Abstract
As per newspapers and national news reports, small and medium-sized enterprises (SMEs) in Indonesia, currently 26,574 in number, are spreading widely. The transformation of SMEs to large, mature business entities is slow. This study investigates the sluggish transformation of SMEs in Indonesia and offers new explanations for the sluggishness, focusing on knowledge empowerment instead of financial aspects. A new development model was constructed with an aim to enhance SMEs. This study serves as research with a paradigm of constructivism, prioritizing knowledge empowerment. Executive officers of SMEs should aim for the construction of conceptual knowledge of social networks and social cognition in a sequential-ordered logic to achieve organizational readiness and readiness for change. They, moreover, internalize these concepts to transform SMEs into large, mature business entities with high levels of competitiveness, leadership engagement, dynamic capabilities, and profound sustainabilities.
Highlights
This study investigates the sluggish transformation of small and medium-sized enterprises (SMEs) in Indonesia, caused by Indonesian regulators' concentration on financial capabilities for SMEs
Financial, and innovator characteristics were employed as second-order factors, this study succeeded in supporting the association between characteristics and both organizational readiness and readiness for change
This study found that most Indonesian SMEs were considerate of recommendations of social networks
Summary
This study investigates the sluggish transformation of SMEs in Indonesia, caused by Indonesian regulators' concentration on financial capabilities for SMEs. This research offers a fresh perspective in several ways It can explain the construction of the transformation of SMEs to achieve organizational readiness and change. The capability of SMEs to form social networks (Chen et al, 2019; Fatoki, 2011; Jones & Volpe, 2011; Lee et al, 2010; Zhou et al, 2007) and their social cognition (Bandura, 1986, 1988, 1989, 2008; Boudreaux et al, 2019; Majid et al, 2017) supports the development of SMEs in terms of organizational readiness and change. SMEs could achieve growth opportunities by expanding their network and capture social cognitive phenomena Researchers argue that these SMEs could be sustainable because of their social capital. SMEs have selfefficacies that are equivalent to knowledge capital to solve future problems
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