Indonesian Small And Medium-sized Enterprises Research Articles

AN EXPLORATION OF HEALTHY AGRICULTURAL PRODUCT DEVELOPMENT STRATEGIES WITHIN INDONESIAN SMALL AND MEDIUM-SIZED ENTERPRISES (SMES)

For the first time, this study aims to comprehensively explore the landscape of innovation and healthy product development within Indonesian Small and medium-sized enterprises (SMEs) in the food and drinks industry. By addressing existing gaps, the paper provides insights into the context-specific factors, the role of healthy product variants, and the interconnected dynamics that drive innovation. The research employs a thorough literature review. The literature review establishes the foundation by identifying gaps and theoretical frameworks, including the Innovation Ecosystem Theory, to guide the analysis. The findings illuminate several key contributions of this research. First, the study crystallizes the specific new product development practices within Indonesian SMEs, addressing the lack of context-specific insights. It highlights the significance of healthy product development within a changing consumer landscape. The analysis reveals diverse strategies, challenges, and successes, emphasizing the role of networking, creative innovation drivers, and the absence of financial constraints. Furthermore, the introduction of a unified framework for innovation provides a holistic understanding that bridges theoretical constructs and practical applications. This study identifies flaws in the current innovation policy, suggesting actionable recommendations for improvement. In conclusion, this paper fills critical gaps in the literature, offering a comprehensive exploration of innovation and healthy product development within Indonesian SMEs in the food and drinks industry. By integrating context-specific insights, addressing gaps, and providing practical value for stakeholders and policymakers, the research significantly advances our understanding of healthy agricultural product development.

Impact of Social Responsibility as a Driver of Business Performance in Indonesian Smes

The Covid-19 pandemic continues to shape Indonesia's trajectory, with projections indicating its influence for the next 4-5 years, prompting a paradigm shift across all spheres, including the economy. Companies find themselves at a crossroads, tasked with aligning profitability with the evolving needs of communities, while simultaneously meeting ethical obligations to society and the environment. Consequently, Corporate Social Responsibility (CSR) has taken on a dynamic role, expanding beyond large corporations to encompass Small-and-Medium Sized Enterprises (SMEs). Nevertheless, the intricate interplay between CSR, SME resilience, and the capacity to endure economic downturns remains largely unexplored.This study endeavors to bridge this research gap by delving into the impact of CSR on the financial performance of SMEs in the face of economic challenges. As the Covid-19 pandemic persists, Indonesian SMEs must navigate an altered economic landscape. Although the concept of CSR has gained prominence, its precise influence on SMEs' ability to weather economic adversities and attain sustained financial success remains enigmatic. Consequently, this research aims to uncover the factors that shape the adoption of CSR practices among SMEs, while also investigating the extent to which CSR implementation correlates with financial performance. By elucidating this relationship, the study aspires to provide valuable insights into fortifying the sustainability and resilience of SMEs within the dynamic framework of evolving economic norms. Keywords: Decarbonization, Malaysia, Net-zero emissions, Corporate practices

Cultivating Green Human Resource Management (GHRM) to Small and Medium-Sized Enterprises (SMEs) for Green Performance

At the present time in Indonesia, businesses that fall into the category of "small" or "medium" might employ a sizable workforce. It is necessary to establish policies and strategies to overcome the obstacles to entry into export markets, such as local regulations and a lack of knowledge about the varying demands of export markets, even if many different types of SME products have the potential to become high-quality exports. Therefore, in order to address this problem, this article presents a literature analysis on Green Human Resource Management (GHRM) for SMEs to improve their green performance. This paper presents a comprehensive assessment as a model for professional development in light of the constraints of the existing HR development procedures in Indonesian MSMEs. This article draws the conclusion that GHRM has an opportunity to encourage green performance in Indonesian SMEs in accordance with the national business objectives of decision makers after analyzing the current practice of GHRM development in Indonesia MSMEs with national and international practices reported in the published literature. Given HRM's potential as a model for effective and sustained HRM professional development, especially in the context of SMEs in Indonesia, due to its empowering qualities in terms of both its content and its structure.

