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Proceedings of

THE 6TH INDONESIA INTERNATIONAL CONFERENCE ON INNOVATION, ENTREPRENEURSHIP, & SMALL BUSINESS IICIES 2014 August 12-14, 2014 The Patra Bali Resort & Villas, Bali, Indonesia

6th Edition

Accelerating Techno-Creative Innovation and

Global Collaboration toward Sustainable Entrepreneurial Ecosystem

Editors Dwi Larso, Donald Crestofel Lantu, Wawan Dhewanto

Organized by

ar

Proceedings of

THE 6TH INDONESIA INTERNATIONAL CONFERENCE ON INNOVATION, ENTREPRENEURSHIP, & SMALL BUSINESS IICIES 2014 August 12-14, 2014 The Patra Bali Resort & Villas, Bali, Indonesia

6th Edition

Accelerating Techno-Creative Innovation and

Global Collaboration toward Sustainable Entrepreneurial Ecosystem

Editors Dwi Larso, Donald Crestofel Lantu, Wawan Dhewanto

Organized by

ii

Proceeding of the 6

th Indonesia International Conference on Innovation, Entrepreneurship, and

Small Business “Accelerating Techno-Creative Innovation and Global Collaboration toward

Sustainable Entrepreneurial Ecosystem”

Oleh: Center for Innovation, Entrepreneurship, & Leadership, School of Business and

Management ITB.

Hak Cipta © 2015 CIEL SBM ITB

Penerbit: CIEL SBM ITB

Gedung Sekolah Bisnis dan Manajemen

Institut Teknologi Bandung

Jl. Ganesa No. 10, Bandung 40132

Telp. 022-2531923 ext.318

Fax.022-2504249

Desain Sampul : Dini Aprilia Murdeani

Tata letak : Amilia Wulansari, Andra Riandita, Mandra Lazuardi Kitri, Raden Roro Mirna

Astari Magetsari, Mochamad Sandy Triady, Nur Hatta Krisna Triaditya, Suryo

Utomo.

ISBN: 978-602-72342-2-2

Hak cipta dilindungi oleh undang-undang.

Undang-undang Republik Indonesia No. 19 Tahun 2002 Tentang Hak Cipta

Lingkup Hak Cipta merupakan hak eksklusid bagi Pencipta atau Pemegang Hak Cipta untuk mengumumkan

atau memperbanyak ciptaannya, yang timbul secara otomatis setelah suatu ciptaan dilahirkan tanpa

mengurangi pembatasan menurut peraturan perundang-undangan yang berlaku.

Ketentuan Pidana

Pasal 72:

1. Barangsiapa dengan sengaja atau tanpa hak melakukan perbuatan sebagaimana dimaksud dalam Pasal 2

ayat (1) atau Pasal 49 ayat (1) dan ayat (2) dipidana dengan pidana penjara masing-masing paling singkat

1 (satu) bulan dan/atau denda paling sedikit Rp. 1.000.000,00 (Satu juta rupiah), atau pidana penjara

paling lama 7 (tujuh) tahun dan/atau denda paling banyak Rp.5.000.000.000,00 (lima milyar rupiah)

2. Barangsiapa dengan sengaja menyiarkan,memamerkan, mengedarkan, atau menjual kepada umum suatu

Ciptaan atau barang hasil pelanggaran Hak CIpta atau Hak Terkait sebagaimana dimaksud pada ayat (1)

dipidana dengan pidana penjara paling lama 5 (lima) tahun dan/atau dengan paling banyak

Rp.500.000.000,00 (lima ratus juta rupiah)

iii

SCIENTIFIC COMMITTEE

Chair, Dwi Larso, Ph.D.

(Institut Teknologi Bandung, Indonesia)

Prof. Wawan Gunawan A. Kadir


Prof. Sudarso Kaderi Wiryono, Dr.


Prof. Togar M. Simatupang, Ph.D.


Prof. Ian O. Williamson

(University of Melbourne, Australia)

Prof. Howard H. Frederick, Ph.D.

(Deakin University, Australia)

Donald C. Lantu, Ph.D.


Mursyid Hasan Basri, Dr.


Wawan Dhewanto, Ph.D.

(InstitutTeknologi Bandung, Indonesia)

Woerjantari Kartidjo, Dr.


Zhenyu Wu, Ph.D.

(University of Manitoba, Canada)

Hooi Den Huan, Ph.D.

(Nanyang Technological University, Singapore)

Dr. Brendan Galbraith

(University of Ulster, United Kingdom)

Dr. Challoner A. Matero

(University of San Carlos, Philipine)

Russell Toth, Ph.D.

(University of Sydney, Australia)

Dr. Bambang Rudito


Yulianto Suharto, MBA. (Ph.D. Candidate)

(Portland State University, USA)

Melia Famiola Hariadi, Ph.D.

(Macquarie University, Australia)

Akbar Adhiutama, Ph.D

(Shibaura Institut of Technology, Japan)

Dr. Dudy Wiyancoko


Prof. Dundar F. Kocaoglu, Ph.D.


Prof. Dr. Nawaz Sharif

(John Hopkins University, USA)

Prof. Dr. Dennis Cheek

(National University of Singapore, Singapore)

Prof. Dr. Uichol Kim

(Inha University, Korea)

Dr. Gerald Lidstone

(Goldsmith, University of London, UK)

Dr. Leo Aldianto


Achmad Ghazali, Ph.D.


iv

Dr. Sen Sendjaya, Ph.D.

(Monash University, Australia)

Yudho Anggoro, MBA, (Ph.D. Candidate)

(University of North Carolina at Charlotte,

USA)

Sonny Rustiadi, MBA. (Ph.D. Candidate)

(Goldsmith, University of London, UK)

Tezar Yuliansyah, M.Sc. (Ph.D. Candidate)

(VU University Amsterdam, Netherland)

Ubaidillah Zuhdi, M.Eng, MSM (Ph.D.

Candidate)

(Tokyo University of Science, Japan)

v

ORGANIZING COMMITTEE

Conference Chair

Dwi Larso, Ph.D

Conference Co – Chair

Donald C. Lantu, Ph.D

Organizing Committee

Chair, Andra Riandita, Co-Chair, Mandra Lazuardi Kitri

General Secretary, Olva Patriani, Riyadhusolihah

Public Relation, Raden Roro Mirna Astari Magetsari

Treasurer, Suryo Utomo

IT, Web & Design, Epri Triyono Saputra

Program, Marina Natalia Tampubolon

Paper and Submission, Amilia Wulansari

Publication & Documentation, R. Bayuningrat Hardjakaprabon

Logistic, Bob Situmorang, Fathurrohman

vi

PAPER REVIEWER

Akbar A. Utama, Ph.D


Akhmad Ghozali, Ph.D


Ana Noveria, MBA


Anggara Wisesa, MM


Atik Aprianingsih, DBA


Donald Crestofel Lantu, Ph.D


Dr. Bambang Rudito, MSi


Dr. J.E. Sutanto, MM

(Universitas Ciputra, Indonesia)

Dr. Tugrul U. Daim


Dr.Sen Sendjaya, Ph.D

(Monash University, Australia)

Dwi Larso, Ph.D


Eko Agus Prasetio, MBA


Hary Febriansyah, Ph.D


Isti Raf’aldini Mirzanti, MBA


Lenny Martini, ST, MSM


Leo Aldianto, MBA, MSc


Mia T.D. Indriani, MSc


Prof. Dr. Dennis Cheek

(National University of Singapore, Singapore)

Prof. Togar M. Simatupang, M. Tech., Ph.D


Robbin Serrano

(De-La Salle College of Saint of Benilde, Philippines)

Russell Toth, Ph.D

(University of Sydney, Australia)

Salfitrie Roos Maryunani, ST, MBA


Santi Novani, Ph.D


Sian Prime

(Goldsmith, University of London, United Kingdom)

Sonny Rustiadi, MBA

(Goldsmith, University of London, United Kingdom)

Suyin Chew

(University of South Australia, Australia)

Ubaidillah Zuhdi, MSM


Wawan Dhewanto, Ph.D


Yuanita Handayati, MSM


Yudo Anggoro, ST, MSM


Yulianto Suharto, MBA


Zoel Hutabarat, MBA


vii

PREFACE

Constant innovation is the key to economic stability and development of entrepreneurship

ecosystem pave way for economic growth. Researches have long recognized innovation as the

driver of sustainable and thriving business ecosystem. In the dynamic economic environment where

knowledge is vastly distributed, companies can no longer rely on their own research and are pushed

to utilize outside sources to sustain growth. This understanding inspires the theme of IICIES 2014,

accelerating techno-creative innovation and global collaboration towards sustainable

entrepreneurial ecosystem. Creating a business environment where all stakeholders can share

knowledge, collaborate, operate and spread on a global canvas is a vision we would like to share.

With a purpose to generate and share knowledge in supporting innovation, entrepreneurship, and

small businesses, The Indonesia International Conference on Innovation, Entrepreneurship, and

Small Business (IICIES) was initiated in 2009 by the Center for Innovation, Entrepreneurship, and

Leadership (CIEL), School of Business and Management (SBM), Institut Teknologi Bandung

(ITB). Throughout the years, we constantly challenge ourselves to learn, study, and create local

knowledge with global mindset and to promote the development of new entrepreneurs and small

businesses. This conference provides platform for Indonesian and international scholars to present

their research on this vital subject network as well as to collaborate.

Held in the beautiful island of Bali, 12-14 August 2014, the 6th IICIES has attracted more than 200

abstract submissions; all of which were reviewed and 80 accepted papers will be presented. Topics

are ranging from entrepreneurship, creativity, innovation, management of technology, managing

small business and start-up, and leadership. At least 200 researchers and participants from esteemed

universities in Indonesia and more than fifteen other countries were attending the conference.

Selected papers are published in International Journal of Entrepreneurship and Small Business and

Asian Journal of Technology Management. As our conference proceeding, selected ones are

published in the special issue of Procedia - Social and Behavioral Science. Continuing previous

conference publication, we are also proud to present you the IICIES 2014 Proceeding by CIEL

SBM ITB.

In this occasion, we are honored to thank all contributors to the conference including all authors,

reviewers, speakers and program facilitators, participants, and sponsors. This proceeding is

expected to be the dissemination tools of our fruitful meeting, thus we would highly encourage you

also to take part in spreading the words.

Dwi Larso, Ph.D

Conference Chair

ix

TABLE OF CONTENT

Scientific Committee iii

Organizing Committee v

Paper Reviewer vi

Preface vii

Table of Content ix

The Application of Value Systems Prevailing in the Community on the Development

of Entrepreneurship in College (Case Study of PTS)

1

Wahyu Susihono

Sultan Ageng Tirtayasa University, Serang, Indonesia

Pattern of Appropriate Technology Development of Processing of Pineapple Fruit in

Together Business Group of Alam Sari Subang

5

Sukirno

Center of Appropriate Technology Development - Indonesian Institute of Sciences

A Course on Idea-to-launch Process with Emphasis on Experiential Learning 13

Odi Akhyarsi, Jonathan Gultom, Burhan Primanintyo

Surya University, Tangerang, Indonesia

The Effect of Tweet Ads Through @infobdg Twitter Account toward Bandung

People Buying Interest

21

Athira Setira Adil, Rah Utami Nugrahani

Telkom University, Bandung, Indonesia

Empowerment Strategy Small Medium Entreprises (SMEs) Creative Industry to

Increase Competitiveness in Dealing Free Trade

31

Sri Hartati, Kartib Bayu, Edwin Karim

School of Business and Management, Institut Teknologi Bandung, Bandung, Indonesia

Sekolah Tinggi Ilmu Ekonomi, Bandung, Indonesia

Determining Customer Satisfaction by Analyzing Price in The Case of Small

Medium Enterprises in Internet Cafe Business

41

Wardah Naili Ulfah, Qorri Aina


Applications of Psychology in Business Context: An Innovative Approach of

Entrepreneurship Education

51

Cicilia Larasati Rembulan

Universitas Ciputra, Surabaya, Indonesia

Small ICT Enterprises Development Based on Community Entrepreneurship 57

Rendra Chaerudin, Sri Hartati


Management Understanding in Small and Medium Enterprises 63

Aris Budi Setyawan, Ichwan Suyudi

Gunadarma University, Jakarta, Indonesia

x

Servant Leadership Practices: Case Study in Indonesian Workplaces 69

Sanchia Arindhita, Donald Crestofel Lantu


Developing Competitiveness of Small and Medium Scale Industries in Magelang and

Salatiga City: An Innovation Policy Perspective

79

Anugerah Yuka Asmara, Purnama Alamsyah

Pappiptek LIPI, Jakarta, Indonesia

Implementation Policy of Acquisition Intangible Assets in Government Financial

Statements

89

Tommy Hendrix

Center for Innovation – Indonesian Institute of Sciences, Indonesia

Identification for Biological Resource Based Creative Industry Cluster

Developmental Model in the Province of West Java, Indonesia

95

Sudrajati Ratnaningtyas, Wawan Dhewanto, Sri Herlina


A Course on Idea-to-launch Process with Emphasis on Experiential Learning 107

Sri Hartati , Rendra Chaerudin, Kartib Bayu


Batik Solo Tourism Cluster Ecosystem: A Qualitative Approach Problem Analysis 115

Pri Hermawan, Ghita Yoshanti, Santi Novani, Utomo Sarjono Putro


Innovation for Mutual Funds Investment Strategy in Indonesia 129

Wirata Adi Dharma, Subiakto Soekarno


Application RF Module for Safety Helmet 137

Pola Risma, Yurni Oktarina, RD. Kusumanto

Politeknik Negeri Sriwijaya, Palembang, Indonesia

Innovative Model in Determining the Capital Structure Target in State Owned

Enterprises

145

Subiakto Soekarno


Competitiveness Strategy Analysis of Women Entrepreneurs: A Case Study of SMEs

in Indonesia

155

Sri Herliana, Wawan Dhewanto, Grisna Anggadwita


Creativity and Innovation: “Asli Bali” New Destination 161

Gai Suhardja

Maranatha Christian University, Bandung, Indonesia

Ecosystem for Indonesian Creative Industry: Case in Design Subsector 165

Achmad Ghazali, Nadinastiti, R. Bayuningrat Hardjakaprabon, Mandra Lazuardi K.


xi

Designing Photography Industry as Subsector in Indonesia Creative Economy 173

Achmad Ghazali, Wijayanto B. Santoso, Nur Arief R. Putranto


A New Dynamic of Innovation System Based on Local Competitiveness in Emerging

Region in Indonesia: The Case of Cimahi City

183

Lutfah Ariana

Center for Science and Technology Development Studies, Indonesian Institute of

Sciences, Jakarta, Indonesia

Abstracts of Publication in ELSEVIER Procedia – Social and Behavioral Sciences

ISSN 1877-0428, Vol. 169, Pages 1-410

193

© 2014 The Authors. Published by Center for Innovation, Entrepreneurship, and Leadership (CIEL), School of Business and Management

(SBM), Institut Teknologi Bandung (ITB).

The 6th Indonesia International Conference on Innovation, Entrepreneurship and Small Business, 12 – 14 August 2014

The Application of Value Systems Prevailing in the Community

on the Development of Entrepreneurship in College

(Case Study of PTS)

Wahyu Susihono*

Sultan Ageng Tirtayasa University, Serang, Indonesia

Abstract

Development of entrepreneurship in college to nowadays is very sluggish, whereas the government has been giving a big

opportunity to create an educated young entrepreneur and convenience in accessing capital, training and assistance. Development

model of entrepreneurship from one college to another could not be equated. uniqueness and local wisdom become one of

consideration in business development. In 2009, PTS passed 40 groups of student entrepreneur in university level. There are

66,7% business units that running to actualize their new business, and only 40 % that running continuously. In 2010 new

entrepreneur reached 605, while in 2011 new entrepreneur even could not be identified. This condition happened because the

project leader had not had seriousness and commitment in implementing the project, and ignore the impact of value system in

college environment starting from the selection of proposal to business assistance. The aim of this research is to evaluate

implementation of value system applied in the environment of college PTS to obtain model and recommendation of development

mechanism of entrepreneurship in the college. Analysis method applied is qualitative descriptive by using data which is result of

evaluation of implementation “Entrepreneur student program (PMW PTS) for 3 years and evaluation of Implementation of

Knowledge and technology for entrepreneurship”. Result shows that new selection consider business experience, psychology of

tenant, and portfolio of proposal. While the management of entrepreneurship program is still partial. The are no mechanism of

integrated regulation of interest between parties. Learning entrepreneurship model in PTS has not characterized value system.

The alternative solution given to this value system is a student entrepreneurship which produce not only for profit but also

oriented to imaging college environment in PTS, product that offer local wisdom, product that could stimulate idea of new

business in college environment. The entrepreneurship center in university level is needed.

© 2014 The Authors. Published by Center for Innovation, Entrepreneurship, and Leadership (CIEL), School of Business and

Management (SBM), Institut Teknologi Bandung (ITB).

Keywords: value system; entrepreneurship; college

* Corresponding author.

E-mail address: [email protected]

2 Wahyu Susihono / IICIES 2014 Proceeding

1. Introduction

Spirit of entrepreneurship for young generation and education institution is very strong. Students have strong

willingness to be an entrepreneur, especially for male students (Mazzarol et al.,1999). In some education institutions

of university level, entrepreneurship included as one of subject that have to be taken by the student. This condition

stimulates students to entrepreneur seriously (Swierczek, 2003). Even some education institutions apply field

practice in order to give comprehensive understanding and experience in entrepreneurship. The entrepreneurship

practice also supported by some funding, from internal study program, institution, or other stakeholders which

cooperated in form of CRS or banking. These networks could convince the students to create new business (Aldrich,

1986). Students are given some fund to run their business. Success is not only measured by return of investment, but

more to up and down and the process of leadership in running the business and which business strategy that has been

chosen to reach the success. The student business whether in category success or failed are assessed. The key of

work performance instrument is the process. Because business is not just a theory but it needs experience

(Kolvereid, 1996).

Up to this time, implementation of student entrepreneurships are based on creative idea of the students which

indeed implementation of the project is still in category program finishing. Therefore selection process considered

range of cost and creativity only. Concept or grand design that lead students to create new business that could be run

for long times which is adjusted to mission and vision of university or institution had not been implemented. That is

why entrepreneurship in university is not more than a program only. Since the program accomplished so the

business is finished too. The aim of entrepreneurship here, is only still in learning level for the students, while the

further aim is entrepreneurship could give welfare or even give an opportunity for new business.

Some education oriented entrepreneurship or which give experience to the students in college are quite good,

because education is one of factor in determining the success (Sinha, 1996). But an education without concept and

discontinued will give bad impact to the students. Students entrepreneurship which are based on student creativities

if not adjusted by mission and vision of university could not give positive value in further. The old student

entrepreneur could not be a coach for the new student entrepreneur. While an assistance is very needed in running

the entrepreneurship.

Education institution that have entrepreneurship program or the students will be better if has an organization in

university level which could accommodate some kinds of entrepreneurship problems, beside as organization that

functioned as optimizing funding or capital for the strengthen of student entrepreneurship.

2. Result and Discussion

Implementation of value system is an approach that could become a framework in developing grand design of

entrepreneurship model in education institution. Therefore students with creative idea are given guideline before

preparing entrepreneurship proposal. In that so the sustainability in running the business could be guaranteed. Some

approach related to the value system are tend to culture in college environment whether written information or not

that become characteristic or special condition in college environment. For example, students that want to study in

Banten and want to market their product in Banten should recognize, know, and understand culture of Banten

society. Vice versa, if student want to market their product to college environment, they should recognize, know,

and understand culture in college environment too.

Product which consider consumer needs and willingness will be easier to be accepted than that are produced that

rely on creativity only, without considering characteristic of the main consumers of the market.

2.1. Entrepreneurship Management Cooperation Model in College

Management of entrepreneurship based on student creativity has special charactherstic where student in this case

tenant have to have strong willingness in entrepreneurship. The main activities as a student is learning and finishing

study. But only finishing study is not sufficient without any personal skill. Students are demanded to have

achievement in study but in the other side also have to have knowledge and experience in order to compete globally.

This condition has consequence to different management of entrepreneurship. Below are figure of synergy of

entrepreneurship as an alternative solution which is “closed loop”.

Wahyu Susihono / IICIES 2014 Proceeding 3

Fig. 1. Symbiosis students entrepreneurship activities in college

Business incubator and technology in university level should be synergy with the activity of carrier development

which is known by Partnership Career Development Center (PCDC). Data of student interest to or willingness to be

an entrepreneur could be an input to early selection of business proposal. IT should be avoided that proposal from

student with different interest was approved. In this condition the business will not be running well because student

only thinking about how to execute the program without thinking about sustainability of the business.

Carrier development unit should could take advantage from outside network such as department of industry and

trading in form of cooperation in build commitment to lift up local technology or to market local product. In that so

potential resources could be mingled by student in college environment. This strategy will effect to utilization of

local resources and will give advantage to local income indirectly.

Related department is expected could be cooperated with education institution to socialize programs which are

related to development of region to college environment. In that so some kind of opportunities and potential

resources could be an input and base of study program or lecturer in determining kind of business that will be run.

Since there are relations or synergy from one party to another, sustainability of student entrepreneurship could be

guaranteed. of policy could give broader impact in business (Licht, 2007).

Bank as an institution that have capital to strengthen funding, take important role in “closed loop” system. Bank

as capital resources, even in one side institution as capital resources, it still need bank in process of disbursement.

This mechanism give consequences to students as the business actors that funding of business is need to be proposed

from Bank, not only rely on institution. The system applied recently is that students are given some fund from

institution and they don’t have consciousness to pay it back. The mindset that should be develop is that institution

should support the student to make their business sustainable. If the capital from institution is very limited, student

could make loan to Bank. Therefore student will be more responsible in running their business.

2.2. Value system Approach

Some consideration in implementation of value system activities approach, those are (Sastroasmoro, 2011):

a. Value system to cost: by considering consumer need and will, it is expected that cost of product development,

promotion, and other could be minimize. Since the product has meet consumer need and will.

b. Value system to profit; profit is not only measured in rupiah, but also the advantage of the product. Since the

product could give much advantage to consumer, it will make consumer interest to buy it more and more. The

advantage could be hygiene product, interested packing, after sales services or health guarantee and quality of

product.

4 Wahyu Susihono / IICIES 2014 Proceeding

c. Value system to effective: product is meet the targeted market so targeted profit could be reached.

d. Value system to utility: product are give value added to consumer.

2.3. Steps of Entrepreneurship in College

There are some models of steps of entrepreneurship as following (Indarti, 2008):

Starter business level

In this step, students are given basic business training. Students are given opportunity to make business plan with

some certain capital and run their business. In the end of the program, students will evaluated whether their

business succeed or failed. This evaluation become lesson learned and personal experience to run next level.

Student are not pushed to bay back the capital.

One start level

In this level, student has already run starter level. Student are given opportunity to make business plan without

determined capital but its limited below Rp5.000.000,00. In the end of the program, students will evaluated

whether their business succeed or failed. Student are pushed to bay back the capital.

Two stars level

In this level student already run one star with uncertain capital whether who succeed or failed. Student are given

opportunity to make business plan without determined capital in the end of the program, students will evaluated

whether their business succeed or failed. For those who can develop their business, so bank will give additional

capital.

Advance business level

In this level, students can take their coach to cooperate to create business unit managed together with capital

from some parties. Students are given opportunity to make business plan with some capital that depend on their

need. In the end of the program student evaluate all of effort to be succeed.

3. Conclusions

Grand design of entrepreneurship model is needed in education institution that is by including value system.

Different treatment which based on characteristic and experience in running the business could make student

creative. Bank role in disbursement of capital as assistance and coach to student business. Government as policy

maker give impact to harmony in running entrepreneurship program and guarantee sustainability of program.

References

Aldrich, H. Zimmer, C. 1986. Entrepreneurship through Social Network.in D. L. Sexton and R. W. Smilor (eds.) The Art and Science of

Entrepreneurship. (Cambridge): Ballinger Publishing. 3-25.

Kolvereid, L, 1996. Prediction of employment status choice intentions. Entrepreneurship Theory and Practice 21 (1): 47-57.

Licht, A. N. 2007. Entrepreneurial spirit and what the law can do about it. Comparative Labor Law & Policy Journal. Vol. 28 No. 4

Mazzarol, T. T. Volery, N. Doss. Thein, V. 1999. Factors influencing small business start-ups. International Journal of Entrepreneurial Behaviour

and Research 5 (2): 48-63.

Sastroasmoro, 2011. Dasar-dasar metodologi Penelitian Kinis. Edisi ke4. Sagung Seto. Jakarta. Sinha, T.N. 1996. Human factors in

entrepreneurship effectiveness. Journal of Entrepreneurship 5 (1): 23-29.

Swierczek, F. W., dan T. T. Ha, 2003. “Entrepreneurial orientation, uncertainty avoidance and firm performance: an analysis of Thai and

Vietnamese SMEs”. International Journal of Entrepreneurship and Innovation 4 (1): 46-58.




Pattern of Appropriate Technology Development of Processing of

Pineapple Fruit in Together Business Group of Alam Sari Subang

Sukirno*

Center of Appropriate Technology Development - Indonesian Institute of Sciences

K.S. Tubun No.5, Subang, West Java 41213, Indonesia

Abstract

Indonesia is one of center of variety of tropical biologic and has kinds of specific fruits. Fruits production of Indonesia in 2010 is

around 13,852,462 tons (BPS, 2011). Exporting value on January till September 2011 is as high as Rp. 1.6 trillion. The fruit that

the most exported are for example mango, orange and pineapple. Subang is one of the producers of pineapple fruit with farm area

of around 6,400 hectares in 2012. The yield result is in the average of 46 tons per hectare. The yield of pineapple crop in Subang,

as much as 42% goes into food processing industry, 30 % fulfill local need and 28 % goes into retailer. Pineapple fruit (Ananas

comosus) is easy commodity to get damage if there is no preserved treatment. Processing is one of alternative to give added value

of pineapple fruit product and prevent loss. The activity that conducted within the development of pineapple fruit processing

effort for example: forming of together business group (KUB: Kelompok Usaha Bersama) Alam Sari with bases of pineapple

fruit processing activity becomes product: dodol pineapple, wajid pineapple, pineapple crispy and pineapple juice. Production

process equipments that has been introduced: vacuum fraying, pulper press, filter press, extractor, screw press, mixing tank,

packaging tool and other supported equipment. Raw material needed of pineapple as much as 6000 Kg per month and involved

labor as much as 18 people. Marketing pass by grocery, retailer in Bandung, Yogyakarta, Bali and Subang region and its

surroundings. Pattern that applied in business development is: conducted observation, identification and character building,

institute forming and partnership, training and process production attendance through scheme of Science & Technology activity

for Region (Iptekda) – Indonesian Institute of Sciences (LIPI). Methodologies that used by ”action research” and analytic

descriptive that aimed at how process of technology innovation is implemented to grow and develop the Micro Small Medium

Business (UMKM: Usaha Mikro Kecil Menengah) which sustainably competitive. The result that obtained: Group of Alam Sari

Business Subang (Kelompok Usaha Alam Sari Subang) becomes prior UMKM in West Java.



Keywords: alam sari; appropriate technology development; pineapple processing.



6 Sukirno / IICIES 2014 Proceeding

1. Introduction

Indonesia is one of the biggest centres of variety of tropical biologic and has kinds of specific fruits from facet of

taste, form and colour. Fruits product occupies of vital importance position in the case of accomplishment of

nutrition substance requirement for human, especially vitamin of A, B and C, mineral and food fibre. Fruits

production in Indonesia in 2010 around 13,852,462 tons that disseminated in some production centre areas (BPS,

2011). The reached exporting value at January till September 2011 as high as 309,981 tons that got of improvement

as high as 60.43 % from 2010 that is as high as Rp.1,6 trillion become Rp.2,7 trillion (Surabaya Post, 2012). The

mostly fruits which are produced are banana that is 5,755,073 tons, orange 2,028,904 tons, and pineapple 1,306,445

tons (BPS, 2011).

Fruits is very easy commodity to become damage, this condition are caused by physiological, chemically and also

microbiologic change. If not followed with correctly handling and preserving, in range of 5 – 10 day fruits becoming

not fresh anymore, that eventually will result the quality of fruits easily destroyed, decayed and easy lessened its

weight. This damage amount is predicted can reach 5 – 25 % at developed countries and 20 – 50 % at developing

countries (Anonym, 2012). Because of its character of easy to become damage, then fruits processing is one of

alternative to anticipate the abundantly of crop harvest and it can not be marketed consequently, due to its low

quality.

With this highly harvesting of pineapple fruit, it is required a processing technology such as the process and its

equipments to process pineapple fruit which becomes product that has higher selling value and competitiveness. On

the other hand, its low level of technology acquirement becomes constraint for society to be able to participate in

activity of technology development to process existing resources. Natural resources owned by Subang for example

production of pineapple fruit is 238,098.72 tons (BPS Kab. Subang 2012) is one of potency for its developing of the

prior middle small business (UKM) in this region.

The problem that is faced by pineapple's farmer is in harvesting season. Pineapple fruits inundates marketing, as a

consequence price sells go down and detrimental the farmer. Lack of processing industry which can absorb

harvested pineapple will cause this product marketing is limited and the price is also fluctuated. From the result of

study that has been conducted, it has been known that pineapple fruit with the process technology and certain

additional material, it can be processed become multifarious kinds of natural food and beverage product at profitable

small scale business. One of the prior products of the pineapple processing in KUB Alam Sari Subang is pineapple

juice beverage. As for this article aim is to assess pattern of technology ability improvement of agribusiness business

unit of juice pineapple processed of the KUB Alam Sari Subang.

2. The Methodology

The method which is used in application of technology at business activity KUB Alam Sari Subang as follows:

analytic description which is instructed to how the growth of pineapple juice processing business based on local

resources can become object of empowerment activity and productive business development and sustained. The

method of action assessment is conducted through group approaching in the form of together business for execution

of technology implementation activity, strengthening of business group institution of processing of pineapple juice

which is located in the Tambak Mekar village, sub district of Jalan Cagak, district of Subang, and West Java

province.

The data collecting Method is conducted with active participation in activity of business group and utilizing

method of focus group discussion (FGD). The secondary data which is collected from several of related institutions

is used as reference materials in analysis and interpret it which is connected to FGD result. The analysis of SWOT is

conducted specifically for see the positive factors that must be defended, built even improved. See weakness that

must be repaired, altered or desisted. Opportunity must be given high priority, caught, built and optimized. The

threat must be overcome or minimized and managed.

Sukirno / IICIES 2014 Proceeding 7


3.1. Profile of KUB Alam Sari Business

KUB Alam Sari has run its business for 12 year. At its early stage was under advisory of Industrial Service of

Subang district and also West Java province. Furthermore its advisory is continued by Center of Appropriate

Technology Development - Indonesian Institute of Sciences. With its multifarious product of processing food based

on pineapple for example, pineapple dodol, pineapple wajit, and pineapple flaky. The members of its business group

consist of 12 people. Production capacity is 77.52 kg per day or equivalent to 204 kg of pineapple fruits per day.

3.2. Raw Material Procurement

Pineapple Raw material is indigenous from the farmer in surrounding of business location with its centre of

pineapple raw material in sub district of Jalan Cagak, district of Subang. Pineapple's price is very fluctuate, at peak

harvest season, the pineapple's price in farmer level can till Rp. 40,000.- per quintal on month June- July, and on

September- October can till Rp. 200,000.- per quintal. The pineapple raw material requirement is fulfilled from

pineapple farmer that become customer. For this pineapple processing necessity, this alam sari business group uses

principle of efficiency comparability which is by combine the pineapple fruit that not enter the grade of fresh fruit

merchant. Or accommodate the remaining pineapple fresh fruit merchant of which its pineapple fruit has been

assessed too ripe for sold fresh. Thus it can get lower price of pineapple raw material around 50% from the market

price.

3.3. Activity Description

Activity is executed in together business group (KUB) Alam Sari which is located in Simpang street No.72,

Tambak Mekar village, sub district of Jalan Cagak, district of Subang or by distance around 15 km from Subang

city or around 45 km from Bandung West Java.

Introduction of juice processing technology and production process advisory is expected can improve business

capacities through operational of the existing machine equipments. Improvement of business development capacities

and improvement of production capacities are expected can improve the existing raw material utilization. The

development of food agro industry business with local raw material by UKM especially its processing of pineapple

juice beverage, its understanding has been not yet acceptable. Thus it needs advisory in equipments operation,

formulation, management system and marketing.

Activity that conducted with steps as follows:

1. Activity socialization is conducted with benefit receiver that is KUB Alam Sari, Office of Industrial & Trade and

Market Management as partner, partner of machine equipments provider and stake holder.

2. Technical and managerial training for business development and business strengthening.

The activities of technical supervise covers:

- Inventory of equipments / machine which is required to support production process

- Purchasing / supporting tool order of production process, equipments installation and testing.

- Design of packaging and label it, design of form and size of packaging unit.

- Raw material procurement and supporting materials of production process.

- Settlement of business management (raw material, processing and marketing)

- Business advisory

- Commercial production and evaluation


3.4. Production Process Technology

From pineapple fruit (Ananas Comosus (L) Merr) can be produced variety of forms and product type with wide

variety for example product of pineapple juice beverage (juice pineapple). Processing aim is to give added value to

local product, to lengthen the durability of its preservation, so it can be consumed widely by society.

Materials that used in process of producing are pineapple fruit, sugar, citron zuur, water, food additive material

that admissible by BPOM.

Process of making pineapple juice as follows:

1. Sorting and grading; pineapple is selected (sorting and grading) with optimum matured, that is with evenly

colored. Better selected good and no deformity (decay, contusion)

2. Peeling; peeling is conducted by using stainless steel knife. Furthermore, leaf crown and eye of pineapple fruit

are thrown away, afterwards split become 2 or 4 parts (depend on its extractor tool).

3. Fruit Washing; washing is conducted by soaking and spraying with water.

4. Pulping; pulping is conducted by pulper press equipment.

5. Extracting; extracting is conducted with filter press and by means of extractor equipment (screw extractor).

6. Mixing and conditioning ; fruit juice from extraction process is collected, then added sugar in accordance with

appetite (organoleptik test, if less acid then at fruit juice the citron zuur can be added little by little till the

desired acid taste is reached. To enhance level of C vitamin, it can be also added C vitamin around 100 mg/litre

of fruit juice.

7. Pasteurizing; pasteurizing of pineapple fruit juice is conducted in cooker tank. Pasteurizing is conducted at

temperature of around 95 oC for 15 minute to take care of fruit juice from damage. Besides by pasteurizing, it

can be also added with organic preservative that admissible by BPOM

8. Packaging; pineapple juice that already pasteurized then packed in cup plastic that already prepared and

packaged in hardboard package which is content 20 cups.

Fig. 1. Process of making of pineapple juice

Pineapple Fruit

Peeling-washing

Cut into four part

Throw away its liver

Squeeze with screw press

Mixing

Filtered with filter press

Packaging

Cooking in tank

Pineapple Juice

Sugar Citrat acid

Na Benzoat

Water

Essence colourant


3.5. Production Capacities and Loss-Profit Projection

Capacities of pineapple juice processing production for once processes (8 hour) is 800 kg of pineapple fruits

with required other materials compound will produce 1,600 litre of pineapple juice. From 1,600 litre of pineapple

juices will be packed become 8,000 cups. For this explanation of loss and profit projection can be seen in Table 1.

From table 1, it indicates that business of pineapple juice beverage production with production capacities of

1,600 liter of juice will produce 8,000 cups of juices @ 200 ml with its price of Rp.1,200.-/cup will get rough

advantage of Rp.1,436,460.- per process / day. Within 1 month can produce 10 times, and will obtained a rough

advantage of Rp. 14,364,600.- so this business is quite competent to be developed.

Table 1. Projection of Loss-Profit of pineapple juice product of KUB Alam Sari.

No Cost Amount Unit Price per unit (Rp.) Total Price (Rp)

1 Pineaplle 800 kg 1,200 960,000

2 White sugar 192 kg 11,000 2,112,000

3 CMC 0.48 kg 85,000 40,800

4 Citrat acid 0.48 kg 20,000 9,600

5 Food colorant 0.16 kg 95,000 15,200

6 Benzoat 0.48 kg 25,000 12,000

7 Esence 0.16 kg 120,000 19,200

8 Plastick cup 8,000 pcs 250 2,000,000

9 Cup cover 8,000 pcs 30 240,000

10 Straw 8,000 pcs 7 56,000

11 Packaging box 400 pcs 2,000 800,000

12 Local Labor 8 man/day 70,000 560,000

13 Processing expert 2 man/day 150,000 300,000

14 Diesel fuel 25 l 6,000 150,000

15 Electricity 400 kva 1,250 500,000

16 Depreciation of equipment (5%)

388,740

Total

8,163,540

Sale 8,000 pcs 1,200 9,600,000

Rough profit

1,436,460

3.6. Introduced Technology

The challenge which was met that is how can utilize the equipments of juice production process that already exist

in KUB Alam Sari (aid equipments from Directorate General Industry of Agro and Chemistry, Department of

Industry in 2010). The equipments has been installed and tested by researcher staff and technician of Center of

Appropriate Technology Development - Indonesian Institute of Sciences, with competent result to be operated and

must be supported by other additional equipments if it want to produce juice.

Center of Appropriate Technology Development - Indonesian Institute of Sciences- Subang has had experience in

developing and applying of appropriate technology for society (UKM) and provide appropriate technology needed

for society, especially area of food processing and juice beverage.

Besides the need of process equipments installation, raw material and packaging, product quality is continues

monitored with mini laboratory making to conduct testing and evaluation of product quality. Technology that will be

introduced trough this activity, to equip the equipments that already there is for example: Pulper press, Refractor

Meter Digital, pH meter and Digital Weighing-machine. Hereinafter in running and developing KUB Alam Sari are

required business management that cover process management (raw material, equipments, production process),


financial management (recording and transaction bookkeeping, job contracts and cash flow) and marketing

management.

3.7. Management Pattern of Transfer Technology Funding

The fund of technological transfer which is used for business management will be realized in the form of

additional equipments which is required, raw material and packaging material that suit with the need. The fund of

technological transfer hereinafter will be managed by KIAT (Intermediacy Group of Technological Transfer) that is

KIAT Mitra Tena Abadi with notarial document of Dian Wardianto SH, MM. Kiat has function as the container of

provider / equipments procurement, mediator of business development. Profit sharing is done by advantage sharing

of 60 % for KUB Alam Sari and 40 % for KIAT Mitra Tena Abadi. The fund that come into KIAT will be used for

working capital additional and develop other UKM on an ongoing basis. The management scheme of the technology

transfer fund can be seen at Figure 2 as follow:

Fig. 2. Management scheme of the technology transfer fund

3.8. Market Potential and the Way to Sell the Product

As has been written in introduction part, where the market potential of food processed product such as fruit juice

is very big along with the improvement of society earning and more awareness on their health.

As for marketing strategy that taken by UMKM Alam Sari, that at this moment with prior product of pineapple

juice, is through direct selling to sale agents that have come to its customer that spread out in some areas for

example: Subang, Purwakarta, Bandung, Cirebon, Indramayu, Cianjur, Bogor, Yogyakarta and Bali. Nevertheless

some of its product is sold through the shops of business partner and at retailer for specific gift from Subang.

Fund owner Technology Provider and

technological transfer fund.

Supervisor its activity runs.

Provider of UKM required

equipment.

Organizer of technology transfer

fund.

Advisory of production and

business management.

Aid user and technology

implementation and business

development

Fund aid

KIAT Mitra Tena Abadi

UKM

Alam Sari

Market


3.9. SWOT Analysis of Together Business Group (KUB) of Alam Sari

SWOT analysis is identification of various factors systematically to formulate the pattern of business

development strategy of KUB Alam Sari. This Analysis is based on logic to develop strength, overcome weakness,

utilizing opportunity and overcome or threat minimization.

Strength in business development in KUB Alam Sari for example:

Raw material (pineapple) available as long as season

Available enough human Resources

The Technology which is required is simple technology

Strong support from stake holder by promote the area prior product

Product of genuine fruit juice (natural) by utilizes the local resources product

Weakness in business development in KUB Alam Sari:

Production Capacities and its capital are limited

Mindset or awaits aid culture has been sticked

Product of natural fruit juice has average higher price

Technical and managerial ability are remain limited

Market range still rely on local market

Opportunity in business development in KUB Alam Sari:

The siding of stake holder to KUB Alam Sari is high enough

Society need of natural beverage product is growing up

Business location is relatively close to tourism place (Ciater, Lembang, and Tangkuban Perahu)

Product marketing Network is much opened

Threat in business development in KUB Alam Sari:

Competition against big company that has been recognized

Pineapple plantation of society property tends to convert to people settlement

Increasing of electricity and fuel tariff and

ASEAN Economic Community (AEC) 2015.

Based on SWOT analysis result to KUB Alam Sari, then the alternative strategy pattern that can be developed for

example:

Strategy to maximize the internal strength to utilize external opportunity that is: extend the marketing network by

recruit the experienced person, maximize the sale by multiply the customer. Thus this strategy is conducted by

maximize the existing strength to get the advantage, market compartment to reach sustainable business

development.

Strategy to overcome the internal weakness to utilize the external opportunity is conducted by improve the

promotion/advertisement, apply managerial system assistance, especially in the field of standard record and

bookkeeping.

Strategy to maximize the strength and effort to overcome or threat minimization, conducted by improve

innovation, product competitive ability and product quantity, product certification and waste management.

Strategy to overcome the internal weakness for external threat minimization is conducted by care of productivity,

hygienist and production cost efficiency and improve skill and human resource prosperity.

4. Conclusion

The conclusion that can be taken from this study is: the production of fruit juice processing with raw material

from local farmer harvesting product can help stabilize the market price. Business on production of pineapple juice

beverage of KUB Alam Sari, is competent for developed it, this condition is strengthened by analysis that show this

business can give competent reward that is with advantage of Rp 14,366,600.- per month. Give local product added

value, create employment and make pineapple processed product become the prior product in the region.


Pattern of local partnership is functioned as technical assistance and management assistance with container of

Intermediacy Group of Technology Transfer - Kelompok Intermediasi Technological Transfer (KIAT) as advisor,

technological transfer, working capital and promotion of production result and extend the market network.

Acknowledgment

Utterance thank you addressed to Center of Appropriate Technology Development - Indonesian Institute of

Sciences Subang and KUB Alam Sari Subang, especially to: Ir. R. Ismu Tribowo, MSc, Ir. Agustriyono, MSc,

Sutrisno, Dedi Sumaryadi, Wawan Setiawan and Ade Patas to the all aids that already given.

