The effect of patronage buying motives on small business profitability: evidence from Indonesia

Chalarce Totanan,Nina Yusnita Yamin,Arung Gihna Mayapada,Ni Made Suwitri Parwati,Rahayu Indriasari

doi:10.21511/im.17(1).2021.09

Abstract

This study aims to find and analyze the profitability level of Fried Onion Small Business in Palu City, influenced by Patronage Buying Motives (PBM), which consist of company reputation, location of sales, selling price and guarantee to profitability. The population of this study was 52. Population was chosen based on small business that still survives in fried onion business as a local business. The sample taken by purposive sampling was 35. Data collection was carried out by distributing questionnaires to the managers of fried onion small businesses. The analytical tool used is multiple linear analysis. The results shows that F test of PBM had a significant influence on profitability at 0,822 or 82.2%. This means a very strong influence of the value of PBM. T-test shows that corporate reputation is of significant value of 0,286, location of sales – 0,426, and selling price has a significant value of the 0.235 influence on profitability, except guarantees that do not affect profitability because the value of 0.151 is less than the t table value of 2.0395. The impact of this study implies that small food businesses do not really need a guarantee like electronic products, because reputation and quality have become their guarantee.

Highlights

Small business is the backbone of any economy and the largest employment opportunities in every country (Eggers, 2020)
The expected contribution of this study is to find empirical evidence that the profitability of an entity is influenced by accounting variables such as assets, but one of the factors is influenced by patronage buying motives, which consist of the company’s reputation, sales location, selling price, and guarantee
This study proves that company reputation influ- utation and financial performance, even the study ences the profitability of small business in Palu City. proved that there is a positive and sustained re

Summary

Introduction

Small business is the backbone of any economy and the largest employment opportunities in every country (Eggers, 2020). They play an important role in increasing people’s income because they open jobs for communities. They play an important role as a source of foreign exchange income for the country.

Objectives

Findings

Discussion

Conclusion