Main Article Content
Abstract
Purpose ─ This paper analyzes the determinants of micro and small enterprise company performance and its employees in Indonesia using a data set covering 2010 – 2019.
Method ─ This study uses the robust estimation of the panel data regression method to estimate an alternative least squares regression that does not require strict assumptions and is not sensitive to outliers.
Findings ─ The study's findings are as follows: 1) Improving resources, markets, entrepreneurs, and institutions has different impacts on business performance and workers' compensation due to the complexity and size of businesses, 2) The formal education of micro and small business entrepreneurship and institutionalization of partnerships have improved workers' compensation but not business performance, 3) Improving resource access, market orientation, and policies indirectly implemented by the Creative Economy Agency have improved business performance but not workers' compensation. Therefore, programs aimed at enhancing productivity of entrepreneurs and workers through partnerships are a key factor in improving the competitiveness of micro and small enterprises.
Originality ─ Four determinants of the business environment of micro and small enterprises were analyzed to determine their impact on entrepreneur and worker performance, in order to identify the key factors contributing to the successful empowerment of these businesses.
Keywords
Article Details
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References
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- Allen, E. R. (2016). Analysis of trends and challenges in the Indonesian labor market (ADB Papers on Indonesia No. 16). Retrieved from https://www.adb.org/sites/default/files/publication/182935/ino-paper-16-2016
- Amalia, R. T., & von Korflesch, H. F. O. (2021). Entrepreneurship education in Indonesian higher education: Mapping literature from the Country’s perspective. Entrepreneurship Education, 4(3), 291–333. https://doi.org/10.1007/s41959-021-00053-9
- Amornkitvikai, Y., Tham, S. Y., Harvie, C., & Buachoom, W. W. (2022). Barriers and factors affecting the e-commerce sustainability of Thai Micro-, Small- and Medium-Sized Enterprises (MSMEs). Sustainability, 14(14), 1–28. https://doi.org/10.3390/su14148476
- Asian Development Bank. (2019). The evolution of Indonesia’s participation in global value chains.
- Berniell, L. (2021). Occupational choice and investments in human capital in informal economies. The B.E. Journal of Macroeconomics, 21(2), 399–423. https://doi.org/10.1515/bejm-2020-0024
- Burger, N., Chazali, C., Gaduh, A., D.Rothenberg, A., Tjandraningsih, I., & Weilant, S. (2015). Reforming policies for small and medium-sized enterprises in Indonesia. RAND Corporation.
- Cusmano, L., & Koreen, M. (2015). New approaches to SME and entrepreneurship financing: Broadening the range of instruments. OECD Centre for Entrepreneurship, SMEs and Local Development.
- Dar, I. A., & Mishra, M. (2021). Human capital and smes internationalization: Development and validation of a measurement scale. Global Business Review, 22(3), 718–734. https://doi.org/10.1177/0972150918817390
- Deijl, C., .de Kok, J., & Veldhuis-Van Essen, C. (2013). Is small still beautiful? Literature review of recent empirical evidence on the contribution of small and medium enterprises to employment creation. Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH.
- Deloitte Touche Tohmatsu. (2004). Partnerships for small enterprise development. New York: United Nations Development Programme (UNDP).
- Demirbag, M., Tatoglu, E., & Glaister, K. W. (2010). Institutional and Transaction Cost Influences on Partnership Structure of Foreign Affiliates. Management International Review, 50(6), 709–745. https://doi.org/10.1007/s11575-010-0055-y
- Dewanta, A. S., & Sidiq, S. (2021). Impact of creative economy policy on micro and small industry development in Indonesia. In Malaysia-Indonesia International Conference on Economics. Management and Accounting (MIICEMA) International conference: ASEAN Integration towards Shared Prosperity in Global Uncertainty. Selangor, Malaysia: Faculty of Economics and Management of Universiti Kebangsaan Malaysia.
