company and the farmers themselves.

3.5. Role of Social Capital in Palm Oil Business Partnership Sustainability

Social capital refers to the network of social relationships, norms, and beliefs among individuals or groups in a society. In the institutional context of palm oil farmers, social capital plays an important role in influencing the success and sustainability of their businesses [94]. Social capital is built from the behavioral characteristics of individuals and local communities, as illustrated in Figure 1. Social capital has five aspects—trust and social networks, participation, reciprocal social capital, local wisdom, and solidarity—each having unique characteristics and roles in sustaining business partnerships between farmers and palm oil plantations. These five aspects also differ in their nature: trust, social networks, and participation do not optimally contribute to these partnerships and thereby require additional efforts from the parties involved; local wisdom and solidarity offer positive support for these partnerships; and reciprocal social capital only plays a neutral role.

3.5.1. Role of Trust

The landowners/farmers and the company generally shared a feeling of distrust. Some farmers did not trust the company, who they believed was not fully committed to fulfilling their agreement and lacked transparency regarding TBS production. Nupueng et al. (2022) stated that trust is an important aspect of building and maintaining partnerships between farmers and palm oil plantations, as strong trust between these parties plays a key role in maintaining the sustainability of these partnerships and strengthening a mutually beneficial relationship [95]. This was also highlighted in more recent studies by Bedenik et al. (2024) and Tao et al. (2024), and the former found that higher trust levels are fundamental, significantly enhancing communication and collaboration within partnerships, leading to improved performance, while the latter observed that trust underpins successful relationships among stakeholders, fostering cooperation, commitment, and long-term partnerships within organizations [96,97]. When trust is established and maintained, it serves as a foundation for positive relationships, cooperation, and collaboration.

Trust influences the ability of farmers and plantations to work together to achieve their common goals. Each party must be confident that the other will fulfill the agreed commitments: farmers must be confident that the company will provide technical support, purchase crops at a fair price, and offer land security, whilst the company must ensure that farmers will follow the established cultivation guidelines, maintain harvest quality, and actively participate in its programs. With strong trust, partnerships can run smoothly and sustainably. Trust also strengthens farmer–company communication, as a high trust level allows farmers and the company to comfortably share information, alongside their problems and hopes, with one another.

Effective and transparent communication helps the two parties easily identify problems, resolve conflicts, and make better decisions. For example, when pests or diseases threaten palm oil cultivation, farmers who trust the company will immediately report the incident, and the company will quickly act on the problem and provide technical support.

Trust also plays an important role in maintaining the long-term sustainability of partnerships, as a strong sense of trust enables the creation of long-term commitments, joint investments, and sustainable programs. A company with a high trust in farmers tends to provide the latter with financial assistance or training to increase their capacity, whilst farmers who have high trust in the company will remain loyal and motivated to carry out agricultural activities following the sustainability principles set by the company.

3.5.2. Role of Social Networks and Participation

Social networks refer to relationships among individuals or groups that are established through social interactions [73]. These networks can take on various forms either directly or through social media [98,99]. Participation refers to an individual’s involvement in certain activities or processes. In a social context, social participation refers to the active involvement of individuals in activities and processes in society [100]. Kurotani et al. (2024) found that the concept of social capital, which encompasses elements like civic participation, social cohesion, and reciprocity, has been identified as a key factor in assessing community empowerment and well-being [101]. Sato et al. (2020) observed that social participation encompasses trust in others, mutual support, community attachment, and active participation in civic activities [102].

The relationship between the company and the landowning farmers in North Konawe remains weak. The farmers are often excluded from discussions about palm oil prices and production, and the agreed mechanism has not yet been implemented, leading to sub-optimal interaction between the parties involved.

Trust between the company and the farmers also strengthens their interaction. However, farmers rarely interact with one another due to differences in their perceptions, which affect their attitudes and behavior. Therefore, farmers’ social networks and involvement in partnerships need to be improved.

Social networks are also important in strengthening the cooperation and communication between farmers and the company. Farmers can share their knowledge, experience, and information related to sustainable agricultural practices through social networks. They can also build strong relationships with palm oil plantations and other relevant parties, such as research institutions or NGOs, to gain support and access the necessary resources.