References

Anonim, 2010, Subang dalam angka, Badan Pusat Statistik Kabupaten Subang.

Anonim, 2012, Biro Pusat Statistik, Jakarta.

Rahman A., 2009, Panduan Mendirikan dan Megelola Usaha, Penerbit Med Press,Yogyakarta.

Surahman D. Nanang, 2007, Nanas dan produk olahannya, Lembaga Ilmu Pengetahuan

Indonesia(LIPI), Balai Besar Pengembangan Teknologi Tepat Guna (B2PTTG),Penerbit LIPI Press,Jakarta.

Dipta.I.W. , 2010, Strategi Penguatan Usaha Mikro Kecil(UMK) melalui kerjasama kemitraan pola CSR, Infokop Vol.16., September 2008,

Jakarta.

Fankel E.G., 1990, Management of Technological Change :The Great Challenge of Management to Future. Dordrecht:Kluwer Academic

Publishers.

Prakati,J., 1999, Participatory Rural Development and Technology Tranfer: Empowering Small Scale Farmers With Appropriate Technology

Skills, Http://www.atnesa.org, 3 April 2010, India.

Suparyanto, 2012, Kewirausahaan Konsep dan Realita pada Usaha Kecil, Penerbit Alfabeta, Bandung.

http://www.atnesa.org/




A Course on Idea-to-launch Process with Emphasis

on Experiential Learning

Odi Akhyarsia*, Jonathan Gultom

b, Burhan Primanintyo

c

abcSurya University, Gading Serpong Boulevard O/1, Tangerang 15810, Indonesia

Abstract

This paper presents a course designed for undergraduate students enrolled in The Department of Technopreneurship at Surya

University, Indonesia. The course, Technology and Innovation 2, was given to first year students. The course aims on giving

experiential learning to the students, regarding the process of innovation and new product development. During the course term,

students were given a series of lectures pertaining to the well-known Stage-Gate process and then asked to simulate the process,

with some modifications. An outcome-driven innovation method was embedded to the process. The students gained knowledge,

skills and experiences on how to generate ideas, evaluate the ideas, make prototypes, and provide strategies to bring products into

the market. The implementation of the course has been gratifying for the lecturers and at the same time the students‟ progress has

been promising. Findings and challenges which appeared during the course are described in this paper. In addition, samples of

two projects carried out by teams of students are also discussed. It is recommended that the course, or any similar courses, should

be offered to more undergraduate students, especially students majoring in entrepreneurship, business, and engineering.



Keywords: product development; Stage-Gate process; innovation; entrepreneurship education; experiential learning.

1. Introduction

Entrepreneurship education has been introduced and promoted in many educational institutions around the

world. The term entrepreneurship education can be interpreted in two ways; either learning about entrepreneurship

as a phenomenon, or learning useful skills in order to become an entrepreneur (Rasmussen & Sorheim, 2006). One

of the skills mentioned in the latter should refer to the ability to develop new products. In order to foster the skill,

educational institutions need to provide a proper teaching course that combines exposure to a proven new product

development method and an appropriate teaching environment. In a paper (Marion, Friar, & Cullinane, 2011), the

authors stated that “a teaching environment that is action-oriented, encourages experiential learning, problem

solving, project-based learning, creativity, and peer evaluation is essential for creating fledgling entrepreneurs”.



14 Odi Akhyarsi / IICIES 2014 Proceeding

This paper describes a course designed to teach students on how to conduct the process of new product

development, from generating ideas to developing a launch strategy through a modified stage-gate process, with a

course structure that emphasizes experiential learning.

The Stage-Gate process is a widely known method for new product development and was developed by Robert

G. Cooper. The Stage-Gate process (Cooper, 2011) breaks the product development process into a number of

predetermined stages, where an assigned team undertakes activities needed to move the project forward. Each stage

is followed by a gate, where the results of the activities in the stage are reviewed and go/kill decision is made. In

every stage, the assigned team needs to collect customer or user feedback. A standard idea-to-launch Stage-Gate

process consists of six stages: discovery, scoping, build business case, development, testing and validation, and

launch. The Stage-Gate process, with some customization for the purpose of the course, is illustrated in Figure 1.

According to studies by the Product Development and Management Association, nearly 60 percent of firms use

some type of Stage-Gate process to manage their new product development process (Schilling, 2013). The benefits

of the Stage-Gate process have been reported in literature (Cooper, 2011; Schilling, 2013). Among the benefits are

shorter product development cycle times, lower development cost, improved teamwork, and a smoother launch.

2. The Course

The course is named Technology and Innovation 2. In its precursor, Technology and Innovation 1, the students

are exposed to the roles of technology and innovation in business as well as some innovation techniques like Mind-

mapping and SCAMPER. In the Technology and Innovation 2 course, students are guided to understand and

experience the process of new product development. During the course term, students are given a series of lectures

pertaining to the Stage-Gate process. They are then asked to simulate the process, step-by-step in a team, with some

modifications. The two courses, Technology and Innovation 1 and 2 are two major courses offered to the first-year

undergraduate students of Technopreneurship Department, Surya University, Indonesia. The courses have been

offered for the first time in the academic year 2013/2014.

2.1. Stage-Gate in the Course

In the beginning of the course, the students were given a lecture highlighting the importance of developing new

products, how companies conduct their new product development, and the introduction of the Stage-Gate process.

Fig. 1. The Stage-Gate process (adapted from Cooper, 2011) implemented on the Technology and Innovation 2 course

Odi Akhyarsi / IICIES 2014 Proceeding 15

Then, students were asked to do a course-long project activity to simulate the Stage-Gate process for developing

their own product. Lectures and guidance related to each steps of the process were provided. Figure 1 shows the

schematic diagram of the Stage-Gate process with some additional information related to the course. In the

Discovery stage, students were asked to form a team (3-4 students per team) and discover opportunities and generate

new-product ideas, as many as possible. The list of ideas were then reviewed by the gatekeeper at Gate 1, or also

called Idea Screen, in order to make decisions on which ideas (2-3 ideas) that were worth spending resources on. In

Stage 1, the Scoping, students were asked to conduct a preliminary investigation in technical feasibility and market

potential. The results of the Scoping were reviewed by the gatekeeper at Gate 2, called as Second Screen. The

Second Screen would decide which idea(s) were to be approved for further investment. Some were recycled, held, or

even killed. It was designed that the gatekeepers for Gate 1 and 2 are their peers. Teams that could not get an

approval at the gates were allowed to reiterate their work.

In Stage 2, Build the Business Case, students were asked to conduct a more detailed investigation, in which they

should clearly define the product and verify the feasibility of the project before more investment was made. The

main guidance for the students to conduct the activity is the outcome-driven innovation method developed by

Anthony W. Ulwick (Ulwick, 2002; Ulwick & Bettencourt, 2008). This method guides product developers to define

the “desired outcomes” based on customer inputs and prioritize them based on an opportunity algorithm. The results

from Stage 3 were reviewed at Gate 3, or Go to Development. The approval at Gate 3 means that the business case

was sound and product developers were allowed to continue to Stage 3. It was designed that Gate 3, as well as Gate

4 and Gate 5, are kept by lecturers.

In Stage 3, Development, the team began the actual design and development of the product. The development

involved iterative loops of product prototyping and internal assessment. Some other activities were designing the

manufacturing process, developing external-test plan, and mapping out a marketing plan. It was designed that the

Technology and Innovation 2 course takes place in parallel with the Entrepreneurial Marketing course. The students

were asked to conduct activities related to the marketing plan based on the theories they learned from the

Entrepreneurial Marketing course, under supervision of the course‟s lecturers. The results of the activities carried

out in Stage 3 were reviewed at Gate 4, or Go to Testing. The gatekeeper had to ensure the developed product is

consistent with the previously agreed definition. The manufacturing process, the external-test plan, and marketing

plan have to be well constructed.

In Stage 4, Testing and Validation, the teams were asked to test and validate the viabilities of the product, the

production, and the marketing aspects. The results from activities undertaken in Stage 4 were reviewed thoroughly

at Gate 5, called as Go to Launch. The evaluation criteria at this gate was the quality of the testing and evaluation

results, the solidity of production plan and launch strategy, as well as the readiness of all other aspects for the

launching. Gate 5 opens the door for Stage 5, Launch, and in turn to the Post-Launch Review. However, it should be

noted that in this course students were not obliged to simulate the Stage 5 and Post-Launch Review activities.

2.2. Experiential Learning Gained by Students

As mentioned earlier, the Technology and Innovation 2 course was designed to allow the students to simulate a

process of new product development. The simulation of activities for each stage and gate should give them new and

concrete experiences. Table 1 lists the experiential learning that the students should gain during the duration of the

course. For instance, the activities performed in Stage 3, Development, should make the students experience the

process of making prototypes. They should make efforts to select and purchase materials, process the materials in

order to form required parts, assemble the parts, and post-process the prototype for a proper appearance and/or

function. Besides the experiences listed in the table, the project should also give the students some other experiences

such as in managing resources, setting up communications with many stakeholders, and handling conflicts.

It is believed that the experiences will be beneficial for their future studies and, in turn, their future business. By

experiencing the processes through this course, it is expected that it will be easier for the students to picture the

relationship between new knowledge they will receive in the future and the flow of new product development.


Table 1. Experiences to be gained by students from simulation of Stage-Gate process in Technology and Innovation 2 course

Step Experience

Discovery: Ideas Generation Team formation, brainstorming

Gate 1: Idea Screen

Stage 1: Scoping

Gate 2: 2nd Screen

Stage 2: Build Business Case

Gate 3: Go to Development

Idea evaluation (as peers)

Desk research

Designing scorecard (as peers)

Interviewing users, salespersons, experts,

designing a questionnaire, distribute, and

analyze the results based on outcome driven innovation method

Presenting product definition

Stage 3: Development Prototyping, prototype improvement, designing production plan,

designing marketing plan (synced with Entrepreneurial Marketing course project)

Gate 4: Go to Test

Stage 4: Testing and Validation

Presenting product and plans

Product testing, collecting feedback, product improvement,

developing marketing materials (synced with Entrepreneurial Marketing course project)

Gate 5: Go to Launch Presenting the justification for product‟s commercial launch

Thus, the experiences should help the students in recognizing the importance of the knowledge. In case the students

develop new products for their company in the future, the experiences gained from the project should help them in

solving the problems. Many of the problems faced by the students during the project are most likely to be similar to

problems in actual business.

2.3. Course Environment

In Technology and Innovation 2 Course, the lecturer is responsible to deliver comprehensive teaching material,

assign product development project, oversee students‟ performance, and provide mentorship during the course‟s

duration. The project is team based. Teams are formed in the first meeting of the course. Each team comprises of

three to four students, where the composition of the teams should be kept the same during the course duration.

Students‟ performance is evaluated based on the quality of their projects. It was designed that there are no written

examinations. Gate 3 and Gate 5 are perceived as the midterm test and final test, respectively. For course evaluation,

after completing Gate 5, the students were asked to fill an on-line questionnaire.

In the academic year 2013/2014, the Technology and Innovation 2 course was taken by 123 students. The

students were then divided to 3 classes, administered by 3 lecturers. In total, 36 new product development projects

were carried out. On average, one lecturer handled 12 teams of students.

3. Course Outcomes

3.1. Students’ Progress

It is obvious that the students gained knowledge and experiences from the course. The qualities of the

prototypes, documents, and presentations delivered at the end of the course were admirable. These qualities imply

that their knowledge and skills have significantly improved. Furthermore, based on student feedback received upon

the completion of the course, in majority (confirmed by more than 80% of the respondents):

Students have a clearer picture on how to generate ideas and transform them onto market-ready products

Students feel inspired and confident to develop innovative product in near future

Students know how to be a gatekeeper.


Considering the points above, the students‟ progress has been promising, especially in terms of the students‟

potential in digesting new knowledge in their future studies, generating customer-driven and innovative ideas,

producing patents, and developing new products for their company.

3.2. Lecturers Feedback

The lecturers, i.e. authors of this paper, agree that the implementation of the course has been successful. It was

gratifying to realize that the students enjoyed the course, put lots of effort on their projects, and most of them were

able to deliver a good prototype and marketing plan. Some prototypes, with their marketing plan, are high-quality

and almost ready for commercialization. In addition, some of the product ideas, designs, logos, and brands created

are believed to have great potential for being transformed into valuable intellectual assets.

3.3. Project Samples

Two of the 36 new product development projects delivered by students in the Technology Innovation 2 course

are Kitchenic composter and Aleurre bio-shampoo by, let say, Team A and Team B respectively. The process of

brainstorming, desk researches, and idea screenings led Team A to pursue the development of a small-scale

appliance that converts domestic organic wastes into compost. Based on their investigation, using the outcome

driven innovation method, they discovered that the appliance should provide some features that can produce the

following outcomes, „faster composting‟ and „easier composting‟. In order to satisfy the outcomes, Team A

developed the Kitchenic composter. The composter is equipped with a rotating blade for breaking down entered

waste. It was also equipped with apparatuses for releasing effective microorganism and collecting liquid and

powdered compost. The composter is 47 cm in height and 24 cm in diameter. The prototype of Kitchenic composter

is shown in Fig. 2a. A series of internal tests on the early prototypes revealed some defects like liquid leakage and

unfavorable blade size. A series of external tests, conducted after some improvements on the prototype, confirmed

that the prototype is acceptable for customers. Twenty out of 20 respondents reported that they liked the prototype,

had the intention to buy, and preferred the Kitchenic composter rather than other products.

Fig. 2b shows the prototype of Aleurre bio-shampoo. Team B developed the shampoo using the oils extracted

from watermelon rind, orange rind, aloe vera, and rice straw. Aleurre bio-shampoo was positioned as an

environment friendly shampoo for urban women. The idea was to produce a shampoo that is effective in cleaning

scalp while at the same time is environment friendly. The shampoo is rich in vitamins and substances that are good

for scalp and hair. The shampoo does not contain chemicals like sodium lauryl sulfate, formaldehyde,

diethanolamine, or parabens which are believed to be toxic.

Fig. 2. Prototypes produced by students in Technology and Innovation 2 course (a) Kitchenic composter; (b) Aleurre bio-shampoo


4. Lessons Learned

After reflecting upon our experience in designing and implementing the Technology and Innovation 2 course, we

identified three lessons learned.

4.1. Support is Crucial

Given that the course required the students to develop new products based on customer needs, it appeared that the

students, in most cases, had to provide a solution that is not straightforward. The difficulty was high. We could not

simply announce the project assignment, provide and deliver some teaching materials, and let them do their work. It

was noticeable that the students needed continuous support from the lecturers, whether in the forms of clarifications

on assignment details, further explanations on the theories, or in the form of advice in solving technical problems.

Inevitably, the teams that asked and received sufficient support from the lecturers tended to get excellent marks

while teams that carried out the project on their own tend to be less than satisfactory.

4.2. Synchronization is Beneficial

As mentioned earlier, it was designed that the Technology and Innovation 2 course took place during the same

term with the Entrepreneurial Marketing course. Once the students decided their product definition, i.e. in the

beginning of Stage 3, they could start drafting a product marketing strategy, based on theories provided in the first-

half of the Entrepreneurial Marketing course. The student feedback revealed that synchronization of both courses

helped them to understand the contents of each courses.

4.3. Students’ Interactions with Many Stakeholders are Valuable

In doing the project, the students were urged to interact with many stakeholders. Students had to collaborate with

team members, discuss with other fellow students, and interviewed some potential users, sales person, and experts.

It was observed that these interactions improved their communication skills. The interactions with unfamiliar

external parties have broadened their network. The student feedback confirmed that the interactions with many

stakeholders during the project had been valuable for them.

However, given that the course is new, some work still need to be done. The authors plan to improve the scheme

of supports provided to students in order to assist them in solving technical issues during prototyping. Another

future work is to collect more data to determine long-term effectiveness of the course, for example the numbers of

intellectual property and commercialized products that can be attributed from the course.

5. Conclusions

A course on new product‟s idea-to-launch process emphasizing on experiential learning has been designed and

implemented. The course provided the students with the concept of the Stage-Gate process in new product

development and inquired them to simulate the process, with some modifications. It was designed that the students

who took the course would gain several concrete experiences by playing the role as a product developer as well as a

gatekeeper.

Prototypes, reports, presentations, lecturers‟ observations, and feedback from students regarding the

implementation of the course have shown positive indicators. Considering that we have successfully implemented

the course at an undergraduate level, majoring in technopreneurship, it is our hope that this course, or any similar

courses, should be offered to more undergraduate students, especially students majoring in entrepreneurship,

business, and engineering.

References

Cooper, R. G. (2011). Winning at new products: creating value through innovation (4th ed.). New York: Basic Books.


Marion, T. J. , Friar, J., & Cullinane, T. (2011), Lessons learned from developing and teaching a multi-disciplinary new product development

course for entrepreneurs, NCIIA Annual Conference. Washington, DC, USA.

Rasmussen, E. A., & Sorheim, R. (2006). Action-based entrepreneurship education. Technovation, 26, 185-194.

Schilling, M. A. (2013). Strategic management of technological innovation (4th ed.). New York: McGraw-Hill. Ulwick, A. W. (2002). Turn customer input into innovation. Harvard business review, 80(1), 91-7.

Ulwick, A. W., & Bettencourt, L. A. (2008). Giving customers a fair hearing. MIT Sloan Management Review, 49(3), 62.




The Effect of Tweet Ads Through @infobdg Twitter Account

toward Bandung People Buying Interest

Athira Setira Adila, Rah Utami Nugrahani

b*

abTelkom University, Telekomunikasi Street, Bandung, Indonesia

Abstract

Today, the utilization of social media like Twitter is not only as a means of communication but also as a medium for marketing

purpose. The account of @infobdg is one of many Twitter utilized by many local and national companies as their promotion

medium.

The purpose of this study is to determine the effect of advertising tweets through @infobdg Twitter account toward Bandung

people buying interest. The variables are tweet ads as independent variable (X) and buying interest as dependent variable (Y). .

The writer used quantitative method with descriptive research and causal. It should use instrument testing, validity and reliability

testing. The data are primary and secondary data. Primary data were obtained through validity and reliability survey using

questionnaires for 40 respondents with convenience sampling technique. To answer all issues contained in the formulation of the

problem, the writer used several data analysis techniques, such as descriptive statistical analysis, classical assumption test, simple

linear regression, determination of coefficient commission calculation, and hypothesis testing.

The result was shown that @infobdg ads tweets through Twitter effected Bandung people buying interest. Coefficient of

determination 0.210 indicated that independent variable trough Twitter account effected Bandung people by 21 % and the rest

was 79 % effected by other factors outside of variable.



Keywords: tweet ads; interests buying; twitter; social media

1. Introduction

Today, the use of media for advertising is one of the important considerable factors. It can be from conventional

media which encountered every day, or either through newspapers, magazines, television, and radio. It also includes

social media as we all know in many parts of the world.

As time goes by, social media has changed its way and motive in the field of marketing. It is challenging to

create effective advertising at this industry. We do it by utilizing innovative technology, sniper tactics, and



22 Athira Setira Adil / IICIES 2014 Proceeding

following consumer interests. Based on the data above, these issues are taken to generate further effective

advertising and affect public interest strategy. Surely, it needs a well-arranged design strategy. Not only physical

appearance or visual impressive, but it can also communicate hidden message. It takes brilliant and wise strategy to

be well-captured. Especially if the media like Twitter is just a text with the use of 140 maximum characters.

Other media usage to advertise in many companies has been used generally, but the new media like Twitter is

mentioned as the fastest information media. It becomes unusual opportunity to the companies in advertising their

products, as seen by Twitter user all around the world and the effectiveness of 140 characters.

The amount of public response to Twitter has made it a strategic field for the business actors. Many strategic

advantages gained by promoting through Twitter. We have to understand how to use it first. The easiest way to do

that is to create the account. Business owners or companies simply create an account on Twitter; follow public

account or other accounts that can help promoting, and writing attractive status by the goal of promotion. As an

entrepreneur, Twitter has many advantages. People can easily recognize new products and seek information from

the product by advertising it through Twitter. In addition, business owners can also easily figure out how to respond,

comment, criticize and suggest he products that they offer to the public. If you get negative comments from

customers about a product or company, we can directly find the solution.

Social media still needs much time to be adapted in Indonesia. Not only the medium of technological factors or

companies ability, but also the main focus is on the users themselves. When the users do not understand how to run

social media, it will certainly be difficult to communicate with consumers.

However, the trend of social media usage continues to grow, and companies should begin to explore and analyze

the extent of which social media help companies in making engagement with consumers.

Twitter has been popular in Bandung. It is the eighth biggest twitter user’s city after Jakarta, Yogyakarta,

Surabaya, Semarang, Medan, Bali and Makassar, but the number is possible to grow. Based on the data above, it is

unsurprisingly that businessmen from Bandung participate to create their own company account. In addition, many

of them use paid tweet facility by using the most influential account in Bandung.

Paid to tweet is a term for tweet that containing particular brand promotion. Usually, the promotional sentence

issued by a buzzer who doesn’t concern whether the user will use the brand product or not. The term of buzzer /

influencer is considered as a medium party to deliver the message, as similar as what the advertisement lips of radio

broadcaster does. But it has the difference from classified ad because the buzzer conveys subtle and interactive

messages to interact with followers in the form of conversation.

The selected twitter account to be brand or company buzzer usually has a lot of followers. It does not have

personal account, group account can be the buzzer too by the assumption of tweet brand message containing. The

message issued by the buzzer will appear at follower timeline. Then, it appears two possibilities. First possibility is

the tweet will be read, and given positive response, i.e. followers eventually open twitter account to be mentioned at

tweet, so they will get direct information from the Twitter account company. The second possibility is precisely

ignored. The ignorance of paid tweet is due to the tweet without regarding the affected tweet.

It should keep in mind that assessing the effectiveness is not counting the number of tweets, but assessing how it

influences to the audience. In connection with the influence of a buzzer at the effectiveness of paid tweet, a

company must also select the buzzer by its power to influence the followers. People who influence the audience or

followers are usually referred to key opinion leader or influencer.

One fairly successful influencer Twitter accounts and key opinion leader in Bandung is @ infobdg. There are

many other interesting account information in other cities to be the buzzer, but when it compared to other similar

account, @ infobdg considered to be more influential. It is seen from the number of followers, re tweets, its and

social relationships. From the data obtained, @ infobdg score of Klout is higher than @ infobandung twitter account

and @bdgupdate. Klout Score is usually used as reference to compare the effect of the account as a buzzer.

Talking about people buying interest is a sense of interest which experienced by the consumers to a product

(goods or services). It is influenced by the external consumer attitudes outside and inside consumer attitudes. If I

review about the emergence of an interest, it can be understood that buying interest is a combination between

stimulus (marketing) and consumer response. When a stimulus provides the attraction to consumer, it will create a

positive response. How strong the buying interest is very dependent on the strength and weakness of a stimulus. It

provides consumer interest that implicates to the purchase decision. So, it can be concluded that buying interest is a

Athira Setira Adil / IICIES 2014 Proceeding 23

passion or personal shoppers desire to purchase some amount of things, particular product or brand within specific

time period. The plan is established through decision or selection process.

From the data obtained globally, Asia Pacific customers more likely to love shopping online if it compared to

customers in other parts of the world. The customer is categorized into people who like to order the products and

ship it to customer house.

Talking about Bandung people interest in purchasing the product, there is not any specific data that showing

specific number of it until now. But seeing from the number of Internet users, social media Twitter, and the

widespread of online shop in Bandung, the chances of the people shopping online are quite large. Moreover, Google

Adwords has gained 165.000 searching to online shop keyword in the past month.

Meanwhile, the result shows that Bandung is the third city with the most internet users who search the keyword

of online shop. It followed by Internet users in Surabaya and Jakarta. It is more than just reading @ infobdg timeline

on Twitter, tweet advertisement from @ infobdg will also attract public interest to buy seeing how consumptive

Indonesian society is.

@infobdg is quite concerned to take the advantages in increasing their income. So, the biggest source of revenue

is through the account number of a advertisement. To gain more trust for prospective clients and retain old client,

@infobdg should provide information to public perception about tweet advertisements through Twitter @infobdg.

Unfortunately, there is no statistical evidence regarding to public perception to the tweet advertisement until now.

2. The Purpose of The Study

To know the perception of @infobdg Twitter account followers about the tweet advertisement component at @

infobdg timeline.

To know the buying interest of Bandung people to the products offered by the advertiser through @infobdg

Twitter account.

To know the effect of tweet advertisement through @infobdg Twitter account of buying interest in Bandung.

3. The Method

In this study, I use the descriptive studies to answer the research problems. They are the explanation of @infobdg

Twitter account perception about @infobdg tweet advertisement component at @ infobdg timeline and the interest

of Bandung people in purchasing the products offered by the @infobdg Twitter account advertiser.


Table 1. Profile of Respondents by Sex

Sex Respondent

Men 223

Women 177

Total 400

Table 2. Profile of respondent by age

Age Respondent

< 17 year 30

17 – 20 year 124

21 - 24 year 161

25 - 34 year 71

> 34 year 14

total 400


Table 3. Profile of Respondent by education level

Education Level Respondent

SMP 9

SMA 224

S1 125

S2 6

others 36

Total 400

Table 4. Profile of Respondent by income

income Respondent

< Rp 1.000.000 214

Rp 1.000.001 – Rp 3.000.000 145 Rp 3.000.001 – Rp 5.000.000 32

Rp 5.000.001 – Rp 7.000.000 5

> Rp 7.000.000 4 total 400

Table 5. Profile of Respondent By the Duration of Following @infobdg Twitter Account

Duration of following @infobdg Respondent

< 1 month 22

1 – 6 month 92 6 – 12 month 85

1 – 1,5 year 101

> 1,5 year 100 Total 400

Table 6. Result of Descriptive Statistic Test to the Variable of Tweet Advertisement

No. Item Sub Variabel Total

Score

Ideal

Score

Percentage

Average

IT1, IT2 Short and Catchy Text 2594 3200 81,06%

IT3, IT4 URL Shortner 2792 87,25%

IT5, IT6 References Other 2666 83,3%

IT7, IT8 Hashtags / Keywords 2609 81,53%

Total score 2665,25

Total Percentage 83,28%

Very Low Low High Very high

Table 7. Result of Descriptive Statistic Test to the Variable of Purchasing

No. Item Sub Variabel Total

Score

Ideal

Score

Percentage

MB1, MB2 Perception 2611 3200 81,59%

MB3, MB4 Affective 2459 76,84%

MB5, MB6 Kognitif 2424 75,75%

MB7, MB8 Association 2062 64,44%

MB9, MB10 Persuasion 2227 69,59%

MB11, MB12 Behavior 2137 66,78%

Total Score 2320

Tota Percentage 72,5%

25% 43,75% 62,50% 81,25% 100%

83,28%


Very Low Low High Very High

Table 8. Result of Simple Linear Regression Test

Model Unstandardized Coefficients Standardized

Coefficients

t Sig.

B Std. Error Beta

1 (Constant) 17.135 2.259 7.584 .000

IT .760 .074 .459 10.298 .000

Based on the result of regression test, it can be seen that the price of zero beta (a) is 0,760 and the price of one beta

(b) is 17.135. From the results, it can be determined the equation of linear regression line between tweet

advertisement through @infobdg Twitter account toward Bandung people buying interest as follows:

Ŷ = 17,135+ 0,760X

The equation of Linear regression can be used to predict or forecast the effect of the independent variable change

(tweet advertisement through @ infobdg twitter account) to dependent variable (Bandung people buying interest).

With 0.760 values can be interpreted that the effect of variable tweet advertisement through @ infobdg twitter

account to Bandung people buying interest is positive. It indicates that the increase of tweet advertisement variable

will be followed by an increase of buying interest at 76%. It can be interpreted as follows: a = 17,135 : It means that if the tweet advertisement (X) is zero (0), so the buying interest (Y) will be

worth 17.135.

b = 0,760 : It means that if the tweet advertisement (X) increases by one unit, so the buying interest (Y)

will increase by 0.760 units.

Table 9. Result of Regression Test

Model R R Square Adjusted R

Square

Std. Error of the

Estimate 1 .459a .210 .208 6.00143

a. Predictors: (Constant), Tweet Adv (TA)

b. Dependent Variable: Buying Interest (BI)

KD = 100%

KD = 100% = 21%

Based on the calculation table above, the acquisition value of determinant coefficient is equal to 0.210 or 21%. It

can be interpreted that the tweet advertisement variable ability in explaining the behavior of buying interest is 21%,

while the 79% remaining is explained by other factors which is not examined in this study. The unexamined factor is

the behavior of consumers toward the brand.

5. Hypothesis Result

The hypothesis of this study aims to investigate the influence of tweet advertisement through @infobdg Twitter

account buying interest is as follows:

H0: Tweet advertisement thorugh @infobdg Twitter account doesn’t have the effect toward Bandung people

buying interest.

H1: Tweet advertisement through @infobdg Twitter account has the effect toward Bandung people buying

interest.

25% 43,75% 62,50% 81,25% 100%

72,5%


Decision rules by using the t test (α = 0.05 error rate):

If t value ≤ t table (n=400, α=0,05) 1.65, so H0 is accepted and H1 is rejected. It means that there is no effect

between tweet advertisement through @infobdg Twitter account and Bandung people buying interest.

The score of t value is 10,298, and the score of t table from t distribution table with α = 0.05 and the score of t

table is 1,65. If it is stated by the decision rule, so the t value score is 10.928 greater that t table score by 1,65. It can

be stated that H0 is rejected and H1 is accepted.

The significance test on the results of calculation output data with the SPSS version 20 shows the number of

significance (Sig.) 0.0001 ≤ 0.05, which can be interpreted that the influence of variables X and Y are significant. It

concludes that @infobdg Twitter account affects Bandung people buying interest.

F test on the concept of linear regression is a test to examine whether the regression model is totally acceptable. F

test aims to test whether the dependent variable (X) and bound variable (Y), or at least one of variable X with

variable Y has linear correlation. The elaboration for the F test can be found in the table of ANOVA (Analysis of

Variance) below:

Table 10. Result of F Test

ANOVAa

Model Sum of Squares df Mean Square F Sig.

1 Regression 3819.842 1 3819.842 106.056 .000b

Residual 14334.841 398 36.017 Total 18154.683 399

The testing is done by using numeric significance or Sig. It is used with the following conditions: If the number

of research significance <0.05 and F count> F table, then H0 is rejected and H1 is accepted. If the number of

research significance> 0.05 and Fcount ≤ F table H0 is accepted and H1 is rejected.

Based on the calculations, the number of significance is 0.000 <0.05. It also obtained Fcount score is greater than

F table at 106,056 > 0,00393. Hence, H0 is rejected and H1 is accepted. It means that there is a linear relation

between the tweets variable through @infobdg Twitter account with Bandung people buying interest.

6. Research Discussion

The perception @infobdg Twitter account respondent about tweet advertisement components containing at

@infobdg timeline is very good. Its high position indicates that @ infobdg has fulfilled the effective tweet

advertisement component in writing the tweet ads.

The effective tweet advertisement components include: short and catchy text, URL shortener, references others,

and hash tags/keywords. The result from the respondent will be discussed one by one regarding to their perception

about the ad tweet component. For the first component, short and catchy text is obtained at good result where the

two item statements are rarely disagree. The statement intended to tweet advertisement @ infobdg displayed by

@infobdg with no more than 140 characters. The characters are a maximum limit of 140 characters at micro blog

Twitter account. The written tweet with more than 140 characters will be truncated.

There is now a wide variety of sites that provide services to allow Twitter users writing more than 140 characters

(example: Twitlonger). But if the tweet advertisement wants to look more interesting, the ad tweet must meet

maximum character limit. @Infobdg is aware of this thing. So, the tweet advertisement will be seen as a whole

without being interrupted by tweet link extender.

For the next statement, the considerable components are the attractiveness of tweet content. @ Infobdg has been

receiving tweet material directly from advertisers, but the editing it still done by @ infobdg in order to attract people

who read it. The very good position in the continuum line indicates very interesting. Things that @infobdg should

do is by keeping it. It is done to get the follower attention.

The second component is the inclusion of URL shorten where it can be used to clarify the displayed information

at @infobdg tweet advertisement. Tweet advertiser typically includes additional links to provide more information

to tweet reader. The links are intended to be the official company website advertisers, link images and video product

advertisers, and so forth. And the link address displayed should be accurate, because if the destination address is a


link that does not conform to the tweet advertisement, then the advertisement will mean nothing. Respondents see it

as something that can enhance their confidence in the advertised product. Therefore @ infobdg has been included

the link and use link shortened like Bit.ly. It is used to limit the maximum character.

References others has been one of the most important components at the next component. Every generated tweet

generated tweet advertisement should include Twitter account/advertiser company that can be contacted, and it is

necessary to check twitter account accuracy. This twitter account/company contact function is to facilitate the

followers if they have questions or comments regarding to the tweet advertisement. The respondents strongly agreed

on the importance of inclusion and twitter account accuracy/advertiser company contact. It can be seen from the

very high obtained result through descriptive statistical analysis.

The use of hash tag / keywords should be the last item equipped to acquire effective tweet advertisement.

According to the majority of respondents, @ infobdg has succeeded using its tweet advertisement hash tag. Besides

that, hash tag usage apparently has made the respondents easier to obtain the information they needs. It is seen from

a very high position on the continuum line.By looking at the results of positive respond, it means that @ infobdg has

successfully written a good tweet advertisement. Not only that, the effects of tweet advertisement should be found

out. The effect would find out the effect of people buying interest or just simply the fulfillment of effective tweet

advertisement component. Therefore, we can see the results of respondent to Bandung people buying interest on the

products offered by twitter account advertiser first.

There are six factors of the advertising effect to measure the impact of buying interest and the effect cause of the

tweet advertisement, there are: perception, affective, cognitive, association, persuasion, and behavior. At the first

factor, the respondents’ perceptions were aware of and read @infobdg account. The tweet advertisement should be

concerned to make it effective. The tweet advertisement should be read, even though the effect is minimal. And if its

presence had been realized by the respondent, the minimal effect of advertising tweet has been reached.The next

factor which may be the effect of advertising is affective. Affective respond reflects our feelings about something.

From the two statements, respondents respond it positively. The tweet advertisement has caught respondent

attention, and some tweet advertisements are appropriate to respondent wants. It indicates that tweet advertisement

has been able to stimulate the desire of love or cause certain feelings.

By the appearance of attractive tweet advertisement and respondent wants, the respondent cognitive response has

raised to search and evaluate more information about the products offered through the tweet advertisement. The

positive response can be seen from the high position on the continuum line. By studying the process and

understanding product information, it means that they become interested and get the effects of cognition in the

products of the tweet advertisement.

Association is the next response. It should be able to build a connection between respondents and products

offered through lifestyle and respondent personality of the respondent. The respond about association factors is more

neutral. There are tight competition among the respondents who agree and disagree with the statement that the

product ads displayed tweets reflect their lifestyle and personality. The respondents characteristic are adolescents

and adulthood. Because of that, @ infobdg should adjust the language, product filtration, lifestyle and personality of

respondents majority to obtain better response. Sub variables of persuasion and behavioral are the response to

describe overall respondent buying interest through infobdg tweet advertisement. It mentioned that the majority of

respondents have agreed with the statement that says that the respondents have desires to try, buy or see the products

offered. The respondent shall include it in their shopping list which means they are interested to buy these products.

The action was proportionally taken to the desire of respondents. They usually respond / ask questions about the

information contained in the advertisement tweet, either by way of replies/ re tweet or call the company directly. In

other words, it indicates the seriousness of respondents who are interested in buying, and made buying decision.

After seeing the results of respondents about the two variables, the influence of effect generated by tweet

advertisement on buying interest is seen. The high value of the correlation between tweet advertisement and buying

interest showed the substantial degree of relationship. According to hypothesis testing testing result using t-test with

α = 0.05 level of error, it can be concluded that H1 is accepted and Ho is rejected. It means that tweet advertisement

through @infobdg twitter account affects Bandung people buying interest.

From the coefficient of determination test results with simple regression analysis techniques, the effect of tweet

advertisement through @infobdg Twitter account to Bandung people buying interest is 21%, and the rest 79%


influenced by other factors which is not addressed in the present study. In addition to the answer of research

problems, the adaptable respondents’ characteristics to their answer need to be concerned. From the data obtained,

follower with high school education and the monthly income less than Rp. 1,000,000 are the highest majority of

respondents. They mostly assume that the components of @infobdg tweet advertisement result are very good and

completed. Their responses to buying interest from the advertisement tweet are also good. By the level education at

senior high school, the respondents are already mature enough to see, judge and decide which tweet advertisement

attracted their interest to see or seek out the offered products. It includes the decision to put the product in their

shopping list. The respondents should think carefully about the product they want by the fact their minimal income

and wages. They do not necessarily just buy it, but they adapt to their needs. Therefore, most of the respondents do a

little research about it.

The association of sub-variables is related to the characteristics of respondent majority. It is matched with the

majority data that shows the tendency of advertising products displayed is ranged from 17-24 years at senior high

school education level. But it remains a tendency that cause them do not feel suited to their lifestyle and personality.

This can be seen from the number of respondents who disagreed with the statement claiming that the ads displayed

product is in conformity with the lifestyle, personality and their income. By the criteria of age, and education level,

the respondents are more likely to have a modern advertising product, but it is not so expensive and can be useful for

their daily life. Therefore, it can be used as a suggestion for @infobdg in choosing corporate advertisers and proper

language to be used in advertising the products.

7. Conclusion

1. The results of @infobdg twitter account respondents perceptions about tweet advertisement components at

@infobdg timeline is very good, because it rated at very high position in the continuum line with the average

total score of 2665.25 and total percentage average of 83,28%. The averages are: short and catchy text sub

variable at 81.06% total percentage, URL shortner at 87, 25%, references others at 83.3%, and hastags/keywords

at 81.53%. According to respondent, it can be interpreted that @infobdg has fulfilled effective component tweet

advertisement in writing its ads. If it is seen from the length of their following, it can be drawn that content tweet

is pretty informative. It is also effective at the tweet informative content and can attract people to fulfill effective

weet component.

2. The results of @infobdg twitter account respondents perceptions about tweet advertisement components at

@infobdg timeline is very good, because it rated at very high position in the continuum line with the average

total score of 2665.25 and total percentage average of 83,28%. The averages are: short and catchy text sub

variable at 81.06% total percentage, URL shortner at 87, 25%, references others at 83.3%, and hastags/keywords

at 81.53%. According to respondent, it can be interpreted that @infobdg has fulfilled effective component tweet

advertisement in writing its ads. If it is seen from the length of their following, it can be drawn that content tweet

is pretty informative. It is also effective at the tweet informative content and can attract people to fulfill effective

tweet component.

3. The influence of tweet advertisement through @infobdg twitter account to Bandung people buying interest is of

0.21. Score of 0.21 means the influence of @infobdg twitter account to Bandung people buying interest is 21%,

and the rest 79% influenced by other factors which is not addressed in the present study.

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http://reviewpro.com/blog/




Empowerment Strategy Small Medium Entreprises (SMEs) Creative

Industry to Increase Competitiveness in Dealing Free Trade

Sri Hartatia* Kartib Bayu

b, Edwin Karim

c

aSchool of Business and Management, Institut Teknologi Bandung, Jl. Ganesha No 10, Bandung, 40132, Indonesia bSchool of Architecture, Planning and Policy Development, Institut Teknologi Bandung, Jl. Ganesha No 10, Bandung, 40132, Indonesia

cSekolah Tinggi Ilmu Ekonomi, Bandung, Indonesia

Abstract

SMEs have a very important role as the support for the national economy. Important role mainly contributed by SMEs in job

creation, employment, contribution to national income and growth spirit of entrepreneurship. One of the SMEs that have

contributed the creative industries are SMEs. Creative industry is an industry that is loaded with creativity and innovation to the

products of creative industryi currently expanding rapidly. In line with the development of creative industries growth and creative

industries must be able to maintain its contribution to the improvement of the national economy. Several challenges must be

faced ole h SMEs creative industries, among others, in the face of free trade in the Asian which will apply from 2015 in which

creative industries must produce products that can compete with other countries. Creative industries must strive to optimize

strength and minimize the weaknesses that are owned. The method in this study is Descriptive Comparative Method. Technique

studies using three approaches, namely (1) Literature (Desk Study); (2) The use of Participatory Rural Appraisal (PRA), and (3)

Survey (interviews and observations). The type of data consists of primary data and secondary data. Primary data were collected

with a three (3) ways: through PRA (Participatory Rural Appraisal), and that is through an interview survey using questionnaires,

and direct observations. Secondary data were collected through literature, documentary review and the results of previous

studies.The results show that the strategy should be done by the creative industries is of Corrections and Growth Entrepreneurial

Motivation, Reinforcement and Improvement of Human Resource Competency, Improvement Products Market Attractiveness

Crafts Precious Stones, Resource Capacity SMEs Crafts Precious Stones, Extension Upgrades and guides SMEs Precious Stones,

Strengthening and Improving SME Research and Development of Precious Stones



Keywords: empowerment; Small Medium Enterprise; creative industry; free trade

* Corresponding author


32 Sri Hartati / IICIES 2014 Proceeding

1. Introduction

Sukabumi has potential industrial precious stones scattered in several districts by the number of 1600

entrepreneur. Business activities in precious stones largely a business hereditary (inherited) from parents so its

management is still family-run, the owner as manager and financial management has not done using good

accounting standards. Equipment or production machines used are simple this result low production capacity and

product quality less than the maximum, especially for export is still semi-finished materials and raw materials, this

has resulted in low value-added products. Product design,

packaging, and coasters are still relatively monotonous; there is no variation in the product so that consumers are

less attractive due to the lack of the ability to design and innovation the product.

Given the potential for raw materials, and precious stone products market in Sukabumi is promising, there are

companies that make investments in Korea .Sukabumi using technology and equipment / machinery is quite modern

and adequate financial support, so that local SMEs in the Sukabumi rivalry is quite tight, and if this is allowed to be

feared local SMEs precious stones be unable to compete and will go insolvent. Knowledge and skills of labor

production techniques, as well as management (administration) is based on the experience (instinct) have not

attended formal education or training relevant to the field at hand, resulting in the power of creativity and innovation

is still relatively low.