- Drábek, J., Lorincová, S., & Javorčíková, J. (2017). Investing in human capital as a key factor for the development of enterprises. In L. Mura (Ed.), Issues of Human Resource Management. Rijeka: IntechOpen. https://doi.org/10.5772/67741
- Hamiye Beyaztas, B., & Bandyopadhyay, S. (2020). Robust estimation for linear panel data models. Statistics in Medicine, 39(29), 4421–4438. https://doi.org/https://doi.org/10.1002/sim.8732
- Hasan, A., Amrusi, Musfiana, & Mardhani, M. (2021). An overview of e-commerce adoption in Indonesian SMEs. Journal of Physics: Conference Series, 1811(1), 12104. https://doi.org/10.1088/1742-6596/1811/1/012104
- Hernita, H., Surya, B., Perwira, I., Abubakar, H., & Idris, M. (2021). Economic Business Sustainability and Strengthening Human Resource Capacity Based on Increasing the Productivity of Small and Medium Enterprises (SMEs) in Makassar City, Indonesia. Sustainability, 13(6). https://doi.org/10.3390/su13063177
- Hidayat, A., Hidayat, M., & Hendrix, T. (2018). The effect of Indonesia's small and medium enterprises participation in the global value chain to enhance competitiveness. In The international conference and call for paper on trade: A new paradigm in trade governance to increase domestic efficiency and to strengthen global competitiveness. Lembaga Ilmu Pengetahuan Indonesia.
- Hing, V., Thangavelu, S. M., & Narjoko, D. (2020). Human capital and participation in global value chains: Evidence from small and medium-sized enterprises in Indonesia (ADBI Working Papers No. 1142). Tokyo.
- Hossain, M., Yoshino, N. ., & Aghizadeh-Hesary, F. (2018). Local financial development. access to credit and small and medium enterprises’ performance: Evidence from Bangladesh (ADBI Working Paper Series No. 906). Tokyo.
- Idris, B., Saridakis, G., & Johnstone, S. (2023). Training and performance in SMEs: Empirical evidence from large-scale data from the UK. Journal of Small Business Management, 61(2), 769–801. https://doi.org/10.1080/00472778.2020.1816431
- ILO. (2019). Financing small businesses in Indonesia: Challenges and opportunities. Jakarta: International Labour Organization.
- International Finance Corporation. (2018). How technology creates markets: Trends and examples for private investors in emerging markets. Washington, DC.: World Bank. Retrieved from https://openknowledge.worldbank.org/handle/10986/30196
- Jobin, D. (2008). A Transaction Cost-Based Approach to Partnership Performance Evaluation. Evaluation, 14(4), 437–465. https://doi.org/10.1177/1356389008095487
- Khadan, J. (2018). Estimating the Effects of Human Capital Constraints on Innovation in the Caribbean. Economies, 6(2). https://doi.org/10.3390/economies6020033
- Kristiansen, S., Dwiyanto, A., Pramusinto, A., & Putranto, E. A. (2009). Public sector reforms and financial transparency: Experiences from Indonesian districts. Contemporary Southeast Asia, 31(1), 64–87.
- Krugman, P. (2014). Jobs and skills and zombies.
- Le, P. N. (2012). What determines the access to credit by small and medium enterprises? A case study in Vietnam. Journal of Management Research, 4(4), 90–115. https://doi.org/10.5296/jmr.v4i4.1838
- Maksum, I. R., Sri Rahayu, A. Y., & Kusumawardhani, D. (2020). A social enterprise approach to empowering micro, small and medium enterprises (SMEs) in Indonesia. Journal of Open Innovation: Technology, Market, and Complexity, 6(3), 30050. https://doi.org/10.3390/joitmc6030050
- McLean, S., & Charles, D. (2020). A preliminary review of policy responses to enhance small and medium enterprise access to trade financing in the Caribbean (Studies and Perspectives Series No. 88). Santiago.
- Mêgnigbêto, E. (2015). Effect of international collaboration on knowledge flow within an innovation system: a Triple Helix approach. Triple Helix, 2(1), 16. https://doi.org/10.1186/s40604-015-0027-0
- Mertzanis, C., & Said, M. (2019). Access to skilled labor, institutions and firm performance in developing countries. International Journal of Manpower, 40(2), 328–355. https://doi.org/10.1108/IJM-11-2017-0301
- Nursini, N. (2020). Micro, small, and medium enterprises (MSMEs) and poverty reduction: Empirical evidence from Indonesia. Development Studies Research, 7(1), 153–166. https://doi.org/10.1080/21665095.2020.1823238
- OECD. (2017). Small, medium, strong, trends in SME performance and business conditions. Paris: OECD Publishing.
- OECD. (2018). Small and medium enterprise and entrepreneurship policy in Indonesia 2018. Paris: OECD Publishing. https://doi.org/10.1787/9789264306264-en
- Ogoi, H. J. (2017). Strategies for accessing credit by small and medium enterprises: A case study of Kakamega Town, Kenya. International Journal of Academic Research in Business and Social Sciences, 7(6), 429–448.