Social networks and participation are important dimensions of social capital in business partnerships between farmers and palm oil companies [103]. Apart from sharing their knowledge through social networks and building strong relationships with the company [104,105], farmers may also engage in decision making and policy implementation to improve their partnership sustainability. By strengthening social capital, farmers and palm oil companies can effectively work together and achieve sustainable agricultural goals.

3.5.3. Role of Reciprocal Social Capital

Reciprocal social capital refers to mutually beneficial relationships among individuals, groups, or entities based on mutual trust, cooperation, and assistance. The establishment of the company in North Konawe positively benefited the community by introducing employment opportunities, increasing farmer income, and facilitating village infrastructure development. However, the company also introduced relatively negative impacts, such as environmental pollution. The collaboration between the company and the community can help amplify these positive impacts whilst managing the negative ones.

Reciprocal social capital plays an important role in maintaining the sustainability of the relationships between farmers and palm oil plantations and achieving their common goals [13,106]. With reciprocal social capital, farmers and palm oil plantations can share their knowledge, experiences, and resources to increase agricultural productivity [27]. Reciprocal social capital also empowers farmers by giving them access to training, education, and resources for developing their skills and capacities. In other words, reciprocal social capital helps farmers increase their economic independence and strengthen their bargaining position in partnerships with palm oil plantations [107]. Reciprocal social capital also allows farmers and palm oil plantations to work together to overcome the social and economic challenges faced in the local community, positively affecting social and economic welfare [94,108].

Reciprocal social capital also plays an important role in environmental conservation efforts [109]. Farmers and palm oil plantations can work together to implement environmentally friendly and sustainable agricultural practices, such as waste management, water conservation, or the use of organic fertilizers. They can achieve environmental sustainability goals together by supporting and sharing knowledge.

3.5.4. Role of Social Solidarity

Social solidarity refers to the bonds formed in society that enable individuals and groups to work together and support one another [110]. Social solidarity strengthens the relationships between farmers and palm oil plantations by encouraging them to work together towards common goals. The social solidarity of farmers in North Konawe is a positive state as they continue to support company operations. For example, they maintain good communication and relationships with the company, receive training to increase their capacity, and promote a sense of unity and cohesion whenever they encounter difficulties. The company also helps these farmers in constructing public facilities and provides them with training and education programs to increase their knowledge of sustainable agricultural practices. Social solidarity can encourage companies to provide fair financing to farmers to develop their agricultural businesses. In this case, if social solidarity can be implemented in practice, then the sustainability of the business partnerships between farmers and palm oil companies can be improved. Alexandro et al. (2023) highlighted the importance of social solidarity in creating fair partnerships between these parties [111].

3.6. Role of Local Wisdom in the Sustainability of Palm Oil Plantation Business Partnerships

Having local wisdom or a good understanding of the local environment, including the soil, the climate, the flora, and the fauna, is very important in maintaining the sustainability of agricultural business partnerships between farmers and palm oil companies. Farmers who know about the local soil and climate characteristics can adopt appropriate agricultural practices, such as efficient water management, organic fertilizers, and environmentally friendly pest control. Syahza and Irianti (2021) state that local wisdom plays a role in minimizing negative environmental impacts and maintaining ecosystem sustainability around palm oil plantations [4]. Local wisdom also positively supports natural resources and local community habits, norms, and behavior, such as people’s closeness to nature (plants, water, and soil) and gardening habits. Local communities’ behavior and habits support palm oil company programs; this is not technically difficult as they are supported by accompanying company staff. In the study area, farmers are involved in partnerships with the company and have applied local wisdom in managing land and other natural resources. For example, they adopt agroforestry practices, where palm oil plants are planted alongside other plants with ecological benefits, such as shade trees, ground cover crops, or medicinal plants. Local wisdom also involves the wise use of natural resources, such as water and energy, the effective management of waste from oil palm plantations [112], and maintaining local culture and traditional wisdom in agricultural practices. Farmers who partner with palm oil companies can maintain sustainable agricultural practices based on their cultural values and traditions by selecting palm varieties suited to the local environment, employing traditional fertilization and pest control techniques, and sharing local knowledge about maintaining biodiversity. Kurnia et al. (2022) found that integrating customary law in agricultural practices contributes to agricultural sustainability [113]. Moreover, Otieno et al. (2022) observed that farmers who apply traditional techniques tend to have better soil health and higher biodiversity levels on their farms, which contribute to more sustainable and productive agricultural systems [114]. By maintaining local wisdom in agricultural practices, business partnerships between farmers and palm oil companies can simultaneously strengthen cultural and environmental sustainability.