E-Commerce Technologies Adoption Strategy Selection in Indonesian SMEs Using the Decision-Makers, Technological, Organizational and Environmental (DTOE) Framework

Small and Medium-sized Enterprises (SMEs) are key contributors to Indonesia’s economy. E-commerce can assist SMEs in gaining a competitive edge and is expected to be the largest contributor to the country’s digital economy by 2030. However, only 22% of SMEs in Indonesia have adopted E-commerce. Hence this study aims to investigate the criteria that influence E-commerce adoption by Indonesian retail SMEs and select the best strategy using the Decision-Makers, Technological, Organizational, and Environmental (DTOE) Framework and the Diffusion of Innovation (DOI) theory. This study aims to fill the research gap by examining the essential factors in E-commerce adoption by Indonesian SMEs in the retail industry and their key strategy to increase utilization. The influence and priorities between criteria were calculated using the Decision-Making Trial and Evaluation Laboratory (DEMATEL) based Analytic Network Process (ANP) method. Furthermore, an E-commerce adoption strategy was selected using Complex Proportional Assessment (COPRAS) method. This research showed critical criteria for adopting E-commerce technology in retail SMEs, Decision Maker’s IT Knowledge, Innovativeness, and Complexity. In addition, developing or training Information Technology (IT) and E-commerce skills were identified as the best strategy to increase E-commerce adoption. This study can help raise the understanding of policymakers, E-commerce service providers, and retail SME decision-makers on influencing criteria in adopting the best strategy to be applied to increase this technology adoption.

Improving Customer Satisfaction for SMES in Emerging Countries: A Comparative Study of Hungary and Indonesia

Abstract Improving Customer Satisfaction (CS) is a key strategical goal for companies, especially for Small and Medium-Sized Enterprises (SMEs). The objective of this research is to find and rank the major factors supporting CS. We focus on SMEs in two emerging markets located in two countries with different geographical and supply chain environments. We test a conceptual framework that includes several factors supporting CS. The data were collected from Hungarian and Indonesian SMEs by online questionnaire. We used statistical analysis such as Exploratory Factor Analysis (EFA), Confirmatory Factor Analysis (CFA), and Structural Equation Model (SEM) to test our model and hypothesis. Based on the survey of the top management of the SMEs, the three factors that have a significant positive effect on CS in both countries are Market Pressure (MP), Organizational Culture (OC), and Corporate Strategy (CStra). The rank order is MP followed by OC and CStra in Hungary; MP, CStra, and OC for Indonesia. Even though many scholars discussed CS, a few studies have shown the connection between CS and the successful implementation of SCM. Evaluating and ranking the supporting factors contributes to the literature and business practice of SME decision-making related to SCM.

Adoption of Enabling E-Commerce Technologies for Indonean SMEs

E-commerce is classified as Business-to-Business (B2B), Business-to-Consumer (B2C) and Consumer-to- Consumer (C2C) based on the available relation between potential buyers and sectors. The three significant classifications have developed significantly in tandem with the advancement of technology. However, B2B seems to report significant growth than the remaining two classifications. In this paper, a review of e-commerce (B2B marketplace e-commerce) has been done with reference to Indonesian SMEs. This study found that Indonesian Small and Medium- sized Enterprises (SMEs) were not proficient in using B2B e-commerce to its full potential. The following recommendations to the government and nonprofits in Indonesia that might be helpful to small and medium enterprises have been detailed in this paper: (a) Trainings and educational programs associated with the implementation of e- commerce include the creation of company websites, participation in B2B e-commerce, and the employment of e-media in connecting with prospective buyers or overseas traders. Trainings and educational programs that b) teach participants how to connect successfully (through electronic media) with overseas business partners and prospective purchasers are also common.