- Pinto, H. (2017). Connecting the Triple Helix space: Actor-network creation and institutionalisation of knowledge transfer offices. Triple Helix, 4(1), 2. https://doi.org/10.1186/s40604-017-0045-1
- Purbasari, R., Wijaya, C., & Rahayu, N. (2020). Actor collaboration in the entrepreneurial ecosystem: Triple Helix approach. Review of Integrative Business and Economics Research, 9(4), 157–175.
- Ramalho, R. M., Jiang, N., Koltko, O., Chavez, E. S., Koch-Saldarriaga, K. A., & Gamez, M. A. Q. (2018). Improving access to finance for SMES: opportunities through credit reporting, secured lending, and insolvency practices (No. 129283).
- Schomaker, R. M., & Bauer, C. (2022). Trust and transaction costs in public–private partnerships—theoretical reflections and empirical findings. Public Money & Management, 42(4), 284–290. https://doi.org/10.1080/09540962.2020.1801882
- Statistics Indonesia. (2016). Sensus ekonomi 2016. Retrieved from https://se2016.bps.go.id/umkumb/
- Tambunan, T. (2020). MSMEs in times of crisis: Evidence from Indonesia. Journal of Developing Economies, 5(2), 89–102. https://doi.org/10.20473/jde.v5i2.20848
- Tambunan, T. T. H. (2021). Export of Indonesian MSEs and the role of partnership. JDE (Journal of Developing Economies), 6(2), 235–252. https://doi.org/10.20473/jde.v6i2.28747
- Taylor, T., & Owusu, E. D. E. (2012). Factors affecting Internet and e-commerce adoption among small and medium-sized enterprise non-traditional exporters: Case studies of Ghanaian handicraft exporters. European Journal of Business and Management, 4(13), 25–37.
- Ueasangkomsate, P. (2015). Adoption e-commerce for export market of small and medium enterprises in Thailand. Procedia - Social and Behavioral Sciences, 207, 111–120. https://doi.org/10.1016/j.sbspro.2015.10.158
- Urata, S., & Baek, Y. (2021). Does GVC participation improve firm productivity? A study of three developing Asian countries (ADBI Working Papers No. 1245). Tokyo.
- Williamson, O. E. (1981). The economics of organization: The transaction cost approach. American Journal of Sociology, 87(3), 548–577. https://doi.org/10.1086/227496
- World Bank Enterprise Survey. (2021). Enterprise surveys indicators data - world bank group. Retrieved from https://www.enterprisesurveys.org/en/data
- Yu, C., & Yao, W. (2017). Robust linear regression: A review and comparison. Communications in Statistics - Simulation and Computation, 46(8), 6261–6282. https://doi.org/10.1080/03610918.2016.1202271
References
Ahman, E. (2017). Small and medium enterprise’s development model based on partnership. In Proceedings of the 2nd International Conference on Economic Education and Entrepreneurship. https://doi.org/10.5220/0006883502150219
Allen, E. R. (2016). Analysis of trends and challenges in the Indonesian labor market (ADB Papers on Indonesia No. 16). Retrieved from https://www.adb.org/sites/default/files/publication/182935/ino-paper-16-2016
Amalia, R. T., & von Korflesch, H. F. O. (2021). Entrepreneurship education in Indonesian higher education: Mapping literature from the Country’s perspective. Entrepreneurship Education, 4(3), 291–333. https://doi.org/10.1007/s41959-021-00053-9
Amornkitvikai, Y., Tham, S. Y., Harvie, C., & Buachoom, W. W. (2022). Barriers and factors affecting the e-commerce sustainability of Thai Micro-, Small- and Medium-Sized Enterprises (MSMEs). Sustainability, 14(14), 1–28. https://doi.org/10.3390/su14148476
Asian Development Bank. (2019). The evolution of Indonesia’s participation in global value chains.
Berniell, L. (2021). Occupational choice and investments in human capital in informal economies. The B.E. Journal of Macroeconomics, 21(2), 399–423. https://doi.org/10.1515/bejm-2020-0024
Burger, N., Chazali, C., Gaduh, A., D.Rothenberg, A., Tjandraningsih, I., & Weilant, S. (2015). Reforming policies for small and medium-sized enterprises in Indonesia. RAND Corporation.
Cusmano, L., & Koreen, M. (2015). New approaches to SME and entrepreneurship financing: Broadening the range of instruments. OECD Centre for Entrepreneurship, SMEs and Local Development.