Demand precious stone products for export to Saudi Arabia, the Netherlands, Taiwan and Korea can not be

fulfilled, this is because the product is required of the four countries require the design, specification, quality, and

certain variations have not been able to be produced by Mustika Alam Putera SMEs and also the amount of product

required enough. Have not been able to fulfill the request due to HR products and technical production design

inadequate and also requires specific machining. SMEs in marketing their products just waiting for buyers to come

to the place of production or showroom, this resulted in most SMEs can not determine price; this resulted learning is

determined by the price of the product. In marketing the product has not been done in a professional, yet do

promotion (product catalog, brochure), and also have not been able to use information technology (Internet) in

promoting its products.

Production precious stones made will determine the type and quality of product produced. The resulting product

will depend on the raw materials, technology, equipment, and skills of Human Resources. The selection of raw

materials has not done carefully; sometimes there are errors in determining the raw materials to be processed.

Cutting raw materials depends on the size of the stone and the equipment used. In the cutting direction and cutting

accuracy will determine the results processed. Product formation so ultimately determine the form of the product to

be produced, it also depends on the design of products that have been made. In forming the required special skills

and accuracy. Based on the real conditions faced by SMEs craft gems and promising market opportunities, to meet

market demand, the required breakthrough strategies and efforts to empower SMEs craft precious stones, precious

stones so that the products of SMEs to compete for local market and exports.

2. Literature

2.1 Conditions precious stones SMEs

Industry precious stones and jewelry industry is part of a group of small and medium field of handicrafts. Jewelry

products are jewelry items that use the main raw material in the form of gold and silver alloys and materials such as

copper or brass and other alloys. Precious stones are a mineral formed by natural processes without human

assistance or effort. Precious or gemstone is a rock, mineral or other natural materials which when processed have

the beauty and resilience sufficient to be used as decorative items and jewelry. The rock has a high value is a rock

that has a certain hardness and luster beautiful. Precious Stone / Stone Honor / gemstone is a general sense that

includes rocks or minerals that have undergone treatment if it would reveal the beauty that has a high selling price.

The price of a precious stone is determined by the level of hardness, color, clarity, pattern / shape, rarity and

sometimes the values contained believed in the precious stones. Stone initially worthless, but because they have high

hardness and may also complexion interesting, if it has been processed will has high added value to the sale price

multiplied double precious stones industry and the Watch is part of a group of small and medium industries

Sri Hartati / IICIES 2014 Proceeding 33

handicraft sector . Jewelry products are jewelry items that use the main raw material in the form of gold and silver

alloys and materials such as copper or brass and other alloys.

2.2. Small and Medium Enterprises (SMEs)

Used to define the limits of Micro, Small and Medium Enterprises is the Law of the Republic of Indonesia No 20

Year 2008 on Micro, Small and Medium Enterprises are:

1. Small Business, is a productive economic stand-alone, carried by an individual or business entity that is not a

subsidiary or branch company is not owned, controlled, or a part, either directly or indirectly from the medium or

large business that meets the criteria Small Business as defined in the Act. Criteria for Small Business, described in

Chapter IV as follows:

a. has a net worth of more than IDR. 50.000.000, up to IDR. 500,000,000, excluding land and buildings,

premises, or

b. has annual sales of more than IDR. 300. 000. 000, to IDR. 2.5 billion,

2. Medium Enterprises, is the economically productive stand-alone, carried out by an individual or business

entity that is not a subsidiary or branch company is not owned, controlled, or a part, either directly or indirectly from

the business to the total net assets and results sale as provided in this Act. has a net worth of more than IDR.

500.000.000, - to IDR. 10 billion, - not including land and buildings, premises, or has annual sales of more than

IDR. 2.5 Billion, - (three hundred million) to IDR. 50 billion,

2.3 Strategy

According to the perspective of Porter (1990), the determinants of 'internationally competitiveness' is the

interaction of four specific factors (country-specific determinants) and two external factors, mix 'diamond' is a

domestic source of competitive advantage for a company. The four specific factors are (1) Condition Factor, (2)

Conditions Demand, (3) Related and Supporting Industries, (4) Corporate Strategy, Structure, and Competition.

Source: Porter, 1990

Fig 1. Complete System Competitiveness Diamond Advantage (Porter, 1994)

Chance

FACTOR

CONDITIONS

DEMAND

CONDITIONS

FIRM STRATEGY,

STRUCTURE AND RIVALRY

Government


Two external factors that also contributed to the creation of the nation, but not direct competitiveness are:

1. Opportunity (chance), which can be caused by several factors such as: (a) a new discovery, (b) the opportunities

unleashed by political decisions of other countries, (c) war, and (d) significant changes in the financial industry

and the exchange rate.

2. Government factor in the creation of situations 'competitiveness' in a country, such as: (a) the provision of

subsidies, (b) intervention through financial markets (capital market), (c) the implementation of product

standardization and regulation of the industry, (d) tax regulatory instruments and (e) anti-monopoly regulations.

3. Relationships between to all the local factors in the creation of competitiveness can be seen in Porter's Diamond

Framework. As shown in the chart above, that the relationship between each of these factors interplay and

mutual interaction and augmented by two external factors that also contributed to the creation of

'competitiveness'

4. To assess the competitiveness of a company, need to learn the sources of lead. One device (tool) to do this is the

value chain (value chain) that provides a systematic way to examine all activities performed by the company and

its association with one another. Outlines a company's value chain into a set of activities that have a strategic

impact, through an examination of these activities was traced and found to be tried behavioral cost (what factors

influence the cost and how it affects). In addition, the investigation also things that can be a source of

differentiation (differentiation) either already present, or potential. Basically a company competitive advantage

gained by performing key activities in a way that is cheaper or better way than by its competitors. Conceptually,

Porter (1994) defines the value chain of an organization (company) consists of a series of activities that create

and build 'value', in which a whole series of activities will reflect the overall value generated by an organization.

The objective of the activity is to produce products that are offered to the customers / users with a value in

excess of costs / expenses (cost) to produce, so the excess value of the added value generated by the

organization. Within this concept the parts of an organization is separated into (1) Main activities and (2)

supporting activities.

5. Logistics Log (Inbound Logistics) is an activity that provides input (either in the form of goods and / or services)

for the company.

6. Operations is the input processing into finished goods or services.

7. Exit Logistics (Outbound Logistics) is the activity of delivering products to customers.

8. Marketing and Sales (Marketing and Sales) are conducting marketing activities and sales to customers.

9. Service (Service) is an activity that provides service to customers.

Figure 2.2 Value Chain generic Major Activities (Primary Activity management and other technology development efforts)

(Porter, Competitive Advantage, 1994)

Support Activity Procurement: This activity relates to the provision of support (goods and services) needed to run

the main activity.


1. Human Resource Management (Human Resource Management): relating to the activities of recruitment,

appointment, training and development of human resources to run the main activity.

2. Infrastructure (Infrastructure): relating to the provision of infrastructure activity required by all parts of the

company, such as management information systems, financial management, and planning and control

mechanisms.

3. Margin or profit depending on an organization's effectiveness in performing major activities and support them

efficiently. Competitive advantage can be achieved by adjusting / setting the value chain in such a way that the

activity can produce (a) run as low cost or (b) create a different product (no differentiation) of the resulting

competition.

In an effort to accelerate the development of SMEs needs to be viewed from two interrelated elements, namely

the element of businesses and entrepreneurs as an element of business or sought commodity. Elements entrepreneur

seen from the element of commitment and competence. Elements of the business in terms of market attractiveness

factors and resources. To determine the pattern of development of SMEs Development and the factors those are

analyzed as follows:

1. Elements of Employers

a. Commitments include: Motivation (Economic, Social, and Psychological), Learning, and Experience

b. Competencies include: Human Skill (Training), Experience (Development) and Managerial Skill (ability to

manage)

2. Elements of Business

Market attractiveness include: potential consumers, intermediaries, suppliers, competitors, changes, and policy.

Resources include: natural resources (processing), human resources (skilled labor), capital, technology, and

institutional (organizational). In general, the pattern of accelerated development of SMEs can be done in two ways:

a. Development of the vertical scale MSME business development small business be directed to medium and

large enterprises with a commercial motive.

b. Horizontal development in the development of SMEs with small but numerous.

The businesses usually do not have the desire to be great because managerial constraints. Large enterprise

typically weak but strong in managerial entrepreneurship, instead of the small businesses that strong but weak in

managerial entrepreneurship. The business is expected to have competence in running the business that includes

education and experience in accordance with the currently practiced field and other business sectors as well as

entrepreneurial competence (technical skills, expertise, concepts and expertise in managing human resources).

The balance between commitment and competence will grow their entrepreneurial spirit in business as well.

Business is expected to have flexibility in the face of environmental demands in order to have a competitive

advantage. To create excellence, then the businesses are required to achieve a balance between internal resources

owned by the turbulence changes in the external environment SMEs, need to master information about the

development of environmental factors such as economic, technological, political, social, cultural, government

policy, competition and consumer demands.

These factors could be at any given moment chance and could be a threat to firms. In the face of these conditions

need to be improve the ability of internal resources such as human resources, management and operations and

provision of facilities .The success of small and medium enterprises is determined by the extent to which the

businesses are able to create market appeal. The creation of market attractiveness is inseparable from the ability of

businesses to determine the position in an increasingly competitive market competition. Therefore, businessmen

need to establish competitive strategies. In conducting its business in order to become a winning effort, it is

necessary to pay attention to the potential of the resources that would be the advantage for Small and Medium

businesses. Potential resources include natural resources, human resources, capital, the availability of technology

and institutional businesses. Balance between market appeals with a potential resource will foster a winning effort.

3. Methodology

The method in this study is descriptive Comparative Method. Engineering studies using three approaches, namely

(1) Study of literature, (2) use of Participatory Rural Appraisal (PRA), and (3) Survey (interviews and observations).


The type of data consists of primary data and secondary data. Primary data was collected by 3 (three) ways is

through PRA (Participatory Rural Appraisal), and the survey through interviews using questionnaires, and direct

observation (observation). Secondary data was collected through literature, documentary review and the results of

previous studies.

4. Results

4.1 Existing Condition SMEs Precious Stone

4.1.1 Raw Materials

Raw materials are used to make ornaments and jewelry of Honor by Stone Company Mustika Alam Putra are

Agate jasper resd stone, wood fossil, wasp nest, yellow stones and obsidian. Condition of material is enough and

good. Raw materials are used to make ornaments and jewelry from Noble Stone by Stone Mustika SME Company

Majesty as in Table 2.

4.1.2 Equipment Production

Equipment production owned by SME Mustika Alam Putra still relatively simple and there are still done

manually. Type and Value of Investment Capacity Machine Tools SMEs precious Stone Mustika Alam Putera

namely small cutting saws, chain saw medium, polishing machine and good machine. Condition for facilities are

good guarantee the product with equipment is a relatively simple and some work still use manual (hand skills), the

quality of the product is less stable. Less stable product quality caused equipment / machinery that has not been

designed automatically, also depends on the emotional stability (mode) of the workforce to avoid human error

4.1.3 Production

The products by SMEs Precious stones Mustika Putera basically a good indoor and outdoor ornaments and

jewelry (accessories) are accessories 1 ton with condition are good quality and for Jewlry have production 100

peaces with quality are enough.

4.1.4 Management

Mustika Alam Putra is a business hereditary (inherited) from parents, managing the work done by the family. The

owner cum manager of business ranging from planning, execution, organization and control is carried out by the

owner. Financial management is still using relatively simple opening.

4.1.5 Marketing

Company Mustika Alam Putera in addition to the production process also has media to market their products.

Marketing products to meet local demand (domestic) and also to meet export demand. The company markets its

products in Mustika AlamPutera just wait for buyers to come to the gallery or to the factory. The resulting product

marketing company Mustika Alam Putera held domestically and for export to several countries. Marketing

techniques buyers who come to the site, asking for product orders.

4.1.6 Human Resources

Number of employees in the Mustika Alam Putra 20 people comprises 18 technical personnel and 2

administrative staff consisting of 6 people section production technical and 2 administrative staff.


4.1.7 Financial Condition SMEs precious stones

Mustika Alam Putra SME for investment and for working capital is still using their own capital has not been used

outside capital (loans). The amount of venture capital for investment and for working capital to SMEs Mustika Alam

Putera 2.1 billion. Revenue generated from the business at 125 million per year. Revenue generated from the

business is $ 300 Million per Year.

4.2 The pattern of development and empowerment of SMEs Stone Crafts Noble

The results of analysis of employer commitment Precious shows the average value of 6.67, while the average

value of the precious stones competence businesses an average of 5.11. Viewed from the aspect of business that the

businesses of stones have an average market value of the attractiveness of 7.08, which means that the market

opportunity is highly prospective precious stone products. While the resource value 5.73 averages, which means the

resources to develop the business in the category of precious stones was thus sufficient support to develop the

handicraft precious stone. Based on Figure 2. Then the position of the business of precious stones are in cell 4,

which means that the light of the business, craft business is considerable potential precious stones or included in the

seed business.

Fig 3. Position between the entrepreneurs and businesses

M

A R

K ET

RESOURCES

9

5,73

7,08

High

6

3

0

6

3

0

Medium

Low

Low

Medium

High

3

6

9

2

5

8

1

4

7

BU

SI

N

ESS

ENTREPRENEUR

9

5,89

6,41

High

6

3

0

6

3

0

Medium

Low

Low

Medium

High

3

6

9

2

5

8

1

4

7


Based on Figure 3. Position between the entrepreneurs and businesses that are in the four cell means that the

empowerment to develop precious stone handicraft business in Sukabumi done within the Medium Term. Position

on Tue 4 means employers are reliability and business excellence has also been high.

4.3. Strategy, Policy and Methods

Empowering SMEs precious stone Empowering SMEs are power sharing effort between the builder for SMEs

who have access to and control over the sources of power (government, universities, NGOs, etc.) with a group of

SMEs that have some limitations. The process of sharing power (empowerment) is done by increasing the power

(empowerment) to those who do not / less powerful, and reduce the power that is too powerful (disempowering). In

an effort to empower SMEs, as far as possible the SMEs as objects and fully participate in empowerment, so that

outside parties such as governments, NGOs or universities only act as a motivator, facilitator, and dynamic. Thus the

goal of empowerment will run effectively and efficiently. SME empowerment strategy Crafts precious stones that

can be implemented as follows:

1. Corrections and Growing Entrepreneurial Motivation

2. Strengthening and Improving Competence of Human Resources

3. Increased Product Market Attractiveness Stone Crafts Noble

4. SME Resource Capacity Stone Crafts Noble

5. Capacity extension and Batu Mulia SME Guides

5. Conclusions and Recommendations

Management efforts are made by the family. The owner cum manager of business and financial management are

still using simple opening. Sources of raw materials crafting gems are imported from various regions. Equipment

production owned by the SMEs is still relatively simple and there are still done manually. The products produced by

SMEs Crafts precious stones form both indoor and outdoor decorations and accessories. Product Marketing held

domestically and for export to several countries.

Precious stones craft business is a business that potential to be developed. However, improvement efforts should

continue to be considered, especially in the provision of production inputs and infrastructure as well as increased

potential for entrepreneurship.

Pattern Empowerment for business development craft gems in Sukabumi done within the Medium Term.

In an effort to empower SMEs precious stone crafts, all SMEs should participate in empowerment, so that outside

parties such as governments, NGOs or universities only act as a regulator, motivator, facilitator, and dynamic. Thus

the goal of empowerment will run effectively and efficiently.

Strategy Empowering SMEs Noble Stone craft can be implemented as follows:

Correctional entrepreneurial strategies and Growing Entrepreneurial Motivation, Strengthening and Improvement

Strategy Competence (Ability) HR,Strategy Improvement Products Market Attractivenes,Resources Capacity,

Development Strategies of SME, Capacity Strategy Officer, Extension and guides SMEs,Strengthening and

Improvement Research and Development of SMEs Batu Mulia.

Recommendations for empowerment Mustika Alam Putera:

Required commitment of the government and relevant stakeholders in the implementation of development

programs for SMEs Stone Craft Honor to be able to improve the competitiveness of products both for the domestic

market and for export.

Need to improve the competence of SMEs Stone Craft Majesty that business activities carried on getting better

and developing competencies supported by the SMEs precious stones reliable craft.

Government should conduct more intensive coordination with the government of West Java Province and the

Central Government to empower SMEs Stone Craft Majesty, so that the synergy of policies and programs in an

effort to accelerate the achievement of empowering SMEs precious stones.

In support of empowering SMEs precious stones government should craft more intensive socialization SME


financing program, both program funds (KUR, KCR, revolving funds, etc.), funds from corporate CSR (SOE,

BUMS) as well as funds from the banks.

It is hoped the strategy, policies and methods of empowerment and the role of each stakeholder can be

disseminated to stakeholders and implemented in an effort to empower SMEs precious stones craft to support

regional and national economic development.

References

Badan Perencanaan Pembangunan Daerah (BAPPEDA) Kabupaten Sukabumi. 2009. Dokumen Rencana Pembangunan Jangka Menengah Daerah

(RPJMD) Kabupaten Sukabumi 2010 – 2015. Palabuhanratu. Badan Pusat Statistik Kabupaten

Sukabumi. 2011. Statistik Daerah Kabupaten Sukabumi 2011. Palabuhanratu.

Badan Pusat Statistik Kabupaten Sukabumi. 2012. Sukabumi Regency in Number 2012. Palabuhanratu.

Chaniago Adrinof A.Failure Development; Study of Politic Economic to Indonesia. Crisis groot LP3ES. Jakarta.(201 1)

Daryanto Arief. Indonesia’s Crisis and the Agricultural Sector: the Relevance of Agricultural Demand-Led Industrialisation. UNEAC Asia Papers. No.2. 1999. p. 6 1-72.

Dinas Koperasi, Perindustrian dan Perdagangan Kabupaten Sukabumi. 2012. Recapitulation DataInstitutional SME Sukabumi Regency

2011. Cisaat. Kuratko,Donald.Introduction to Entrepreneurship. South Western (2011)

Ina Primiana. Drive Riil Sector SMEs and Industries. Alpabeta Bandung. 2009. Leon C.Meggison,Mary jane Burd, William L. Magginson. Small Business Management an entrepreneur’s Guidebook. The McGraw-Hill

Companies,Inc.1221 Avenue of the Americas. New York,NY 10020(2006)

Pemerintah Kabupaten Sukabumi. 2012. Buku Profil of Investasmen in Sukabumi Regency 2012. Palabuhanratu. Porter, M.E. 1990. The Competitive

Advantage of Nations. New York: The Free Press.

. 1991. Strategi Bersaing

Teknik Menganalisis Industri dan Pesaing. Jakarta : Penerbit Erlangga.

Rangkuti, Freddy. 1997. Analisis SWOT: Teknik Membedah Kasus BisnisReorientasi konsep perencanaan Strategi untuk Menghadapi Abad 21.

Jakarta : Gramedia Pustaka Utama. Siti Astiyah et al.2005. Dampak

Liberalisasi Perdagangan terhadap Perilaku Pembentukan Harga Produk Industri melalui Structure- Conduct Performance Model. Buletin

Ekonomi dan Moneter, Maret 2005 Undang-Undang Republic Indonesia No. 20 Tahun 2008 tentang Usaha Micro, Kecil dan Menengah. Jakarta.

Pemerintah Kabupaten Sukabumi. 2012. Buku Profil Investasi Kabupaten Sukabumi Tahun 2012. Palabuhanratu.

Porter, M.E 1990. The Competitive Advantage of Nations. New York: The Free Press.

Rangkuti, Freddy. 1997. SWOT Analysis: Teknik Membedah Kasus BisnisReorientasi konsep perencanaan Strategi untuk Menghadapi Abad 21.

Jakarta : Gramedia Pustaka Utama.




Determining Customer Satisfaction by Analyzing Price in The Case

of Small Medium Enterprises in Internet Cafe Business

Wardah Naili Ulfaha, Qorri Aina

b*

abSchool of Business and Management, Institut Teknologi Bandung, Jl. Ganesha No 10, Bandung, 40132, Indonesia

Abstract

This paper investigates satisfactory level of Indonesian customers. There are some researches in evaluating customer

satisfaction. However, this paper provides the analysis of price alteration and price adjustment related to customer satisfaction.

Survey method was conducted in this paper, the researchers use quantitative research methodology. The data was gathered by

using the questionnaire in 4 case study of small and medium enterprise in internet cafe business. The case study is conducted in

sub-district of Indonesia. The district is represents the area of potential market for internet cafe. The phenomenon that occurs in

Indonesia as a developing country, that the internet cafe was very popular recently as the popularity on internet uses. But most of

the cafe cannot hold and a lot of them are closed down. The owner of the cafe should aware of the rivalry among others cafe. So

this study was conducted to determine price alteration and price adjustment related to customer satisfaction. The method used in

this study is a survey method with the approach of descriptive and verification methods. Data collection techniques derived from

primary data collected directly in the field through survey method and questionnaires. To determine the influence and the

relationship of price, both alteration and adjustment, on customer satisfaction processed using multiple regression method. This

researcher found that in Indonesia, price is the attracted factor of customer satisfaction.


Management (SBM), Institut Teknologi Bandung (ITB)

Keywords: price; customers satisfaction; SMEs; internet cafe business

1. Introduction

Entrepreneurship has been one career path that has been hot around these years. Young ventures arise and went

big rapidly like Mark Zuckerberg with his Facebook and other ones are just about to come. Other Silicon Valley’s

built everywhere to handle the flood of the young entrepreneurs all over the world. But, how many do succeed? The

fact shows that there’s a lot more that failed then the ones that succeed.



42 Wardah Naili Ulfah / IICIES 2014 Proceeding

In order to solve geographic problems in communication people now use the internet. Since 20th century interne

already change so many people in the world (Dickinson et. al., 1999). Internet derived from the abbreviation of

interconnection networking. Many experts and companies innovate, so the internet has a function that can be

unlimited. As a tool for communication, whether through email, social media, even as the search engines the

required information.

Clearly the Internet is one of the most important and powerful creations in all of human history. Indonesia itself

as a developing country has adopted this technology since the late 90's era. Central Statistics Agency (BPS) and the

Association of Indonesian Internet Service Providers (APJII) states that internet users in Indonesia has continued to

grow since 2007. In the year 2012 has reached its 63 million people. Households indicate that more computer

communications have become a part of their daily lives (Dickinson et. al., 1999).

Based on these facts can be seen that the real opportunities for Internet business is very large. As every year the

number of users of Internet services is growing and will continue to grow, along with the evolving technology and

innovation fast enough. The Internet is also reshaping the corporate workplace, by spawning a growing list of

exclusively online businesses and is becoming a tool for traditional businesses to meet with millions of potential

customers (Davis, 1999).

Indonesia is a developing country market potential. Internet is becoming one of the businesses that are considered

very promising. Because of the internet eventually become the Indonesian people, many local entrepreneurs who

glanced providing internet services business. Since the 2000s many internet cafes have sprung up in response to

public demand for the provision of internet services.

However, the fact nowadays Internet business can be said to be weakened. It turns internet cafes businesses

cannot survive long. This can be based on various factors, one of which is the price factor that is not able to compete

with competitors. In this case the competitors are another technological medium that makes it easy for people to

access the internet. However, the internet business are equipped with internet gaming was still promising, especially

in certain areas, especially in rural areas.

Despite the relatively rapid growth of mobile internet, for some classes of Indonesian society cafe is still a

popular location to be visited. Especially in areas that are located around the area of education. Nielsen report says

that 67 percent of Internet users in other Southeast Asian countries accessing the Internet from home, 66 percent of

Indonesia's population went to the cafe to access the internet.

To resolve these problems is not easy. Research is needed that can provide insight to solve the problems faced by

the owner of the internet cafe. Therefore, this study wanted to assess whether the price factor either price alteration

or price adjustment can influence the customer satisfaction in small business and enterprise, in this case the

Indonesian internet cafe. This research is also expected that to provide richer picture of the price adjustment and

price alteration to the customer satisfaction. This research also expected to be used as additional information and

reference for the development of marketing management in particular and science in general. For companies, the

expected results of this study can provide feedback or input for the company concerned in connection with the

implementation of price adjustment and price alterations as well as customers to buy.

2. Literature Review

1.1 Marketing Mix to Develop Service

There are not only one problem faced by business’ owner while running their business. The business owner

should be able to assess what the problem is and then decided how to solve the problem. To solve the problem, first

we should make the problem analysis. So we can understand what main source of problem that affect the declining

of customer of internet cafe. In problem analysis there are several variations, but reverse brainstorming is the

commonly used technique.

Company service providers can increase productivity by designing to make services more effectively. Customers

satisfaction is very important for business owner. The componay used to give specific objectives for each employee

including the costumer satisfaction (Hauser, 1994). Business in the services sector is very complex because there are

many elements that affect. Until now the lags behind service manufacturing company in the field of marketing.

Wardah Naili Ulfah / IICIES 2014 Proceeding 43

Along with intense price competition lately, marketing services often complain about the difficulty of differentiating

their services with the services of competitors.

The key to success in the marketing of services is to fulfill or superiority of the target customer expectations for

the quality of services to be provided. Marketing mix can become a tool used by the company to achieve their

objectives. Marketing mix is a collection of marketing variable, which can controlled by the company and used to

achieve the objectives in the target market (Saladin, 2003).

Marketing mix in product has differences from marketing mix in service. Although in both types of business price

is the only elements of marketing mix that generates revenue. Price the olny one flexible elements in marketing mix

which can changed quickly (Kotler, 2001). If the revenue in the company increase, it does not represent the customer

satisfaction.

1.2 Price Determination

The definition of price is simply defined as the total of the amount of money which expenses for a product or

service (Armstrong, 2000). It is means that the amount of money will become more valuable if we can barter it in to

products or services. The only element in marketing mix which can lead the company to the revenue is price, in

rever on the other way the other elements represent costs. Price also the flexible elements of marketing mix, that can

changed quickly (Kotler, 2001). It is means that none of element in marketing mix can represent the form of money

form revenue except price. From those statements, we can generally conclude that from the perspective of the

customer, the price is the amount of money needed to obtain the desired product or service. Meanwhile, if we look at

it from the standpoint of the company, the price of an element of the marketing mix that generates revenue.

Price in the narrower sense is the amount of expenses for a service or product. However, in broad the term of

price is the tota of value that custumers gave to the benefit after having the product or service (Amstrong, 2000).

Policies for price are sets in a period of time by company (Alma, 2005). Price is one of the significant factor in

giving the value of buying respond and affected decision to buy from customers (Lupiyoadi, 2001). To optimize the

price of product, the posibility of production scenarios must be considered with a range of product prices.

From the statements above can be concluded in general. Seen from the point of view customer, the price is the

amount of money needed to get the desired product or service. Meanwhile, if we look at it from the standpoint of the

company, the price of an element of the marketing mix that generates revenue. Pricing strategies are very significant

in providing value to the customer and affect the image of the product, as well as the customer to buy. Decisions in

the price must be consistent with the overall marketing strategy.

1.3 Customer Satisfaction

In a large company, there is usually a division and product line managers who possess the authority to determine

the price of their product. The pricing according to market segment and sales strategies that have been set as well.

However, in small companies, prices are generally set by top management. The pricing is determined based on the

needs of the company, especially in determining the price for a new product. A company should set prices for the

first time when the company is going to sell a product (Susanto, 2001).

The rationale for starting the marketing of human needs and desires, a person's interest arises because of the

influence from within and from outside himself. At a time when customers will buy a product will certainly pay

close attention regarding the product to be purchased.

The literature about pricing is very broad and diverse. Though some literature are focus in the area of fostering

and test the appropriate measurement scale in customers loyality. While some other literatures are discussing on the

correlation of satisfaction and quality to future sales. Future sales also can be determined by the the buying interest

of the customers, the interest could determined by satisfactory experience (Hauser, 1994). Based on those literatures,

this paper wanted to understand how the price alteration and price adjusment can influeced the custumer satisfaction.

Understanding customer buying interest as a buying interest is an impulse, desire, passion and driving force

others from your-self to do something that he wants and will set the goal in the direction of his behaviour (Griffin,


1993). Customer buying also could be states that the appetite is the desire for a specific product that is supported by

the Traffic and willingness to buy.

Customers buying interest consists of (Alma, 2003):

Attention (attention)

Interest (Attracted)

Desire (Desire)

Action (Action)

Satisfaction (cause satisfaction)

Price is very significant in providing the "Value" to the customer and affects the image of the product and the

customer's decision to buy According (Cengiz, 2010). Usually companies do not set a single price but rather a

pricing structure that reflects differences in demand and other factors, these things we are familiar with the term

price adjustment and price alteration (Susanto, 2001).

The starting point of knowing and understanding the function of price as corporate strategy is by find out if it is

influence customer buying interest trough repurchase activity or not. Customers overstepping to several stages,

which are attention, interest, desire, action and satisfaction (Alma, 2005). These steps are need to determine

customer proclivity to price alteration and price adjusment of a business and customer satisfaction within the result

of rebuying action to the business. These model called AIDA+S is determine to attract customer’s (attention), and in

further decision for price alteration and price adjustment in small and medium enterprises this model is implemented

to know customer’s prespective in trying (interest). Which then can arouse customer desire to buy product (desire),

before ultimatel ecourage customers to buy the product (action). It does not have to stop the action in the purchase

only, but the model will perfectly complete if in the end the customers are satisfied with their purchase (Satisfaction)

so that the customer is willing to repeat their purchase.

By those explanations, the researchers found a research framework as in figure 1. Indirectly figure 1 shows us

about the relationship between variables, which are price alteration, price adjustment and the customer satisfaction.

Fig. 1. Research Framework

Customer Satisfaction (Y)

Attention

Interest

Desire

Action (Alma, 2005)

Price adjustment (X2)

Geographic price

Promotion price

Discount price

Discrimination price (Kotler, 2001)

Price alteration (X1)

Increasing price

Decreasing price

(Kotler, 2001)


3. Methodology

There are 16 internet cafe found in the district of research, but then only 4 internet cafe were chosen. The criterias

are already made in order to choose this multiple case study. The respondents were the customer of internet cafe,

which has survives for more than three years. Instead the age of the small and medium enterprise, the location is also

determined to be the criteria. Strategic location of internet cafe, which places in the side of main road or not too far

from the main road is chosen, and the owner of the business is not changing very often. Table 1 shows us about the

average customers per day for all internet cafe in Bandung, Indonesia. From those 400 respondents, the researchers

gain 120 valid questionnaires.

Table 1. Respondents

No Internet Cafe Average Customers per Day Samples

1 IC 1 150 45 2 IC 2 70 21

3 IC 3 110 33

4 IC 4 70 21 Total 400 120

The data was collected by using the quantitative methodology. Observation and survey was conducted before the

researchers spread the questionnaires. Every single question in the questionnaire were analyzed the satisfactory level

of customers in internet cafe. To understand the appraisal the questionnaire were used likerts scale.

To evaluate the impact of price alteration and price adjustment related to customer satisfaction. This paper also

used the multiple case study. It is chosen because the authors were focus on more than one actions which already

occurs (Yin, 2002). The data were processed using multiple regression, in order to know the relationship between

these three variables, and to understand how important the relationship between the independent variables to

dependent variable.

Hence the hypothesis conjectured in this study are :

H1 = Price alteration influenced customer satisfaction partially

H2 = Price Adjustment influenced on customer satisfaction partially

H3= Price adjustment and price adjustment influenced on customer satisfaction simultaneously

4. Finding

Based on the calculation, the samples were chosen based on the calculation of sample fraction (f) by comparing

numbers of element in every sub-population. So it is necessary to find the comparison of every element of each sub-

population with the sum of all of the elements of the population, in order to get each sample fraction.

After that, from the gathered questionnaires we can calculate the profile of the customers as table 2 shows us. The

sample characteristic consists of the customers of internet cafe in Indonesia. The respondent are overwhelming

concentrated in male respondents (60,83%). Most of the respondent who loved to come to internet cafe is in ages of

between 18 to 23 years old (54,17%), with the occupation of the respondent mostly as students (79,17%). So, that is

why the ages of the customers are 65% in range 18 to 23 years old, with the expenses per month are 44,2% in range

of IDR 300.000 to IDR 600.000, but most of the are not the member of the internet cafe (70,83%). Level of

education are concentrated in bachelor degree (55,8%), with frequency to visits is 2 days a week (32,50%).

Table 2. Respondent Profiles

Gender Frequency Percentage

Ages Frequency Percentage

Man 73 60,83%

< 18 10 8,33%


Woman 47 39,17%

18 – 23 65 54,17%

24 – 27 37 30,84%

Occupation Frequency Percentage

> 27 8 6,67%

Student 95 79,17%

Civil Servants 4 3,33%

Level of Education Frequency Percentage

Employees 12 10%

Elementary - -

Entrepreneurs 6 5%

Junior High School - -

Others 3 2,5%

High School 23 19,17%

Dilpoma 30 25%

Bachelor 67 55,8%

Expenses per Moth (IDR) Frequency Percentage

< 300.000 12 10%

Frequency of Visits Frequency Percentage

300.000 - 600.000 53 44,2%

Everyday 10 8,33%

600.000 - 900.000 40 33,3%

6 days a week 6 5%

>900.000 15 12,5%

5 days a week 7 5,83%

4 days a week 12 10%

3 days a week 11 9,17%

Membership Frequency Percentage

2 days a week 39 32,50%

Member 35 29,17%

Once a week 16 13,34%

Not Member 85 70,83%

Others 19 15,83%

The researchers analyzed the result of the questionnaire to quantified all the data with using weighting analysis

and determine the highest and the lowest scores (Umar, 2003). The data were analyzed by using SPSS 2.0, and the

results as you can see in below table. The table shows us about the correlation between the predictors to variable

dependent. As we can see the R is 0,844 indicates that the two variables simultaneously correlated to the dependent

variable. From the table 3 below we can see the R square of this research is 0,712. It is means that the predictors are

influenced 71,2% to variable dependent, however 28,8% customers satisfaction were affected by another factors.

Fig. 2. Model Summary

The equation model of R square is :

k

i

yxiyxiyxiR1

2 r.P


= 0,712

While the other path coefficients outside X1 and X2 to Y, namely:

1

21 yxy Rp

= 0,288

The correlation between the other coefficient and coefficient X1 and X2 were show in figure 2.

In this study the results of calculations obtained F (Ftest) amounted to 15.814 and if we compare it with the Ftable

(3.07), then the result will be greater Ftest. That means the price alteration (X1) and price adjustment (X2)

simultaneously affect the dependent variable. In addition, the Researchers also conducted a t-test. The results

obtained from the t-test is equal to 5.248 to 4.981 for X1 and X2. While the ttable is 1.98 it shows that the t-test is

greater than t-table means both X1 and X2 partially affect the dependent variable.

Coefficientsa

.433 .127 7.470 .000

.260 .148 .394 5.248 .015

.236 .201 .301 4.981 .011

(Constant)

X1

X2

Model

1

B Std. Error

Unstandardized

Coefficients

Beta

Standardized

Coefficients

t Sig.

Dependent Variable: Ya.

Fig. 3. Coefficients

Furthermore, in figure 1 below shows how the relationship between the variables X1 (price alteration) and X2

(price adjustment) to the dependent variable (customers satisfaction). This is in accordance with the calculations

have been carried out by researchers through SPSS 2.0 to the data listed in Table 5 which is coefficients table.

Where coefficient of X1 and X2 is 0.394 is 0.301. Therefore based on this, the exact structural equation model :

21 yxyx PPY

288,0301,0394,0 21 XXY


Fig.4 Correlation among Variable

5. Conclusion

This paper correlation wanted to see the alteration between price and price adjustment related to customer

satisfaction. Therefore by observation in the sub-population of 16 internet cafes in the area that has been determined,

and 4 cafe which was determined according to the criteria of the study. With collecting the necessary data through

questionnaires on the deployment of 120 customers of the internet cafe. Study multiple regression method was

considered appropriate to calculate the hypotheses that have been determined by the author. So based on the F test, t

test performed by SPSS 2.0 as well as the calculation of R and R square to see the relationship and how much of the

relationship between price and price adjustment alteration related to customer satisfaction.

Therefore, based on those calculations the Researchers made several conclusion. The Researchers found that the

implementation of the price alteration and price adjustment in Indonesian internet cafe has been cultivated to its full

potential to Attract the Customers' intention. The implementation of price adjustment consists of geographical

pricing, discount pricing and rebates, promotional pricing, and pricing discrimination. While the price alteration

implemented by raising and lowering the price.

This paper turned out to be a partial find the price alteration has an influence on customer satisfaction, as well as

price adjustment which also have an influence on customer satisfaction of Indonesian internet cafe. This is evidenced

by the results of t-test calculation of variable alteration price greater than the t-table (5.248> 1.98). t-test on the

variable price adjustment greater than the t-table (4.981> 1.98). While the alteration price and price adjustment

simultaneously influenced customer satisfaction. This is evidenced by the results of the testing ftest larger than ftable

(15.814> 3.07).

Furthermore, it was found that coefficient of determination of 0.844 (R square) of 0.712 or 71.2%. This figure

means that the price adjustment and price alteration affect customer satisfactory by 71.2% and the remaining 28.8%

is influenced by other factors. This means that the determination of the price alteration and price adjustment in a

small and medium enterprise, especially in a district in Indonesia is very important. Especially small and medium

enterprise located in an area that a lot was left out by the students.

Based on the data processing is done by the Researchers concluded that the implementation of price adjustment

and price alteration in the internet cafe in Indonesia is considered to be good. In order to increase the evaluation to

become more than good, the implementation of price alteration and price adjustment in the region in Indonesia needs

to be improved.

Based on the profile shows the majority of respondents were internet cafe in Indonesian customer is the student

district. The need for the use of the Internet by students is very large, in line with the increasing of internet cafe

existence in the area. So, that more and more customers have many choices. For these conditions, many customers

settled on a set a cheaper Internet cafe’s price. In the implementation of price adjustments need to be re-implemented

and modified in order to increase customer buying interest.

We can conclude that in this case, the increasing price should be avoided due to the presence of majority

customers. The customer’s profile which are form student of university do not like the price increasing. If the owner

of internet cafe wanted to increase the price, then they should figuring gradually raise prices and the reason for the

price increase is necessary to know the customer.

Pricing policies are the core marketing activity that is as giving satisfaction to the customer so that the company

can achieve the desired goal clearly visible. On the one hand, the price set by the company essentially an offer to

customers or the market, the price is acceptable or not customers or the market determines.

This research is also expected that to provide richer picture of the price adjustment and price alteration to the

customer satisfaction. This research also expected to be used as additional information and reference for the

development of marketing management in particular and science in general. For companies, the expected results of

this study can provide feedback or input for the company concerned in connection with the implementation of price

adjustment and price alterations as well as customers to buy.


Reference

Alma, B. (2005). Manajemen Pemasaran dan Pemasaran Jasa. Revised Edition. Alfabeta. Bandung.

Armstrong, R., W., and Seng, T., B. (2000). Corporate-customer satisfaction in the banking industry of Singapore. International Journal of Bank

Marketing. Vol. 18, 3:97-111.

Cengiz, E. (2010). Measuring Customer Satisfaction: Must or Not?. Journal of Naval Science and Engineering Vol. 6, 2:76-88.

Davis, R. (1999). The Web of Politics: The Internet’s Impact on The American Political System.

Dickinson, P., Ellison. J. (1999). Plugged into the Internet. Canadian Social Trends.

Griffin., A., Hauser, J., R. (1993). The Voice of the Customer. Marketing Science, Vol. 12, 1:1-27. Jstor.

Hauser, J., R., Simester, D., I., Wernerfelt, B. (1994). Customer Satisfaction Incentives. Marketing Science Vol. 13, 4:327-350. Jstor.

Kotler, P., Lane, K. (2001). Marketing Management 13th edition, Pearson Prentice Hall.

Lupiyoadi, R. (2001). Manajemen Pemasaran Jasa Teori dan Praktik. Salemba Empat. Jakarta.

Saladin, D. (2003). Intisari Pemasaran dan Unsur-unsur Pemasaran, Linda Karya. Bandung.

Susanto, A., B. (2001). Manajemen Pemasaran Di Indonesia – Second Book. Salemba Empat. Jakarta.

Umar, H. (2003). Metode Penelitian Untuk Skripsi dan Tesis Bisnis. Fifth Edition. PT RajaGrafindo Persada. Jakarta.

Yin, R., K. (1981). The Case Study Crisis: Some Answers. Administrative Science Quarterly, 26: 58-65.




Applications of Psychology in Business Context:

An Innovative Approach of Entrepreneurship Education

Cicilia Larasati Rembulan*

Universitas Ciputra JI UC Town,Surabaya 60219, Indonesia

Abstract

Psychology is a science which very close to the entrepreneurship world. The basic principle in psychology is about human

behavior. Meanwhile in the entrepreneurship world, human behavior is also an important issue. However, in Indonesia there is a

few concern focuses on psychology and entrepreneurship (psychopreneurship). Whereas psychology could also contribute to

entrepreneurship education which is one of the most important way to achieve nation’s welfare. Using a contextual approach of

learning, Application of Psychology in Business Context (APBC) there is a way to integrate psychology and entrepreneurship.

The objective of the research is to understand the impact of APBC implementation for psychology students. This research is

descriptive quantitative which using online survey as a collecting data (N =55 in odd semester). The result is majority of the

students realize the connectedness between psychology and entrepreneurship. They understand both sides, the theory and the

application in business context.



Keywords: psychopreneur; entrepreneurship education; innovative curriculum

1. Introduction

Historically, psychology as a science arise when world war. Many psychologist’s had a role as an assessor who

select the soldier to put them in the right man in the right place or division. After war, psychologist had important

role as a therapist who help the soldier to relieve the post traumatic stress disorder they’ve experienced. Therefore it

is not surprising if people recognize psychology as a professional helper, therapist, assessor. In Indonesia,

psychology also known as a curative psychology or clinical psychology. Historically, in Indonesia psychology was

born from medicine faculty, army psychology bureau and later then educational psychology (Prawitasari, 2011).

Until now, majority of psychologist have a few concern in entrepreneurship and or business.



52 Cicilia Larasati Rembulan / IICIES 2014 Proceeding

At this time, in developed countries, psychology is improving. Some indicators are there are association which

concern in psychology and entrepreneurship such as INPERE (international network for psychology and

entrepreneurship), journal of applied psychology, faculty of business psychology, behavioral economics or

psychology economics in some universities. Daniel Kahneman, one of winner nobel prize in economic science in

2002 is one of the proof that psychology is connected with entrepreneurship. His research was about jusgement,

decision making, behavioral economics and hedonic psychology which is very close with entrepreneurship world.

Schleifer (2012) stated that Kahneman’s work have a large impact on applied psychology and policy making.

Psychology have a broader theme about human behavior, not only about healing or curative psychology but plays

important role also in entrepreneurship.

