Abstract
The purpose of this study is to compare the natural rubber latex-based industry innovation capacities of two natural rubber producing countries namely Malaysia and Indonesia, and its implications for the improvement of the industry. Using purposive sampling method with the natural rubber industry experts from both countries as the respondents. This study was conducted through several stages, including: 1) determining attributes for each innovation capability dimensions: organization, process, service, product and marketing. These attributes are based on literature review and validated by experts, 2) distribution of questionnaires to experts in Indonesia and Malaysia, 3) Analysis of the innovation capacity index using multidimensional scaling. The Indonesia innovation capacity index is 60.22, while it is 78.80 for Malaysia. This shows that overall, in terms of its ability to innovate the industry in Indonesia is still lagging behind Malaysia. In addition, all attributes for each capability: organizational, processes, services, product/product development and marketing innovation capability, Indonesia is also still lagging behind Malaysia. It only compares the two natural rubber producing countries, namely Indonesia and Malaysia. The implication for Indonesia is the need of government's political commitment, legal direction for innovation, legal certainty, strong institutions, institutional restructuring to facilitate coordination, improvement the quality of human resources and ease of financial access. The research contributes in finding 25 attributes of innovation capabilities. Further, this study also maps the comparative capabilities of Malaysian and Indonesian innovations for each latex-based natural rubber industry innovation capability dimension, and the steps to improve the innovation progress, specifically for Indonesia in order to catch up. Keywords: Innovation capacity, capacity index, Latex based industry, Multi-dimensional scaling and rubber latex DOI: 10.7176/EJBM/12-11-05 Publication date: April 30 th 2020
Highlights
Indonesia is known as a country with the largest natural rubber planting area in the world, the value added generated from the industry is still inferior to Malaysia
When viewed in more detail, Indonesia's position for the organizational, processes, services, product/product development and marketing innovation capabilities are still lower than Malaysia (Figure 2)
Comparison of the average marketing innovation capability (Figure 7) shows that of the five attributes, which are the ability to convince potential customers that the product innovation can substitute, provide benefits and is needed by consumers (MIC1), the ability to drive company resources to become customer-oriented (MIC2), the ability to build effective strategic networks with customers (MIC3), the ability to use new lines of communication that are more effective and efficient (MIC4) and the ability to identify changes in consumer habits and make adjustments to marketing strategies (MIC5), Malaysia is still superior to Indonesia
Summary
Indonesia is known as a country with the largest natural rubber planting area in the world, the value added generated from the industry is still inferior to Malaysia. While Malaysia's manufacturing industry is able to absorb 52% of its total natural rubber production (Dekarindo, 2019) This condition causes foreign exchange earnings, increase in value addition, and employment absorption becomes not optimal (RPN, 2011). Revitalization of the domestic downstream rubber industry can be done to reduce the consequences from the decreasing natural rubber market price, which results in disruption of the industry players' income stability (especially rubber planters) It will increase the domestic rubber absorption or consumption for non-traditional uses (Gapkindo, 2016; Erni, 2013). There are several innovative products which can be potentially developed commercially, namely rubberized asphalt, earthquake resistant rubber, dock fenders and rubber water tanks These types of products are alternative solutions to increase value addition to Indonesia's natural rubber industry
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