Dar, I. A., & Mishra, M. (2021). Human capital and smes internationalization: Development and validation of a measurement scale. Global Business Review, 22(3), 718–734. https://doi.org/10.1177/0972150918817390
Deijl, C., .de Kok, J., & Veldhuis-Van Essen, C. (2013). Is small still beautiful? Literature review of recent empirical evidence on the contribution of small and medium enterprises to employment creation. Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH.
Deloitte Touche Tohmatsu. (2004). Partnerships for small enterprise development. New York: United Nations Development Programme (UNDP).
Demirbag, M., Tatoglu, E., & Glaister, K. W. (2010). Institutional and Transaction Cost Influences on Partnership Structure of Foreign Affiliates. Management International Review, 50(6), 709–745. https://doi.org/10.1007/s11575-010-0055-y
Dewanta, A. S., & Sidiq, S. (2021). Impact of creative economy policy on micro and small industry development in Indonesia. In Malaysia-Indonesia International Conference on Economics. Management and Accounting (MIICEMA) International conference: ASEAN Integration towards Shared Prosperity in Global Uncertainty. Selangor, Malaysia: Faculty of Economics and Management of Universiti Kebangsaan Malaysia.
Drábek, J., Lorincová, S., & Javorčíková, J. (2017). Investing in human capital as a key factor for the development of enterprises. In L. Mura (Ed.), Issues of Human Resource Management. Rijeka: IntechOpen. https://doi.org/10.5772/67741
Hamiye Beyaztas, B., & Bandyopadhyay, S. (2020). Robust estimation for linear panel data models. Statistics in Medicine, 39(29), 4421–4438. https://doi.org/https://doi.org/10.1002/sim.8732
Hasan, A., Amrusi, Musfiana, & Mardhani, M. (2021). An overview of e-commerce adoption in Indonesian SMEs. Journal of Physics: Conference Series, 1811(1), 12104. https://doi.org/10.1088/1742-6596/1811/1/012104
Hernita, H., Surya, B., Perwira, I., Abubakar, H., & Idris, M. (2021). Economic Business Sustainability and Strengthening Human Resource Capacity Based on Increasing the Productivity of Small and Medium Enterprises (SMEs) in Makassar City, Indonesia. Sustainability, 13(6). https://doi.org/10.3390/su13063177
Hidayat, A., Hidayat, M., & Hendrix, T. (2018). The effect of Indonesia's small and medium enterprises participation in the global value chain to enhance competitiveness. In The international conference and call for paper on trade: A new paradigm in trade governance to increase domestic efficiency and to strengthen global competitiveness. Lembaga Ilmu Pengetahuan Indonesia.
Hing, V., Thangavelu, S. M., & Narjoko, D. (2020). Human capital and participation in global value chains: Evidence from small and medium-sized enterprises in Indonesia (ADBI Working Papers No. 1142). Tokyo.
Hossain, M., Yoshino, N. ., & Aghizadeh-Hesary, F. (2018). Local financial development. access to credit and small and medium enterprises’ performance: Evidence from Bangladesh (ADBI Working Paper Series No. 906). Tokyo.
Idris, B., Saridakis, G., & Johnstone, S. (2023). Training and performance in SMEs: Empirical evidence from large-scale data from the UK. Journal of Small Business Management, 61(2), 769–801. https://doi.org/10.1080/00472778.2020.1816431
ILO. (2019). Financing small businesses in Indonesia: Challenges and opportunities. Jakarta: International Labour Organization.
International Finance Corporation. (2018). How technology creates markets: Trends and examples for private investors in emerging markets. Washington, DC.: World Bank. Retrieved from https://openknowledge.worldbank.org/handle/10986/30196
Jobin, D. (2008). A Transaction Cost-Based Approach to Partnership Performance Evaluation. Evaluation, 14(4), 437–465. https://doi.org/10.1177/1356389008095487
Khadan, J. (2018). Estimating the Effects of Human Capital Constraints on Innovation in the Caribbean. Economies, 6(2). https://doi.org/10.3390/economies6020033
Kristiansen, S., Dwiyanto, A., Pramusinto, A., & Putranto, E. A. (2009). Public sector reforms and financial transparency: Experiences from Indonesian districts. Contemporary Southeast Asia, 31(1), 64–87.
Krugman, P. (2014). Jobs and skills and zombies.