In entrepreneurship world, the human factor is important keys such as the entrepreneur, consumer, stakeholder.

Entrepreneurship is a habitual creating and innovating value to build something of recognized value around

perceived opportunities (Thompson and Bolton , 2004). Value creation can be found if we sensitive to market.

Psychology can have a contribution to understand the human or create opportunities by observing human problems.

Rabin (2002) says applied psychology is and should be going. To support the rise of applied psychology

especially psychology and entrepreneurship in Indonesia, Faculty of Psychology Universtias Ciputra create an

innovative approach of learning which called Application of Psychology in Business Context. APBC consist of :

psychological theory, business example, and creative idea generation. Every single course contextualized with

business context. The aim of this approach is to make the students understand about the integration of psychology

and entrepreneurship. Gielnik, Kramer, Kappel, Freese (2014) stated that someone should be facilitated the

experience and knowledge to influence opportunity identification. By doing this, someone will be capable to

identify an opportunity. If students have a habit to identify and sensitive to business opportunity, their knowledge

structures supported them to detect opportunities and create values. Besides, the students was facilitated to create

idea generation. This is a combination and reorganization of activated pieces of information. Creating idea

generation is important because these ideas may then lead to business opportunities (Gielnik, Kramer, Kappel,

Freese, 2014) e.g :

Observation Course. The basic competence of observation course is to improve student’s skill in planning,

doing, and reporting observation. The implementation of APBC in this course : (a) Psychological theory is

about the purpose of assessment, kind of assessment, observational method, observational record method. (b)

Business example is to make a guideline, observe and make a report to the consumer profile and service quality

In the café. The report should be presented to the stakeholder of café, (c) Creating idea generation is to identify

the opportunities using observational skills, e.g : mysterious shopper

Counseling course.

The basic competence of counseling psychology is to improve the competence to listen and understanding. (a)

Psychological theory is about the basic skills of listening, paraphrasing, attending, understanding, using

empathy, (b) Business example is to identify whether basic counseling skills is important in the customer area

and a lot of awards highlight the customer service satisfaction, (c) creating idea generation is to identify the

opportunities using counseling skills : e.g build a training for customer service excellence

Besides APBC the students work on project innovation psychology from child segment until adult. The basic

competence of these course are to improve the skills of the students to identify human problem during

developmental stages. By identifying the problems, the students create value and idea to solve the problems. As said

by Gielnik, et al (2014) to improve entrepreneurial habit, someone should be taught entrepreneurial alertness.

This is the example of student’s work in project innovation psychology course :

Fig. 1. Illumination Board Game, Student’s Innovation Product

Cicilia Larasati Rembulan / IICIES 2014 Proceeding 53

Illumination board game is game for kids to enhance entrepreneurial skills. This board game production in

collaboration with Gramedia. Later, the board game will be publish and sold in Gramedia bookstore.

Lorenco, Taylor and Taylor (2013) stated that entrepreneurship education enhance entrepreneurial graduate

profile. These approach will help to minimize the amount of jobless person because of the limited job in the market.

Entrepreneurship education could help to increase new job creation and help other people to work. Leitch and

Harrison (1999) stated the pedagogical approach of entrepreneurial education is allowing students to learn the basic

concepts and connecting the concept to the riil problem. This approach will support the students to involved in the

learning process. Learning process will be better if there is a connection between theory and riil context.

The objective of this research is to contribute to the literature on contribution of psychology in entrepreneurship

education and to understand, clarify the impact of APBC (Application of Business Context) for students.

2. Method

Data collecting technique conducted in this quantitative research was by handing out questionnaires with online

survey. A number of 55 students (students in odd semester) had filled out the questionnaires and the data was

analyzed descriptively.

3. Research Methodology

Odd semester 2013 2014

Fig. 2. Demography Chart

Table 1. Demography

Semester Percentage

Semester 1 40 %

Semester 3 13 %

Semester 5 42 %

Semester 7 5 %

100 %

Based on figure 1 and table 1 it can be known that the number of students who act as respondents is 55 students.

Based on demography 40 % (22 ) of students are 1st semester and 42 % (23) of students 5th semester.

Table 2. Awareness of students about lecturer who apply APBC in the class

Courses Strongly

disagree

Disagree Agree Strongly Agree Total

Introduction to psychology 1 0 (0%) 1(4%) 14(56%) 10 (40%) 25 (100%)

Introduction to developmental psychology 2 (8%) 14(58%) 5(21%) 3(13%) 24(100%)

Statistic 1(4%) 3(13%) 17(71%) 3(13%) 24(100%)

Psychodiagnostic 1 0(0%) 0(0%) 7(70%) 3(30%) 10(100%)


Courses Strongly

disagree

Disagree Agree Strongly Agree Total

Psychometrics 1(13%) 1(13%) 4(50%) 2(25%) 8(100%)

Biopsychology 1(13%) 0(0%) 6(75%) 1(13%) 8(100%)

Social psychology 2 0(0%) 0(0%) 2(25%) 6(75%) 8(100%)

Educational psychology 0(0%) 0(0%) 17(74%) 6(26%) 23(100%)

Counseling psychology 0(0%) 1(7%) 10(71%) 3(21%) 14(100%)

Quantitative Research Methodology 0(0%) 4(17%) 15(63%) 5(21%) 24(100%)

Cognitive and personality assessment 2(8%) 9(38%) 12(50%) 1(4%) 24(100%)

Psychology Innovation Project 0(0%) 1(4%) 10(43%) 12(52%) 23(100%)

Psychology of Emotional Wellness 0(0%) 0(0%) 8(50%) 8(50%) 16(100%)

Media Psychology 0(0%) 2(11%) 11(58%) 6(32%) 19(100%)

Innovation project and entrepreneurship 0(0%) 0(0%) 3(75%) 1(25%) 4(100%)

Based on table 2 it can be known most of the students aware of APBC implementation in most subjects except

introduction to developmental psychology, psychometrics, and cognitive and personality assessment. In

developmental psychology 64% (16) students stated they strongly disagree or disagree about the APBC in the

subject. In cognitive and personality assessment 44% (11) students stated they strongly disagree or disagree about

APBC in the subject. In the course of psychometrics 26% (2) students stated they strongly disagree or disagree

about APBC in the subject.

Table 3. Students’ comprehension about APBC applied in the course

Courses Strongly disagree Disagree Agree Strongly Agree Total

Introduction to psychology 1 0(0%) 1(4%) 17(68%) 7(28%) 25(100%)

Introduction to developmental psychology 2(8%) 14(58%) 5(21%) 3(13%) 24(100%)

Statistic 2(8%) 3(13%) 17(71%) 3(13%) 25(100%)


Psychometrics 1(13%) 1(13%) 3(38%) 3(38%) 8(100%)

Biopsychology 1(13%) 0(0%) 6(75%) 1(13%) 8(100%)










Based on table 3 it can be known most of the students understand the APBC implementation in most subjects

except introduction to developmental psychology, psychometrics, and cognitive and personality assessment. In

developmental psychology 66% (16), in cognitive and personality assessment 50% (12), in the course of

psychometrics 26% (2) students stated they don’t understand about APBC implementation.

Table 4. Satisfaction with the APBC approach of learning




Statistic 1(4%) 8(33%) 12(50%) 3(13%) 24(100%)


Cicilia Larasati Rembulan / IICIES 2014 Proceeding 55


Psychometrics 1(13%) 1(13%) 5(63%) 1(13%) 8(100%)

Biopsychology 1(13%) 1(13%) 5(63%) 1(13%) 8(100%)










Based on table 4 it can be known most of the students satisfy with APBC approach of learning in most subjects

except introduction to developmental psychology, psychometrics, and cognitive and personality assessment. In

developmental psychology 67% (16), in cognitive and personality assessment 61% (14), in the course of

psychometrics 26% (2), and in the course of biopsychology 26% (2) students stated they don’t satisfy with APBC

approach of learning.

Table 5. Perception about benefit from APBC given in the class




Statistic 1(4%) 5(21%) 14(58%) 4(17%) 24(100%)


Psychometrics 1(13%) 1(13%) 5(63%) 1(13%) 8(100%)

Biopsychology 1(13%) 1(13%) 5(63%) 1(13%) 8(100%)










Based on table 5 it can be known most of the students get benefit with APBC approach of learning in most

subjects except introduction to developmental psychology, psychometrics, biopsychology and cognitive and

personality assessment. In developmental psychology 55% (13), in cognitive and personality assessment 37% (9), in

the course of psychometrics 26% (2), and in the course of biopsychology 26% (2) students stated they don’t get

benefit from APBC in these courses.

4. Conclussion and Discussion

The aim of this research is to to contribute to the literature on contribution of psychology in entrepreneurship

education and to understand, clarify the impact of APBC (Application of Business Context) for students. The result

of this research is expected to be the basis for curriculum improvement in School of Psychology, Universitas

Ciputra. The research result shows that 11 from 15 courses students aware, understand, satisfy and get benefit from


APBC approach of learning. However, there are 4 courses that students’ perceived as negative ones. The

possibilities about these phenomena are:

Majority students got benefit from this (APBC) innovative approach of learning

APBC can be perceived as positive one by the students in the courses which lecturer have already experienced in

teaching the subject

APBC can be perceived as positive one by the students in the courses which lecturer explore more in APBC

which up to date and relevant to students.

The nature of the subject/course is different from one to another. It needed different levels and exploration to

teach APBC to the students

To teach APBC in the courses it needed experience, exploration and extra miles from the lecturer so the APBC is

updated and relevant to students.

APBC given to the lecturer is a stimulus, however the lecturer should improve and explore by themselves in

order to give the optimal contextual learning using APBC.

References

Gielnik, M.M., Kramer, A.C., Kappel, B., Freese, M. (2014). Antecedents of business opportunity identification and innovation : Investigating

the interplay of information processing and information acquisition. Applied Psychology an International Review, 63, 344-381

Leitch, C.M., Harrison, R.T (1999). A process model for entrepreneurship education and development. International Journal of Entrepreneurial

Behavior and Research, 5, 83-110

Lourenco, F., Taylor, T.G., Taylor, D. W. (2013). Integrating education for entrepreneurship in multiple faculties in half the time to enhance

graduate entrepreneurship. Journal of Small Business and Enterprise Development, 503-525

Prawitasari, J.E. (2011). Psikologi klinis terapan mikro dan makro. Jakarta : Erlangga

Rabin, M. (2002). A perspective on psychology and economics. European Economic Review, 46, 657-685

Schleifer, A. (2012). Psychologist at the gate : Review of Daniel Kahneman’s Thinking Fast and Slow. Journal of Economic Literature, 50. 1080-

91

Thompson, J., Bolton, B. (2004). Defining the entrepreneur, entrepreneurs talent, temperament, technique, 2nd edition. Great Britain : Elsevier




Small ICT Enterprises Development

Based on Community Entrepreneurship

Rendra Chaerudina*, Sri Hartati

b

ab School of Business and Management, Institut Teknologi Bandung, Jl.Ganesha 10, Bandung 40132, Indonesia

Abstract

Creative Cimahi Association (CCA) is one of the business community that is formed by the creative industry players in the field

of ICT. The CCA community members realized the need for a forum for creative industries to foster community-based creative

economy.

The development of business community containing four or determinant factor known as the diamond model that leads to the

competitiveness of the industry, namely: factor / input condition, demand condition, related and supporting industries, and

context for the firm and strategy.

To analyze community-based Entrepreneurship development model of Cimahi Creative Association (CCA) is used diamond

model (Porter, 2000) approach. While the research method used is the case study method. Determination of the respondents were

purposively and then using snowball sampling. Necessary Data are qualitative and quantitative the data in the form of the data of

primary and secondary data.



Keywords: community entrepreneurship; small ICT enterprises development; small ICT enterprises

1. Introduction

At this time in Indonesia, many community empowerment program developed ICT-based entrepreneurship.

Through participatory methods to grow the role and the entrepreneurial spirit, community members are encouraged

to participate feel ICT has had, and from what they were developing. In this case there will be more community

decision-making of the implementation of the program, because the purpose of the program is the solution to their

problems.

Business community empowerment strategy in a participatory development paradigm centered on people (people

centered development). This approach emphasizes the importance of community capacity to improve internal

strength in small business management.



58 Rendra Chaerudin / IICIES 2014 Proceeding

Creative cimahi Association (CCA) is one of the business community that is formed by the creative industry

players in the field of ICT. The CCA community members realized the need for a forum for creative industries to

foster community-based creative economy. According to Charles Landry (2008), networks and creativity are

essentially mutually beneficial, because the greater the number of nodes in a system of greater capacity to innovate.

The business community amid the existing heterogeneity is not easy. Constraints faced at the beginning of the

formation is to build confidence (trust) between the community members. Different backgrounds is not easy to set

up business community of trust capital only, without power and funds. But the spirit of cooperativeness make sense

of it eventually formed Cimahi Creative Association (CCA). Landry (2008) suggests that builds awareness of the

need to network and collaborate much more difficult for a heterogeneous actors with each organization's culture and

its plans.

The phenomenon of CCA as a community-based entrepreneurship is still unexplored. Until now research on how

the individual creative process into a collaborative strength through numbers are still a little networking. Therefore,

how the process of formation of the CCA and how to develop strategies CCA menupakan interesting thing to study.


To analyze community-based Entrepreneurship development model of Cimahi Creative Association (CCA) is

used diamond model (Porter, 2000) approach. While the research method used is the case study method.

Determination of the respondents were purposively and then using snowball sampling. Necessary data are

qualitative and quantitative data in the form of primary data and secondary data. In accordance with the method of

study in-depth case study, the primary data performed with the variety of ways: in-depth interviews (in-depth

interviews), tracing (historical), and observation. Secondary data were obtained by collecting documents and

literature / literature. The analysis technique used is descriptive analysis of qualitative / quantitative descriptive

narrative and analysis.

3. Literature review

Community-based Entrepreneurship has become a topic of discussion for those interested in the development of

the business community for many years (Loveridge 2007, Emery et al., 2004, Rightmyre et al. 2004). The pilot

program launched by the Michigan State University Ekstensipada in 2007, entitled "Creating Entrepreneurial

Communities," particularly involving nine rural communities are geographically dispersed throughout the state.

Each local community-based teams send three to five persons for the training program during the week (using

curriculum Energizing Entrepreneurs) to learn about community-based models / approaches. To assist in developing

a community plan, each community is assigned "coaches" to assist in community planning, identify potential

resources, and offer encouragement while keeping the team on task during the planning process.

Community systems and network engineering related to items such as the creation of support peer-to-peer and

idea generation, one-mission organization focused on climate entrepreneurial community, coordination across

service providers, system for welcoming new businesses, and encourage group knowledge.

Other research has supported the categories summarized by Loveridge (2007). Emery et al. (2004) identified

three primary elements of entrepreneurial communities: (1) enhancing business skills among entrepreneurs; (2)

developing relevant resource centers that focus on entrepreneurs needs in a seamless fashion; and (3) strong

networks and collaborations between and among entrepreneurs.

Loveridge (2007) and Emery et al. (2004) findings supported the establishment of networks to foster

entrepreneurial growth, it was not identified as a key factor for a sustainable community-based approach among the

Michigan coaches. Subsequent interviews with the Michigan coaches revealed that they fully recognized the

importance of networking opportunities to creating a local entrepreneurial culture, but felt that building local

capacity was a necessary first step in creating a sustainable approach. Once the local coordinating committee was

more established and had gained credibility among local entrepreneurs, peer-to-peer entrepreneur networks could

then be better pursued.

Porter's cluster approach is the development of a model of industrial district or industrial area developed by

Alfred Marshall in 1920 (Desrochers and Sautet, 2004). In contrast to Marshall that only focus on similar

companies, Cluster model of Porter is not limiting to just one industry, but more broadly. Diamond Cluster Model,

Rendra Chaerudin / IICIES 2014 Proceeding 59

includes related industries, as well as other companies that have relevance in technology, the same input. By

working together in a cluster, then the companies or related industries will benefit from synergies and efficiencies

are higher than those working individually. According to Porter (2000) Clusters can be formed in the city, region,

and even within a country.

Cluster analyzes Porter diamond industry with a model approach. The elements of the diamond model consists

of: (1) input factors (factor / input condition), (2) demand conditions (demand condition), (3) supporting and related

industries (related and supporting industries), and (4) strategies companies and competitors (and context for firm

strategy).

According to Linde (2004), there are several factors that determine the success of a cluster. These factors are the

presence of venture capital; availability of technical infrastructure, the presence of higher education and research

institutions, entrepreneurs, networking and quality of linkages, social capital and diversity.

Various studies of the cluster is also found that the cluster has a competitive environment, and absence of rivalry

will be more developed than the cluster that is highly dependent on natural resources, weather and geography.

Meanwhile Chen (2005) suggested the important factors that led to Taiwan succeeded in developing Clusters

industry since the 1980s. First, the government's role is very important in the early stages of establishment Clusters

to encourage innovation through research institutions like ITRI and the Institute for Information Industry (III). With

the innovation, Clusters grow rapidly. Government in the early stages also provide fiscal incentives in the form of

income tax-free for 5 years for a company that invests in the cluster causes backward and forward linkages of the

industry vertical, horizontal differentiation as well. Horizontal differentiation promoting healthy competition and

encouraging innovation. Scale economies of the electronics industry in Taiwan got a positive distribution in the U.S.

market. Availability of reliable labor is also a factor in the success of Taiwan's industrial Clusters.

Triple Helix as the main actor should always do a move to form a knowledge circulation spaces, spaces of

knowledge in which the three actors already have an understanding and knowledge equivalent, which will direct the

third actor to create a consensus space, space agreements in which three actors began to make a deal and

commitment over a matter that ultimately will lead to the formation of innovation spaces, spaces of innovation that

can be packaged into economic value of creative products. Circulation is always trying to create novelty

(innovation) and innovation often alter existing structures, or Creative Destruction (Joseph Schumpeter, 1934),

which means, the emergence of new innovations in the industry will displace the old industries that are not creative

and replaced with industry more creative.

4. Result and discussion

Community-based entrepreneurship development models of Cimahi Creative Association (CCA) is used

diamond model (Porter, 2000) approach. CCA is largely determined by the development of the business

environment surrounding the ICT businesses that are members of the CCA.

CCA ICT community development, as defined by Porter (2000), containing four or determinant factor known as

the diamond model that leads to the competitiveness of the industry, namely: (1) factor / input condition, (2) demand

condition, (3) related and supporting industries, and (4) context for firm strategy. Here is an explanation of the

model of Porter diamond:

4.1. Input Factors

Human resources (human resources), capital (capital resources), physical infrastructure (physical infrastructure),

infrastructure information (information infrastructure), the infrastructure of science and technology (scientific

andtechnological infrastructure), administrative infrastructure (administrative infrastructure), as well as natural

resources .

Table 1. Input Factor

No Criteria Condition

1 Human

resource

CCA was founded by the Government of Cimahi cooperation with ICT industry players. Currently managed by the

ICT industry players who are members of the CCA community. CCA is considered adequate number of stewards in

accordance with the existing workload at this time. Capabilities and skills of managers in the currently considered sufficient according to the scope kegiataan at this time.



2 Capital resource The initial capital came from government establishment CCA Cimahi. To run its operations, the source of funding is

derived from CCA members independently and government assistance. Fund support from other parties Derived from the Ministry of Industry, Trade and Industry Department of West Java Province, Government Cimahi, etc. Cca

for development activities, available funds were deemed to be insufficient.

3 Physical infrastructure

CCA Office Buildings and Building to conduct business incubation activities, provided by the Government Cimahi (BITC building space facilitated public service or public service information display space and a place to introduce

the world Information Technology (IT) to the public, trade, and research and development space telematics industry.

room Studio Research and Development field of informatics and telecommunications, computer room access to technological developments, the IT training space and Community Activities CCA (Cimahi Creative Association),

for indoor display and multimedia simulations (auditorium), where seminars, discussions and and meeting space

infrastructure and animasiyang facilitated movie). Existing building at this time was considered sufficient to perform the development activities of the CCA.

4 Information

infrastructure

Infrastructure supporting information available at this time include Routers, Hubs, Network, InFocus, Multimedia

Tools. The facility is considered sufficient to perform the development activities of the CCA at this time. 5 Scientific and

technological

infrastructure

Infrastrukrur supporting science and technology are considered sufficient for the scope of the current activity

(Servers, Routers, Hubs, Network, Multimedia Tools). The labor while having knowledge in related field with cca

activities are considered within the scope of the current work. 6 Administrative

infrastructure

Furniture and office equipment for the scope of activities considered Sufficient current (Server, Printer, Scanner,

Infocus, Routers, Hubs, Network, Multimedia Tools).

4.2. Demand Conditions

Models according to demand conditions diamond is associated with sophisticated and demanding local

customers. The more advanced a society and increasingly demanding customers in the country, then the industry

will always strive untukmeningkatkan product quality or conduct innovation to meet local keinginanpelanggan high.

But with globalization, kondisipermintaan not only from local but also sourced from overseas.

Table 2. Demand Conditions


1 Domestic market needs Product animations can be produced by cca is significant, as the development of technology and content development and animation industry is growing rapidly.

2 Purchasing Power Market Industries and companies that utilize animation and content products, have started to choose to use

domestically made animation although foreign products are cheaper. 3 The market demands will be

the quality of the product

CCA products are required to be able to compete in price and quality products made overseas

animation.

4 Domestic Demand Growth Rate

Underdeveloped domestic demand, especially broadcash industry who prefer to use the products because of cheaper foreign.

5 Effect of International Demand International demand continues to increase, due to the international scale industry, the cost of

production in Indonesia is cheap.

4.3. Supporting and Related Industries

The existence of supporting and related industries will increase efficiency and synergies in Clusters. Synergies

and efficiencies can be created mainly in transaction costs, technology sharing, specific information and skills that

can be utilized by industry or other companies. Another benefit supporting and related industries are going to create

competitiveness and increased productivity.

Table 3. Supporting and Related Industries


1 Availability Local Suppliers The tools support the production activities of more than 90% of import.

2 The ability of Local Suppliers The low availability of local suppliers and quality products.

3 Availability of complementary products

Not available complementary products made locally (100% Import).

4 achievement of efficiency Production cost efficiency has not been achieved because of the cost of production is still dominated

by imported content. 5 Linkages with the business

community technology

development activities

The perpetrators members of the business community still has not made the connection and does not

have any technological development cooperation.

6 Business community linkages

with market development

The perpetrators members of the business community still has not made the connection and does not

have any market development cooperation, is still limited to the exchange of information on market.

Rendra Chaerudin / IICIES 2014 Proceeding 61

activities

7 Linkages with the business community development

activities of manufacturing

The perpetrators members of the business community still has not made the connection and does not have any manufacturing development cooperation.

8 Linkages with the business community development

activity distribution

The perpetrators members of the business community still do not hold a connection and distribution of development cooperation.

9 Linkages with the business community services

development activities

The perpetrators members of the business community still has not made the connection and does not have any joint development services.

4.4. Corporate Strategy and Competitors

Corporate strategy and competitors in the diamond models are also important because these conditions will

motivate the company or industry to constantly improve the quality of the products and are always looking for new

innovations. With healthy competition, companies will always look for new strategies that fit and strive to always

improve efficiency.

Table 4. Corporate Strategy and Competitors


1 Encouragement of Innovation Competition similar industries in domestic and foreign demand must innovate.

2 The company's goal The purpose of business actors in the business community has led to the success and

growth of the business community. 3 The purpose of the individual employee Individual goals of the employees in the company who are members of the business

community, has been concerned with the success and growth of the business community.

4 The influence of national priorities National policy and local governments do not support the development of clusters. 5 Commitment of human resources and

capital to the industry

HR commitment to the industry is quite high because there is a career and business

interests.

6 HR Commitment to Profession HR commitment to the industry is quite high because there is a career and business interests.

7 Competition similar local companies HR commitment to the industry is quite high because there is a career and business

interests. 8 The development of new business HR commitment to the industry is quite high because there is a career and business

interests.

Based on the analysis of the diamond determinant factor models it is known that the competitiveness of the

CCA is good because it is supported by the input factors and demand good condition. Competitive conditions in

the animation industry encourages innovation. It's just existence of supporting and related industries are still

lacking support for the availability of local suppliers and the availability of complementary products are still

available and still rely on the supply from abroad.

Of cases of CCA can also note that the power of collaborative arise if the presence of a fusion of thought

through interactive and communicative processes in problem solving and planning. collaborative strength will

also appear if the same commitment from all parties, partnerships are not berhirarkis and all parties have the

same role.

5. Conclusion

Based on the analysis of the diamond determinant factor models it is known that the competitiveness of the

CCA is good because it is supported by the input factors and demand good condition. Competitive conditions in

the animation industry encourages innovation. It's just existence of supporting and related industries are still

lacking support for the availability of local suppliers and the availability of complementary products are still

available and still rely on the supply from abroad.

Essentially networks and creativity are mutually beneficial, Because The greater the number of nodes in a

system of greater capacity to innovate.


References

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Emery, M., M. Wall, and D. Macke. (2004). From theory to action: Energizing entrepreneurship (E2), strategies to aid distressed communities

grow their own. Journal of the Community Development Society 35(1): 82-96.

Florida, R. (2002). The rise of the creative class. New York: Basic Books.

Green, G. (2001). Amenities and community economic development: Strategies for sustainability. The Journal of Regional Analysis and Policy 3

1(2): 61-75.

Hanham, A., S. Loveridge, and B. Richardson. (1999). A national school-based entrepreneurship program offers promise. Journal of the

Community Development Society 30(2): 115-129.

Healey, Patsy. (2006). Collaborative Planning. Houndmills: Macmillan Press

Johanisson, B. (1991). University training for entrepreneurship: Swedish approaches. Entrepreneurship and Development 3: 67-82.

Lambe, W. (2007). Small towns, big ideas: Case studies in community economic development. Chapel Hill: School of Government, University of

North Carolina–Chapel Hill.

Landry, Charles. (2008). Creative city: a toolkit for urban innovation. London: Earthscan

Loveridge, S. (1996). On the continuing popularity of industrial recruitment. Economic Development Quarterly 10: 151-158.

Loveridge, S. (2007). Getting started in community-based entrepreneurship. In Creating entrepreneurial approaches to local economic

development, ed. N. Walzer, 255-273. Lanham, MD: Lexington Books.

Marullo, Sam, Roxanna Moayedi, and Deanna Cooke. (2009). “C. Wright Mills’s Friendly Critique of Service Learning and an Innovative

Response: Cross-Institutional Collaborations for Community-Based Research.” Teaching Sociology 37:61-75.

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Porter E.Michael. Location, Competition, and Economic Development: Local Clusters in a Global Economy, Harvard Business School, (2000).

Porter, M. E. (2000) The Competitive Advantage of Nations, London: Macmillan.

Porter, Michael E and Scott Stern. (2001). National Innovative Capacity. Dalam “The Global Competitiveness Report 2001-2002.” New York:

Oxford University Press, 2001. http://www.isc.hbs.edu/,

Rightmyre, V., T. G. Johnson, and D. Chatman. (2004). From the ground up: A community-based approach to growing your own business.

Columbia: Community Policy Analysis Center, University of Missouri–Columbia.

Von Bargen, P., D. Freedman, and E. R. Pages. (2003). The rise of the entrepreneurial society. Economic Development Quarterly 17: 31 5-324.

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for Entrepreneurship Education, Center for Entrepreneurial Leadership, Inc.

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Walzer, N. (2004). Introduction: Entrepreneurship in community development. Journal of the Community Development Society 35(1 ): 1-4.




Management Understanding in Small and Medium Enterprises

Aris Budi Setyawana*, Ichwan Suyudi

b

aFaculty of Economics, Gunadarma University, Jakarta, Indonesia bFaculty of Letters, Gunadarma University, Jakarta, Indonesia

Abstract

Constraints and problems that are faced in small and medium enterprises can not be separated from an understanding of SMEs to

management knowledge. Management function that starts with good planning , organizing many resources , mobilization of

human resources, and monitoring / evaluating business activity also, should help small and medium enterprises to have a better

business performance.

Research conducted on 200 small and medium entrepreneurs in Jabodetabek (Jakarta , Bogor , Depok , Tangerang and Bekasi)

descriptively, aims to determine the level of understanding and practice of small and medium enterprises of management

knowledge in their business activities .

The results showed that there are still many SMEs who do not yet have sufficient understanding and practice of management

knowledge in their business activities, especially in terms of planning, so this situation does not lead to optimal business

performance. Ongoing training and mentoring is expected to be a solution to this problem.



Keywords: SMEs; knowledge management; business performance

1. Background

There are several research have been done related the constraints and their solutions proposed to the small and

medium enterprises (SMEs). Most of the research done focusing on the financial management (Nurhayati, 2009;

Damaringati, 2012; Apriliani, 2013), productions, and marketing (Rifai, 2013; Suprapto, 2014, ) that are faced by

most SMEs. Instead of the those problems, SMEs also face the followings, such as: determining visions, program

planning, organization, employee motivation, authority delegation, monitoring, and other management activities.

Likewise as the enterprise grows, also grows the necessity for other types of skills needed for survival (Zuzana

Papulová And Matej Mokroš, 2007)



64 Aris Budi Setyawan / IICIES 2014 Proceeding

SMEs have significant roles in the Indonesian economy by giving contribution more than 50% of the GDP.

Besides, they also absorb more employees than large scale businesses. These roles can be increased as the

knowledge, understanding, and management functions increase in their daily practice.

This understanding will give significant impact to better management of SMEs. The worse condition may occur

in the long run if such understanding is not implemented soon. SMEs must be able to handle conflict management

unless the business performance will decrease

In a certain point, in the organization level, such conflict will result in negative effects, such as: energy wasting

and unproductive employees (they will loose their concentration to work), lack of collaboration among employees,

the decrease of understanding of other groups of work, lack of group collaboration (this condition may lead to the

conflict between groups), the coordination will get worse (Daft, 1982). Another example can be seen in

understanding the impact of business firm in a good conflict management that it can benefit the performance of the

organization, (Andraeni, 2003). Similarly, the importance of understanding the external environment can

significantly affect the performance of the organization, (Yurniwati, 2003). This research aims to investigate the

levels of understanding towards the management functions of SMEs.

2. Theories

Based on the previous descriptions above, therefore it is a must for SMEs to understand the management

functions. This is because management is a science that tells people how to achieve the goals by employing others.

The followings are the management functions that must be understood and implemented:

Fig. 1.Identifiable Functions in the Management Process

The eight functions above denote a set of activities that will direct an organization to achieve the goals smoothly:

a. Planning Function

This is related with the organization activities, such as determining the long term goals, targets and strategies

that will used.

b. Decision Making Function

This is related with the organization activities such as determining the best alternatives toward every problems

faced.

c. Organizing functions

This denotes the activities of an organization to allocate the resources optimally, so that all jobs can be well

accomplished.

Aris Budi Setyawan / IICIES 2014 Proceeding 65

d. Staffing function

This relates with organization activities to manage human resources, such as recruitment, and pensions.

e. Communicating Function

This is an activity of an organization to build communications and good relationships with all entities in it.

f. Motivating Function

This is related with the activities of organization to support human resources to do their job.

g. Leading Function

This is related with activities to direct the staffs to achieve the goals.

h. Controlling Function

This is related with the activities to determine the parameters and evaluate the activities that have been done.

There are many definitions about SMEs, one of them is, According to the Ministry of Cooperatives and Small and

Medium Enterprises (SME Menegkop), Small Enterprises (SE), including Micro Enterprises (ME), is a business

entity that has a net worth until Rp 200 million, not including land and buildings, and has annual sales do not more

than Rp 1,000, million. Meanwhile, Medium Enterprises (ME) is a business entity that has a net worth greater than R

200 million until Rp 10,000, million, excluding land and buildings.

3. Methodology

This research was done toward 200 SMEs located in Jakarta-Bogor-Depok-Tangerang and Bekasi regions. The

samples were taken randomly in 2013.

The data were taken from the response of the questionnaires given to the respondents. The analysis are done

descriptively toward the variable. The variable of this research is the understanding of the respondents toward eight

management functions, namely: planning, staffing, communicating, motivating, leading, and controlling.


In general, the result of the research shows that the respondent profiles are the SMEs that have been already

established not less than 5 years ago. 50% of the SMEs already had establishment permission from the government

and the owners are well educated. 80% of the respondents have senior high school certificates. More than 75% have

omzet no more than 5 millions. 63.8% of the owners had ever learnt management. Most of them (88.2%) believed

that their business success is also due to other people contributions.

Based on the responses of the SMEs toward the questionnaires about the eight management functions, the results

can be described as the following:

1. Most of the respondents have already made planning for their business activities. 95.8% of the responndents plan

to expand their businesses in the future. This implies that they have understood the importance of planning in a

business activity. However not all respondents have understood the importance of business environment. This

can be seen that 14,8% of the respondents did not evaluate the business environment.

Fig. 2 Understanding of Enronment Evaluation

14,8%


2. In determining the strategy to achieve the goals, most of the respondents (more than 80%) have good

understanding of the meaning of strengths, weaknesses, and opportunity.

3. In term of organizing function, for this organization is informal, 50% of the respondednts have not made an

organization structure for the business. However they already determined job descriptions to the employees

(80.9%). This means the allocation of human resources has been made.

4. Respondents have implemented staffing function. This can be seen that 79.6% have recruited employees based

on their skills and 75% of them implemented reward and punishment system in accordance with their

performance.

5. Meanwhile, in describing the understanding toward communication function, it is found that 44.5% of the

respondents avoid conflict in the workplace. From this result, this can be seen that 48.4% still believe in the old

understanding. However, 48.4% of them have good understanding on the conflict. They agree that conflict must

be managed.

6. SMEs already motivate their employees This shows that they already understood the importance of motivation.

7. The understanding of SMEs toward leading function shows that 51.1% of the managers felt that they have not

been good leaders yet. However, they already shared the authorities, and there are 26,5% of the respondents have

not delegated the authorities.

Fig. 3 Understanding of Authorities Delegation

8. Almost all of the respondents agree that controlling function needs to be implemented. However only 45,2% of

them state that the controlling need to be implemented to all activities. Such kind of understanding needs to be

changed because controlling functions are needed in all business activities.

Fig. 4 Understanding of Controlling Implementation

26,5%

45,2%

Aris Budi Setyawan / IICIES 2014 Proceeding 67

The explanation above shows that all eight management functions have been understood and implemented well

by SMEs. This can also be noticed that the attention to the business environment has not been imlemented yet. The

delegation of authority has not been implemented yet. Not all of the respondents understood that all stages in their

business activities need control.

5. Conclusion

From the discussion it can be concluded that in order to run the business well, SMEs must understand all

management functions. The result of the survey shows that SMEs have understood well about the management

functions, however, not all of the 8 functions have been implemented in their daily activity, especially for the

evaluation toward the sustainable environment, authority delegation, and activity controlling.

Therefore, sustainable dissemination, training, and partnership can be the solutions and alternatives to improve

the understanding of SMEs toward the management functions. This is expected to raise better performance of SMEs.

References

Ágnes Szlávicz, Nemanja Berber, 2013, Strategic Human Resource Management at Small and Medium Sized Enterprises in Serbia,11th

International Conference on Management, Enterprise and Benchmarking Aviation 179, 2008, SJSU, The Management Function

Maria Criveanu and Constanta Iacob, 2011, Role Of Management Control In Small And Medium Enterprises Performance Assurance

Mohamad Efendi, 2013, Pengaruh Kompensasi dan Disiplin Kerja Terhadap Semangat Kerja Serta Dampaknya Terhadap Kinerja Karyawan Pada EO Di Indonesia, Universitas Gunadarma

Monika Březinová, 2013, Basic characteristics of small and medium sized enterprises in terms of their strategic management, the 2013

International Conference on Business Administration, Marketing and Economics Ni Nyoman Novitasari Andraeni., 2003, Pengaruh Stress Kerja Terhadap Motivasi Kerja dam Kinerja Karyawan PT HM Sampoerna Tbk.

Surabaya, Thesis

Newton, K., 2001. Management skills for small business, from http://strategis.ic.gc.ca/epic/site/sbrp-rppe.nsf/en/rd00255e.html Rosidah, 2003, Pengaryh Kopetensi Sumber Daya Manusia Terhadap Kinerja PT Cheil Jedang Indonesia, Jombang Jawa Timur, Tesis

Williams, 2000, Management, Charlie Cook © Copyright The McGraw-Hill Companies, Inc. Yurniwati, 2003, Pengaruh Lingkungan Bisnis Ekternal dan Perencanaan Strategi Terhadap Kinerja Perusahaan Manufaktur

Zuzana Papulová And Matej Mokroš, 2007, Importance Of Managerial Skills And Knowledge In Management For Small Entrepreneurs




Servant Leadership Practices:

Case Study in Indonesian Workplaces

Sanchia Arindhitaa*, Donald Crestofel Lantu

b

abSchool of Business and Management, Institut Teknologi Bandung, Jl. Ganesha 10, Bandung, 40132, Indonesia

Abstract

Servant leadership is one of the most discussed about leadership philosophies. Many of us are likely to have been familiarized to

its philosophy, practice, and concept in religious education and social institution for centuries. There is a concern that caught my

attention, its recent popularity within the business corporations. It has become one of the most appealing leadership philosophies

in those communities.

This paper is aimed to explore and examine the implementation of servant leadership within big business corporations as well as

small and medium enterprises. The methodology used is qualitative research. The data will be collected through two main ways:

(1) biography and other documents analysis of two great business leaders in Indonesia, named William Soeryadjaya, the founder

of PT Astra International and Jacob Oetomo, the founder of Kompas Gramedia.

The results of this research are expected to provide richer knowledges and insights that are related to the implementation of

servant leadership in the business setting, both big corporations as well as small and medium enterprises, particularly in the

Indonesian context. This research may encourage more qualitative studies on the operationalization of servant leadership model

in the workplaces so that could be useful for practitioners who want to embrace the idea as a meaningful and effective way of

leading knowledge workers.



Keywords: servant leadership; business field; entrepreneur

1. Introduction

Servant leadership is one of the approaches in the philosophy of leadership. Servant leadership defined as a model

of leadership which is oriented on the development of the employee in order to increase their productivity and

upgrade the quality along with the care of many institutions through the unification of team and society. Lots of us

have known about the philosophy, practice, and concept of servant leadership implemented in the religion education

and social institution for over the years. The needs of serving others have been becoming the basis value in religion

world (Polleys, 2002; Sendjaya, Sarros, & Santora, 2008). There are lots of story we have heard about a leader of



mailto:[email protected]

70 Sanchia Arindhita / IICIES 2014 Proceeding

religion concerned with remarkable extending services, and history also gives the same story in ancient kings‘ life

and their families (Ebener & O'Connell, 2010; Sendjaya & Sarros, 2002).

Robert K. Greenleaf (1977) describes a servant leadership as having focus on serving people rather than himself

and understanding leader role as a servant. On his book, he states that ―The great leader was seen as a servant first,

and that simple fact is the key to his greatness‖. He hopes people can think again about the assumptions about the

connection between the leader and his subordinates in an organization that have been appearing these days. It is

reinforced with the title of his essay, ―The Servant as Leader‖ not ―The Leader as Servant‖. Greenleaf explains that a

servant leader starts by taking steps with high integrity, trying to construct a supportive relationship, and helping

others to grow (Beazley, Beggs, and Spears, 2003). Greenleaf gives more than a clear leadership philosophy for the

leaders who hold servant leadership to be followed. Greenleaf elaborates his view about leadership without

grounding on academic theories or broad inquiries, but it is grounded in very long experience and observation over

the years in the workplace, inside and outside community service institutions (Anderson, 2008). He describes servant

leader as an individual that is able to give a positive impact to society. In order to achieve it, the servants have to

produce a quality that seems different with common leadership concepts. The quality derives from the will to serve

which adheres in each individual. Thus, great outcomes are expected to derive from servant leadership action.

Greenleaf believes that others will consider the individual leader as a great leader.

Greenleaf (2002) found the idea about servant leadership when he met with a conflict that a big organization

which is governed by more than one manager tends to be selfish and dominates the society. They tend to give

priority to their profit and stakeholders. Greenleaf offers the idea of servant leadership as the solution, which

considered as the best form of leadership to be implemented both in business field and organization these days, with

an approach that servant leadership is the highest form of leadership in breaking impersonal and bureaucracy

problems, because it can help them to develop each other. Greenleaf (2002) also states that service for subordinates

is the core of servant leadership. The acts that should be conducted by the leader include: supporting, caring, and

holding a brief of subordinates (Northouse, 2010). The implication of having servant leadership as their managerial

manner is they will be able to get the whole goal in one pack; the success in an economy and spiritual salvation

(Direktur, 1996). The presence of servant leader in a workplace will bring a positive outcome for the organization

and its members. Greenleaf (1977) states that servant leader is able to develop his subordinates to become wiser,

healthier, more free, more autonomous, and be servant for themselves. In other words, the outcome resulted is self-

development of the subordinates and people around them.

Then, it can be seen clearly that servant leadership becomes more popular in the leadership model used in

business field because servant leadership is the best leadership model for an organization (e.g. TDIndustries,

Southwest Airlines, and Synovus) puts the story onto the practice (Levering & Moskowitz, 2000; Sendjaya &

Sarros, 2002). They maintain the principle of the philosophy of servant leadership as it has a main focus on the

workers and costumers‘ needs. The core of servant leadership is serving the workers as the first step, and the success

with client or customers as the following. It is also shown in the case study below that servant leadership can be

used effectively in corporation, for example Southwest Airlines, Kompas Gramedia, and PT Astra International Tbk.

This paper aimed to explain the implementation of servant leadership in those companies.

2. Theoretical Foundation

Some big companies have implemented the principle of servant leadership on their management system.

However, the company which becomes referenced by society resulted in a deeper investigation is Southwest

Airlines. Southwest Airlines is an American flight company located in Dallas, Texas. Southwest is the biggest flight

company both in the United States and in the world according to the amount of passengers taken in domestic routes

in each year (December 31, 2007). Southwest becomes the only company which is able to achieve profits for 39

years in sequences. They are stated as having ‗the best safety record‘ in flight industries and having the highest

consumer satisfaction compared to other flight industries, according to DOT. They are the true success story in the

United States. U. S. Airline Industry experienced a big loss up to $12.8 billion in 1990 to 1994.