3.7. Efforts to Sustain Business Partnerships through Social Capital

Social capital affects the management of palm oil business partnerships, each aspect offering a unique contribution: trust, social networks, and participation show a negative response, thus needing improvement, while social solidarity and local wisdom positively contribute to the establishment of farmer–palm oil company partnerships. One issue identified from stakeholder FGDs was the need to establish and optimize farmer institutions, such as BUMDES and cooperatives at the village level.

Social capital can support the business partnerships between farmers and palm oil companies by implementing institutional processes at the village and sub-district levels, encompassing social networks. These institutions are expected to strengthen farmers’ bargaining position in BUMDES, involving the main stakeholders in palm oil plantation management, namely, farmers/landowners, palm oil companies, universities or research institutions, regional and central governments, and the Regional Palm Oil Working Group (with the Plantation Service as the secretariat).

Stakeholder collaboration and commitment can provide social, economic, and environmental benefits and ensure the sustainability of palm oil businesses. Tambi et al. (2021) argue that good partnerships among palm oil plantation companies, local governments, and indigenous communities can improve the welfare of surrounding communities by increasing their access to education and health services and developing better village infrastructure [115]. This collaboration not only improves the quality of life of local communities but also strengthens the social relations and trust amongst the parties involved. Partnerships in managing oil palm plantations can also bring significant economic benefits. Furumo et al. (2020) show that certification schemes involving various stakeholders, including small farmers, can increase productivity and income [116]. Access to the global market for sustainable palm products is also facilitated through certification recognition. Ayompe et al. (2021) found that farmers participating in certified sustainable palm oil schemes experienced 20% increase in income due to premium prices and the adoption of improved farming practices [3]. Herdiansyah and Majesty (2024) noted that, by strengthening collective action among smallholders and fostering partnerships with larger companies, conditions for sustainable oil palm cultivation can be created, leading to improved working conditions and increased job security for workers [117]. In sum, an effective collaboration can lead to added economic value, directly affecting farmer and worker welfare in the palm oil plantation sector.

From the environmental perspective, collaboration among stakeholders in sustainable palm oil plantation management has shown progress in environmental conservation. According to Purnomo et al. (2023), the sustainable management practices that are implemented through partnerships among companies, governments, and environmental institutions can reduce deforestation and habitat degradation [118]. Certain initiatives, such as efficient land use and reducing greenhouse gas emissions from palm oil plantations, also contribute to climate change mitigation. Besar et al. (2020) found that agroforestry systems have been shown to increase the carbon stock and sequestration potential in oil palm plantations, contributing to mitigating climate change while providing various other environmental advantages [119]. Galezzo et al. (2024) observed that, by implementing proper water management and storage practices, along with community training, it is possible to enhance water safety and public health [120]. Purnama et al. (2024) highlighted that the success of IPM lies in its ability to bring together diverse stakeholders, including farmers, plantation companies, government agencies, and local communities, to collaboratively implement sustainable pest management practices [121]. In sum, strong collaboration among various stakeholders, such as companies, governments, and environmental institutions, in sustainable palm oil plantation management has shown positive environmental conservation results. Through these partnerships, sustainable management practices have reduced deforestation, habitat degradation, water consumption, pesticide use, and environmental contamination, while increasing biodiversity and improving soil health and water quality. Thus, such collaborations have proven effective in addressing the environmental challenges faced by the palm oil industry and contributing to climate change mitigation.

4. Conclusions

The research conclusions are as follows:

• The social capital of landowning farmers in North Konawe is characterized by low levels of trust and weak social networks between farmers and palm oil companies. Farmer participation in sustainable management is also limited. However, local wisdom and social solidarity have great potential to enhance partnership sustainability if effectively leveraged.
• Social capital, including trust, social networks, and participation, greatly influences the effectiveness of business partnerships between farmers and palm oil companies. Currently, issues of low trust and weak social networks hinder mutually beneficial relationships. Strengthening institutional structures at the village and sub-district levels can optimize the role of social capital in these partnerships.
• Local wisdom is crucial in managing business partnerships, as it fosters solidarity and mutual respect between farmers and companies. This includes traditional values that support community cohesion, ethical behavior, and environmental stewardship. By integrating local wisdom into business practices, partnerships can become more effective and sustainable.