Le, P. N. (2012). What determines the access to credit by small and medium enterprises? A case study in Vietnam. Journal of Management Research, 4(4), 90–115. https://doi.org/10.5296/jmr.v4i4.1838
Maksum, I. R., Sri Rahayu, A. Y., & Kusumawardhani, D. (2020). A social enterprise approach to empowering micro, small and medium enterprises (SMEs) in Indonesia. Journal of Open Innovation: Technology, Market, and Complexity, 6(3), 30050. https://doi.org/10.3390/joitmc6030050
McLean, S., & Charles, D. (2020). A preliminary review of policy responses to enhance small and medium enterprise access to trade financing in the Caribbean (Studies and Perspectives Series No. 88). Santiago.
Mêgnigbêto, E. (2015). Effect of international collaboration on knowledge flow within an innovation system: a Triple Helix approach. Triple Helix, 2(1), 16. https://doi.org/10.1186/s40604-015-0027-0
Mertzanis, C., & Said, M. (2019). Access to skilled labor, institutions and firm performance in developing countries. International Journal of Manpower, 40(2), 328–355. https://doi.org/10.1108/IJM-11-2017-0301
Nursini, N. (2020). Micro, small, and medium enterprises (MSMEs) and poverty reduction: Empirical evidence from Indonesia. Development Studies Research, 7(1), 153–166. https://doi.org/10.1080/21665095.2020.1823238
OECD. (2017). Small, medium, strong, trends in SME performance and business conditions. Paris: OECD Publishing.
OECD. (2018). Small and medium enterprise and entrepreneurship policy in Indonesia 2018. Paris: OECD Publishing. https://doi.org/10.1787/9789264306264-en
Ogoi, H. J. (2017). Strategies for accessing credit by small and medium enterprises: A case study of Kakamega Town, Kenya. International Journal of Academic Research in Business and Social Sciences, 7(6), 429–448.
Pinto, H. (2017). Connecting the Triple Helix space: Actor-network creation and institutionalisation of knowledge transfer offices. Triple Helix, 4(1), 2. https://doi.org/10.1186/s40604-017-0045-1
Purbasari, R., Wijaya, C., & Rahayu, N. (2020). Actor collaboration in the entrepreneurial ecosystem: Triple Helix approach. Review of Integrative Business and Economics Research, 9(4), 157–175.
Ramalho, R. M., Jiang, N., Koltko, O., Chavez, E. S., Koch-Saldarriaga, K. A., & Gamez, M. A. Q. (2018). Improving access to finance for SMES: opportunities through credit reporting, secured lending, and insolvency practices (No. 129283).
Schomaker, R. M., & Bauer, C. (2022). Trust and transaction costs in public–private partnerships—theoretical reflections and empirical findings. Public Money & Management, 42(4), 284–290. https://doi.org/10.1080/09540962.2020.1801882
Statistics Indonesia. (2016). Sensus ekonomi 2016. Retrieved from https://se2016.bps.go.id/umkumb/
Tambunan, T. (2020). MSMEs in times of crisis: Evidence from Indonesia. Journal of Developing Economies, 5(2), 89–102. https://doi.org/10.20473/jde.v5i2.20848
Tambunan, T. T. H. (2021). Export of Indonesian MSEs and the role of partnership. JDE (Journal of Developing Economies), 6(2), 235–252. https://doi.org/10.20473/jde.v6i2.28747
Taylor, T., & Owusu, E. D. E. (2012). Factors affecting Internet and e-commerce adoption among small and medium-sized enterprise non-traditional exporters: Case studies of Ghanaian handicraft exporters. European Journal of Business and Management, 4(13), 25–37.
Ueasangkomsate, P. (2015). Adoption e-commerce for export market of small and medium enterprises in Thailand. Procedia - Social and Behavioral Sciences, 207, 111–120. https://doi.org/10.1016/j.sbspro.2015.10.158
Urata, S., & Baek, Y. (2021). Does GVC participation improve firm productivity? A study of three developing Asian countries (ADBI Working Papers No. 1245). Tokyo.
Williamson, O. E. (1981). The economics of organization: The transaction cost approach. American Journal of Sociology, 87(3), 548–577. https://doi.org/10.1086/227496
World Bank Enterprise Survey. (2021). Enterprise surveys indicators data - world bank group. Retrieved from https://www.enterprisesurveys.org/en/data
Yu, C., & Yao, W. (2017). Robust linear regression: A review and comparison. Communications in Statistics - Simulation and Computation, 46(8), 6261–6282. https://doi.org/10.1080/03610918.2016.1202271