Local Economic Development Strategy Based on Localindustrial Core Competence

Rahab Bintara,Najmudin Najmudin,Istiqomah Istiqomah

doi:10.5539/ijbm.v8n16p41

Rahab Bintara, Najmudin Najmudin + Show 1 more

Open Access

https://doi.org/10.5539/ijbm.v8n16p41

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Abstract

Local economy can be promoted through the development of small and medium industries by building up localindustrial core competence. Local core competence is one of the strategies to increase local competitiveadvantage through the optimization of local competitive potency. This study was aimed at drafting the strategyof local economic development through local industrial core competence based on competitive commodities ofBanyumas district.This study employed qualitative as well as quantitative approaches. The study site is Banyumas Regency. Datacollecting techniques include secondary data mining, survey, observation, in-depth interview, and focussedgroup disscusion. Data were then analyzed using interactive analysis, Analytic Hierarchy Process andInterpretive Structural Modeling.The results show that batik is the most potential industry to be the local industrial core competence in Banyumasdistrict. The competitive advantage of batik as the industrial core competence of Banyumas district can beexecuted through the following three stages: (1) initial stage (infrastructure improvement, finance and legislationsupport (2) main stage (human resource development, management and marketing, branding and the creation ofbatik uniqueness) and (3) final stage (increase in productivity and initiation of related and supporting industries).

Highlights

Local development is very important to optimize local economy in order to improve the welfare of people
The results show that batik is the most potential industry to be the local industrial core competence in Banyumas district
This study is aimed to draft the strategy of developing local economy of Banyumas district through local industrial core competence

Summary

Introduction

Local development is very important to optimize local economy in order to improve the welfare of people. Within the perspective of local competitiveness, the advantages and disadvantages of individual localities should create synergy to promote distribution and harmonization of regional economic development. The potency of individual localities should be promoted to be their competitive advantage. One of the strategies to promote local competitive advantage is the development of local industrial core competence. The term core competence, initiated by Prahalad and Hamel (1990), serves as the source of competitive advantage in future competition (Prahalad and Hamel, 1994). Within the framework of local economic development, this concept could be the basis forlocal development because it is rooted on the advantage of a particular area. Prahalad and Hamel (1990) argued that core competence should have the following characteristics: it delivers real benefit to customers, it is not easy for competitors to imitate, and it opens access to quite a few markets

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