Sanchia Arindhita / IICIES 2014 Proceeding 71

2.1. Herb Kelleher, Southwest Airlines Chairman

Herb Kelleher did not start his career by doing business, but instead he became a lawyer. Herb got his law degree

from Wesleyan, New York University. After graduating from the university, he applied his knowledge as a law

practitioner in East Coast and moved to Texas to open a law company. However, he tried to change his luck. Along

with his client, they developed Southwest Airlines. Kelleher said, ―Anybody who likes to be called a ‗professional‘

probably should not be around Southwest Airlines. We want people who can do things well with laughter and

grace.‖ It means that he does not want to disappoint people who have trusted them as professional, not in a serious

and stiff act, but in laughter and happiness. They recruit people with good behavior and train them in order to get

optimal skills. Southwest gives its employees a freedom to show their bright side of personality. Southwest believes

that an employee who is forced to become another person will feel pressure and stressed out in his work life, and the

stress will spread to other employees and customers. Stress is the biggest obstacle to be avoided by Southwest

Company. Southwest must have been ready and adapting for opportunities exists in the flight industries. One reason

why Southwest Airlines can adapt themselves in a short time is because the company believes its employees and

provides them with necessary policy and authority to finish their work. It is the reason behind successful trust that

Kelleher and Southwest Airlines have between them. Kelleher is the kind of person who will do what he says. He

thinks straightforward and speaks directly, caused people to respect and trust him.

2.2. The Implementation on the Company

Create a Legendary Culture

The fact is that the employees of Southwest Airlines extremely avoid industries trend. When the other flight

companies create a big flight route, Southwest tends to fly from one spot to another spot. They do not give luxurious

meal during the flight; the flight stewardesses give customers peanuts. They also use T-shirt and short pants. Their

styles are slowly imitated by other flight companies. People are interested and join Southwest because they want to

be the part of things that give them a meaningful life and significance changes; they want to be a part of something

big inside themselves. The employees of Southwest Airlines have ‗egalitarian‘ spirit in which they believe that they

are on a free, flexible, and unimpeded business world. Their mission is to open the sky‘s gate and give others

opportunities to see the thing, and to do things that they dream of. It is the reason of Southwest keeping the low

price. In implementing the discipline and motivated in all modesty, Southwest never seen as being trapped in self-

achievement or having serious decision. They are success in keeping focus on the goal and the strategic sense.

Having seen it from the surface, people can easily believe that Southwest Airlines does things frivols.

Keeping the Spirit Alive

Right from the beginning, Southwest always thinks that they are a flight company fulfilled by people who care

about the others, so their teams work hard to keeping the high standard. Lots of people in Southwest believe that

their company exists for a reason, not for a profit only. Their focus is to serve the needs and wants from people who

they care of, even if they have to involve pain and self-sacrifice, as if they understand that their needs is also being

fulfilled, not as the impact of chasing after their own importance, but as the impact of serving act. It becomes more

real in each day for them. Besides, with an easy access toward important people, employees indirectly develop their

self-confidence to be involved in the process of decision making. Southwest also fasten the process of employees‘

training with motivating people to understand the others‘ jobs. It is intended to stimulate the trans-functional

communication and to remind people that there lays another perspective rather than themselves. Southwest motivates

the employees to step out briefly in taking risks. In fact, Southwest has done everything that they could in keeping

the value and respect towards the employees who have done mistakes.

Leadership from the Inside Out

In Southwest Airlines, a leadership is conducted through a collaborative relationship. The people from Southwest

Airlines work in a relationship where the leader‘s and collaborator‘s role is being exchanged. The connection

between a leader and collaborator in Southwest Airlines is based on the commitment, not the pursuance. Leadership


is not a high technology for making people do things that they want to do. Leadership is to make people want to do

what they want to do is based on the mission, vision, and values that have been shared. When the priority of a leader

and collaborator is overlapping, it results a long-term commitment. When people are having commitments, they are

emotionally and intellectually tied between each other in order to achieve a goal or to conduct an act.

Great Service Begins at Home

Southwest‘s culture is rooted from the first effort to be ‗upside down‘ or in the modern life called as ‗mblusuk‘.

Their vision to be hold on together has built a family-like culture between them. The dominant values that push the

company and give a significant contribution toward the characteristic of Southwest Company are the profitability,

low prices, family, fun, love, hard work, individuality, ownership, legendary service, egalitarianism, common sense,

simplicity, and altruism. Besides, Southwest Airlines includes a role as a good company which is not only caused by

the obligation to become one, but also because it gives the society something that full of sincerity and love.

Compassion for the Community

Two main values that the company has; love and fun, are the form of the company‘s social responsibilities

towards the employees and its environment. With the values, Southwest Airlines is able to create a comfortable work

environment for the employees which also a part of its social responsibilities. The company is also involved in

several celebration days with showing its core value to the society in general. They give the society something that is

more important. They offer their time, heart, and soul. For instance, they contributed as voluntary in Oklahomat City

Bombing, The Loma Prieta Earthquake, St. Louis Flood Relief, etc.

Kill the Bureaucracy

Observing and discussing about the philosophy of Southwest itself, they also believe that bureaucracy defeats the

entrepreneur motivation, decreasing the development of company, and obstruct their competitive position. It means

that bureaucracy creates a dependent thought. Instead of pushing employees to create a sense of belonging and

responsibilities, bureaucracy teaches them to move the responsibilities away. Southwest gives an opportunity for

each employee to be involved in lots of decision making processes. As likely as each developing companies, a

structure is extremely needed. Indeed, there is a hierarchy in Southwest, but the company operates informally so the

new employees are able to communicate freely to all layers of pyramid structure every time they need it. They

believe that bureaucracy classifies people according to the position, authority, and capacity. It decreases the

productivity and obstructs the fast development of the company.

3. Case Study in Kompas Gramedia and PT Astra International Tbk

3.1. The Turning Point

The journey of Kompas, which was first issued in June 28, 1965 and established by Petrus Kanisius Ojong and

Jakob Oetama, cannot be separated from three turning points. First, Jakob Oetama‘s decision to be ready in holding

the responsibility in signing the apologize letter in February 5, 1978. Second, Jakob Oetama‘s decision of choosing

journalism as the ultimate of life. Last, Ojong‘s death in May 31, 1980 which was very sudden, where the position of

business matters became null, while the editorial matters was being held by Jakob Oetama. Because of the incident,

Jakob had to take over both his position itself and Ojong‘s position, which he did not know at all at the time. From

the three turning points, the second turning point was the one which touched Jakob‘s heart. At the time, he wanted to

move to become a journalist instead of being a teacher. The professions were conducted together, becoming the

teacher and journalist. However, he decided to choose one of the profession, gave a full passion into one, because his

soul is dedicated to be a journalist. For Jakob, the meaning of life is how we apply the faith through daily

experiences, not only based on theories or dogmatic. The gift that he felt was reflected into daily life which is full of

secular enjoyment. It is because he believes that faith was not made to be pure, but told through the life, applied in

the real life. That was the principle of life that he holds a lifetime. It cannot be denied that Jakob seeks for money,

but he hopes that the money he gets can gives the others opportunity to work, gives prosperity to the employees, and

gives social impact for the society around the company.


Back into the discussion about PT Astra International and one turning point experienced by William. There was a

time when Astra attacked by a series of challenges. From corruption accusation, the obligation to pay back the

government in a big amount of money, problem in its colleague with Holland investor, and the collapse of steel

factory which was built together with Canada company. However, William is William. When he heard about

business opportunity, he always reaches it, without any feasibility study like profit or loss analysis and the break

even point analysis. Lots of his decisions to enter particular business are based on ―anxiety‖ of an opportunity which

might not come again, resulted him to be always thirsts for new ideas and opportunities. The rushed decisions

making that he does caused William to be aware that he has to be careful in making a decision of his business. He

finally realized it because some of his decisions fell into loss and problems encountered by his employees and the

company. Since then, every time he wants to make a big decision which might also has a big impact, he will ask

some suggestions from the management of the company and his brothers who always full of calculation.

3.2. View and Leadership in Business and Life

According to Jakob, the profession of journalist and teacher are both have important role in giving values to the

society for human and humanity development. Both professions require an all out attitude and motivation, not only

expertise in its field, but also demand the whole energy, power, heart, and mind to be unaware with the work time.

Jakob has a firm belief that in working on an industry, especially in a media industry like Kompas, working in team

or group is a necessity. It does not mean to finish a work together, but also chain some energy together into one. Any

weakness has to be tolerated and any strength has to be mobilized to any party, in order to achieve an optimal

balance. Observing the profession as journalist, Jakob can be entitled as a productive writer. He sets a high value on

concentration, focus, and effectiveness in working.

At one moment, he got sad news of Ojong‘s death. He felt sad and sorrow. He is the type of person who has big

empathy. It is showed by the condition where he cannot sleep because he keeps thinking about the problems

encountered by this country, as example. The thoughtfulness and fidgetiness that he feels are always brought to

home and even to sleep. Because of that reason, the time when tears dropped form his eyes as he heard about

Ojong‘s death was not a surprising picture. However, his faith and belief have strengthen his heart as he believes that

death is a door toward the eternal life. As he got up from his sorrow, Jakob wiped the tears off directly, realized his

humanity weaknesses. At the same time, something appeared on his mind, ―Faith strength us‖ and he prayed on heart

and came back in a rigid condition. Ojong‘s death left a heavy responsibility in Jakob‘s hands. All this time, Jakob

focused on developing editorial field. However, he realized that the greatest appreciation towards those who have

left is when their creations and inheritance are continued by other people, and Jakob was ready to continue Ojong‘s

work with the help of his colleagues.

Now, he has to carry out business matters, which he does not know about. The strength and talents that Jakob

Oetama has is ngemong only. He tries to apply the concept of ngemong as a habituality implemented in his company

and environment, not as a written theory only. He is a kind of person who does not forget his origin. His attitude and

appearance are still modest even though he is now a successful businessman. His daily life is very wealth and bright,

does not mean that he wastes his money away every day, but it means that he lives a life where people love him and

he can also give love to other people. He is very discipline; he never comes late to work, even before the time, and

he fulfills all invitations given to him. The thing that makes his employees amaze is his habit to greet the employees

which has adhered on him; he is very friendly. For over the years, he teaches all leaders to do the ‗management by

walking‘, not finishing all duties and problems as the meeting over. In the management system that he implemented

in his company, the factors that are held tightly are the human factor and humanity factor. Both factors are

emphasized and become the key factors because they are the executor of the plan which first established together to

achieve the goal of the company. There is a group responsibility between the company and the employees, in which

the bottom-line is based on the philosophy focuses on human, which is caring people, caring the others. In other

hand, Jakob Oetama very appreciates the hard work of his employees. For Jakob, the measurements of being

successful for a journalist does not change until now, those are: having strong characteristic, working hard in seeking

news, being open, sensitive and caring, having orientation along with beyond and transcend view, always being on


the society and events. Being a journalist means to give high dedication in distributing the effort, energy, mind, and

time.

Meanwhile, William, who indeed has a high entrepreneur soul, occupied some business at the same time in earlier

business, like continuing a rollaway business established by Lily and supplied department needs. Like others

Tionghoa entrepreneurs, William had to maneuver the Program Benteng. He made a business frame ‗Ali Baba‘ with

jobs distribution: indigene people managed the business license while non-indigene people managed the operational

side. However in the middle of its development, one of his colleagues who wanted to take over their business

slandered William by accusation of tax peculation. William was kicked out from the company and sent to Banceuy

prison. At that moment, he felt like he has found the God that was disappearing from him. The change from his

spiritual side was seen in his daily life. Not so long, Lily‘s effort to set him free from the jail was success. He was

out from the jail with a new spiritual spirit. With God on his side, he had a very strong mental foundation, because

the company that was established by him was not his belonging anymore even though he was proven not to have any

finances crime. Actually, William wanted Astra to become a big tree which can give lots of benefits to its

environment, protecting all people who need protection from it, and always refreshing. He explains that, to get the

wish, Astra has to results profits. With the existence of the profits, Astra will be able to grow and extend its business

in order to accommodate more labors, retribute, increase the employees‘ salary and conduct a training session for the

employees so they can develop themselves to become the human resources people can rely on which can also make

Astra become greater than before.

The thinking system which is held by William is a loop effect by using a close loop model, where the output gives

effect towards the input, that is: Astra grows, offers job demands, consumption increases, business grows, and

Indonesia‘s economy grows. That is an interconnected close loop, which results a growing economy that may help

Astra to keep growing. William even believes that a company ownership does not always have to be related with

management. William‘s will is quite big to see Astra‘s growth. William is also lucky because he has some strong

colleagues, his brothers: Kian Tie and Benjamin. William is like a pedal who always seeks for new projects and

business opportunities. Kian Tie is like a clutch who analyzes whether the projects or opportunities are good or not.

His thinking system is systematic according to economy. Benjamin, the brake, is a figure who settles all things

down. He is systematic yet organized in details and perfectionist. Their difference behavior and attitudes are

believed to construct a balance of each other‘s nature.

It has been a general issue that behind his modest and friendly manner, William is very ambitious and tends to be

hard in doing business. If he has a will and particular business idea, he will furiously assist and look after his idea.

Uniquely, even though his expansion passion is always tempestuous, William is capable in managing the emotion.

The same attitude appears when they persuade the outside party/company. William always tries hard to gain trust

from the bank manager. He also teaches and forms cadres for the experts to follow his path. Even though William is

popular as a brave entrepreneur in starting a new business, has a lot of ideas, and has a high reputation, William is a

very friendly, soft, kind, and donor person. Every time he meets with people in his business trip, like security guard

who welcomes him, lift officer, or the hotel manager, he always sticks some money onto their palm, which is called

‘salam tempel’. He also gives his own money to Astra employees who are doing a training program in overseas.

3.3. View and Leadership in Business and Life

Observing the development of Kompas Gramedia, at first they seemed having less of competitors. Now, the

competitors are a lot, especially those with big finance and dynamics, along with high motivation and enthusiasm. It

makes the developments has to be assisted, while the mainstay of Kompas Gramedia is creditability and trust. They

have a mission; that is the strength of the company. Newspapers grow through daily interactions with problems

encounter every day and the vision-mission developed. The serious newspapers have references frames, philosophy,

outlook, but the translation is still professional.

The big changes in the existences of electronic and digital media, which are not only related to the

contemporaneously and rapidity of information delivery, but also the increase of quality and the searching of new

tricks, are also becoming the addition. The delivery framework becomes simultaneous so the press media does not

even know about the history‘s periods; the ways of thinking and work styles are also changing. Kompas has a value

which becomes its base and defined as vision and mission, which runs in their blood, that is historical humanism.


Therefore, on the change of the technology of communication which happens rapidly, they still believe that press

media can last long with a good attention on the young‘s‘ needs. The things that should be concerned in taking the

problem are divided into two principles; first, a commitment on the basic values of journalism, for example is

honesty and ethics which have to be held by the journalists. The second is how the editors or the managements of the

company can arise the inspirations of the journalists so they can result in a better achievement. Besides, one of the

commitments that keeps on being developed by Kompas in giving contribution to the citizen of Indonesia is

motivating the effort in getting back Indonesia even though there are some troubles like the economy, which is not

yet able to give the society a prosperity, and also the law maintenance which is not certifiable. About Kompas

Gramedia, Jakob also emphasizes on the humanity, because the thing served by Kompas is human matters, and that

might be the reason why Kompas Gramedia is open. Through the openness of Kompas Gramedia, various potential

like ethnics, religions, and background are unireable. He also believes if all potential can be unified, Indonesia

united, we all can go forward.

Kompas wants to stand ahead, with giving priority to the strong brand which is able to survive, develop, and get a

first. However, passing more than 46 years old, Kompas realizes their position in this competitive condition.

Nevertheless, Jakob believes that content is the main factor. The growth of internet just as same as its predecessor,

press media, which is not instant, sudden, and definite, but there will be also increase and decrease process. He and

the colleagues in Kompas Company try to survive because they have a good intention and determination to

implement their main mission, which is as a toll for educating the society, as the part of nation and character

building.

Behind all of the ambitions (in positive way) and intentions in giving positive impact to Indonesia, he is sure that

they have to work as a group; it is impossible to work all alone. The company that is held by him has been growing

with the collaboration of many people. The most important thing is that God which always leads the development.

―Eternal thankfulness‖ is not a phrase only; it something that he has always done in his life. In every success or

failure that happens in his life, Jakob always be grateful. It is seen as the wealthy on his life. He even feels the God‘s

work and His miracle upon all of the things that he has done in Kompas Gramedia, as we have known that he was a

teacher who did not anything about business. The only strength he has at the tie is ngemong, which he used to unite

people‘s strengths, motivate them to keep growing and help each other. Along with the growth and development of

the company, Jakob realizes and feels that Kompas Gramedia is a copy of his journey on life. The growth of Kompas

Gramedia is an encounter in Jakob Oetama‘s life. The encounters keep alive, without stopping, giving the motivation

to life from the positive side, and giving the burden from negative side. However, with pray and thankfulness, he

amazingly passed them all. Even though his life is really complicated, he always be grateful. He often says that

everything is done because of Allah. Though he does not deny the fact that there was time when he was very

desperate and disloyal to God, but He is The Greatest with all of His mercy, and he becomes even closer to God.

Going back to William. In Jakarta, William and his colleagues agreed to buy a ‗sleep company‘ and changed its

name to ―Astra‖. William hopes that he will able to bring Astra to its greatness so everything that is considered as

something good for the company will be accepted. William became the one and only owner of Astra International in

1961. He does not want to give up and believes that God always besides him. In the horrible macro-economy

situation, he kept trying to seek for information and business opportunities in order to take care of the company from

busting up. This time, prays are with him.

The development of Astra after getting two offices in Bandung and Jakarta was the issuance of The Warrant of

Eleven March 1966, which states that General Soeharto became The President of Indonesia as the subtitute of

Soekarno. He arranged the New Order government and determined to recover the economy status of Indonesia as

quickly as possible. Done in a flash, William started to point his aim to government projects and success in getting

the trust to imported 80.000 tons of asphalt from Japan. Astra also won a tender to built steel bridge construction in

West Java. At that time, all of employees, who were not a lot, were enjoying the situation where they had to work

very hard and feeling comfortable because William highly appreciated them as humans.

Indeed, luck cannot be separated from William. The internal recommendation from Kamio (The manager of

Toyota in Asia and Oceania) and Indonesia government finally made Toyota to choose William as their colleague.

William was absolutely happy. He felt that all of his luck are gifts from the God and he had to pay all of the gifts

with opening a work field and work hard for the country. He was more than happy to see people working rather than


saw a mounting pile of money in his account. This view is often misunderstood by the outsider when he will

aggressively establish a company-by-company. Astra regarded as octopus, a greedy octopus.

Having managed to hook Toyota, the name of William getting bounced in a range of major companies in Japan.

In just one year, William was able to pick up the giant Japanese corporations to partner with Astra as Fuji Xerox,

Honda Motor Company, Daihatsu, and Komatsu. He never stops looking for wind. He also gone through a major

step by establishing PT Astra Motor Sales in 1976—this is the company that later became the Toyota car dealers

which are very successful, and recently renamed as Auto 2000. During the following years, he pointed to the Astra

dealers and representatives to sell products throughout Indonesia. This is the foundation of a vast distribution

network and become one of the biggest sources of Astra‘s superiority. William vigorous nature and spontaneity is

based on the principle that the opportunity does not always come two times.

Until the final moments in the Astra, he never ceases to be an amazing figure. Especially in overcoming the Bank

Summa‘s crisis which erupted in July 1991 and brought William sucked into the vortex problem. Management of the

bank which has nothing to do with the actual business of Astra was actually handed to his eldest son, Edward

Soeryadjaya, an undergraduate economics graduated from West Germany. In this bank, William pocketed 60 percent

of the shares which are divided equally with Edward. However, unfortunately, Edward was less careful in running

the banking business. Edward was too generous in the credit indulgence. As a result, in 1992 the debt-stricken banks

are so big and to pay it off, William was forced off its stake in Astra. William resigned. He always returned to God.

He has always adhered to the principle: Man tried, God disposes. The most important thing to him was the fate of the

employees and customers of Bank Summa. He was greatly saddened to imagine that many employees have lost their

livelihoods.

In fact, he was even willing to sign a personal guarantee which a number of people were willing for the shackled

hands as it provides. Several top executives of Astra were surprised and shocked after knowing about William‘s step.

This decision was taken in the name of his family, Soeryadjaya. After signing personal guarantees and a statement of

June 1, William tried to move with an accelerated rhythm compared to previous months. In fact, he asked his friend's

willingness, Mu'min Ali Gunawan of Panin Group to manage and bring healthy to the management. There are three

main things he requested to be styled: liquidity, managerial, and solvency. But the available state and funding was

not supporting. Eventually, he was poised to swing a bigger step, which was much earlier had been suggested by a

number of parties and being a subject to many speculations: sell Astra‘s stock. William chose to sell all shares of

Astra to an overseas investor, Jardin, rather than handing Edward to go to jail. In the end, William sought to build

the business back, although it was not as successful as the Astra. However, all the values that he woke up, including

the company's philosophy remains the same as when he was still serving as the owner of the company.

3.4. Relationship of Employee and Company in Performance

Regarding the business field of Kompas Gramedia itself, Jakob asserted that all fields of work are equally

important. Indeed, each part has a different function and role, there are meeting with people outside the company,

and there are some people who prefer struggling with the documents. All are expected to work together. In addition,

he hoped that the "good‖ vote obtained by Kompas Gramedia itself was not only from the environment but from

someone else, which in this case means the Indonesian people as a whole. Jakob also calls attention to all employees

on the issue of honesty in power and authority, finance, and the problem of hard work. He was determined to

continue forwarding the late Ojong‘s discipline, maybe with another style but will not be soft. He wants all

employees to continue the legacy of the late Ojong like the issue of integrity, honesty, frugal, simple, and diligence

work. Jakob‘s simplicity of life which is still applied and is very impressive in the hearts of the employees actually

has been growing since childhood because the simplicity of the teacher family dominates the formation of simplicity

in attitudes and way of life. Last but not least, what would like Jakob bequeathed to his successors in AP are the

values. He always reminded his workers, that be great financially is important, but the shared values will determine

how someone could interpret his life and achieve success in his own eyes.

While the founder of PT Astra International Tbk, William, seeks to bind the employees‘ emotions and to have

Astra in its own way. In addition, as a company owner, William stated that the aspects of openness, equality, and

unity must exist in Astra. He always told his employees, treat people as human. No employee is dismissed because it

violates the principle of the company, because Astra was not built for the money alone. Money is not everything.


Astra‘s main goal is the welfare of the employees and the nation. Another philosophy which William applies and

understands is 'let the flowers bloom'. He was reluctant to interfere in the operations of the business because

basically he did not want to make Astra not going well. He is aware of its limitations. Every time he was in too deep,

just a lot of big problems that caused accidentally due to the high aggressiveness which crashed into the business

opportunity. And it worked, it seems like the dreams and obsession of William during his lifetime have been

translated by his successors in the Astra, namely how to create jobs as much as possible for the people of Indonesia.

Right on the anniversary of William in his 60th, Astra authorized the corporate philosophy which is a manifesto that

has been the soul, breath, and a DNA of nationalist industrialists who are always thinking of the welfare of the

people. William was very happy because of what had been thought, felt, said, and done now could be crystallized.

Since the beginning of building Astra, to the professionals and employees, William was repeatedly conveyed the

message, if Astra is successful and great someday, the success and greatness should not be enjoyed alone. The

success of Astra should be a blessing to many people. Then on May 2, 1980 he established Dharma Bhakti Astra

Foundation. Through this foundation, William wanted it to be able to expand in reaching more people who can be

helped; the main focus is the development of small and medium-sized businesses. He helped create Astra‘s culture

with an approach and distinctive personal style: humanist and fatherly. This was done through a natural process with

a very dominant pattern, which gives an example. For example, hold a joint Christmas celebration, congratulate Eid

directly to the employees one-on-one, and is active in national day celebrations.

3.5. Other Dynamics Life of Jakob Oetama and William Soeryadjaya

Indeed, they both have carved out a marvelous history for the mankind. But it does not mean they are super

humans without the slightest deficiency. Almighty God is just perfect. Jakob and William have a few things which

are rated as "gaps" in their lives, according to the views of others. One weakness that is often criticized by people

related to issues in Kompas Gramedia is an inadequate salary when compared to the time and effort given by the

employee. In addition, the process of becoming the permanent employees of the company is very complicated.

If the constraints related to salaries and hiring process experienced by Jakob Oetama, William Soeryadjaya

experiencing problems in his personal life, more specifically in the way he educates his children. Several parties,

including his own children felt that William pamper them and give whatever they want. Not infrequently, William

provides financial support in a very large number that are often scattered by the children at the club and clubbing

places abroad. Actually there are some reasons why William did it. William, who came from poor families do not

want their children to feel the feelings of lack of money, based on that reason the money which he has are equally

shared to his four children. Consequently, they tend to not have the responsibility.

4. Conclusion

Leadership models applied in Kompas Gramedia and PT Astra International Tbk have been analyzed based on the

pattern of implementation, leader-employees relations, and performance of the company, as well as in the

implementation of every aspects in daily life. Researcher identify linkages between some of these and found that:

a. Individual characteristics that consist of values, leadership styles, traits, personality, and self-learning is a process

that forms a pattern of thinking and leadership implementation of a servant leader.

b. Corporate culture that consist of leader-follower work engagement, productivity focus, and performance focus is

the state in company which leader gives emphasis on self-development employees in order to achieve higher

productivity as well as provide a better end result

c. Systematic decision making which consists of group decision making and tactic decision making is base of

decision making used by the company with reference to the interests of all employees and the company's vision

d. Spirituality that composed of horizontal and vertical relationship is an important factor underlying the entire

decision and thought of a servant leader in all aspects in life, because a servant leader understands that "all of this

back to God". Thus, what he did and what he has decided is for God and others, not for himself.


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GramediaPustakaUtama

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Ismal, R. (2010). "The Management of Liquidity Risk in Islamic Banks: The Case of Indonesia." 264.

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Swanson, R. A. and E. F. HoltonIII (2005). Research In Organizations: Foundations and Methods of Inquiry. San Francisco, Berret-Koehler

Publishers, Inc.214

Theresa KaetkaewPunnachet, S. (2009). "Catholic Servant-Leadership in Education: Going Beyond The Secular Paradigm."

Utami, R. M. and D. C. Lantu "Development of Competitiveness Model for Small-Medium Enterprise Among The Creative Industry in

Bandung." 7.




Developing Competitiveness of Small and Medium Scale Industries

in Magelang and Salatiga City: An Innovation Policy Perspective

Anugerah Yuka Asmaraa*, Purnama Alamsyah

b

abPappiptek LIPI, Building A PDII LIPI 4th Floor Jl. Gatot Subroto Kav 10, Jakarta Selatan 12710, Indonesia

Abstract

Innovation is a main factor to increase competitiveness of industry. Small and Medium Scale Industries (SMIs) considerably

contribute to reduce unemployment in Indonesia, especially after economic crisis in 1997. Growth of Small and medium scale

industries (SMIs) is very amazing in Central Java. In 2013, the significant increase of SMIs was accounted for 88.505 units in

this area. Both cities in Central Java which are popular with unique SMIs are Magelang and Salatiga City. Both cities do not have

natural resources in which they totally rely on their economy revenue on services and tax. SMIs in Magelang and Salatiga City

are limited at human resource, capital flow, advanced technology, and market access. Even though, a few of those SMIs are able

to innovate by means of way themselves. In Magelang City, innovation of SMIs is very influenced by a role of local government

because each of SMIs does not have a mutual goal. One of prominent government programs which it can promote

competitiveness on SMIs is Krenova Program. Whereas, in Salatiga City, a few of SMIs collaborate each other to achieve a

market access at higher level. Local Government of Salatiga indirectly stimulates SMIs to innovate. However, both local

governments (Magelang and Salatiga City) do not assume innovation as a single factor. In broader sense, innovation is influenced

by three elements which they are interwoven each other (namely: social, technology, and economy).



Keywords: competitiveness; innovation; small and medium scale industries; role of government.

1. Introduction

After economic crisis in 1997, small and medium scale industries (SMIs) have played a prominent role in

economic development in Indonesia. They have been able to persist in economic fluctuation and to accommodate

many people to work in this sector (Asmara and Rahayu, 2013; Ulfa, 2013). In Indonesia, SMIs have approximately

absorbed million people to work in this sector and to reduce unemployment (Tambunan, 2006; Setiawan, 2010).

According to Saedah (2013), total number of SMIs in Indonesia are 3,9 million SMIs which they can absorb a

plentiful amount of work force (9,14 million people). In 2012, SMIs had entirely contributed about 10% of the gross

national product and its contribution will be targeted to achieve about 50% in 2025 (Hidayat, 2013).



80 Anugerah Yuka Asmara / IICIES 2014 Proceeding

Saedah (2013) reveals that the accretion of SMIs is concentrated about 75 % in Java Island, and the remains of

them is about 25% outside of Java. Most of all SMIs are located in Central Java Province. In 1998, SMIs in Central

Java Province were accounted for 3.061 (53,6%) units of 5.715 units in Indonesia, and most of them were specially

existing in rural area (Marijan, 2005). In 2008, the total number of SMIs in Central Java were 64.294 units. In 2013,

the significant increase of SMIs was accounted for 88.505 units or 37,66 percent of the growth of SMIs in 2008

(Strategic Plan of Central Java Province 2013-2018 period).

Thus far, SMIs have contributed in alleviating poverty, reducing unemployment, and minimizing negative impact

of urbanization in Central Java. (www.balitbangjateng.go.id). According to Swastuti (2013) who cites from Agency

for Planning and Development at Central Java (abbreviated Bappeda Provinsi jawa Tengah), SMIs can absorb

unemployment about 5 million people in 35 regions of Central Java. SMIs produce many products such as clothes,

batik, bags or belts made from animal leather, variety of foods and beverages, wood engraving, and the other unique

products. Therefore, Central Java is the heart of SMIs in Indonesia.

Both regions which are popular with unique SMIs in Central Java are located in Magelang and Salatiga City.

Magelang and Salatiga City are highly known as city of SMIs for various foods and beverages. Unlike the other

cities in Central Java, Magelang and Salatiga city do not have a plentiful number of natural resources (mining, forest,

ocean). In fact, most of food-beverage SMIs do not have legal certificates or product standardization. Prasetyo et al.,

(2013) reveals that food SMIs in Magelang City having P-IRT (or health standard from Government of Indonesia)

are 7,34% of 654 food SMIs. While in Salatiga City, according to Ulfa (2013) who cites Disperindagkop and

UMKM’s† data of Salatiga City (2006) mentions that the total number of SMIs in Salatiga are 138 units (updated

data, there are 587 SMIs in Salatiga City). In food-beverage sector, there are only 42 SMIs of 95 total SMIs that

have good quality product and SPP-IRT certificate.

In many countries, governments believe that small and medium sized enterprises (SMEs) require supports, again

due to market failures, such as insufficient information regarding good practice and new technologies. Recent SMEs

innovation policies include subsidies for business consultancy, government supported learning networks and

sponsored programmes which attempt to upgrade SMEs (Hobday et al., 2012). Many problems of SMIs (especially

SMIs on beverage-food sector) lead to role of local governments (Municipality of Magelang and Salatiga) to

increase performance and competitiveness of SMIs by conducting innovation policy in both regions. Castro et al.,

(2013) argue that innovation is a primary instrument of competition for many firms, especially within technology and

knowledge-based industries. Therefore, competitiveness is main prerequisite for each industry to survive in midst of

uncertainty of recent economy development.

In both areas, SMIs grow to achieve their market in a different way. In Magelang City, SMIs compete each other

to grab market niche at local and regional (province) level, while in Salatiga, they collaborate each other to retain old

market niche and also to attract the new consumers. In this case, both municipalities of Magelang and Salatiga play

the major role to promote SMIs growth. Both governments keep an eye on competition among SMIs to avoid a quick

change shift from fair competition to fierce competition. One of the policies which is undertaken by both

municipalities to promote the SMIs development is innovation policy. Either competing or collaborating is directed

by local governments through innovation-based SMIs development to increase their competitiveness at local and

national level. Mani (2002) and Taufik (2005) stress that government role in developing countries is vital to

encourage and accelerate growth of industries which its growth is based on innovation. This study aims to reveal the

type of competition of SMIs in Magelang and Salatiga City as well as to analyze the role of local government in

supporting innovation-based SMIs development in both areas.

† Disperindagkop and UMKM or Dinas Perindustrian, Perdagangan, Koperasi, dan UMKM is as same as Agency of Industry, Trade, Cooperative,

SMIs of Salatiga City.

http://www.balitbangjateng.go.id/

Anugerah Yuka Asmara / IICIES 2014 Proceeding 81


2.1. Small-and-Medium Enterprises and Innovation

Small and medium enterprises are much more than simply economic agents; they are social and cultural

conveyors of values, trust, self realisation and welfare. They represent a large part of the population worldwide and

their desires to realise their own autonomous ideals, objectives and aspirations. Supporting their development

process means helping the people to increase their own welfare which may be independent from quantitative

economic success (Parrilli, 2007). Nowadays, many SMIs have evolved to be more innovative to fulfill local and

global demands. In this matter, innovation is defined as an interactive process among a wide variety of actors. It

stresses the point that firms do not innovate in isolation, so that innovation has to be seen as a collective process. In

the innovative process firms interact with other firms as well as with non-firms organizations such as universities,

research centers, government agencies, financial institutions and so on (Malerba, 2002). In line with Malerba,

Kuhlmann et al., (2010) state that innovation is a social, economic, and technological character. It emerges

sometimes spontaneously, sometimes as a result of actors strategic endeavor. Innovations vary according to subject,

location, actors, speed, and numerous other characteristics.

2.2. Competitiveness

Innovation is a must for industries to sustain their own economic activities and to compete with other similar

industries. Porter (1980) defines competitiveness or competitive strategy as taking offensive or defensive actions to

create a defendable position in an industry. In developing countries, to support industry competitiveness, role of

government is absolutely existing. Caniels et al., (2009) argue, over time, public policy has become a factor of some

importance for the sector’s more recent expansion and its future growth potential. Public policy, and in association

with this the role played by public institutions, is therefore an important contextual factor influencing the

performance of the sector. Governments using the concept as policy tool to promote competitiveness by innovation,

clusters and poles of competitiveness, even if they develop on the basis of pre-existing spontaneous industrial

districts, appear as politico-economical constructs at the interface between sciences and technology on the one hand

and production on the other hand (Ganne and Lecler, 2009).

2.3. Innovation Policy

Regarding this study, the term innovation policy is often synonymous with R&D policy, partly because of the

market failure argument. However, it should be noted that the above definition does not capture the incremental

innovations which can lead to large gains in productivity, product and process quality which can be essential to

structural change and economic growth (Hobday et al., 2012). Innovation policy can be characterized as “systemic”

in a double sense: as a system-wide distribution of varieties of innovation-related policies across domains (e.g.

manufacturing, services), or as policies designed to work on system characteristics, such as demand-oriented policies

(Kuhlmann et al, 2010).

Recognized that policy is made in complex interaction processes between a large number of actors which takes

place within network of interdependent actors, the actors involved are mutually dependent because they need each

other’s resource to achieve goals (Klijn and Koppenjan; Scharpf; Benson; Rhodes in Hill and Hupe, 2002). Related

to innovation policy, it means setting up powerful schemes and developments which are attractive and able to use

multiple synergies which can decompartmentalise both sectors and actors (public/private, production/services, basic

and applied research, economic management and management of innovation, etc.) so as to accumulate around a

given sector strong potentialities and broad dynamics which allow the poles to present themselves as major

benchmarks capable of holding their own not only nationally but globally. The key words in this perspective are now

competitiveness, global networks, attractiveness, and especially governance, the main problem of these new poles

being to maintain the coordination of a large number of different actors at all levels (Ganne and Lecler, 2009).


3. Methodology

This research is a qualitative method using a descriptive analysis to explain the phenomena of the SMIs

competition pattern in Magelang and Salatiga City. In addition, this study aims to describe the form of policy which

is undertaken by both municipalities to promote SMIs competitiveness in Magelang and Salatiga City. This research

uses two data sources, namely: the informants interviews (primary data) were derived from the government officials,

entrepreneurs of SMIs, and the consumers. Then, review of books, scientific articles/journals, website, newspapers,

and the other relevant documents are secondary data which used in this study. Data collection had been conducted in

Magelang City by the middle of 2012 year and in Salatiga City by the end of 2012 year.

Analytical framework in this study is innovation policy adapted from Kuhlmann et al. (2010). They state that

innovation policy is not only technological factors, but also social and economic factors which those elements are

strongly embedded in a organization environment.

Fig. 1 Elements of innovation policy

Source: Adapted from Kuhlmann et al., 2010


4.1. General Problem Description

SMIs in Magelang City

According to Bureau of Cooperation, Trade, and Industry of Magelang City (2012), number of SMIs in Magelang

City are 1.357 units consisting of 39 medium industries, 294 small industries, and 1.024 household industries. Most

of them are food industries (654 units) dispersed in three sub-districts in Magelang City (Three sub-districts are

North Magelang, South Magelang, and Center Magelang). They are mainly constrained by capital flow, technology,

human resource, and market access. Low capital is crucial factor to develop SMIs and to compete with other SMIs

from outside of Magelang city. In this case, SMI’s capital flow is stemmed from internal family budget or loan

capital from middleman or small scale bank (In Indonesia, middleman is familiar with “tengkulak”, whilst small

scale bank is popular with “bank kredit or bank cicil”). Most of these SMIs are traditionally operated by people

whom their education level is limited on elementary school or junior high school. Each of SMIs almost uses old or

simple technology to produce products that it only yields a number of limited products. In addition, the restricted

market access influences activities of production and distribution of SMIs and which in turn reduce the profit for

SMIs themselves.

Prasetyo et al., (2013) reveal that SMIs in Magelang city, particularly food industries, have had certificate from

Agency for Drug and Food Control Republik of Indonesia (abbreviated BPOM RI), but most of them have not had

certificate for ISO 9001/ISO 17025, Hazard Analysis and Critical Control Points (HACCP) and Indonesia National

Standard (abbreviated SNI). Many SMIs do not have a legal certificate either national or international (Not only in

Innovation of industries Social values:

(Norm, informal agreements, convention,

customary law, etc)

Economy

(market, demand, competitor, etc)

Technology (research and development,

purchasing new machines, etc)

Competitiveness of industries


food industries, but also in other sector industries). This matter becomes a crucial factor that constrains spread of

SMI’s market access to national or international area. Henceforth, it leads to low competitiveness of SMIs and to

make economic development to be sluggish in Magelang City.

SMIs in Salatiga City

There are thousands of small-medium scale industries (SMIs) dispersed in four sub-districts in Salatiga City. Like

SMIs in Magelang City, SMIs in Salatiga are dominated by beverage and food industries such as crackers, nuts,

soybean, sticky rice, brown rice, and others. Each of SMIs has a distinct character even though one industry

produces similar products with other industry products. SMIs in Salatiga City have problems in extending and in

growing industry capability, especially concerning with worker skill, capital flow, product packaging, and market

niche. Majority of actors or entrepreneurs of SMIs are people who do not have formal job and who have been retired

from their job (low-medium economy actors). Education level of workers is limited at junior high school, senior high

school or vocational high school. Capital flow of SMIs, like SMIs in Indonesia, is very limited on purchasing raw

materials, hiring workers, fulfilling their daily needs and maintaining machines. They cannot buy a new production

machine, to save their profit, and to extend their industry. Some SMIs often receive aids (machines, money,

workshops) from large scale industries which they are interested on SMIs.

4.2. Innovation Policy for SMIs

In Magelang City

According to Kuhlmann et al., (2010), generally there are three elements influencing innovation (social,

economy, and technology). Most of SMIs in Magelang City are categorized into food and handicraft industries.

These elements are truly considered by Municipality of Magelang to promote SMIs innovation in Magelang City. In

case of Magelang City, SMIs capability to innovate is highly influenced by the involvement of Municipality of

Magelang.

Fig. 2 Innovation elements of SMIs and innovation policy in Magelang City

Source: Modified from Kuhlmann et al., 2010 and adjusted from field findings, 2013

Picture above can be described as follow. Innovation comprises social, economic, and technological values that

these elements are strongly interwoven with one another. Dankbaar and Vissers (2010) argue that innovation is

created not only to internally satisfy industry needs, but also to externally fulfill demand needs. In other words,

innovation can increase competitiveness of SMIs if it is used by consumers and its benefits are received by SMIs.

Actors of SMIs in Magelang City compete with one another. They generally tend to behave individually and to

develop their own business. Moreover, each of SMIs actors does not have a mutual goal to grow SMIs more

Krenova program implementation;

yearly program to

increase

performance of

SMIs

Social values among SMIs

actors : Tend to behave

individually

There is no mutual goal Competition with one

another

Economy factors: Relying on domestic and

foreign tourists

There is no specific market type to sell SMI’s products

Internal technologies:

A cutter-tofu tool; a simple accounting software; a paving block

Competitiveness at local and regional level (Java area)

External technologies:

Computer/information technology

Inside of Magelang City

Outside of Magelang City


significant in Magelang City. Most of SMIs actors are Javanese ethnic, but in general business environment, this

social tie is less considerate as a main factor to unite SMIs goals.

SMIs in Magelang City have used both external technology and internal technology to support their production

activities. External technologies are advanced technologies like mobile phones, computers, and others. Internal

technologies are simple technologies made by Magelang townspeople or actors of SMIs. Internal technologies are a

cutter-tofu tool to produce tofu snack (Rusdjijati, 2012), a simple accounting software which it is made by lecturers

from Magelang Muhammadiyah University to accelerate works in SMIs, and a paving block to mold the brick and

paving (Aji et al., 2012). These new technologies considerably assist SMIs to increase their products quantity and to

make production more efficient.

Majority of SMIs in Magelang City are mostly relied on domestic and foreign tourists who visit to Magelang City

and its surroundings area. One of the superiorities of Magelang City is where this city is surrounded by various

tourism destinations like Borobudur temple, Merapi Mount, Merbabu Mount, Dieng Mount, Ketep Pass, Kopeng

Area, and Yogyakarta City. In addition, Magelang City is located at an intersection of four close cities namely,

Temanggung, Yogyakarta, Semarang, and Purworejo which brings about Magelang as a transit city in Central Java.

Unfortunately, several SMIs do not have a specific market to sell their products. They generally sell their products to

retail stores and also they directly sell products through their stores. Consequently, there is no a vision which it can

tie actors of SMIs to make SMIs more innovative.