4.1. Practical Implications

• Social Capital of Landowning Farmers: To improve the social capital of landowning farmers in North Konawe, it is essential to build trust between farmers and palm oil companies through transparent communication and consistent, fair practices. Strengthening social networks among farmers can be achieved by implementing cooperative societies or regular community meetings, which will enhance their collective influence and support. Additionally, increasing farmer participation in sustainable management can be promoted through training programs and inclusive policies, ensuring that their voices are heard in decision-making processes. Leveraging local wisdom and social solidarity offers significant opportunities to enhance business partnership sustainability. Integrating traditional practices and cultural insights into partnership strategies can foster mutual understanding and respect. Community initiatives that emphasize collective well-being and mutual support can further promote social solidarity. By addressing these areas, the challenges of low trust, weak social networks, and limited participation can be overcome, leading to more effective and sustainable partnerships between landowning farmers and palm oil plantations in North Konawe.
• The Role of Social Capital in Managing Business Partnerships: To effectively manage business partnerships, addressing trust issues between farmers and palm oil companies is essential. This can be achieved by improving transparency and consistency in company practices, ensuring that all parties adhere to fair and open communication. Strengthening social networks and encouraging greater participation through community-based initiatives and stakeholder engagement can also significantly enhance these partnerships. By fostering stronger connections and active involvement, farmers can collectively influence decisions and contribute to the success of the partnerships. Institutional strengthening at the village and sub-district levels is crucial for optimizing the role of social capital. This includes establishing local governance bodies and providing capacity-building workshops to empower community leaders and stakeholders. Emulating successful partnership models like PT.DJL, which ensures mutual benefits and fair resource distribution, can provide a framework for other partnerships. Additionally, promoting reciprocal benefits can enhance the sense of mutual gain, supporting long-term partnership sustainability and fostering a cooperative environment where both farmers and companies can thrive.
• The Role of Local Wisdom in Managing Business Partnerships: Implementing programs that emphasize traditional values and practices can foster solidarity and mutual respect between farmers and companies. Local wisdom can be used to build trust and transparency in business dealings by adhering to ethical standards and long-established norms. This approach will create a collaborative atmosphere where both farmers and companies can work together towards common goals. Additionally, leveraging social solidarity can reinforce positive aspects of social capital, such as participation and collaboration, leading to more effective management. Optimizing the integration of local wisdom into business practices will help achieve mutual benefits and long-term success, ensuring the sustainability and effectiveness of these partnerships. With these measures, business partnerships between farmers and palm oil plantations in North Konawe can become more effective and sustainable.

4.2. Theoretical Implications

This research makes an important contribution to our understanding of social capital and cultural sustainability in the context of business partnerships between landowning farmers and palm oil companies in North Konawe. The low levels of trust and weak social networks between farmers and companies support the theories of Coleman (1988) and Putnam (1993) on the importance of trust and social networks in social capital [122,123]. Additionally, the limited participation of farmers reinforces Arnstein’s (1969) theory of participation, which states that genuine participation leads to empowerment and better decision making [124]. The importance of local wisdom in this study also supports Throsby’s (2019) theory of cultural sustainability, which emphasizes the value of integrating traditional knowledge into contemporary management systems [125]. Finally, the need to strengthen local institutional structures aligns with North’s (1990) view that strong institutions are key to effective economic performance [126]. Thus, the findings of this research not only reinforce existing theories but also provide empirical evidence that can be used for further development in the study of social capital, participation, cultural sustainability, and institutional theory.

4.3. Future Research Opportunities

Several future research opportunities can be explored to enhance the partnership between farmers and palm oil companies. Future research can focus on developing strategies to increase trust, using information technology to strengthen social networks and model farmer involvement in sustainable management. Additionally, it is important to study how strengthening institutional structures at the village and sub-district levels can influence social capital and business partnership effectiveness, as well as how local wisdom can be integrated into business practices to enhance sustainability. Further research can also evaluate the social and economic impacts of strengthening social capital in farming communities, conduct comparative studies between regions to understand the factors of partnership success, and assess the effectiveness of government programs and policies in enhancing social capital and partnership sustainability. By exploring these opportunities, significant contributions could be made to improving the success and sustainability of partnerships between farmers and palm oil companies in the future.