A study on socio-aesthetic value accentuation and marketing performance: an SDL perspective

PurposeThis study aims to build a conceptual model based on socio-aesthetic value accentuation (SAVA), positional advantage and sales-network power as the bridging process for enhancing sales performance in the context of small- and medium-sized enterprises (SMEs).Design/methodology/approachA structural study methodology is adopted. In all, 200 owner– managers of SMEs were involved in the study and voluntarily spent time for an interview in the data collection process. To test the model and hypotheses, the authors used the analysis moment structure structural equation modeling (AMOS SEM structural model software to analyse 178 usable questionnaires.FindingsThe results demonstrate three strategic pathways to enhanced sales performance, namely, anchors on SAVA, positional advantage and sales-network power and are the basis of the separate contribution of our proposed strategic equilateral triangle model for conceptual bridging.Research limitations/implicationsThe rejection of the hypothesis provides a room for further research. The sample frame of Indonesian SMEs limits the generalisation power of SAVA concept, which then calls for replication to achieve a broader generalisation. The theoretical implication of the study relates to strengthening the applicability of the theory of service-dominant logic in marketing studies.Practical implicationsThere are several practical managerial implications for SME entrepreneurs seeking to improve sales performance.Originality/valueThis pioneering study explains the role of SAVA – positional advantage and sales-network power to bridge innovation capability and enhanced marketing performance.

Does internationalization moderate the effect of SMEs size, age, and other financial determinants on investment opportunities set? Evidence from Indonesia

Small and medium-sized enterprises (SMEs) are increasingly considering international expansion as one of the sustainable growth strategic options. This study aims to reveal how the effect of internationalization as a moderator of SMEs size, age, and other financial determinants toward investment opportunity set of SMEs that listed on the Indonesia Stock Exchange (IDX) from 2006 to 2020. Market to book asset ratio used as a proxy of investment opportunity set of SMEs. This study is one of the most important in the context of Indonesian SMEs as there were limited previous studies that have explored the internationalization factor. A total of 102 SMEs companies with 156 data observations were studied. A moderation regression analysis was used to test whether the determinants of the investment opportunity set were statistically significant. Surprisingly, the study found that the degree of internationalization has a moderating effect that weakens the relationship between SMEs age and size on investment opportunities set (market value ratio).

The effect of innovation capability on business performance: The role of social capital and entrepreneurial leadership on SMEs in Indonesia

The presence of small and medium-sized enterprises (SMEs) in Indonesia will contribute to the movement of the Indonesian economy, so its growth is an essential part that must be considered by the government. The goal of this study was to explore the role of innovative capabilities in improving the performance of Indonesian SMEs. A variable approach to social capital, entrepreneurial leadership, innovation ability and SME efficiency was used in this research. The research included a sample of 352 small and medium-sized enterprises in Pekanbaru, Indonesia, consisting of 19 medium-sized enterprises and 333 small enterprises out of a total population of 2887 small and medium-sized enterprises (the sampling methodology used was chance sampling and simple random sampling methods). The findings show that social capital does not explicitly have a substantial impact on the business performance of SMEs in Pekanbaru, but if it is mediated by creative capacities, social capital indirectly plays a role in improving the performance of SMEs. Entrepreneurial leadership has a big influence on SMEs.

A new method to empower organizational readiness for change in Indonesian SMEs

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.

What Do Banks, Rural Credit Institutions, and Regulators Infer from the Current Strengths and Standing of Indonesian SMEs?

This study investigates whether the Indonesian regulators control Indonesian small and medium-sized enterprises (SMEs) with matching or mismatching empowerment strategies, in light of their strengths and current standing. Indonesian SMEs contributed approximately 60.34% to Indonesia’s gross domestic product (GDP) in 2018. In addition, Indonesian regulators have focused on financial support through credit policies and tax incentives. Indonesian SMEs have been standing on organizational readiness and readiness for change, based on their social networks and social cognition. It collected thirteen informants with different expertise and experiences. This study’s results suggest Indonesia’s regulatory body and financial institutions should consider the SMEs’ social cognition and organizational readiness for change. According to the current situation, to empower Indonesian SMEs, we recommend strategies such as achieving knowledge supremacy, creating an economic development board, as in Singapore, formulating comprehensive industry-wide policies, adopting omnibus laws, and implementing a shifting balance strategy. In other words, the Indonesian regulators should implement major reforms, which are similar to glasnost and perestroika in the former Soviet Union. This is to enhance Indonesian SMEs and achieve the goal of the Government of Indonesia (GoI) with respect to the optimal distinctiveness of Indonesia’s future economy. This optimal distinctiveness refers to the GoI’s policies, which focused on knowledge supremacy, an industry-wide regime, and research for empowerment.