Even though, few of SMIs use technologies made by themselves or university, but most of SMIs still use

traditional technologies (or by their hands) to make a product. Therefore, capital flow, advanced technology, human

resource, and market access are still key problems for SMIs in Magelang City to innovate. In this matter, Local

Government of Magelang City initiates to promote competitiveness of SMIs by means of reducing limitations of

SMIs and to provoke SMIs to innovate more. Agency of Research, Development, and Statistics of Magelang City

(abbreviated Kantor Litbang dan Statistik) in collaboration with Agency of Cooperative, Industry, and Trade of

Magelang City (abbreviated Diskoperindag) arrange and implement many programs to promote innovation

capability on SMIs.

One of the prominent programs supporting innovation is “Krenova Program” (Creative and innovative program).

In Indonesia, Krenova program is initiated by Indonesian Ministry of Research and Technology. At local level, this

program is implemented by Agency of Research, Development, and Statistics of Magelang City. Krenova program is

one of successful programs which it can provoke SMIs to innovate in short period of time, exactly only one-three

years. Amazingly, many of SMIs are involved on this program and most of them are successful to be champion at

national level. One of judgement criteria of Krenova is capability of SMIs or townspeople to innovate. It means that

Krenova program has been able to make SMIs more innovative in Magelang City. Indeed, Magelang City has

received the “Anugerah Ristek award” at national level from Indonesian Ministry of Research and Technology (In

Indonesia abbreviated KRT) as many as three successive periods (2009, 2010, and 2011).

Krenova is implemented by Municipality of Magelang by means of both formal and informal way. First,

Municipality of Magelang formally collects information from SMIs, selects them, and determines SMIs which are

deserved to be engaged on the Krenova competition at local level. Next, Government of Magelang City forwards the

Krenova champions from local level to national level. At national level, Indonesian Ministry of Research and

Technology judges candidates of SMIs (all SMIs in Indonesia) and this ministry announces its champion. Krenova

award is received by few of SMIs in Magelang City which in turn stimulates other SMIs to participate on this

program and to increase SMIs innovation capability. Second, Municipality of Magelang informally invites actors of

SMIs through person-to-person communication and also use of social networks in Javanese culture. The result of this

way is effectiveness of Krenova implementation to jack up desires of SMIs to innovate in Magelang City.

Agency of Cooperative, Industry, and Trade of Magelang City (Diskoperindag) also implements programs to

development of SMIs, but these programs are larger than Krenova program. Diskoperindag’s programs consist of

not only regarding to innovation capability but also regarding to sales, workshops, funding, etc. Diskoperindag’s

programs indirectly contribute and support Krenova Program which it is implemented by Kantor Litbang and

Statistik Kota Magelang to promote innovation on SMIs. In example, Diskoperindag invites SMIs to join in many

fairs at both local level and national level. In addition, Diskoperindag engages few of SMIs actors to be keynote

speaker and to participate in conferences or workshops concerning with a strategies how to develop SMIs. These

programs can stimulate SMIs to open their mind and to give many opportunities for SMIs to innovate better.


However, emergence of Krenova Program is not separable from programs which are arranged and implemented

by Diskoperindag of Magelang City. In an example, a new technology like a cutter-tofu tool is existing because

Magelang Muhammadiyah University (UMM) and Diskoperindag of Magelang City mutually cooperate to turn up

this tool to assist production process on SMIs. Diskoperindag facilitates SMIs by empowering and supporting,

whereas UMM supports SMIs by generating this tool, and by showing how to use it well. The strong and active role

of Government of Magelang City is a key to promote innovation on SMIs and it is a potent way to revive confidence

of SMIs to compete each other. According to Dodgson (2002) innovation policy is important in both developed

countries and developing countries. In the end, it can say that innovation capability of SMIs is triggered by an

innovative stimulation conducted by Municipality of Magelang to promote competitiveness of SMIs in Magelang

City. Nowadays, Magelang City is a pilot project of regional innovation system (abbreviated SIDA) in Indonesia.

In Salatiga City

Municipality of Salatiga, especially “Agency of Industry, Trade, Cooperative, and SMIs of Salatiga City”

(Disperindagkop and UMKM Kota Salatiga), develops competitiveness of SMIs by giving amenities to stimulate

emergence of innovative SMIs massively and qucikly. In line with Manual statement (2005), innovation is not only

limited on products, but also on marketing, organization, and process. In addition, Kuhlmann et al., (2010) state that

innovation is influenced by social, economic, and technological factors. Hence, innovation can be understood as a

broader definition. Although SMIs in Salatiga City face many limitations, however actors of SMIs have innovated

more further than SMIs in other cities.

Fig. 3 Innovation elements of SMIs and innovation policy in Salatiga City

Source: Modified from Kuhlmann et al., 2010 and adjusted from field findings, 2013

Three elements mentioned above are supporting elements to increase innovation capability and competitiveness

of SMIs in Salatiga City. Every actor of SMIs is strongly tied by internal social values such as mutual trust,

solidarity, and mutual goal to achieve market access at higher level. Each of actors is cooperative and responsible to

operate joint agreements one another. Mutual trust is formed by the proximity of location where the SMIs operate

their daily activities in one close area. In addition, mutual trust is also influenced by the “akin clan” (Javanese

people) whom they occupy in Salatiga City in long period. Solidarity is formed by a tie of similar business (small-

medium scale industries). Mutual goal is triggered by similar limitation of human resource, capital flow, and market

access.

Yearly government program to increase

performance of SMIs

Social values among SMIs

actors:

Mutual trust Solidarity

Mutual goal to move

forward to market access at higher level

Economy factors:

Goal: Modern retail market

(inside and outside)

Internal technologies:

less-oil frying machine (only

food industries)

Competitiveness at regional and national level

External technologies:

Computer/information

technology

Inside of Salatiga City

Outside of Salatiga City


SMIs in Salatiga use simple technologies to operate their production activities such as a stove to cook food (food

industries), knife to cut the cloth (handicraft industries), and others. Usage of external technology (computer) is

needed to account revenue and expenditure of SMIs. In addition, one of SMIs actors has invented a new frying

machine functioning to reduce vegetable oil and to measure food maturity level. An inventor of this machine is Mr.

Eko Susilo. He is a new entrepreneur who has passion to be a better person from day to day. Historically, to fulfill

his family need, Mr. Eko produced “kacang telur” (this product is snack which is made from nut, egg and powder) as

a main product to be sold to local consumers firstly. Then, He tried to invent a new frying machine made from a

second-hand washing machine. This washing machine was modified by him to be the frying machine which it

functions to make bean to be more delicious taste, good texture, and low cholesterol. In addition, this machine also

makes more efficient and faster production process. This machine has been recognized by Business Innovation

Centre (BIC) from Government of Indonesia. In line with it, Mr Eko had been awarded as a new 102 innovator in

Indonesia (Asmara and Triyono, 2012).

Social and technological factors unite various interest of SMIs to achieve a mutual goal. Exactly, they move

forward to attain market access at higher level. Each of actors mutually cooperates to represent their interests

through a business community which is led by Mr Eko (an owner of SEHATI). Recently, SEHATI is the most

popular and successful model of SMIs in Salatiga City. Since 2008 year, SEHATI has not only produced “kacang

telur” as primary product but also it has produced soybean powder (raw material for making hot soybean beverage).

Indeed, 50-60% marketing area of SEHATI is in Bali, and its rest is in Central Java (JogloSemar or Jogja, Solo, and

Semarang).

An owner of SEHATI, Mr. Eko, invites and engages other entrepreneurs to emulate his efforts to be successful

SMIs. Mr Eko and the other entrepreneurs built this community in 2009, then they named this community as “Suci

Hati”. Currently, existence of Suci Hati has shifted existence of SAGA (Snack of Salatiga) in which SAGA is an

older community of SMIs than Suci Hati. Formally, Suci Hati has not yet had official unity in Salatiga, but it has had

the broad networks comprising 32 members of SMIs in Salatiga City. They consist of food-beverage industries and

handicraft industries having a mutual goal to penetrate at higher level market. A mutual goal of Suci Hati is modern

retail markets (department stores) located at both local level (Salatiga, Yogyakarta, Semarang, Solo and the

surroundings) and national level (all Java, Celebes, Bali, etc).

Related to development of competitiveness of SMIs in Salatiga City, Disperindagkop and UMKM of Salatiga

does not act solely to promote competitiveness of SMIs. It works together with “Agency of Small-Medium

Enterprises and Cooperative of Central Java Province” (Dinas UKM dan Koperasi at regional level). Existence of

Dinas UKM dan Koperasi of Central Java is very important to assist Disperindagkop and UMKM of Salatiga within

developing SMIs competitiveness. Both agencies have similar programs (innovation policy) to promote innovation

on SMIs in Salatiga by conducting five main programs as follow:

1. Facilitate to join in various SMIs fairs at local, regional, and national level. SMIs are encouraged to expose their

products to consumers. Majority of SMIs receive positive effects after they join in various fairs. (Positive effects

are like new knowledge, innovative ideas, increasing consumers, and new experiences).

2. Assist to SMIs funding either through governmental funds or through bank funds. Municipality of Salatiga often

gives fund‡ to SMIs (loan or full gift). In addition, this government donates machines, tools, and other things to

increase performance and production of SMIs. Unfortunately, maintenance of machines is often neglected by

actors of SMIs because fund to operate machine is very limited.

3. Bridging between SMIs and large corporations either regional level or national level to get corporate social

responsibility (CSR). Few of SMIs have received CSR from large and national corporations. In example,

SEHATI had received fund from the state electricity company (perusahaan listrik negara or abbreviated PLN) to

operate his industry and to buy new machines.

4. Introducing SMIs at national level, Salatiga’s major promises that he would build 1000 SMIs in Salatiga city to

increase local economy and human well-being (sindonews, 2012). This way leads to attract many tourists to visit

Salatiga City and in order to tourists buy various products of SMIs. Nowadays, Municipality of Salatiga arranges

a series of tourism destination in Salatiga City and its surroundings area which one of these series is to visit the

‡ In 2012, Disperindakop dan UMKM of Salatiga City donates (grant-in-aid) amount 2 billion rupiah to SMIs (sindonews, 2012).


SMIs. SEHATI is one of SMIs visited by tourists to see and to learn stages of production directly. Moreover,

tourists can buy SMIs products as a gift to bring back from trip.

5. Keeping alive the positive social values and encouraging capability each actor to always innovate. Municipality

of Salatiga facilitates SMIs to share much information and to interchange experience each other. Municipality of

Salatiga gives a host of large space to SMIs to meet and to express their innovative ideas. This way is very

substantial to promote and to grow innovation on SMIs in Salatiga City. The important thing that innovation is

not static way, but it is more dynamic way. Kuhlmann et al., (2010) say that innovation in a systemic system,

particularly a successful innovation requires transgressing limits.

Innovation programs which are implemented by Municipality of Salatiga have less-positive impacts on SMIs.

Indeed, Most of SMIs in Salatiga almost operate their business activities independently. The key role of local

government emerges when the government has more budget to assist SMIs development. In other one, the

government role in mostly developing countries to develop innovation is limited on funding (Mani, 2002). In

example SEHATI, is mainly assisted by two large non government organisations, namely, state electricity company

(PLN) and Soegijapranoto University in Semarang City. Both organizations had differently contributed to encourage

innovation capability of SEHATI. PLN assisted SEHATI through funding to buy new machines and to maintain

machines, whereas Soegijapranoto University revealed protein content of SEHATI’s products in 2012. Its finding is

44,128% for virgin soybean and 45,235% for fried soybean. In 2010, SEHATI’s products were also tested by

Succofindo. It was revealed that content of protein was 43,72% for soybean powder.

Recognized that government programs to develop innovation on SMIs in Salatiga have not yet been maximal to

trigger SMIs more innovative. Nevertheless, these programs have become a stimulus for accretion of qualified SMIs

in Salatiga City. By conducting these programs, Local Government of Salatiga revives SMIs to compete among

many SMIs in Indonesia. In the similar meaning, it means that policy for development of SMIs indirectly gives

positive effects on SMIs to innovate in Salatiga City.

5. Conclusion

Innovation of SMIs in Magelang and Salatiga City is influenced by social, economic, and technological factors.

Innovation policy implemented by local government is very important to trigger and to make SMIs more innovative.

In Magelang City, the role of local government in collaboration with regional government (at province level) can

influence SMIs directly to be more innovative. On contrary, in Salatiga City, the role of local government has less

influence on SMIs to innovate. Regardless, government policy is highly vital to promote competitiveness of SMIs

because it gives a way in midst of uncertainty of social change and economic fluctuation in a geographic area.

Acknowledgments

We thank a lot to Mr Andjar Prasetyo (Magelang) and Mr. Eko (Salatiga) as a key informant in this research.

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Implementation Policy of Acquisition Intangible Assets in

Government Financial Statements

Tommy Hendrix*

Center for Innovation – Indonesian Institute of Sciences

Abstract

The implementation policy of intangible asset has become hot issue to study. In order to makes national regulation more

effective and efficient especially in applying financial statement needs strong commitment to rebuild framework in management

of intangible asset. In order to see more directive portion to patent result in research and development institute. Direction in

implementation policy must be in line with goals that being focus in transparency and accountability particularly in financial

report statement. In progress of Intellectual Property Right seem to be valuable if we see in management of valuation side to find

the value of patent acquisition based on formulation data. Intangible asset policy is needed to be confirm as a obligation in

government institution to avoid many error in reporting performance accountability of government agencies. Mainstream of

intangible asset is how many budget that being used in research activities must be accounted as government expenditure.

Guidelines through BULTEK SAP 11, 2011 give us direction how to manage intangible asset, the problem can be solved by

following the systematic and formulation based on new regulation. R & D institution must prepare many option related to

intangible asset requirement such as supporting document relevant in patent applications.



Keywords: implementation; policy; intangible asset; R&D Institute

1. Introduction

Implementation Policy related to calculation of the value of patent acquisition is a substance that can affect the

valuation opinion on the financial statements of government agencies, through the implementation of patents

registration in research and development. Dynamics implementation of recording up to this time is something that is

required in recording the financial statements where technical philosophy is how much money that is being used in

the registration of a patent it is fitting that it should be accountable to the State through the financial statements.

Development of Intangible Assets is possible be in line with the government program to one of the elements in



90 Tommy Hendrix / IICIES 2014 Proceeding

accelerating national development priority in the national development of Indonesia. Among them through the

research and development of science and technology has been progressing very rapidly. This role is also

increasingly important for economic growth because it can accelerate the development process, improve efficiency,

quality, and quantity of economic development activities. This concept is called the knowledge-based economy or

knowledge-based economy (OECD, 2001). The concept emphasizes how importance the role of science and

technology to economic growth and is now application required in the implementation of the Government

Accounting Standards Board Technical Bulletin No. 11 in 2012.

Intangible assets are non-monetary assets that do not have a physical form that is contained in the balance sheets

of government agencies, which are used to produce goods and services in particular the results of research and

development. In analyzing the intangible assets are various difficulties, such as when he admitted, how the

assessment, measurement and reporting on the financial account. On the other hand, users of financial statements

requires quantitative and qualitative evaluation of the performance of government agencies as well as information

on intellectual capital owned.

2. The Importance of Intangible Assets

Intangible asset becomes hot topic now, especially in developing country that have many obstacle in gaining a

good financial report. How intangible asset can makes direct effect from accountability document becomes live

document that can be access in government financial realization. There is treatment of intangible assets in financial

reporting. The increasing significance of intangible assets has fuelled discussion over their nature and treatment. The

lack of consensus over their treatment leaves scope for manipulation and results in a lack of comparability.

Generally accepted accounting principles were established under a predominantly manufacturing-based,

economic structure. Hence, emphasis has been placed on the tangible assets of an entity and intangible assets have

been largely ignored. It can be argued that due to changing technology, this type of economic structure and the

accounting rules that are derived from it are outdated.

These rules ignore many of the flows of the modern, knowledge-based economy. In the latter half of the

twentieth century, there has been a qualitative transformation to technology intensive industry where different

blends of resources are used. In this environment, value is principally comprised of intangible rather than tangible

factors.

3. Recording Patent in Balance Sheet

Policy related to implementation of Financial Statements on patent recording began with the release of the draft

rules issued by Technical Bulletin Government Accounting Standards Committee (BULTEK KSAP 01) Team

which regulates the management of intangible assets for governmental agencies. Where the application warns that

accountability intangible assets are non-financial assets that can be identified and has no physical form and held for

use in producing goods or services, or used for other purposes, including intellectual property rights. In regard to

reporting on the financial statements of the recording dynamics is related to the amount of the budget that is used in

the registration and maintenance of patents must be registered and accountable.

The recording is meant is mandatory present financial statements with reference to the Government Accounting

Standards. Mandatory financial statements prepared consisted of Budget Realization Report, Balance Sheet,

Statement of Cash Flows, and Notes to Financial Statements. Patent is one of the intangible assets of non-financial

assets which can be identified and does not have a physical form and held for use in producing goods or services, or

used for other purposes, including intellectual property rights.

Recording mechanism on the financial statements is a step to be able to see the level of performance of the

utilization of research and development produced by institution research and development.

Methodology in reporting valuation of intangible asset need many specific data that in line with supporting

document and commonly different in each institution. But all thing finally set up as figure 1. Based on analysis

requirement that being used in generally.

Tommy Hendrix / IICIES 2014 Proceeding 91

Fig 1. Intangible Assets Assessment Process

4. Implementation Policy of Recording Intangible Assets in Financial Statements

Intangible asset has become big issue relating in schematic policy in accounting report in government institution,

in order to make effective policy analysis needs to be done. The analysis was done with the intent to obtain

information relevant to the policy. With the acquisition of a complete and comprehensive information can be

formulated effective policies in the sense that when the policy implementation can achieve the expected goals.

For that, based on that description of Intellectual Property Rights (IPRs) becomes an increasingly interesting

issue to be studied for its role is increasingly determine towards accelerating the pace of national development,

especially in the era of globalization. In this connection, the era of globalization can be analyzed from two dominant

characteristics. First, the era of globalization characterized by widely opening of relations between nations and

between nations are supported by transparency in the information. The transparency of information in such a

condition, then the incidence or discovery in the world would be easily recognized and quickly spread to other parts

of the world. This implication, that at the time any form of plagiarism efforts, piracy, and the like are no longer

getting evicted from the place and the phenomenon of life of nations. Second, the era of globalization opens

opportunities of all nations and countries in the world to be able to know the potential, abilities, and needs of each.

Despite the tendency that may occur in relations between countries are based on the efforts the fulfillment of mutual

interests, but instead states that have more ability to gain greater profits. One important capability is the ability of a

country's technological mastery. Refers to two things, efforts to protect intellectual property rights it is time a

concern, interests and concerns of all parties in order to create conditions conducive to the growth of developing

innovative and creative activities which foster the ability of the boundary conditions in the application,

development, and mastery of technology.

One of them with the process of technology transfer and licensing implications of IPR will bring up a fairly

difficult problem, in which developing countries generally requires IP owners to grant the license transfer

technology that enables the guarantee for holders of such licenses to be able to replicate the technology. This has

spurred many empowerment of R & D results that can be used by the license in the form of technology transfer

especially in using profitable intangible asset based on R & D activities.

In this case R & D Institute especially government, trying to do application performance to be gained by

empowering and socialization among the Intellectual Property Rights to researchers who are in the environment by

trying to develop prospects to get the protection of an effective IPR work in order reduce the occurrence of

negligence, carelessness, early disclosure, or leak or exposure of information that should be protected but not

protected. Where a new technology created by one institute under contract with, or in cooperation with, a particular


company then the problem of ownership of IPRs should be solved explicitly from the initial plan of cooperation and

created a written form. It has been arranged in the internal rules of the mechanism and assessment of an activity to

foster a corporate spirit as stipulated in the Guidelines for Implementation in internal institute and policies relating

to development and seeks to commercialize R & D and R & D results to a reference for the work unit within

enhancing cooperation between units. Issues to be discussed is about the influence of factors namely the

implementation of intellectual property protection of Government Regulation (No. 20, 2005) on technology

transfer, intellectual property, research and development activities by universities and R & D institutions, especially

in terms of elaboration of the Intellectual Property Rights in institute environment, to assess how close a research

and development that can improve the effectiveness of the products produced either in the form of products or

services that benefit the public interest. The process of utilization of the technology has been certified as ought to be

able to add value to the interests of society, both individuals and groups. Other result that can be gain is haw R & D

institution dissemination in reporting valuation of intangible asset in government report especially in financial

statement based on BULTEK SAP no. 11, 2012.

Implementation of policy making process in intangible assets is a complex process because it involves a lot of

processes and variables that must be assessed. However, to assess the policy can be made with reference to the

provisions of propriety in setting processes can theoretically base on several stages made by William Dunn (1984)

are: a) the agenda-setting phase, and the phase is a very strategic process the reality of public policy. In this process

have the space to make sense of what is referred to as a priority issue on the agenda of public and publicly contested.

If an issue managed to gain status as a public issue, and get priority on the public agenda, the issue is entitled to the

allocation of public resources more than any other issue policies (policy issues). Growing issue now is how the

impact of the use of budget associated with the acquisition of patents that should be noted and recorded in the

financial statements, it is becoming a very important issue towards a transparent and accountable system, b) policy

formulation, the problems had been defined for solving the problem and then look for the best. Solving these

problems is derived from a variety of alternatives or options policy. Similarly, the struggle of a problem for the

policy agenda, the policy formulation stage alternative each competing to be chosen as the measures taken to solve

the problem. Follow up of solving the problem by identifying the actual internal conditions where the number of

patent registrations can be calculated through utilization in detail, it is necessary to standard operating procedures

related to the recording of intangible assets. Strategy and process flow created with the assumption that solving the

problem will be solved by translating existing problems working unit sphere ; c) Adoption / legitimacy of the policy

, the goal is to provide authorization on the basis of government. If the act of legitimacy in a society governed by the

rule of the people, the citizens will follow government directives. However, citizens must believe that government

action is legitimate supported. Support for the regime tends to diffuse - a backup of both attitude and goodwill

towards government action that helps members tolerate. The legitimate government can be managed through the

manipulation of certain symbols. Where do these people through the process of learning to support the government.

A strong commitment to follow up the existing problems and implementing good management by mutual agreement

in the internal forum to see the need for data to be used. Beside it also saw the growing potential that can be used as

a reference for existing policies in relation to the management of intangible assets and the impact will happen in the

future; d) Assessment / Evaluation Policy, in general it can be said as a policy evaluation activities regarding

estimates or judgments that include the substance of policy, implementation and impact.

In this case, the evaluation is seen as a functional activity. That is, policy evaluation is not only done at the end of

the course, but the whole process is done in the policy. Thus, evaluation of the policy formulation phase may include

policy issues, the programs proposed to solve the problem of policy, implementation, and impact of the policy stage.

Assessment-related policies that will be used should can touch the basic needs so that the level of formality of the

activities can be recognized as a basic policy to be referred in particular the management and valuation of intangible

assets that can be reported in the financial statements.

Tommy Hendrix / IICIES 2014 Proceeding 93

Fig 2. Patent valuation scheme

5. Intangible Asset Problem

The impact of patent applications in the research and development institutions have implications for the use of

the budget related to the demands of the government in particular, which are required to be able to translate the

value of the acquisition of patent applications used. This is particularly relevant in the case of recording in the

financial statements are required to offer the market prospects in the event of a transaction on the results of research

and development.

To outlined several factors that need to be done a research and development institute in identifying issues on

which the findings of the inspection team the Audit Board Republic of Indonesia. The existing problems including;

1. Institution absence in guidelines that government the research and development management of

intangible assets, which resulted in the orderly management of intangible assets;

2. Absence of the internal designation of institutional management of research and development related to

the management of intangible assets;

3. Patent technical data spread across work units, making it difficult to load the data collection;

4. Completeness of the resulting patent data can’t be traced so that complicates a recapitulation of the

supporting documents that can be used as proof of the validity of the patent is registered.

Many problems rise when the management of intangible assets by government agencies, it can be seen adjusting

the discrepancy in the number of rules that exist with the implementation of the field. It all leads to delayed pattern

of bureaucratic utilization of intangible assets is expected to be used as the basis in developing the research and

development of economically and support national development.

Utilization of the acquisition value of intangible assets is functional for increasing the capability of recording in

the financial statements of government, this is the result of many causes decreased check up on all government

agencies. The core of the problem that arises is how to record the use of state finances into a very powerful asset and

a high potential in generating financial return values related to the state.

6. Conclusion

Intangible assets is the latest issue in recording financial statements, it indicates that the readiness of each

institute of research and development that resulted in the patent to be able to see and measure the level of

productivity of the use of the government budget efficiently and effectively. The steps that should be undertaken

include;


1. Re-identification needs related patent documents;

2. Perform data collection supporting patent;

3. Conduct assessment process patent acquisition;

4. Identify the utility value of patents;

5. Conducting the proposed establishment of the certified value of the acquisition of the patent.

Although intangible assets have been presented in the financial statements, but there is still an unexplained value

is not presented in the financial statements. Unexplained value is typically derived from intangible assets generated

internally by the research and development institutions.

For that there needs to be some provisions that can be used as a guide in assessing intangible assets include:

1. Existence of a shared commitment in management level, to get a common understanding related to the

management of intangible assets;

2. Needs a control of the data access in the research and development unit related to the accessibility of

data to support the needs of the patent;

3. Consideration of the amount of human resources competency in assessing patent;

4. Perform budgeting with regard to patent assessment.

The importance of the role of science and technology in the management of the company's emphasis on the

increasingly important role of intangible assets in research and development institutions. This is according to a

statement Standfield (1999) that the intangible asset is an important component of intellectual capital and have a

very real impact for the company. An example of the role of intangible assets or benefits for research and

development institutions are research and development of new technologies that can produce create a research and

development institution operating more efficiently. Therefore, intangible assets should be getting more serious

attention than tangible assets in the management, measurement and presentation of the financial statements

producing output.

Beneficiation acquisition value of patents is helpful in determining the economic value of the use of the patent

shall be established through the scheme commercialization of research findings and development that generate

royalty and licensing products. Royalty and license is a legal action based on an agreement or obligation. Royalty

and license is one way of IPRs holders choose to give civil rights hereunder economic rights as rights holders

royalties and licensing rights to exploit them. Compulsory license generally is one of the mode of administration of

economic rights that are required legislation, regardless of whether the owner is willing or not.

Acknowledgements

I would like to thank Bambang Subiyanto, Ragil Yoga Edi, Harini Yaniar from Center for Innovation Indonesian

Institute of Sciences, for sharing information and work together in solving intangible asset problems in Indonesian

Institute of Sciences.

Reference

Dunn, William, N, 1984, Public Policy Analysis, Yogyakarta.

Government Accounting Standards Board Technical Bulletin No. 11 in 2012.

Government Regulation No. 20, 2005 on Intellectual Property and Technology Transfer Research and Development by the Institute of Higher

Education and Research and Development.

OECD (2001), The Well-Being of Nations: the Role of Human and Social Capital, Centre for Educational Research and Innovation, Paris.

Standfield, K. (1999). Knowcorp, http://www.knowcorp.com. October 10, 1999.




Identification for Biological Resource Based

Creative Industry Cluster Developmental Model

in the Province of West Java, Indonesia

Sudrajati Ratnaningtyasa*, Wawan Dhewanto

b, Sri Herlina

c

abcSchool of Business and Management, Institut Teknologi Bandung, Jl. Ganesha 10, Bandung 40132, Indonesia

Abstract

Around 1980 the British began to introduce new thinking that creativity is a resource that should be developed as a major source

for the creative industries. In Indonesia, the creative industry was developed with the involvement of many ministries; but since

2011, those were directly under a single ministry, The Ministry of Tourism and Creative Economy. Since the last three decades

many countries in the world realize that natural resources are diminishing and take a long time to recover, and therefore

alternative resources are needed to be developed in order to keep driving the economy. In realizing creativity, natural resources

both biological and non-biological are still needed. Added value would be gained from the relatively more renewable biological

resources through the creativity of human beings. The government has set two approaches in the development of national

industry, namely: 1) through a top-down approach with the development of priority industrial clusters which followed by the

chosen area participation; 2) through a bottom-up approach to the determination of the core competencies of industrial areas as a

manifestation of the areas specialty, which helped establish the center of its development, so that the region has a competitive

edge. This paper discusses which model is more appropriately used to develop the creative industries in The Province of West

Java, Indonesia



Keywords: biological resource based; creative industry; cluster development model; West Java; Indonesia

1. Introduction

In Indonesia, the creative economy is getting more serious attention since 2008, that is by implementing research

and making the Creative Economy Development Plan 2009-2015 (Ministry of Commerce of the Republic of

Indonesia, 2008). This was done in order to support the vision of 2005-2025 national economic development (UU

no.17 tahun 2007).



96 Sudrajati Ratnaningtyas / IICIES 2014 Proceeding

With the demands of an accelerated transformation of the national economy, then a 2010-2030 economic

transformation grand design was arranged with its action plan. Therefore, economic development based on

competitive advantages in all areas is needed, including the creative industries as part of the creative economy

(Kementerian Koordinator Bidang Perekonomian Republik Indonesia, 2011).

In the beginning Creative Industry was comprised of 14 sectors in accord with UK DCMS classification;

however with the addition of the culinary sector on recent development it has made into 15 sectors. The value of

Gross Domestic Product out of Creative Industry in the year of 2006, 2010, and 2013 can be seen in Table 1. Since

December of 2011, Creative Industry sector is under the management of Kementerian Pariwisata dan Ekonomi

Kreatif (The Ministry of Tourism and Creative Economy). In 2014, The Organizational Structure of the ministry is

comprised of two General Director Handling Tourism, and two others handle Creative Industry: Directorate General

of Arts and Cultures based Creative Economy; and Directorate General of Media, Design, and Technology based

Creative Economy; together with their own Resource Development Agency.

The Performance of creative industries is under the various sectors of other Ministries, as this sector has

overlapping fields with 9 main industry sectors, as the sector distribution according to the Central Bureau of

Statistics. Because of the wide scope of the creative economy, the Government has adopted a policy to involve 23

ministries, the three Heads of Agency, and an Institution, as well as all the governors and mayors / regents, to ensure

the implementation of the integration of creative economic development. (Inpres No.6 Tahun 2009).

The potential problems that will arise in the development of creative industries suspected by the Antariksa

(2013), namely, in the aspect of socio-cultural, economic, and ultimately, legal, hinder a person to create a creative

work. In addition, the lack of clarity regarding the concept of "creative agency" that will be developed by the

Government. One indicator of the success of the Government in the development of the creative economy is the

creation of "creative agency". Creative agencies can be a creative space, Creative Center, Creative Zone, Creative

Village, District / City Creative, and so on (Antariksa, 2013) b.

One approach, which considered being a successful way to develop business, is through group approach. In a

group approach, support (both technical and financial) is channeled to the creative industry business group, not per

individual / unit. Group approach is believed to be better because: (1) Individual Business usually captures market

opportunities less quickly, and (2) formed business network are proven effective in improving the competitiveness

of the business because it can work in synergy. For the supporting donor, group approach is also better because the

process of identifying and empowering business can be more focused and efficient. One of The model / concept

approaches of the group nomenclature in question above is cluster model.

Creative industries in Indonesia were initially divided into 14 sectors, as in the UK, because Indonesia is referring

to the United Kingdom. The UK is the first country in the world which develops creative industries at the level of

the Department, the DCMS (Department for Culture, Media and Sport). Since the end of 2011 the field of creative

industries enterprises is spread in 9 sectors / Main Sectors in Indonesia. Until now, the Agriculture, Livestock,

Forestry, and Fisheries sectors are still the dominant sectors which became the input factors supplier for a wide

range of creative industries, especially the culinary industries, crafts, and also a supporter of the fashion industries

and other creative industries.

Here introduce the paper, and put a nomenclature if necessary, in a box with the same font size as the rest of the

paper. The paragraphs continue from here and are only separated by headings, subheadings, images and formulae.

The section headings are arranged by numbers, bold and 10 pt. Here follows further instructions for authors.

It could be said, the creative industries which are supplied by biological resources / bio industry have great

potential to be developed. One of the provinces in Indonesia which has a major contribution to the national GDP is

West Java. Thus, to develop the creative industries business based biological resources / agro-industry in West Java

which are independent, powerful and advanced certainly requires several stages of the assessment process, including

the determination of cluster models that are effective and in accordance with the characteristics of creative

industries.

Sudrajati Ratnaningtyas / IICIES 2014 Proceeding 97


2.1. Creative Industry and Creative Economy

Indonesia uses the definition of creative industries as defined by UK DCMS Task force 1998: “Creative

Industries as those industries which have their origin in individual creativity, skill and talent, and which have a

potential for wealth and job creation through the generation and exploitation of intellectual property and content”

(Departemen Perdagangan Republik Indonesia, 2008)

Potts and Cunningham (2008) proposing four models of the relationship between the creative industries and the

whole economy, namely: 1). The welfare model, in this model, the creative industries are hypothesized to have a net

negative impact on the economy, such that they consume more resources than they produce, 2). The competition

model, in this model, a change in the size or value of the relative industries has a proportionate (but structurally

neutral) effect on the whole economy, 3) The growth model, in this model the creative industries are a growth

„driver‟ in the same way that agriculture was in the early twentieth century, 4).The innovation model, in this model

the significance of the creative industries is not in terms of their relative contribution to economic value (models 1–

3), but due to their contribution to the coordination of new ideas or technologies, and thus to the process of change.

In this view, the creative industries are mis-specified as an industry per se, and better modeled as a complex

evolving system that derives its economic value from the facilitation of economic evolution and the process of

innovation.


Advocates of the creative industries idea believed that this was too narrow a view – the totality of economic

activity stemming from creativity and culture, including their commercial forms, needed to be considered to

Understand their true contribution. This activity included not just the traditional art forms, such as theatre, music and

film, but service businesses such as advertising (which sell their creative skills mostly to other businesses),

manufacturing processes that feed into cultural production, and the retail of creative goods. It was argued that the

industries with their roots in culture and creativity were an important and growing source of jobs and wealth

creation. British Council Creative Economy Unit. (2010)

Creative Economy is a 4th wave Economy, after Agriculture, Industrial, and Information Economy derived from

scientific creativity, cultural creativity, and economy creativity- driven by technological developments. (Direktorat

Jenderal Ekonomi Kreatif Berbasis Media, Desain, dan Iptek.

2.2. Biological Resources

Biological resources are any Plant Resources, such as Crops, and Timber, and Animal resources both aquatic or

nonaquatic that yields benefit; in the present time or in the possible future. Each category of biological resource in

the SEEA (System of Environmental-Economic Accounting) asset classification is subdivided into cultivated and

non cultivated sub-categories. (United Nationsa, et al., 2003). The SEEA clarifies the SNA definition by stating that

cultivated fixed assets are among others the livestocks for any purposes; and repeat producing cultivated trees which

growth and regeneration are controlled by its responsible cultivator institution.

2.3. Industry Cluster

Porter defines Industry Cluster as network of interconnected enterprises and institutions of a particular sector

which is concentrated in a particular area geographically. This Clustering connect the enterprise inside it both

cooperatively and competitively. The Cluster also includes the government, institutions, and other industries that

provide support in the form of services, training, education, information, research, and technological support.

(Porter, 1998).

The San Diego Association of Governments defines Clusters as inter-related industry groups that through

primarily export of goods and services, could stimulate wealth creation in a region. Using clusters rather than

traditional method as a descriptive tool for regional economic relationships provides a richer, more meaningful

representation of local industry drivers and regional dynamics. An industry cluster is different from the classic

definition of industry sectors because it represents the entire value chain of a broadly defined industry from

suppliers to end products, including supporting services and specialized infrastructure. Cluster industries are

geographically concentrated and inter-connected by the flow of goods and services, which is stronger than the flow

linking them to the rest of the economy. Clusters include both high and low-value added employment

(http://www.sandag.org/rta/transfer/industrial_clusters.pdf)

Forming Clusters means forming a consolidated chain of units. The process of cooperation development

formation process is still in the very early stages. Many Artisanal Clusters are dormant in the way that for some

years there are practically almost no market development, production means upgrade, and product development.

Several writers refer dormant artisanal clusters as survival cluster of micro and small enterprises. However, the other

cluster has grown rapidly in terms of improvement of skills, technology, and successful penetration of the domestic

market and export.

Theoretically, Clusters forms because of two things: (1) Historical Factor and (2) Manipulated/Deliberate Factor.

There two factors shall form (1) Mature Cluster and (2) New Cluster. Mature Cluster usually forms when a region

has many artisans, and in the beginning an artisanal cluster would form in the region.


3. Discussion

3.1. Identifying regions with great potential for the development of biological resource based creative industry

Firstly, it is needed to be mentioned the reasons why biological natural resources have an important role for the

development of creative industries in Indonesia and West Java. Based on the definition of "biological resources"

according to the United Nations, relevant resources are natural resources that have been exploited, the results of

which have contributed to the GDP of the region. The relevant Primary Sector to it is the Agriculture sector

(Agriculture, Livestock, Forestry, and Fishery) which provide a substantial contribution (14:50% to 11:47% for the

National and West Java Province). As an illustration of the role, can be seen in Table 2.

Table 2. Indonesian GDP Distribution of 2013 and the Regional GDP of West Java 2012 According

to Major Business Field Constant Market Prices of 2000

Resources of this agricultural sector, which is the raw material for the creative industry in Indonesia or in West

Java. Agricultural products is a primary biological products in the upstream sector. On the other hand, there are the

creative industries in the downstream sector, therefore, a supply chain is needed between the upstream and

downstream sectors. In addition to the supply chain in the form of primary products, there will be opportunities for

the emergence of agro-based industries which process primary products into secondary products, tertiary, etc.

(derivative products), which create added value benefits for businesses, communities and local governments.

The opening of employment opportunities for the existing participants in the upstream sector, supply chain, and

downstream sectors, which will be able to establish a system that runs continuously and integrated when there are

those who become integrators. Certain parties or local government may take on the role as system coordinator also

provides infrastructure and superstructure required by the parties that exist on the system. When it is done on an

ongoing basis, the comparative advantage of the region can be a success factor for the occurrence of competitive

advantage for products produced in the Agro-based industries earlier. Competitive advantage in the form of strong

competitiveness for the products produced by the creative industries that use raw materials from the agro-based

industry.

If it can happen in a certain region, it will be able to form an embryonic industry cluster based on primary


products (biological resources) specified. From one type of primary products, it will be able to create an "industry

tree" that is a diverse derivatives industry. Thus, it can be concluded, that when have an an area of comparative

advantage in producing certain primary products, due to the support of natural factors and culture-then in the area

has the potential for the emergence of creative industries clusters appropriate, requiring the supply of primary

commodities.

To determine which of the creative industries need a supply of biological products, then here will be used

schemes that have been developed by the Directorate General of Media-Based Creative Economy, Design, and

Science and Technology of the Ministry of Tourism and Creative Economy, Republic of Indonesia (2013), as Fig.1.

By using the existing scheme in Table 2, it is identified that biological resources-which is a tangible resource - is

the raw material for some sub-sectors in the creative industries sector. The main sub-sectors craft, culinary, fashion

and fashion. It also became a supplier partly subsector Publishing & Printing, Art & Antique, and Research &

Development. Then, it provide the supply of other industrial subsectors in tangible resources with lower intensity.

Based on the above discussion, it can be concluded that in Indonesia from 2010 until 2013, there are three

dominant sub-sector of the creative industries sub-sectors ie Culinary, Mode & Fashion, and Craft (Table 1). This

is in accordance with the state Agriculture is the sector as a reliable supplier of biological resources sector (primary

product) for the creative industries (Table 2). Biological resources is a tangible resource that is needed by all three

sub-sectors of the creative industries.

Agriculture sector, sub-sector covers Agriculture, Livestock, Forestry and Fisheries that produced a wide

range of primary products. Keep in mind that the primary product which one is superior product and which areas in

West Java that produce these products. The analysis was used to identify production center is Location analysis

Quotient (LQ analysis). Location Quotient and shift Share Analyses are traditional, simple and cheap method for

regional development analyses. These analyses are used to explain structural change in terms of shift in industrial

(Hodgkinson (2005). The mathematical term in the location quotient equation describe as “the region‟s share of the

total production, or quantity supplied, of the products of industry available to the nation”, and “the region‟s share of

the nation‟s consumption or quantity demanded “(Kiser, 1992). If the definitions above are applied to identify the

central region of a primary product (agribusiness “x”) then can be formulated an equation as follows:

To determine the central region of a primary product produced by agribusiness “x” in West Java can be used the

equation [1] as follows:

Pik = the extent of “x” agribusiness cultivation in a county/city in West Java

Pk = Total extent of cultivation of all kinds in every industrial sector in The county/city in West Java

Pij = the number of “x” agribusiness in The Province of West Java

Pj = the number of all agribusiness in the Province of West Java

As for whether a particular sector is the leading sector in the region, it can be used:

Vik = Added Value (Regional GDP)of “Y” industry of a county/city

Vj = Added Value (Regional GDP) of all Industrial Sector in the county/city.

Vij = Added Value (Regional GDP) of “Y” industrial sector in the Province

Vj = Added Value (Regional GDP) of all industrial sectors in the Province

The criteria used to infer If LQ> 1 means the county or city is one of the industrial base of the "Y" in the

Province of West Java, in other words, potentially serve as Industry Cluster "Y". If LQ≤ 1 means the opposite. Shift-

share analysis (SS) include Shift Differential, namely the analysis to determine how a competitive particular sector

in the region, compared to a higher level. If the value is positive (+) means Competitive and if the value is negative

(-) means not competitive.


Fig. 1Creative Industrial Clusters Based on Dominant Substance and Resource Intensity

Source: Direktorat Jenderal Ekonomi Kreatif Berbasis Media, Desain, dan Iptek. (2013). Kementerian Pariwisata dan Industri

Kreatif Republik Indonesia. (redrawn)

3.2. Biological Resources Based Cluster Development Model in West Java

The Previous description is the potential identifying process of creative industries that developed from the supply

side. To counterbalance it is necessary to see from the demand side perspective as well. One of the cases that can be

used as a benchmark is the case of the economic development of the San Diego area, since this case illustrates the

whole process about how the growth of industrial cluster and how SANDAG as the Local Government Association

in the San Diego area make and implement its development strategy. Territory development in all its aspects would

be based on industrial clusters developed community infrastructure and superstructure supported by the Government

of the capital is accumulated in the SANDAG. The main strategy used is the application of regional economic

development model that positioned Emerging Industries Cluster as the Engines of Economic Activity by orienting

the Simplified Export-Driven Economy, which is a view of the supply side, as can be seen in Figure 2.

Since the early 1990s rapidly growing industry clusters have sprung, which has managed to open up job

opportunities and prosperity for its people. The birth of these clusters at first was natural. Since the establishment of

the San Diego Association of Governments (SANDAG), the development of industries cluster are more integrated.

SANDAG develops design strategies for preparing for the San Diego area to obtain economic opportunities in the

present century. In Region to orient its activities to the markets, both domestic and export markets. Thus planning

began in advance of market demand. Export based on existing foreign demand. Based on this export market

demand, final goods and services produced by industries that exist in corresponding clusters. So foreign markets /

export acts as a pull factor. 1998 in the San Diego region there are 16 clusters. Industrial clusters that grow very

rapidly are Biotechnologies / Pharmaceuticals Clusters, Clusters Recreational Goods, and Communications and

Software / Computer Services Clusters. Modern Export-Driven Economy give directions for all of participants

present in the existing economic system in the San Diego.

Increased demand for products and services from abroad will provide a derived demand for linkage industries /

suppliers in the form of an increase in demand for raw materials from local markets. Thus the final demand for


goods will provide a multiplier effect, by increasing the income of participants that is in linkage industries /

suppliers that exist in the local markets. Derived demand is not only happening in one level, but it is possible occurs

at several levels, depending on the characteristics of the industry. Extreme example, for the cluster horticulture

industry supply chain would have a different pattern with Defense & Aviation.

Inter-industry transactions will increase regional economic activity, employment opportunities, increase the

demand for innovation, increase the demand for skilled labor that fueled the emergence of business and training

institutions and research services both private and government-initiated, as well as relevant schools. This is just an

example, while other activities can be very many, varied sizes, types, properties, and its range. The banking industry

or the various sources of funding will emerge and evolve along with the development of the local economy. The

development and growth of business and the economy of the region would provide increased tax revenues of the

government, which will be used by the government to build public infrastructure and to finance the preparation of

regulations as superstructure. For government to contribute better to provide a better business climate, and can act as

facilitators, intermediaries in the Triple-Helix (Business-Academia-Government) interlinkages role model. Modern Export-Driven Economy developed SANDAG can be adopted to make a model of cluster-based

development of biological resources in West Java, with some adaptations. Adaptation needs to be done because of

West Java and Indonesia has its own Characteristic of various things, and specifically to the West Java, It have three

flagship creative industry using biological resources as their raw material, that is the Culinary Industry, Mode &

Fashion Industry, and Craft Industry. Therefore, in Figure 3 can be illustrated how the development of the third

industry in West Java Region in the "Model Domestic and Export-Driven Economy: Culinary-Mode & Fashion-

Craft Creative Industries Cluster are Emerging as the Engines of Economic Activity".

Orientation of Cluster Industries (combined three of Creative Industries Culinary Industry, Mode & Fashion

Industry, and Craft Industry) in West Java for Export oriented in addition, also for the domestic market. Indonesian

domestic market for which is growing with large number of people, and increasing per capita income, a high

appreciation of fashion products and the diverse tastes of the culinary products is still a viable market to be supplied.

To that end, the "promote model" in Figure 3, the domestic market is still the main orientation other than the export

orientation.

Demand for the products and services in all three sub-sectors of creative industries-that is the Culinary Industry,

Mode & Fashion Industry, and Craft Industry or to the products and services that occurs as a result of the interaction

between the three industries will bring a derived demand for products and services produced by the industry in

upstream sector. Industry referred in the discussion in this paper is Agro-based Industry, and the further will cause a

multiplier effect on other sectors that exist in West Java and the surrounding territory. Agro-based Industry may well

result in a final product that can be marketed directly to the end consumer, but would be better if used as raw

materials or components of the complement of the three creative industries earlier. Thus by creating added value in

the third level, the creative industries would be able to provide profit to the entrepreneurs, the people and the

government.

Increased demand on Agro based-industry will lead to "secondary derivative demand" that is the increasing

demand of raw material in the form of biological resources in the form of primary products, which In this case is

agricultural production. Increased demand for primary products is also expected to increase the income of farmers

and the agricultural community centers. Thus the rural area also develops.

So far it is frequently found that the supply chain of agricultural products are very complex and the laden with

problems. With the development of creative industries clusters which integrated and unified, it is hoped these

problems can be reduced. Mechanisms in the cluster development model, as was done by SANDAG can be a

comparison and learned as lessons. Here we could take the benefits of the Success factors in the implementation of

existing models in Figure 3.


Fig. 2 Modern Export-Driven Economy: Cluster Industries are Emerging as the Engines of Economic Activity

Source: San Diego Regional Technology Alliance, compiled by SANDAG (San Diego Association of Governments, 1998). (redrawn)

Fig. 3 Biological Resource Based Creative Industry Cluster Developmental Model in The Province of West Java : “Domestic and Export-Driven

Economy Model , Culinary- Mode & Fashion, Craft Cluster Creative Industries are Emerging as the Engines of Economic Activity”


Mixed industry results from a combination of the three earlier creative industries will be illustrated in the form of

"Mixed Matrix Creative Industries", as shown in Table 3 below. In table 3 can be made of various examples of

creative industries other combination that can be developed.

Table 3. Mixed Creative Industry Matrix

The Ministry of Industry has set two approaches in order to build the competitiveness of national industries,

which synergized and integrated between the central and the regions. First, through a top-down approach to the

development of 35 industrial clusters priorities, planned from the Central Government (by design) and followed by

the participation of selected areas based on international competitiveness as well as the potential of the Indonesian

nation. Secondly, through a bottom-up approach, with the establishment of core competencies that are the area

industrial hallmarks, which the central government helped, develop, so that the region has a competitive edge.

Development of core competencies at the provincial level, referred to as the Leading industry in the province and

district / city level, called the Core Competence Industrial District / City. The second approach is an approach that is

based on the spirit of regional autonomy. Determination of industrial development through the establishment of a

priority industrial clusters and industrial core competency area is needed to provide certainty and have the support of

all sectors in the economy including banking support. (www.kemenperin.go.id/).

Based on the above discussion, it is what has been and will be done by the Government is in line with already

existing model in Figure 3, although not exactly true. In Figure 3, the approach taken is to combine top-down and

bottom up in an integrated way - not a choice of "zero sum game" or "mutually exclusive". Indeed the formations of

existing models in Figure 3 regard more from the aspect orientation, not in the position of the government versus the

people. In Figure 3, instead of each party have their respective roles which complementary and mutually reinforcing

as the underlying philosophy of the Triple Helix model, namely the alignment between the role of Business,

Academia, and Government. Therefore, the right policy is not a "bottom-up" or "top-down" only but can be

regarded as "Bottom-Around".

4. Conclusion and Suggestion

4.1. Conclusions

Based on discussion of the results, it can be taken some conclusions as an answer to problem statement, as follows:

1. The regions that have great potential for the development of biological resource-based creative industries can be

identified with first understanding what natural resources which included in the criteria of biological resources. It

was only then look for data that can support the sector to be-determining what business field that produces the

aforementioned biological resources, and how the role (contribution to GDP of West Java Province), and Based

on that, the identification of which of the dominant creative industry requires the supply of biological resources.

Based on the results, we conclude that the identification of Culinary Creative Industry, Mode & Creative Fashion

Industry, Creative Industry and Craft are three creative industries which is a downstream industry that requires a

supply of raw materials of biological resources.

2. Domestic and Export-Driven Economy Model: Culinary-Mode & Fashion- Craft Cluster Creative Industries are

emerging as the Engines of Economic Activity is a model of cluster development which can be utilized to

develop biological resources based creative industries in West Java.

http://www.kemenperin.go.id/


4.2. Suggestion

1. More detailed analysis are needed to determine which county and city in West Java that are the biological

resource center that are able to support the development of Culinary-Mode & Fashion- Craft Cluster

Creative Industries.

2. More detailed research are needed that can examine the hypothesis model. In this case the “Domestic and

Export-Driven Economy Model: Culinary-Mode & Fashion- Craft Cluster Creative Industries are Emerging

as the Engines of Economic Activity” model is the proposed one to be empirically examined.

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A Course on Idea-to-launch Process with Emphasis

on Experiential Learning

Sri Hartatia*, Rendra Chaerudin

b, Kartib Bayu

c

abSchool of Business and Management, Institut Teknologi Bandung, Jl. Ganesha 10, Bandung, 40132, Indonesia cSchool of Architecture, Planning, and Policy Development, Institut Teknologi Bandung, Jl. Ganesha 10, Bandung, 40132, Indonesia

Abstract

In business supplying products by SMEs to major retailers in general SMEs become the weaker party. Almost all of the terms set

by major retailers, while SMEs just as the receiver only. This is due to the weak bargaining position SMEs. One of the obstacles

faced by SMEs in supplying products to major retailer is a matter of working capital. Payments period made by major retailers to

SME supplier is usually between 1 (one) to 3 (three) months. With a relatively long period of payment, then the SMEs requires

relatively large working capital to supply major retailers. On the other side of the ability of SMEs are generally only able to

provide working capital is less than one-third of the amount required, and then most of the capital is filled by borrowing on the

other with relatively high interest rates. However, if the working capital loans are not available, the SMEs can stop the supply,

and waiting for payment from major retailer. This condition causes uncertainty for both SMEs and for retailers. Models that have

existing loans can not protect and fulfill the needs of SMEs supplier to major retailer. Financing for SME suppliers to major

retailer has specific characteristics that can not be accommodated on the existing funding model. This is caused by 1). Financing

schemes that have been there are still concentrating on the financing for the production process. 2). Credit in the amount of the

existing schemes is low. 3). There are some credit schemes that require collateral / guarantee 4). Credit scheme is oriented to the

business groups / cooperatives. 5). There is no special funding scheme for the payment of bail major retailers. The purpose of

research is to obtain an exact formulation financing model for SMEs supplier to major retailers. The method used is descriptive

comparative and technique analysis using two approaches, Desk Study and Survey . The results showed that: 1). SMEs suppliers

require addition working capital to carry out its business operations. This is caused because the pattern of payments made by the

retailer to SMEs supplier to maturity (15 days, 30 days, 45 and 75 days) depend on the negotiation of each SMEs supplier to the

retailer.. 2). SMEs suppliers tendency patterns utilizing a conventional loan. 3). Financing model for SMEs suppliers to major

retailers have a synergy between SMEs suppliers, major retailer and financing model management agency. 4). Institutions

alternative to manage the financing model of SMEs are suppliers to major retailer a) Managed by revolving fund management

agency b). Cooperatives. c). Bank.



Keywords: SMEs; supplier; wholesaler; finacial scheme model




1. Introduction

In business supplying products to major retailers by SMEs generally become weaker party. Almost all of the

terms set by large retailers, while SMEs just as those who follow the rules set by the course. This is due to the weak

bargaining position of SMEs. One of the obstacles faced by SMEs in supplying products to major retailers is a

matter of working capital. It is given that the period of payments made by large retailers to suppliers typically

between 1 (one) to 3 (three) months. With a repayment period of "relatively long", then SMEs need working capital

"relatively large" to supply large retailers.

The ability of SMEs are only able to provide working capital is less than one-third of the amount required, then

most of the capital is filled by borrowing on the other side with a relatively high rate. However, if the working

capital loan is not available, then the SME can stop the supply, and wait for payment from Major Retailers. This

condition causes uncertainty for both SMEs as well as for retailers, who in turn can move the Big Retailers source of

supply to another party or competitor SMEC.

SMEs generally use more of their own capital to meet financing needs. This leads to limited funds can be raised

by SMEs for business development. Some of the finance schemes available in the market, in general, are also

difficult to access by SMEs. Bank loans, for example, though it is more easily obtained by the SMEs is through the

People's Business Credit (KUR), but in general is still quite limited bank credit accessible to SMEs. This is because

there is a difference in perception between banks and SMEs in several ways, among others:

The number of SMEs are relatively small loans unattractive for banks,

Administration of the banks that are sometimes difficult to understand by SMEs, melting of a relatively long

time,

The rate of interest, and

Collateral requirements.

Skim another example of venture capital financing, are also less suited to SME suppliers because of the nature of

business is not in accordance with the requirements for venture capital and also obtain relatively greater burden on

SMEs. The aggravating factors include collateral requirements that must be provided SMEs. Financing products

provided by finance companies, for example, factoring is actually very interesting as a source of working capital.

But would still need to find a suitable model for SMEs to access the finance factoring. Credit Unions and Savings

and Loans Cooperative Unit (KSP / USP Cooperative) and Microfinance Institutions (MFIs) else is in many ways

preferred by SMEs, among others because the service is fast and relatively easy to access. However, a limited

amount of capital from the MFI has led to limited funding can be provided for the development of SME business.

In accordance with Act No. 20 of 2008 on Micro, Small and Medium Enterprises (SMEs) where Article 21 is

essentially assigning the Government and the business community to develop financing for SMEs, and the financing

constraints of SMEs aware of the supplier, and the pivotal role played by SMEs in the absorption supplier

employment and local economic growth, it would need to be sought financing schemes that can satisfy the needs of

SME suppliers to major retailers so that SME suppliers are protected. SME suppliers need funding in an amount

sufficient, easy, fast, accurate and inexpensive. Hopefully with this financing scheme, the supplier can meet the

needs of SME financing for working capital purposes, so that the real sector, especially in the area can be developed

more quickly, which in turn will benefit the local and national economy.

Small Business, is a productive economic activities that stand alone, which is conducted by an individual or

business entity that is not a subsidiary or branch company is not owned, controlled, or be a part either directly or

indirectly from a medium or large businesses that meet the criteria Small Business as defined in this Act (Act No. 20

of 2008).


The preparation scheme for the protection of the SME Financing suppliers to major retailers, in principle, is a

series of activities that aim to protect the stability of the capital of SMEs in the operations associated with the

marketing cooperation with the major retailers. Traditional markets are markets that are built and managed by the

government, local government, private, state-owned enterprises, and local state-owned enterprises, including co-

operation with the private sector, with a place of business like stores, kiosks. Los, and tents are owned / managed by


small traders, medium, non-governmental, or small-scale cooperative effort, little capital, and with the process of

buying and selling merchandise through Modern bargaining. Bargaining with the system is a self-service store, sells

a wide range of types of goods at retail in the form of Minimarket, Supermarket, Department Store, Hypermarket,

Grocery shaped or wholesale.

Terms of Trade (trading terms) are the terms of the cooperation agreement between the Supplier and Modern

Stores / business-related mini network supplying products that are traded in the relevant Modern Store. Shop the

sales floor area limitation Modern is as follows:

Minimarket, less than 400 m2 (four hundred square meters)

Supermarket, 400 m2 (four hundred square meters) to 5,000 m2 (five thousand square meters);

Hypermarket more than 5000 m2 (five thousand square meters);

Department Store of more than 400 m2 (four hundred square meters) and 5. Grocery Stores more than 5,000 m2

(five thousand square meters).

Classic problem that always arises in order to empower small and medium enterprises and cooperatives, one of

which is the problem of capital, the growth is normally recorded due to limited access to capital resources,

especially access to formal financial institutions such as banks, in addition to lack of knowledge or ability to provide

for the procedure / banking requirements. As a result, the practice of moneylenders (loan shark) despite having high

interest will remain a place for SMEs because aspects of the service that is easy, fast and on time as required.

Law No. 5 of 1999 on competition that is designed to protect SMEs as suppliers with inadequate capital, was the

exploitation of SMEs for the benefit of retailers. However, with the presence of the Regulation No.. 53 of 2008

providing for the "Term Trading"-the relationship or the purchase agreement between the retailer and the supplier of

the substance are adequately pro Permendag SMEs. Any two buy-sell relationship model SME suppliers with

department stores and hypermarkets.

Suppliers displaying their products in the store on consignment and are responsible for sale level. Maximum

repayment period of 1 month after the retailer of goods sold

Suppliers are selling items dropping, retailers and payment is done 2-4 months ago.

Micro Business

Small Business

Medium Business

Financing System

Bank Financing

System

Multi-finance

Financing System

Capital Market

Financing System

Micro-financing System

Modernization

(SWAMITRA)


Previously the government has initiated the factoring financing system through the "National Single Window" for

SME suppliers to large retail goods, to help overcome the problem of liquidity for SMEs. There are two institutions

involved in the idea that the Coordinating Ministry for Economic Affairs and the Ministry of Cooperatives. The

pattern of cash payments factoring suppliers can be done by working with post office banks, and cooperatives.To

coordinate the implementation of the single window factoring into the electronic system. Factoring application is no

different from a payment system for this, namely through a debit card or check. Both products were perceived still a

luxury for SMEs. This can be simplified via invoice or proof of receipt (bill of modern retail) then the supplier can

freely withdraw cash directly to the post office, or bank cooperative program participants factoring for SMEs

suppliers Large Retail Company.

3. Research Method and Question

3.1. Method of Implementation

The method used in this study is Descriptive Comparative Method. Engineering studies using two approaches,

namely (1) Literature (Desk Study); and (2) Survey (interviews and observations). Stages of Implementation of

activities starting from the design phase of the study, drafting instruments, sampling (sampling technique), field data

collection, data tabulation, selection and sorting of data, data analysis, data interpretation and preparation of reports.

Location of the study in West Java. Implementation research preparation for the Protection of the SME Funding

Schemes Supplier to Major Retailers implemented with the following approaches:

Approach to the field, which was conducted to obtain data and information through observation of primary (field

surveys), interviews with the perpetrators of SMEs and Entrepreneurs Large Retailers.

Institutional approach undertaken to obtain data and secondary information coordination and consultation

followed by a discussion of the concept and Protection Schemes for SME Financing Suppliers to Major Retailers

to related parties

Approach literature conducted through literature review (desk study), which contains provisions that are

regulations and legislation, the wisdom, the results of research studies, and ideas (concepts) related.

3.2. Problem Formulation

The problem in this study are as follows:

SMEs Shortage of working capital to maintain continuity of supply of goods / products to large retailers

Bargaining position (Bargaining Position) SMEs against large retailers are still relatively weak

Process payments for goods from major retailers require some time between 30-75 days

Existing Credit Scheme can not accommodate funding needs of SMEs to support transactions with major

retailers.

Yet no specific financing schemes to protect SME suppliers to large retailers who supported the mechanism of

financing schemes are simple and easy to access.


4.1. Financing Scheme for Financing SMEs

SME venture capital often patterned according to typical financial planning itself. SMEC will first use its own

savings and then try to gain access to the family and friends of savings. If these sources are insufficient, SMEs will

seek more formal channels such as banks and investors funding from outside the company. Most of the funding

sources of debt / credit is from individual investors, dealers, commercial banks, government-funded programs and

public financial institutions.

Sources of financing of SMEs is still very limited own capital to expand its business , on the other hand to access

a funding from outside , SMEs still face many obstacles , which limited banks willing to serve the needs of capital


for UKMM with easy terms and procedures , and lack of knowledge and skills in associated with the bank . For the

government to seek a variety of alternative sources of capital more accessible to SMEs.

One form of independence of SMEs in implementing its business is its ability to access capital money from

certain sources . However, many SMEs face constraints , which limited banks that are willing to serve SMEs and on

the other hand there are many SMEs are dependent on access to capital provided by the government through

designated banks . Not to empowerment SMEs in accessing capital due to limited knowledge and skills in dealing

with formal financial institutions require certain terms and procedures.

To help SMEs overcome these obstacles, the government through the Ministry of Cooperatives and SMEs, the

Ministry of Agriculture, and the Ministry of State Enterprises and other departments have been providing various

forms of alternative capital schemes, so that SMEs are able to access capital. there are a variety of facilities capital /

loan programs provided by the government for SMEs. Some existing finance schemes are now as follows:

Skim Credit Strengthening Microfinance institutions

Skim Micro And Small Business Loan (KUKM) of the Fund SUP-005

Skim Commercial Bank Linkage with KSP / USP and KJKS / UJKS

Skim Business Credit Households (Krista)

Agribusiness Credit Scheme of Rural Business Development (PUAP)

Skim Credit Food Security and Energy (KKP-E)

Skim People's Business Credit (KUR)

Skim Through Pattern Warehouse Receipt Loans

Existing financing schemes both from the Ministry of cooperatives and of several other departments have not

been able to meet the needs of large retailers UKMMK suppliers. This is caused by several things:

Existing financing scheme is still concentrated on the financing for the production process.

Plafond Credit on existing schemes is still relatively small

Still some credit schemes that require collateral / guarantee

Skim Credit is still oriented business groups / cooperatives.

Yet there is a special financing scheme for the bail payment of large retailers

4.2. Funding and Supplier Transactions SMEs to Retailer

Micro, small and medium enterprises (SMEs) is a supplier of SME businesses who partner with major retailers /

supermarkets in the process of selling a product (goods) that result. In the process of the supermarket partners

should contribute in building business partnerships and provide real empowerment to micro-small and medium-scale

producers. On the other hand, SMEs are responsible partner need a continuous supply of quality products and

appropriate prerequisites modern shop Thus, both parties (shopping centers / stores modern and SMEC) is able to

realize the role and function of each sort. Some SME financing by the production process ie procurement, personnel

costs, operating costs (including post) and the cost for the "wait" payment from large retailers (bailouts). The cost of

production until the post can be predicted from the beginning, which is contained in the draft budget as data from

PT. Lyco farm (vegetable supplier to the department store company Yogya / Griya, Hypermart, Papaya Fresh

Gallery and Asiana Freshmarket) ie total cost of data, revenue andnet profit (Gain) to supply Hypermart and

Department Store Yogya / Griya.

The sorting of vegetables (tomatoes) to three markets namely Hypermart, Yogya / Griya and traditional markets,

should be done to maximize profits. If based on the price of tomatoes from the garden itself, will be different from

the purchase price of the partners (contract price) and non-contract farmers. So SMEs should have its own funds for

the procurement of three sources of tomatoes. Difficulties will arise when:

Price of tomatoes at the farm level is high and production is not optimal in the garden

Big retailers hold discount program / promo so it does not adjust the price of admission prices at the farm level,

Contract Farmers sell their produce out so UKMMK should have a reserve fund for the purchase of tomatoes and

Must have specific inputs such as green house that not all the perpetrators of agribusiness have it, because Lyco

san tomato farm produce pesticide-free vegetables.


The solution of this problem is the SME should have a self-managed fund for planting tomatoes and do not rely

on goods from outside. To maintain continuity of supply, it should be planted 5 periods x 2 x Rp 54.11 million

hectares of USD 541.1 million. Just as fresh product supplier, supplier of cleaning products must have a reserve

fund for the production of goods stored in the warehouse / indirectly sold or supplied to retailers. Another difficulty

in the transfer of SMEs to large retailers is to be held long before the process of shipment packaging, such as PT

Lyco farm for three "brand" that is Lyco farm, INAgreen and MOCITO FRESH. Manufacture of plastic packaging

tomatoes require considerable cost which is about 180,000 pieces @ Rp 200, Rp 36,000,000 . Cardboard packaging

by 6,000 @ Rp 7,000, Rp 42,000,000. Plastic container 200 pieces @ Rp 90,000 , Rp 18,000,000. Total $ 96 million

for the two months before the vegetables are sent to other retailers such as labor besar.Biaya packaging and ship

could reach Rp 800 to Rp 1,000 per pack. Cost per month with shipments of about 20,000 packs per month could

reach Rp 20 million per month. Difficulties arise if the payment of large retailers has been delayed. This led to

increased funds should be reserved.

4.3. SME Financing Scheme Implementation Mechanism Major Retailers Supplier

Mechanism of action, the implementation of SME financing schemes for the protection of a large retailer supplier

broadly involves three institutions namely SME, large retailers and Institutions business / Implementing financing

scheme. The third institution is a system of interlinked to each other. Third, the agency has different roles and

functions, but it should be mutually supportive, and interdependence that is necessary to synergize among the three

institutions. Therefore, it is necessary to develop a clear mechanism of action among the three institutions. For these

synergies, the initial stage can be initiated or initiated by the government in this case the Ministry of Cooperatives

and SMEs.

5. Conclusions and Recommendations

5.1. Conclusion

Based on the analysis and discussion on SME finance schemes for the protection of the Supplier to Major

Retailers, we can conclude the following:

1. The SME suppliers in desperate need of additional capital in the conduct of its business operations. This is

caused because the pattern of payments made by the retailer to the supplier SMEs due (15 days, 30 days, 45 to

75 days) depending on the negotiation of each SME suppliers to retailers. With the pattern of many SMEs are

experiencing problems in meeting its operational expenses. It is therefore necessary financing model that is right

for the SME suppliers to supply continuity can be maintained.

2. SMEC Supplier relatively wear patterns of conventional loans (credit system with a commercial interest)

compared with the pattern or existing credit schemes. This is due to schemes that have been there have not been

able to accommodate the needs of SME suppliers to large retailers

3. Financing scheme for the protection of the SME Suppliers to Major Retailers need for synergistic cooperation

between SME suppliers, major retailers and institutions managing finance schemes. Financing schemes designed

specifically to protect the SME suppliers to large retailers, because the scheme has specific characteristics and

different financing schemes that already exist.

4. Alternative institutions to manage the SME financing schemes are suppliers to large retailers:

Managed directly by the Institute of Management Revolving Fund (LPDB)

Cooperative which has been feasible to implement schemes of financing MSME suppliers to large retailers

with the type of bailout loans to SME suppliers cooperative to retailer.

Bank financial institutions as finance schemes implementing SME suppliers to large retailers with a special

credit scheme that trade credit scheme for SME suppliers to large retailers.

5. Software that is made in this work is a model of financing schemes with the intention of simplifying calculations

and selection of SME suppliers in determining the pattern of their business credit.


5.2. Recommendation

Based on the above conclusions, it can recommend the following:

Needed stronger legal foundation level of government regulation (PP) as well as the president's decision to

regulate finance schemes to protect the SME suppliers to large retailers.

To expedite the process of implementation of the financing scheme, should be facilitated by the Government in

this case the Ministry of Cooperatives and SMEs.

Preferably finance schemes to protect the SME suppliers to large retailers supported the budgeted costs of the

state budget.

The financing to implement its schemes and programs should be done first Pilot Project, so that the

implementation can be better and more perfect.

Further development of the performance of the software can be developed by applying a multi-network and

multi-user system with the involvement of a wider network of data between stakeholders involved in the

activities of SMEs supply goods to retailers.

References

Ina Primiana. Moving Real Sector Small Medium Enterprises and Industry. Alpabeta. Bandung.(2009)

Kasmir. Bank Marketing. Kencana. Jakarta(2004) Mulyadi Nitisatro. Entrepreneurship and Small Business Management. Alpabeta. Bandung (2010)

Peraturan Kementrian Perindustrian dan Perdagangan. Peraturan Perudang- Undangan No 20.tahun 2008. Tentang usaha kecil menengah dan

koperasi(2008) Sigit Triandaru dan Totok Budisantoso. Bank and Funding Institution. Salemba Empat. Jakarta.(2008)

Suhardi,Taufik Makarao dan Fauziah.Cooperative Law, Small, Micro and Medium Enterprises. Akademia. Jakarta.(2012)

Sunaryo.Financing Institution Law. Sinar Grafika. Jakarta. (2009)




Batik Solo Tourism Cluster Ecosystem:

A Qualitative Approach Problem Analysis

Pri Hermawana*, Ghita Yoshanti

b, Santi Novani

c, Utomo Sarjono Putro

d

abcdSchool of Business and Management, Institut Teknologi Bandung, Jl. Ganesha 10, Bandung40132, Indonesia

Abstract

Surakarta or Solo has the reliable manufactured and commercial commodities for hand-drawn, stamped, and printed batik. Batik

has been the trademark of this city and renowned for its two primary Batik villages Laweyan and Kauman. The richness of Solo

heritage, combined with Batik legacy, has become the energy for Solo to foster their tourism. Therefore, starting in 2012, the

government of Solo aimed to make the city acknowledged as The Capital City of Batik, and pointed Batik as the commodity and

asset to attract more tourists for visiting Solo. This paper is a study based on prior field study in form of interviews with some

informant, to grasp some issues, stakeholder identification, and, their concern toward initiative of Solo as The Capital City of

Batik. This paper reports the problem qualitatively, and applies the concept of Industrial cluster and Tourism Cluster as its

framework. This is an important preliminary study of a larger project in the future. The result of this study are seven problem

identification after conducting interview with key stakeholders; and based on the interview result come up several other relevant

stakeholders with their concern, then this study map the concern by using stakeholder concern mapping. These results are

important for the researcher’s team as the basic foundation to continue the study in higher step of the whole research about Batik

Solo integrated tourism and promote Solo as The Capital City of Batik.



Keywords: batik; solo; qualitative approach; problem analysis; industrial cluster; stakeholder concern mapping

1. Introduction

Solo is renowned as a commercial city, which is located in Central Java province in the mountainous slopes of

Merapi and Lawu mountains with the height of approximately 92 m above sea level, and the area coverage 44 km2.

Solo consists of more or less 500 thousand people, where most of them are Batik trader and worker. The city has

reliable manufactured and commercial commodities, namely: hand-drawn batik, stamped batik, and printed batik. In

the early years of the twentieth century at batik villages of Laweyan and Kauman, the hand-drawn batik home

industries and stamped batik factories developed. (Wijaya, 2009).



116 Pri Hermawan / IICIES 2014 Proceeding

1.1. Background

Laweyan derives from Lawe means yarn. Laweyan is rich of its historical background since 1500s. Laweyan

have existed since 1950s from spinning yarn into cloth. Laweyan also related to the history of Brawijaya V from

Majapahit. The history of Laweyan can be seen from the table below:

Table 1 History of Laweyan Batik Cluster, adapted and improved from (Novani, 2013)

Years History

1500s Laweyan Batik village was emerging with spinning yarn into clothes and related to Brawijaya V from

Majapahit and spreading of Islam

1745 The popularity of Laweyan Batik Village was decreasing since the existence of Keraton (Palace)

1900s Samahoedi movement to keep the private business was conquered by foreigner. The era of batik glory in

Solo. Contribute to the independence of Indonesia

1970s The industry was decreasing by the invention of printing technology which cheaper than hand-drawn

and stamp.

2004-now The industry has reborn and Laweyan officially became Batik cluster and FPBL was developed.

Nowadays, the pattern of batik in Laweyan is following the market demand from the consumer. Kauman derives

from kaum or abdi dalam related to Keraton (palace) as the center of business and industry. Kauman more stresses

in effort to maintain the inheritance of ancestor culture according to Keraton Solo. If Laweyan from the history

consist of big entrepreneurs, Kauman is only consisting of one or two big entrepreneurs, with the rest small

entrepreneurs. The pattern of Kauman Batik is related to moslem and the pattern which is used by Keraton people.

Mostly consumers prefer to buy Batik from the showroom with cheaper price but request for qualified product.

They do not consider or even do not know about the value of the batik pattern and the history behind the pattern.

The government roles still not satisfy because the uniform that is used by the government still printed batik, instead

of hand-drawn batik. Moreover there is no specific law made to accommodate the welfare and safety of the batik

artisans. There is no integration and collaboration between Laweyan, Kauman, and other supporting partner in

fostering batik potency for tourism purpose, not like what is happened in Bali. In Bali has been already happened

collaborative tourism among stakeholders like travel agency, transportation, government, entrepreneur, financial

institution, and so forth. Trust among stakeholders are successfully developed and maintained in Bali.

Today, to follow the success of Bali, to give some tourism destination alternatives for the tourist, preserve Batik

as Indonesia’s culture heritage, and as positioning for Solo, the government of Solo wants to develop the city to

become demand generator for culture and creative industry development especially for Batik commodity. Solo

wants to be branded and acknowledged as capital city of Batik by giving the visitor experiences of Batik Tourism in

all package. Collaboration becomes the important agenda, by maintaining Batik Cluster Kauman and Laweyan with

their own uniqueness and completed by full support from other stakeholders. However, there are some challenges

for the collaboration. Current condition the consumer who have visited one of cluster, they felt enough, and not

necessary come to both cluster. In seeing Batik itself, the consumers just see it as variation of clothes pattern and

abandon the richness of cultural value behind Batik, which is intertwined with Solo’s history.

The result of this research is very important for Solo’s future tourism and solving problem of decreasing amount

of tourist who is visiting Solo recently. Through the data of Indonesia statistic bureau (2013), the amount of foreign

tourist who visited Solo in 2013, lesser 5.451 people than in 2012. [2] If we just let the condition like this, we will

lose the opportunity to grab the pennies from Solo’s potency. By conducting this research, we will analyze the root

causes by conducting important elements of qualitative research and in the next research will raise the certain

solution for fostering Batik Solo Tourism Industrial Cluster, manifested in Solo and approved by all stakeholders,

including the contesting stakeholder like Laweyan and Kauman. This is the preliminary study of a larger project to

promote Solo as the Capital City of Batik and integrated tourism in Solo. The result of this study is important as the

basic foundation for the researcher’s team to continue in higher step for proposing solution to achieve the project’s

output. The result of the study will be confirmed again to each of stakeholder in the form of focus group discussion

until all the stakeholders agree upon these seven problem identification and their portion in every problem based on

Pri Hermawan / IICIES 2014 Proceeding 117

stakeholder concern’s mapping graphs. Without having a clear and conform problem description, so it will be

difficult to find the solution. That is the benefit of this preliminary research.

1.2. Research Objectives

The objective of this paper is to describe the problem in Batik Solo Tourism Industrial Cluster quantitatively

toward Solo as The Capital City of Batik. This paper reports the finding based on previous field study in Solo Batik

Cluster Ecosystem. This paper will provide the basic finding to continue to the higher step of whole research

objective for Solo as the capital city of Batik and integrated tourism.

1.3. Research Questions

This paper is hopefully can answer these several questions:

1. Who are the relevant stakeholders involved in promoting Batik Solo as the capital city of Batik and integrated

tourism?

2. What are the common issues according to the interviewed stakeholders and their level of concern?

3. What are the suggestions derived from the interviewed stakeholders about Batik Solo Tourism Industrial

Cluster?

2. Theoritical Framework

This research will be dealing with the concept of industrial cluster, tourism system, and the linkage between these

two concepts into tourism industrial cluster. Several researches have been conducted within these concepts that will

be described below to enrich the understanding about the concept and also to differentiate the existing research with

this paper.

2.1. Industrial Cluster

(Porter et al. 2000), gave definition to an industrial cluster is the geographic concentration of interconnected

companies, specialized suppliers, service providers, firms in related industries and associated institutions. Industrial

clusters are widely considered to be an important means to promote regional innovation, entrepreneurship and high-

tech industries.

In Indonesia, the agglomeration of manufacturing SME industrial cluster is observed in both rural and urban

areas (mostly surrounding big cities). According to (Weijlan, 1999), rural clusters in Indonesia have a seedbed

function for the development of rural industries, demonstrating that clustering can improve for rural producers to

outside markets, through dense networks of traders. (Klapwijk, 1997) argue that clusters are important for the

development of rural industries because productivity in clusters appears to be higher than in dispersed enterprises.

One of the main reasons is that clustering stimulates active involvement of traders and LEs in agglomeration of

SMEs. A more interesting finding is research from (Sandee, 1996), which shows that enterprises in clusters are in a

better position to adopt innovations in products as well as production process than dispersed enterprises.

According to (Tambunan, 2000) most clusters in Indonesia were established naturally as traditional activities of

local communities whose productions of specific products have long been proceeding. Based on comparative

advantages of products they made, at least with respect to the abundance of local raw materials and workers who

have special skills in making such products, many of these clusters have a large potential to grow. Take for example

the clusters of batik producers that have long been existence in various districts in Java (e.g. Yogyakarta,

Pekalongan, Cirebon, Surakarta, and Tasikmalaya). Various studies show the importance of clustering not only for

the development of SMEs in the clusters, but also for the development of villages or towns in Indonesia.The benefit

of industrial cluster will help the stakeholder to overcome their constraints; succeed in more competitive market;

building external and internal network; and horizontal-vertical inter-firm cooperation-competition (co-opetition).


2.2. Tourism Cluster

Tourism cluster is using the concept of cluster in tourism sector. (Cunha& Cunha, 2005) mention the several

stakeholders who are included in Tourism Cluster. The stakeholders are inside the system and outside the system.

Inside the system are Lodging, tourism product, travel agencies, traders, restaurants, tour guides, and craftsman. In

the external system, the stakeholders are universities and research institutions; Government; Tourist; and Federation-

Association. The concept can be seen in Fig. 1.

Fig .1. Tourism Cluster Representation from (Cunha and Cunha, 2005);

in (Imali& Long, 2012)

The tourism cluster has four influencing factors: core resources and attraction; destination management;

complementary condition; and demand condition. Core resources and attraction represents the main resources that

attract tourist to visit the destination, and main factor that creating the tourism products. Core resources and

attraction is also classified into two, endowment resources and created resources. Endowment resources are the

resource, which already available as it is like mountain, lakes, beaches, rivers, cultural and heritage. Created

resources are the resources, which made by the people, like festival, special events, and exhibitions. Destination

management factor focus on activities that can enhance the appeal of core resources; strengthen the quality and

effectiveness of complementary factors; and best adapt to constrain imposed by the qualifying determinant. This

including the DMO activities like marketing the destination, service dimension, information and technology, human

resources management, and environment management.

The complementary factor consists of the contribution to add value of core resources. Complementary factor can

be categorized into tourism superstructure and supporting elements. Tourism superstructures are accommodation

facilities, food services, transportation facilities and other resources, which may view as the private sector

component of the tourism industry (Crouch and Ritchie, 1999 in Kim and Wicks, 2010). Supporting elements are

general infrastructure, accessibility to a destination beyond the physical facilities such as regulation and entry visas,


hospitality, and market ties. The demand condition is the conditions of tourist demand, including demand awareness,

perception, and preferences (Dwyer and Kim, 2003 in Kim and Wicks, 2010). Fig. 2 shown this relationship.

Fig. 2. Tourism Cluster Development Model for Global Competitiveness (Dwyer and Kim, 2003 in Kim and Wicks, 2010)

3. Qualitative Approach Methhodology

Qualitative approach is used to generate important information and mapping the issues and challenges that

hamper the effort to integrate the stakeholders in a common goal for succeeding Batik Tourism Cluster.

Cresswell(1998) defines qualitative research as an inquiry process of understanding based on distinct

methodological traditions of inquiry that explore a social or human problem. The analyses are complex, holistic

picture, analyze words, and report detailed views of informants, and conduct the study in natural setting. In this case,

qualitative method will use interview, observation, and secondary data to analyze the real phenomenon in the field.

The interview was conducted on August 19th-20th In Solo. The interviewers were the Decision Making and

Strategic Negotiation (DMSN) team from Institut Teknologi Bandung.

The processes of qualitative approach, which illustrated in Fig. 3, are:

1) Research Design: In this step, decided the topic, scope, and research objective, research question as the initial

process of conducting the research.

2) Research Framework: Actually researcher will get a lot of insights in the field through data collection, but

before doing data collection; we also need to limit our study in some specific concept. This framework can be

the basic frame before researcher goes further to the field in collecting data. In this case this paper is using the

concept of industrial cluster and tourism to create the tourism cluster.

3) Preparation before go to the field, it is including choosing the relevant informant, site, finding access to get the

relevant informant and site. After that researcher can compose the tools, which is needed for data collection like

creating list of questions to be asked in interview session.

4) Data Collection, researcher choose the suitable method here, it can be interview, observation, FGD, simple

questioner, and so forth. In order to make the informant communicative to the researcher, researcher should


build rapport by being close to the informant, and construct good relations with them. In this case the DMSN

team were using interview with several informants.

Fig. 3. The Qualitative Method Scheme

5) After the data are collected and stored in recording format, we process the data by making transcription, and

coding the data based on some categories. Collected data than transcript and based on that transcription then we

can find several issues mentioned by all informants. After identifying the found issues, then we filter it into

several key issues. This step is illustrated in Fig. 4.

Fig. 4. Data Processing Scheme Created Based on Creswell, 1998

6) After getting some categories, then we analyze and elaborate them to create some insightful conclusion.

7) Making report to deliver our findings to the scientific communities or related research stakeholders. If the

research is still preliminary research, then the researcher into further research can continue the research. We

also can ensure the validity and reliability of our finding by confirming our research finding in Focus Group

Discussion Forum.

Table 2. The Coding or Issues Categorization

Informant* Important Notes Issues Found Key Issues

(1) (a) Different values and characteristic between

Kauman and Laweyan

Foster Batik as the icon of Solo to

Worldwide

Attracting Local and

International Tourist

Scale of Batik trader in both Kauman and The package to attract more tourist


Laweyan

Trading, Economy, Visit are influenced by

Cooperation and Financial

Cultural activities and Events

In group should help each other but have limited

capacity to intervene, to survive in facing a

condition of " the strong will win, the weak have

barrier to entry”

Tourism as Solo 2nd line potency

Physical development are not optimal Tourism Blueprint

Solo creative community with legal binding History and characteristic of Batik

Kauman

Increasing Batik Value

Keep the status quo, survive in the competition History and characteristic of Batik

Laweyan

Conflict of Interest Complete understanding about

Batik

(1) (b) There are a lot of problem faced, especially

competition among Batik Trader in Solo, Java,

Indonesia, World

Historical building and Keraton as

the supporting elements

Definition of cluster, cluster or sentra (center)? Differentiation of Batik Solo

among other Batik producers in

Java

The phase: prasentra-sentra-cluster Branding Kauman and Laweyan, as

Batik Solo competitive advantage

Clothing standard by government Spatial problem to create Batik

center

Utilization of urban

spatial

Consumer are very sensitive with price Solo spatial area is already 98%

utilized

The funds are in supplier to ensure the

availability of raw materials

Area included in tourism packages

The availability of raw materials Kauman and Laweyan location and

its condition

Complex history of Batik Solo are very essential IPAL

(2) The history of Kauman and Laweyan The funds in supplier to ensure

availability of raw material (Mori)

Fulfillment of Raw

Material

Earlier, government still did not consider to

develop integration among Batik Village

Imported raw material, the price of

raw material also determined the

price of Batik product

The grouping of Kauman and Laweyan naturally

created based on their historical and

characteristic values

The supply of raw material and

competition to get raw material

Government initiative of OBOP (One Believe

One Product)

Solo Ibu Kota Batik (Solo the Capital City of

Batik) with event Solo Batik Carnival,

Ngarsopuro Exhibition

The clear definition about cluster

and sentra

Standard and Supporting

Policy about Clothing

Government of Solo have interest to foster Batik

as the icon of Solo to worldwide

The role of government in

advocating the Batik producer

Need to think a package as the competitive

advantage of Batik Solo among other Batik

Clothing standard, like food and

housing standard


*) 1(a) Laweyan 1(b) Laweyan 2 Kauman 3(a) Tourism and Creative Economics Agency 3(b) Tourism and Creative Economic Agency

with Education and Cultural Agency

producers

The spatial problem to create center of Batik Batik Solo Carnival Event and Program about

Batik Integrated KampungWisataKauman (Keraton-

Kauman-Ps. Klewer-PGS-MesjidAgung)

Ngarsopuro Exhibition

Keraton agreed, but market trader disagree

because afraid of losing customers

Solo International Performing Art

The difficulties to collaborate, each of Kampung

Batik should be equipped with specific branding.