Factors Affecting Propensity to Export: The Case of Indonesian SMEs

The benefits of trade liberalization are not shared equally among countries and enterprises across the globe. Small and Medium-sized Enterprises (SMEs) in developing countries are less able to participate in export markets than their larger counterparts, despite various export assistance provisions by their governments. This study aims to investigate the factors influencing Indonesian SMEs’ decisions and ability to engage in direct export activities. The evidence was collected from 271 exporting SMEs and 226 non-exporting SMEs in seven provinces in Java, Madura, and Bali. Logistic regressions were used to identify the distinct characteristics of the exporting SMEs. The findings show that the exporters differ from non-exporters in terms of their firms’ and owners’ characteristics, their perceptions toward export barriers, their participation in their national government’s export assistance program and network relationships. The academic, policy and managerial implications of the findings are discussed.

The mediating role of customer value on innovation and firm performance: evidence from Indonesian SMEs

Innovation and customer value are central issues in successfully business research. Firms need to determine how they are willing to meet their customers’ needs through the product innovation. This study examines the role of customer value in the relationship between innovation and firm performance on Small and Medium-sized Enterprises (SMEs) Food in Malang City, Indonesia. Due to answer the purpose, questionnaire was developed and data was analyzed by Partial Least Square (PLS). The result indicated that customer value partially mediates the relationship between innovation and firm performance. Moreover, these findings provide evidence that SMEs can achieve competitive advantage through improved innovation encouraged customer value.

Factors Affecting The Use of Management Accounting Practices in Small and Medium Enterprises: Evidence from Indonesia

Small and medium sized enterprises (SMEs) contribute to the development of both developed and developing countries economy. Nevertheless, the focus of the studies in management accounting field is still in the developed countries. Studies on the adoption of management accounting practices (MAPs) in developing countries are still too little. This study explores the level of adoption of MAPs in SMEs sector in one of the developing countries in Indonesia. This study also examines factors which may affect the extent of use of MAPs in SMEs. Logistic regression is applied to analyze the data and to test the hypotheses. It is observed that qualification of internal accounting staffs, participation of owner/manager, and size of the firm significantly affect the use of MAPs in SMEs. The paper serves as a stepping stone to the research in the fields of management accounting and organizational design in Indonesian SMEs.

The Role of Process Innovation between Firm-Specific Capabilities and Sustainable Innovation in SMEs: Empirical Evidence from Indonesia

The importance of sustainable innovation achievement propels firms to consider the economic, social, and environmental dimensions of sustainable development. However, it is important to clarify that not all innovations impact sustainable development. Regardless of the limited circumstances in small and medium-sized enterprises (SMEs), intrapreneurship, stakeholder integration, and absorptive capacity are firm-specific capabilities that could be explored as strategic intentions of management practices in the organization. This paper investigated the mediating role of process innovation in the relationship among the firm-specific capabilities of absorptive capacity, intrapreneurship, and stakeholder integration for sustainable innovation in SMEs. This empirical study examines the manufacturing sector of Indonesian SMEs with a sample size of 190 firms. The study found that practices of process innovation, as a mediator triggered by the firm-specific capabilities of absorptive capacity, intrapreneurship, and stakeholder integration affect sustainable innovation, although at low stages. Finally, implications for the theory and practice of attaining sustainable innovation in SMEs are drawn.

Comparison Between Key Success Factors in Safety Behavior in Small- and Medium-Sized Enterprises (SMEs) and Large Industries, and Development of a Hypothetic Model for Safety Behavior in Indonesian SMEs

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Types and Severities of Export Barriers: Evidence from Indonesian SMEs

Small and Medium-sized Enterprises (SMEs) are more constrained to export than their large counterparts and SMEs' limited participation in export market is more prevalent in developing than in developed countries. Extant literature suggests that SMEs encounter a set of export inhibiting factors distinct to those faced by large firms and therefore accurate identification of export barriers is crucial in fostering SMEs export. This study investigates the export barriers faced by Indonesian SMEs. The evidences were collected from 271 exporting SMEs and 226 non-exporting SMEs in seven provinces in Jawa, Madura and Bali regions. The results show that the types and severities of export barriers perceived or encountered by SMEs vary across export stages and across products/industries. Further, export barriers can be distinguished by their general or specific nature. The policy and managerial implications of the findings are discussed.

Export Stimuli, Export Stages and Internationalization Pathways: The Case of Indonesian SMEs

Small and Medium-sized Enterprises (SMEs) in developing countries are still constrained to seize the opportunity of trade liberalization as compared to their large counterparts. It has been argued that effective efforts to foster SME export require clear understanding of the factors that stimulate them to export. This study investigates the export stimuli of 385 Indonesian SMEs at different export stages (pre-exporting and exporting) and different internationalization pathways (domestically established exporter and born-global SMEs). Three types of export stimuli are consistently identified as the most important in all sub-samples: the presence of foreign buyers, the confidence in the products and the aspiration to find alternative markets. By contrast, two types of export stimuli are consistently found as the least important in all sub-samples: government support and Indonesian diaspora communities. The academic and policy implications of the findings are discussed. AbstrakKontribusi Usaha Kecil dan Menengah (UKM) terhadap ekspor di negara berkembang masih sangat terbatas. Hasil studi sebelumnya menunjukkan bahwa upaya meningkatkan ekspor UKM memerlukan pemahaman akan faktor-faktor yang mendorong ekspor (pemicu ekspor). Studi ini meneliti pemicu ekspor pada 385 UKM di Indonesia, meliputi UKM pada tahapan pra-ekspor dan eksportir serta meliputi UKM dengan jalur internasionalisasi yang berbeda. Hasil studi ini menunjukkan bahwa terdapat tiga jenis pemicu utama ekspor: kontak dari calon pembeli luar negeri, rasa percaya diri atas produk dan keinginan untuk memperluas pasar. Sebaliknya, dukungan pemerintah dan komunitas diaspora Indonesia belum menjadi pemicu utama ekspor. Temuan ini memiliki implikasi bagi diskursus akademis dan pengambil kebijakan di bidang pengembangan UKM.Kata kunci: Pemicu Ekspor; Usaha Kecil dan Menengah (UKM); Tahapan Ekspor; Jalur Internasionalisasi; Perusahaan Born-Global; IndonesiaJEL classifications: F23; L25; M13; M16; O17

Sustainable manufacturing for Indonesian small- and medium-sized enterprises (SMEs): the case of remanufactured alternators

Achieving sustainability is a great challenge for most of the Indonesian manufacturing small- and medium-sized enterprises (SMEs). Remanufacturing has been considered to be a key strategy to attain sustainable manufacturing by maximising the use of old components and minimising landfill size and energy usage. However, SMEs, which are undoubtedly the engine of the Indonesian manufacturing industry, do not have adequate experience, skill, resource, technology and financial support in the remanufacturing area. This paper proposes a new concept for sustainable manufacturing assessment framework through remanufacturing strategies in Indonesian SMEs. In this sustainable manufacturing assessment framework, the existing remanufactured products are assessed using sustainable manufacturing criterion (e.g. reliability, life cycle cost, employment opportunity and greenhouse gases). This framework identifies improvement opportunities, including eco-efficiency, cleaner production and green technology to make existing remanufactured products technically, economically, environmentally and socially sustainable. The sustainability of remanufactured alternators produced by Indonesian SMEs has been assessed to validate the aforementioned sustainable manufacturing assessment framework.

Enhancing Foreign Consumer Acceptance The Role of Capabilities of Creating Export-Market Oriented Products in Small and Medium-Sized Enterprises (SMEs)

The main purpose of this paper is to measure the effects of SMEs capabilities on their export performance. This paper offers a model to test the effects of the capabilities of creating export-market oriented products (EMOPs) on increasing SMEs’ export performance. Six hypotheses are developed to analyze causal effects of variables. Using 387 Indonesian SMEs as sample, hypotheses testing highlight the importance of SMEs’ capabilities of building export-market oriented products, which highly follow foreign (export) market standards. Hence, these kinds of products increase foreign consumer acceptance. In general, this paper offers a possible explanation to predict the determinants of how SMEs’ can perform in the export market.