(Kauman with Keraton and Laweyan with

historical aspects)

Batik Solo Fashion

Needs a further research and takes time Tourism Integration Integrated Tourism

From Bappeda, City has been very crowded 98%

utilized, and IPAL should be developed.

Collaboration of Kauman and

Laweyan

Tourist who come to Solo have complete

understanding about Batik

Fostering Kauman and Laweyan

potency

(3) (a) Solo batik pattern already old, need to do some

improvisation

Complete understanding about

Batik

The cultural activities are initiated by the citizens Experience, Shopping, Historical,

and Cultural Tourism

Not only see the batik product but also

experience the process of making batik

Collaborate and cooperate with

tourism stakeholder to maintain

customer Kauman and Laweyan are having economics and

tourism potency

Kauman and Laweyan are not compete each

other but synergized under the guidance of

government by making some batik event

together

Competition and Cooperation

Tourist feel enough only visited either of

Kauman or Laweyan

Tourism as Solo 2nd line potency under Tourism

agency and Bappeda

The concept of tourism integration to attract

more tourist visiting Solo

(3) (b) Develop and preserve the art and culture of Solo

Government facilitating, coaching, coordinating,

regulating, stimulating

Batik Carnival and Annual Calendar Event

Customer Management

Solo international performance arts

Ecoculture 2025

Tourism Blueprint


4. Key Issues Analytical and Tourism Cluster Stakeholders

Solo as Ibu Kota Batik actually initiated by the people of Solo of their belief that Batik actually rooted in Solo,

then after that by trade from the entrepreneur who moved from one place to another place to distribute batik, then it

spread around Java. At first the government stressed in economic motive from development and planning agency

(Bappeda) and Industrial agency as the first layer, then in the second layer the tourism and creative economic

agency. Laweyan or Kauman itself cannot initiate the collaboration because each of them still struggling with their

own interest in business. The government, in this case Solo government have potential position to create value co-

creation from both side by branding and equipped them with program due to Solo as Ibu Kota Batik.

Here are various point of issues generated from the interview that have been conducted so far with some

stakeholders. The graph shows the level of concern of the actor toward the issues.

a. Attracting local and international Tourist: The output of making the Solo tourism more attractive is to attract

more local and international tourist visiting Solo. Several events are made to increase Solo attractiveness.

Tourism is important for Solo as the 2nd

line potency for Solo’s economy. But the new package of tourism

should be design to collaborate Kauman and Laweyan potency to support Batik Solo differentiation among

other cities, which also produce Batik. The concerned stakeholders are tourism and creative economic agency,

and also Kauman and Laweyan.

b. Increasing Batik Value: Batik is not only seen as a cloth with interesting patterns, but behind those patterns

there is very potential value and meaning to be explored. Kauman with the relation toward Keraton and

Laweyan with the historical richness. The concerned stakeholders are almost the entire interviewed

stakeholders.

c. Utilization of Urban Spatial: The spatial of Solo has been utilized 98%, the possible development or program

have to consider this depletion of free area, and have to maximize the existing artistic building and artefacts.

Now the artistic and artefact building is not really utilize maximally. The concerned stakeholders are

development and planning agency, Kauman and Laweyan.

d. Fulfillment of raw material: The mori fabrics still obtained by importing, and the one who get the cheaper

material will ensure their product owning competitive price. The strongest will win the competition. The

concerned stakeholders are Laweyan and Kauman.

e. Standard and supporting policy about clothing: The entrepreneur of batik still argue that the standard of cloth

and supporting policy toward the entrepreneur and artisans still not enough both material and immaterial. They

hope more advocacy and support from government. The concerned stakeholders are Laweyan and Kauman.

f. Event and program about Batik: Tourism and Creative Economic Agency promoting some event related to batik

named Solo Batik Carnival and Solo Batik Fashion, Ngarsopuro Exhibition, Solo International performing Art,

for the sake of hope to promote batik national and international. The Concerned stakeholder is tourism and

creative economic agency.

g. Integrated Tourism: The tourism experience where the tourist not only consider Solo as the place to buy batik

but also the place to experience and grasp the full education about batik in depth from the potency owned by

Kauman, Laweyan, and Solo tourism as a whole. The concerned stakeholders are tourism and creative

economic agency, Education and cultural institutions, and Kauman.

The scale between 0-10, where 0 indicates the lowest concern and 10 indicates the maximum concern of the

stakeholder.


Fig. 5. Concern of Laweyan FBPL (Batik Cluster Laweyan)

Fig. 6. Concern of Kauman PGBK (Batik Cluster Kauman)


Fig. 7. Concern of Solo Tourism and Creative Agency

Fig. 8. Concern of Development and Planning Agency (BAPPEDA)


Fig. 9. Concern of Education and Cultural Institution (UNIBA)

5. Conclusion

Qualitative problem description gives a preliminary picture based on the previous interview to be processed

further in the future research. The description of the study is illustrated through the interpretation of the researcher.

This description is requiring confirmation and validation of relevant actors in connection with the most current

conditions through focus group discussion because the interview was done almost a year ago. It can be concluded

that the actors involved in the cluster Batik Solo when referring to the concept described (Cunha&Cunha , 2005) is

very complex , but the last interview in 2013, still included limited key actors like: batik cluster Laweyan (FPBL),

batik cluster Kauman (PGBK), Solo Tourism and Creative Agency, Development and Planning Agency

(BAPPEDA), and educational institution (UNIBA).

Issues of concern include: efforts to attract domestic and foreign tourists to visit Solo; Increase the value of batik

in the eyes of tourists; utilization of urban spatial structure to support tourism; fulfilment of raw materials; standards

and supporting policies regarding clothing; activities and events themed Batik Solo; and integrated tourism. The

level of attention from each actor is also varies, projected from the interview by taking a scale of 0-10. Laweyan

(FKBL) pay more attention to issues related to efforts to attract domestic and foreign tourists to visit Solo; increase

the value of batik in the eyes of tourists; fulfilment of raw materials; and advocates policies and standards on

clothing. Kauman (PGBK) pay more attention to issues that are relatively the same as FKBL, which are an effort to

attract domestic and foreign tourists to visit Solo; increase the value of batik in the eyes of tourists; fulfilment of raw

materials; utilization of urban spatial structure to support tourism, as well as an integrated tourism. Tourism agency

pay more attention to attract domestic and foreign tourists to visit Solo; increase the value of batik in the eyes of

tourists; and activities and events themed Batik Solo. BAPPEDA is more interested in the issue about the utilization

of urban spatial structure to support tourism. UNIBA is more interested in the issue of increasing the value of batik

in the eyes of tourists.

There are some suggestions to support Solo Tourism Cluster from the informants include: first, the possibility of

collaboration to form an integrated tourism ecosystem, but because of having the same commodity of batik, so it is

necessary to consider the potential and uniqueness of each batik village. For example Kauman further highlight

more the palace, and Laweyan, which further highlight the value of the history. Second, to ensure the supply of raw

materials and competition of batik fair price, then there is a suggestion for self-sufficiency in raw materials upstream

to provide it. Third, provide the complete package for tourist to experience and learn about batik. The results of this


study are very beneficial for the researchers team as the basic finding to step higher in the further elaboration and

researches by using more complex methodology and methods in the future to come up with solution to promote Solo

as the capital city of Batik and integrated tourism.

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http://www.bps.go.id/




Innovation for Mutual Funds Investment Strategy in Indonesia

Wirata Adi Dharmaa*, Subiakto Soekarno

b

abSchool of Business and Management,Institut Teknologi Bandung, Jl. Ganesha 10, Bandung 40132, Indonesia

Abstract

Investment condition in Indonesia gets better year by year. One of the most interested instruments in Indonesia is mutual funds,

mostly conventional mutual funds. Investor put their money in a mutual funds with an expectation to get a maximum return.

However, a mutual funds does not always perform well for every time frame. There is an economics or macro condition that

affects the time frame of investment activities in one country. To figure out the macro circumstance in a country, it can be seen

from the business cycle pattern. Business cycle have 3 phases of cycle; early expansion, late expansion, and recession. Based on

the fact above, authors want to know the performance from each of conventional mutual funds for each phase of business cycle

and make a portfolio strategy to maximize investors return. Authors use an average return data from mutual funds index in

Indonesia to cover all mutual funds for each category; equity, balance, and fixed income. Then, all the data will be divided based

on the business cycle phase to be analyzed. Finally, from those analysis will be made an optimal portfolio for each phase as the

strategy. Authors find out that equity mutual funds is better for early expansion and late expansion phase while proportional

combination of fixed income mutual funds and equity mutual funds best on recession phase. It is also founded that with the

portfolio strategy based on the business cycle phase, investors can maximizing their return.



Keywords: mutual funds; business cycle; investment strategy



130 Wirata Adi Dharma / IICIES 2014 Proceeding

1. Introduction

This research was aim to find out whether there is an influence from business cycle to mutual funds performance.

From the performance measurement based on business cycle phase, it will be conducted an optimal portfolio for

each phase of cycle. This proportion of portfolio will be proposed as an investment strategy for mutual funds.

1.1. Research Background

Investors put their money in a mutual funds with an expectation of future benefit that they will get. They want

value of their wealth will not get decrease because of inflation. It is in accordance with meaning of investment itself.

Based on Bodie and Kane, investment is a commitment of current money or other wealth with an expectation of

future benefit so investor has a willingness to always maximize the return of mutual funds to meet the maximum

future benefit of an investment.

In stock market, it is known a method called sector rotation to maximize return in stocks market investment.

Sector rotation is a method which investors do a change composition of their stocks portfolio build upon sectors that

outperform in each of business cycle in a country. Sector rotation has been proved to maximizing the stocks

investors return in Indonesia compare to if investors do not perform sector rotation and only rely on several or

certain stocks (Ambarita & Soekarno, 2014)

While sector rotation can be performed in stock market to maximize, the method does not suitable for mutual

funds. It is because mutual funds is a diversified portfolio that is managed by investment manager so investors are

not able to alter composition of the portfolio as their wish. Nevertheless, the role of business cycle still has an

influence for investment area as a whole in Indonesia. When define a business cycle, it is needed a GDP and

inflation data. For calculating GDP there is an investment component there.

It shows that investment and GDP has a relation one and another. Since mutual funds is a part of investment, it

can be said that GDP also affects the mutual funds performance. Inflation also gives an impact for investment area

especially for mutual funds. Inflation gives a significance negative impact for mutual funds performance (Maulana,

A., 2013). In summary, It can be said that business cycle also affect the mutual funds performance.

Mutual funds investors indeed are not able to perform a sector rotation like stocks market. However, since the

business cycle affect mutual funds, investor can change their type of mutual funds investment based on the business

cycle. Although a mutual funds has already diversified, yet it does not always perform well as we expected

(Harsanto, P., Kompasiana, 2013). For example, based on www.investasi.kontan.co.id, in 2008, average return for

equity mutual funds get decrease about 53.75%. On the other hand, the average return of fixed income mutual funds

recorded positive about 4.12%. It is showed a mutual funds not always performed as we wish.

1.2. Methodology

The methodology for conducted the research follow the conceptual frame of input, process and output. For the

input it is needed an average data that can represent data from certain stream of mutual funds. Based on that, it will

be used mutual funds index that exist in Indonesia as representation of mutual funds performance. The types of

mutual funds that is used for this research is equity mutual funds, fixed income mutual funds and balance funds.

The next steps is processing the data. The data will be processed based on each phase of business cycle to find

out how the mutual funds perform. The business cycle will follow the conventional model of business cycle

identification from the past study. The performance measurement will see daily return, variance, standard deviation

and Sharpe ratio from each mutual funds.

When the performance measurement from each phase has finished, the process will continue to build an optimal

portfolio for each phase. Optimal portfolio for each phase will aim to maximize Sharpe ratio. This is because Sharpe

ratio shows the reward from volatility that investors will get.

Wirata Adi Dharma / IICIES 2014 Proceeding 131

This optimal portfolio will be an output as investment strategy to maximize investor wealth. Nevertheless, before

it can be proposed as an investment strategy. The portfolio will be simulated and tested to find out how effective it

can maximize return. Finally after run the test for the portfolio, it can be proposed as the investment strategy for

mutual funds.

2. Indonesia Business Cycle With Conventional Method

According to the previous study by Albert, it has plotted the business cycle of Indonesia using both conventional

and proposed method that he was created. In this research, It will be used the conventional method of business cycle

identification to see how business cycle in Indonesia going through since the method The business cycle had

completely constructed and can be used for further study. The business cycle of Indonesia can be seen below.

Table 1. Indonesia business cycle with conventional method

Source: Sector Rotation Investment Strategy in Indonesia Stock Exchange, Ambarita and Soekarno 2014

Based on the table, there are 2 early expansions, 1 late expansion, 1 peak, and 1 through. The cycle stated in the

first quarter of 2000. The phase was an early expansion. At this time Indonesia’s economy grew rapidly along with

the reformation era after the monetary crisis in 1998. Early Expansion phase went for 16 quarter from Q1/2000 until

Q4/2004 then it was followed by late expansion phase. The late expansion phase went for 15 quarter from Q1/2005

until Q3/2008 and Q3/2008 become a peak point (turnover point) before the phase move to recession phase.

However, it does not always a late expansion phase. As Albert said in his research, the phase could change directly

from early expansion to recession phase.

From Q4/2008 until Q4/2009, Indonesia ran into a recession phase. The phase went for a 5 quarters and then

move to early expansion. The recession phase in this period was followed by the condition from global market.

There is a sub-prime mortgage case in U.S that triggered a crisis in that period. After the global crisis, Indonesia

once again moved into early expansion phase. The early expansion phase went for 12 quarters from Q1/2010 to

Q4/2012.

2.1. Late Expansion (Q1/2005 – Q3/2008, 15 Quarters)

Late expansion phase went from Q1/2005 until Q3/2008 however, it is runs for 15 quarters during this phase. In

the late expansion phase, the equity funds shows the best performance among all followed by the balance funds and

fixed income funds. As the figure 2 above, the performance of equity funds is the best among all at the beginning of

phase however, along with the change of phase from late expansion to recession, the performance get worse. The

fixed income funds has the least growth compare to equity and balance funds with only 21.04%. The equity funds

has the highest growth about 60.59%. On the other hand, balance mutual funds get in between equity and fixed-

income performance with 34.68%.

Start Finish Phase Duration (quarter)

Q1/2000 Q4/2004 Early Expansion 16

Q1/2005 Q3/2008 Late Expansion 15

Q3/2008 Peak

Q4/2008 Q4/2009 Recession 5

Q4/2009 Through

Q1/2010 Q4/2012 Early Expansion 12


Table 2. Late expansion performance analysis

Fig. 2. Late expansion performance

In the performance measurement table, it also shows that in daily average the return from those mutual funds are

positive. However, fixed income funds has the least average daily return. The average return for fixed-income

mutual funds is 0.0230%. The variance for fixed income funds also shows the least number compares to the others.

The variance for fixed-income funds is 0.0002%. It is really small number of variation that showed the daily return

that we get will close to the average return. With the small amount of variance the risk to invest in mutual funds also

get decrease. Risk indicator can be seen from the standard deviation. Fixed income standard deviation is 0.1572%

while equity funds 1.4218% and balance funds 0.8451%.

With average return and standard deviation, it can be used to calculate Sharpe ratio. Although fixed income has

the least risk compare to others, its Sharpe ratio shows negative result. Not only fixed income but also balance funds

has negative Sharpe ratio. It means that both of them are not able to give more reward compare to its risk for

investors. On the other hand, equity mutual fund still able to give more reward to its investors although it has more

risk. With the performance analysis, it can be made an optimal portfolio as investors strategy to maximize their

return.

Table 3. Late expansion optimal portfolio

Equal Maximizing Sharpe

Equity 33.33% 100.000%

Fixed-income 33.33% 0.00%

Balance 33.33% 0.00%

Total Weight 100.00% 100.00%

Expected return 0.04242% 0.06630%

Standard Deviation 0.76917% 1.42179%

Sharpe -0.009853 0.011464

According to the performance analysis above, authors make a calculation to find out the best investment scenario

to maximize Sharpe ratio in late expansion phase. Based on calculation, it is better to have 100% portfolio at equity

mutual funds. With 100% funds in equity, the Sharpe ratio can be maximizing to the same amount of equity mutual

funds Sharpe. This proposed weight is better than the equal one. With equal weight investors only receive 0.04242%

expected daily return while proposed weight can give 0.0663%. Equal weight Sharpe ratio also shows negative

amount. It means with equal weight portfolio investors do not give more reward to its risk. In summarize, it will be

better to have 100% equity mutual funds.

2.2. Recession (Q4/2008 – Q4/2009, 5 Quarters)

When the late expansion over, the phase continue to recession. Recession phase run for 5 quarters from Q4/2008

until Q4/2009.

Equity Funds

Fixed

income

Funds

Balance Funds

Daily Average

Return

0.0663% 0.0230% 0.0379%

Daily Variance

0.0202% 0.0002% 0.0071%

Daily

Standard Deviation

1.4218% 0.1572% 0.8451%

Daily

Sharpe 0.01146 -0.17161 -0.01427


Table 4. Recession performance analysis

Fig. 3. Recession performance

At the beginning in recession phase, all mutual funds show a negative growth (see fig. 3). Equity mutual funds

has the highest negative about -49.53% while balance funds -24.25% and fixed income funds -7.01%. But, at the

end of the phase, equity mutual funds grow beyond fixed income funds and balance funds. Equity mutual funds

grows about 46.60% at this phase. Meanwhile, balance mutual funds still grow in between of equity and fixed

income funds about 29.08%. Lastly, fixed income funds shows the least growth 17.49% at recession phase.

More specifically, performance analysis shows a clear comparison between those funds. Equity mutual funds

daily average return shows the highest amount with 0.1553% while balance funds 0.097% and fixed income return

only 0.0583 average daily return. However, with the significance amount of average return, equity funds also has the

highest amount of variance. Compare to fixed-income and balance, equity funds has variance about 0.0574% while

fixed income 0.0018%, and balance 0.0173%. Indeed, fixed income funds has the least volatility compare to equity

and balance funds. Since equity funds have the highest variance, it also has the highest standard deviation. Equity

funds standard deviation is 2.68274% meanwhile fixed-income funds 0.55219% and balance funds is 1.40348%.

With a high amount of variance and standard deviation, it gives an implication that equity mutual funds is a risky

investment compare to fixed income and balance. However, based on Sharpe calculation, equity mutual funds has

the highest amount of Sharpe ratio (0.04395) compare to fixed income (0.01977) and balance funds (0.03565). It

means that whether equity mutual funds have high risk but its reward is greater than the risk. At a glance, equity

mutual funds still the best for recession phase. However, it is needed to construct optimal portfolio in order to

maximize investors benefit.

Table 5. Recession optimal portfolio


Equity 33.33% 66.12%


Balance 33.33% 0.00%

Total Weight 100.00% 100.00%



Sharpe 0.041553 0.044093

Based on calculation, the optimal portfolio is 66.12% proportion for equity mutual funds and 33.88% at fixed

income mutual funds. With proposed allocated in both equity funds and fixed income funds, investor can maximize

the Sharpe ratio that implicates better reward to its risk. With proposed weight, portfolio’s Sharpe is maximized and

beat individual Sharpe ratio from each funds and equal weight portfolio. Proposed weight give better expected

return than the equal weight but the standard deviation also gets increase. In summarize, for recession phase it is

recommended to have a portfolio with 66.12% at equity mutual funds and 33.88% at fixed income mutual funds.

Although it has higher standard deviation, it can give more reward to its risk compare to equal weight.

Equity

Funds

Fixed-

income

Funds

Balance

Funds

Daily Average

Return 0.1553% 0.0583% 0.0970%

Daily Variance 0.0574% 0.0018% 0.0173%

Daily Standard

Deviation 2.3967% 0.4200% 1.3172%

Daily Sharpe 0.04395 0.01977 0.03565


2.3. Early Expansion (Q1/2010 – Q4/2012, 12 Quarters)

The last but not least is the early expansion phase. Early expansion phase run for 12 quarters from Q1/2010 until

Q4/2012.

Table 6. Early expansion performance analysis

Fig. 4. Early expansion performance

In general all the mutual funds performances have a positive performance along early expansion phase (see fig.

4). Equity funds, once again, shows the best performance based on figure above. It is followed by balance funds and

fixed income funds. At this phase, equity mutual funds grow about 40.96%, fixed income 31.39% and balance funds

34.80%. The equity funds still shows a great performance however, the growth is no longer as significance as the

recession phase.

The slowing growth of equity funds also can be seen from the performance measurement table. In that table daily

average return of equity funds is 0.05551%. It still shows a positive performance of daily return however, if

compare it to the recession phase, which is 0.1553%, the daily average return is decreasing. On the other hand fixed

income mutual funds marks a positive average return for early expansion phase with 0.04253%. However, the

amount also gets decrease compare to recession phase. Similar situation also occurred for balance funds which has

0.04716% average daily return while in recession phase get 0.097%. For the variance and standard deviation, fixed-

income funds show the best performance compares to equity and balance funds. However, its Sharpe ratio shows a

negative result. It means that there is no excess reward compare to its risk. This condition also exists in balance

funds which has -0.00354 Sharpe ratio. The only funds that has positive Sharpe ratio is equity funds with 0.00434.

Table 7. Early expansion optimal portfolio


Equity 33.333% 100.000%


Balance 33.333% 0.000%

Total Weight 100.000% 100.000%



Sharpe -0.002255 0.004341

Optimal portfolio for early expansion is similar with late expansion phase. In early expansion phase, it will be

better if we have our portfolio with proportion of 100% in equity funds. With this proposed weight, the Sharpe ratio

maximize similarly with equity funds. Compare to each funds and equal weight Sharpe ratio, proposed weight give

the highest Sharpe ratio among all. This analysis and portfolio construction also shows that in expansion phase, both

early expansion and late expansion, it will be better to have 100% portfolio at equity funds. It is because at

expansion phase economics at one country is growing grow and it align with stock market growth.

Equity

Funds

Fixed-income

Funds

Balance

Funds

Daily Average

Return 0.05551% 0.04253% 0.04716%

Daily

Variance 0.01610% 0.00028% 0.00646%

Daily

Standard

Deviation

1.2689% 0.1685% 0.8038%

Daily Sharpe 0.00434 -0.04430 -0.00354


3. Strategy Simulation

After the optimal portfolio for each phase has been identified, it is necessary to test the effectiveness of the

strategy to maximizing the investor wealth. This section will run a simulation to test and compare the equal

weighted portfolio and proposed weighted portfolio. Beginning funds for each scenario will be the same Rp

10,000,000.00 and will be run in the same time frame of business cycle. The duration of the business cycle is 32

quarters or 8 years.

Simulation for the equal weighted portfolio divided the amount of funds into the same proportion of equity,

fixed-income and balance funds. The outcome from one phase will be fully reinvested in the next phase of cycle

with the same proportion as previous phase. From the simulation, Rp 10,000,00.00 at the beginning of the cycle will

become Rp 27,888,421.51 at the end of the cycle. Investor will get about 178.88% in 8 years if they do their

investment in mutual funds with the same amount of proportion

Another simulation is the proposed weighted portfolio. The investment scenario will follow the optimal portfolio

for each phase and reinvested the yield from one phase to forward phase. As the simulation start with Rp

10,000,000.00 at the beginning of the phase, it will end up with Rp 35,056,720.56. The proposed weight gives about

250.57% return for one cycle.

Compare the equal weight and proposed weight, it shows a significant difference between proposed weight

strategy and equal weight strategy. With the proposed weight strategy, investor can maximize their return higher

than equal weight portfolio. To ensure that the proposed strategy is really effective, it is need to run another test to

compare if an investor holds certain mutual funds (equity, fixed income, or balance) over the cycle.

Table 8. Comparison of investment scenario

Duration Strategy HPR Annualized

Return

Annualized

Standard Deviation

Annualized

Sharpe Ratio

Equal Weight

8 years (Q1/2005

–

Q4/2012)

Reinvested

at new

phase with equal

weight

178.8842% 13.678% 14.874% 0.0430

Proposed Weight

Reinvested at new

phase with

proposed weight

250.5672% 16.976% 19.489% 0.2020

Equity Buy & Hold 245.8111% 16.776% 25.184% 0.1484 Fixed-Income Buy & Hold 100.0420% 9.054% 3.591% -1.1098

Balance Buy & Hold 146.0040% 11.910% 14.829% -0.0761

LQ45 - 236.2984% 16.370% 28.189% 0.1182

The table above shows that compare to scenario that investor puts their money in a certain funds the proposed

weight scenario still has the highest return. If investor puts their money in equity mutual funds at the beginning of

the phase, it will give 245.81% return at the end of cycle. Meanwhile, if investor chooses to hold fixed-income over

the period, it will give only 100.042% at the end of period. The last but not least, balance mutual funds will give

146.004% at the end. Moreover, proposed weight strategy can beat LQ45 performance for one cycle performance.

Refer to several test, it is proved that the proposed weighted strategy is effective for maximizing investor wealth.

4. Conclusion

Business cycle has an influence through the mutual funds performance. On the late expansion phase, all mutual

funds shows positive growth at the beginning of the phase but slowly turn into negative at the end of the phase.

When the phase gets into recession, all mutual funds has negative growth at the beginning of the phase but it comes

positive at the end. The last phase of the cycle is early expansion phase. Each of mutual funds shows a positive


growth from beginning until the end of phase. However, the growth get slower compare to the last phase. equity

mutual funds outperform in every phase but it is not optimal to have 100% equity funds for every phases.

Since there is an influence of business cycle for mutual funds performance, it can be made an investment strategy

to maximize investors return. The strategy was based on optimal portfolio for each phase of cycle. It is founded that

it would be better to have 100% equity mutual funds on both early expansion and late expansion phase and

proportional weight of 66.12% at equity fund and 33.88% at fixed income funds for recession phase. The investment

strategy is also proved to maximize the investors return compare to several scenarios of investments.

References

Ambarita, A. P., & Soekarno, S. (2014). Sector Rotation Investment Strategy In Indonesia Stock Exchange. Handbook on the Economics,

Finance and Management Outlook, 371-376.

Bodie, Z., Kane, A., & Marcus, A. J. (2010). Essential Of Investments 8th Edition. Singapore: McGraw-Hill/Irwin. Colander, D. C. (2013). Economics. In D. C. Colander, Economics (pp. 534-537). New York: McGraw-Hill/Irwin.

Harsanto, P. (2012, March 13). Ekonomi: Moneter: Artikel: Investasi Reksadana untuk Pemula. Retrieved March 10, 2014, from Kompasiana:

http://ekonomi.kompasiana.com/moneter/2012/03/13/investasi-reksadana-untuk-pemula-446454.html Maulana, A. (2013). Pengaruh SBI, Jumlah Uang Beredar, Inflasi Terhadap Kinerja Reksa Dana Saham di Indonesia Periode 2004-2012. Journal

Ilmu Manajen Volume 1 no 3, 971-981.

Muthalib, A. (2005). Analisis pengaruh variabel makro ekonomi terhadap tingkat kinerja reksadana saham periode 1998-2004. Depok: Fakultas Ekonomi Universitas Indonesia.

Rahmawati, S. A. (2009). Pengaruh Variabel Indeks Suku Bunga SBI, Kurs Nilai Tukar, Harga Minyak Dunia, dan Tingkat Inflasi Terhadap

Kinerja Reksa Dana Pendapatan Tetap. Malang: Fakultas Ekonomi Universitas Brawijaya. Satriani, W. (2013, Febuary 25). News: Kinerja Reksadana Pendapatan Tetap Paling Gemilang. Retrieved March 7, 2014, from

investasi.kontan.co.id: http://investasi.kontan.co.id/news/pendapatan-tetap-paling-gemilang

1877-0428 © 2014 The Authors. Published by Center for Innovation, Entrepreneurship, and Leadership (CIEL), School of Business and



Application RF Module for Safety Helmet

Pola Rismaa, Yurni Oktarina

b*, RD. Kusumanto

c

abcPoliteknik Negeri Sriwijaya, Srijaya Negera Street-Bukit Besar, Palembang 3039, Indonesia

Abstract

Level safety of motorcyclist in roadway in this time very high risk, remember the amount of accident every day progressively

mount this matter earn us read various mass media, problem of this generate doubtfulness to motorcyclist. As known that during

the time motorcycle have been provided with lamp of light turn signal as alarm that the motorcyclist will turn direction, but

because lamp position of light turn signal located is not parallel or below/under line look into from consumer of other road street

when residing in its back more than anything else with rather approach distance far cause view to lamp of light turn signal the

become cant seen, more over if the motorcyclist bring things which quite a lot so that hinder view to lamp of light turn signal.

Therefore require to be designed a helmet with application sensor RF to activate lamp of light turn signal on helmet if the

motorcyclist activate light turn signal on motor as transmitter to lamp of light turn signal as receiver residing in helmet by

wireless. Radio frequency involves two sub units named, transmitter and receiver are both using Amplitude Shift Keying for

communication each other.



Keywords: amplitude shift keying; receiver; RF Module; safety helmet; transmitter

1. Introduction

Traffic accidents not only cause death and damage to motor vehicles but also lead to serious illness and

disability. Crisis lives due to traffic accidents is expected to continue and increase with an increase in the number of

motor vehicles. For example, the number of motorcycles increased significantly for the Southern Sumatera region

(as many as 2,864,717 units in 2011, in 2012 as many as 3,106,088 units).

Based on data from the Centre for Data and Information Secretary General of the Ministry of Transportation

(2012), the growth of rate of number of accidents in Road Transport increased 19.1%; number of casualties by

vehicle increased by 20.75%. The use of motorcycle accidents greater risk than the use of other modes of

transportation. In general, there are three factors that often lead to traffic accidents, human factor, vehicle factor and

road and environmental factors, however, more than 80% incidence caused by human factors, one of which is the

behaviour of traffic discipline.


E-mail address:[email protected]

138 Pola Risma / IICIES 2014 Proceeding

In terms of driving on the road, should pay attention to personal safety such as turning on the lights during the

day and wear a helmet, it is intended that both the rider or passenger safety is as sure up to the destination. For

example in a riding a motorcycle, it is important to turn on the turn signal when turning right or left.

As we know nowadays that helmets mostly used without using technology as a support for the safety of

motorcycle. Therefore in this project we applied using of technology of RF module on the helmet. RF modules are

often used in the communication system, the RF module can be used as a communication technology between the

motorcycle who wear helmets when driving on the highway. Communication used is one-way communication

occurs between a motorcycle and a helmet without cable an advantages of this helmet. This communication system

using the Transmitter as the sender of data that the brake lights, turn left signal and turn right signal placed on the

motor and Receiver placed on the helmet as a receiver of data.

Besides advantages of a safety helmet is easy to use, simple so that users feel comfortable motorcycle helmet

while using the helmet is given without the use of wires and provide a positive impact for both motorists and other

road users. This design project are quite simple and low budget expected to be mass produced so it can be a tool for

the safety of motorcycle on the road. This motorcyclist equipped with a turn signal as an alarm that the motorcyclist would turn directions, but

because of the position of the turn signal is not equal or below the line of sight of other road users when they are

behind (because the motorcycle shorter than car) especially with visibility rather far led to the view of the turn signal

to be blocked (due to the size of a small light and hard to see), plus more if rider carrying enough cargo to block the

view to the turn signal. Based on the above, the authors take the title of “Application RF Module for Safety Helmet".

The topic of safety helmet has been discussed by some of the literature, but in this project we use the RF Module

sensor ICPT2272 and PT2262 as the main electronic components.

2. RF Module

The design of safety helmet consists of two parts, namely the transmitter place on motorcycle and the receiver

place on helmet are both working wirelessly.

Fig. 1. Block diagram of wireless communication through RF module

(www.allabaouelectronic.hpage.in)

RF module was applied as a communication tool between helmet and motorcycle. RF module using Amplitude

Shift Keying (ASK) which works if sensor the transmitter is activated-ON (in this case means the turn or brake

signal on motorcycle activated) then sensor on the receiver receives the signal to active the switch on driver’s turn

and brake signal helmet actively participate in helmet-ON.

Function of the transmitter encoder which is a collection of data in the form of binary numbers the data set is

called a package. This package will be converted by the encoder into the digital data decoder at the receiver while

changing the encoder package in the form of digital data into a sinusoidal signal.

RF module is the one of sensor that can be used for wireless communication, the advantage are the signals

http://www.allabaouelectronic.hpage.in/

Pola Risma / IICIES 2014 Proceeding 139

through RF can passed larger distance, suitable for long range application, and RF signals can through even when

there is an barrier between transmitter and receiver. RF module consist of 2 units are transmitter and receiver, both

are using Amplitude Shift Keying (ASK) for transmission the data, and frequency operates at 315 MHz which is

suitable for wireless control (remote control), it can work by wireless transfer data therefore mostly used for remote

control application, such as robots, control some machines from distance without touching. For transmit the data

from transmitter to receiver used an optional antenna.

The RF transmitter function is convert parallel data (encoding), then transmitted the data wirelessly to RF

receiver, and RF receiver function converted serial data (decoding) after the data came from transmitter. Fig 2 and

Table 1. explained ASK RF transmitter and receiver module, pin diagram and pin description of transmitter and

receiver.

Table. 1

RF Transmitter RF Receiver

Pin No. Name Function Pin No. Name Function

1 GND Ground (oV) 1 GND Ground (oV)

2 DATA Serial Data Input 2 DATA Serial Data Output

3 Vcc Supply Voltage (5V) 3 NC No Connection

4 ANT Antenna Output 4 Vcc Supply Voltage (sV)

5 Vcc Supply Voltage (sV)

6 GND Ground (oV)

7 GND Ground (oV)

8 ANT Antenna Input

2.1 Amplitude Shift Keying (ASK)

Modulation means to arrange parameter waving high frequency carrier with lower frequency information signal

equally variation by proportional to other wave which depend on given modulation. In modulation process requires

two signals that are sent information signal and carrier signal where the information signal joined with others. Two

modulation types are modulation of analogous signal and modulation of digital signal called Amplitude of Shift

Keying (ASK).

In digital modulation characteristics of the conversion process and nature of waving carrier occurs in such that

the result has the shape and characteristic of bit-bit/signal (0 and1). Changes in amplitude to the carrier signal 1 is

represented by the ON and signal 0 is represented by the OFF. Through this modulation process digital signal search

level can be sent to the recipient with either, for the delivery of media transmission using radio waves, therefore,

ASK is best used for short distance communication relationships. RF sensor working the short range, with a

frequency of 315MHz using Amplitude Shift Keying (ASK). On-Off Keying (OOK) is a special form of ASK,

where one of the amplitude is zero as shown as fig. 4. (http://www.ele.uri.edu).

a b

Fig. 2. (a). ASK RF transmitter-receiver module; (b) Pin diagram of transmitter and receiver.




Fig. 3. Amplitude shift keying waveform (http://www.ele.uri.edu)

2.2 Encoder and Decoder

Encoder is a digital signal that produces a binary output code depending on which of its inputs are activated, and

decoder is a digital signal that coverts an input binary code into a single numeric output.

The HT12E Encoder ICs are series of CMOS LSIs for Remote Control system applications. They are capable of

Encoding 12 bit of information which consists of N address bits and 12-N data bits. Each address/data input is

externally binary programmable if bonded out. The HT12D Decoder ICs are series of CMOS LSIs for remote

control system applications. Those ICs are paired with each other. For proper operation a pair of encoder/decoder

with the same number of address and data format should be selected. The decoder receives the serial address and

data from its corresponding decoder, transmitted by a carrier using an RF transmission medium and gives output to

the output pins after processing the data. (http://maxembedded.com).

Fig. 4. Encoder and decoder pin diagram


A four channel encoder/decoder pairs has also been used in this system. The input signals, at the transmitter side,

are taken through four switches while the outputs are monitored on a set of four LEDs corresponding to each input

switch. (http://www.engineergarage.com).

3. Design of Project

Developed two separate systems wirelessly, are divided into two major components are the motorcycle system

and the helmet system are done electronically and mechanically.

3.1 Mechanical Design

Mechanical design includes:

Helmet + battery + electronic components

Components on motorcycle

The battery will supply voltage ( battery on helmet 3 V, on motorcycle 12 V)

Operating temperature -300 to + 80

0 C

http://www.ele.uri.edu/


http://www.engineersgarage.com/content/led


3.2 Electronic Design

Electronic design includes:

Helmet indicator lights are activated by a signal from the helmet’s receiver with a sampling rate≤1 second.

The RF sensor’s transmitter on motorcycle (with a sampling rate ≤ 1 second) will send indicator signals to

the system’s receiver on helmet.

The RF sensor’s transmitter on motorcycle will transmit indicator signals to the helmet’s receiver

within1 second of signal activation

Fig. 6 shows a block diagram for the motorcycle and helmet components.

If we have multiple receivers in a room, they will all work at the same time with a single remote. Another is that

there is no error checking or bi-directional link - that means the remote does not know if the module received the

message or not. Third, there are a few different types of receivers and each one looks identical but they are act

differently.

The L4 latch type acts like a selector switch-when the A button is pressed the first time, the matching pin goes

high. When the B button is pressed it turns A's pin off and turns B's pin on. When C is pressed, it turns B off, etc.

Only one is on at a time. If you press the same button twice, it doesn't turn that pin off. In this receiver circuit have 4

switches, for active right lamp (switch 1), left lamp (switch 2), brake lamp (switch 3), and neutral switch (switch 4).

(http://www.adafruit.com).

While the switch 1 (right lamp) on the motor cycle is pressed , the transmitter IC PT2262 will send a signal logic

"1" and the signal will be received by receiver IC PT2272 then will activate the Latch switches relay. Initial

condition of the Latch switches relay is normally opened, for other switch will be OFF if one of them was selected,

as well as to activated the left light and brake light. In other hand, at “1” transmitter IC PT2262 and receiver IC

PT2272 active. When the switch 1 (right lamp) on the motor cycle was released no signal sent by the transmitter,

thus the transmitter was on standby condition ready for received other signal from transmitter every time.

Fig. 7. Turn and brake lamp on helmet

Turn right lamp Turn left lamp

Brake lamp

Fig. 5. (a) Block diagram for the motorcycle components; (b) Block diagram for the helmet components

a b

+12V +3V

To helmet

From helmet

Motor

cycle power

supply

Linear

Regulator

Right Lamp

Left lamp

Brake lamp

IC

PT2262

From motorcycle

Battery

+3 V

Relay IC

PT2272

to motorcycle

Right

Lamp

Left

Lamp

Brake

Lamp


Fig. 6. Side view of motorcycle and motor-cyclist wearing on improved safety helmet

3.3 Principles of Circuit

The circuit of RF (Radio Frequency) has a transmitter and a receiver using a transmitter IC PT2262 and PT2272

as receiver IC, PT2272 sensor circuit have 3 inputs and 3 outputs. However, the application of the RF sensor

PT2262 as a transmitter to activate the turn lamp and brake lamp on the helmet only using 3 inputs, which

consists of a brake lamp switch A, switch B as the turn right lamp and switch C as the turn left lamp.

If the transmitter circuit is activated or got input from one of the switches, the RF sensor PT2262 gave a signal to

the receiver in order to activate its output

If the transmitter sent a signal switch A (brake lamp on the motorcycle) then the receiver will receive the signal

corresponding to the transmitted data and display it as a brake lamp output at the helmet.

If the transmitter sends a signal switch B (turn right lamp on a motorcycle), the receiver will receive the signal

corresponding to the transmitted data and display it as a right turn signal output at the helmet.

If the transmitter sends a signal switch C (turn left lamp on a motorcycle), the receiver will receive the signal

corresponding to the transmitted data and display it as output left turn signal on helmet.

3.4 Analysis

While switch A as the brake is pressed on the motor then as input to the encoder reaches 8.80 volts while the

switch B is 0.20 volts and switch C is 0.10 volts means that the encoder inputs at logic 1 while switch A, switch B

and switch C logic are 0, the data was sent as a bit stream FFFFFFFF1000 as shown in figure 9 (when switch A is

activated), figure 10 (when switch B is activated), figure 11 (when switch C is activated).

Fig. 7. The result of a measurement when the switch A is activated

Signal from

transmitter on

motorcycle

Signal from transmitter

received by receiver to

active turn and brake lamp on helmet


Fig. 8. The result of a measurement when the switch B is activated

Fig. 9. The result of a measurement when the switch C is activated

4. Conclusion

This design has been successfully performed for circuits in the motor and the helmet worked very well. Lights are

switched on the motor via an electronic circuit can also wirelessly activate lights on the helmet, thus making the

helmet extremely useful for motorcyclist use when carrying goods/cargo are quite a lot and when driving at night. In

other words, the ultimate goal of this project can be achieved that can facilitate other road users to know the

direction of the motorcyclist will turn over the indicator lights on the helmet and can reduce the number of accidents

caused by the indicator lights are not visible due to visibility and weather.

References

Directorate General of Land Transportation website. (2012). [Online]. Available: http://dephub.go.id/files/media/statistik/statistik2012.pdf. Directorate General of Land Transportation South of Sumatera website. (2013). [Online]. Available: http://hubdat.dephub.go.id/.

Gillen, K., Mayle, A., McPherson, K., &Young, P. (2008). Motorcycle Safety System. The University of Akron. Langton, C. (2002). Intuitive Guide to Principles of Communications. [Online]. Available: http://people.seas.harvard.edu/

~jones/cscie129/papers/modulation_1.pdf.

R. Gebelein., D. Varner., J. J. Synder., &J. Parson. (1998). Motorcycle Safety Helmet System. U.S. Patent 5704707.

Scott, W.W. (2002). Helmet Mounted Brake Light. U.S. Patent 6406168 B1. Zainal, A. R., (2009). Development of New Third Light Brake Signal on Motorcycle Helmet. Universiti Teknikal Malaysia Melaka. Malaysia.

www.allaboutelectronic.hpage.in.

http://www.adafruit.com/products/1096.

http://www.ele.uri.edu/Courses/ele436/labs/ASKnFSK.pdf.

http://www.engineersgarage.com/electronic-circuits/wireless-rf-remote-control-circuit. http://maxembedded.com/2011/09/06/rf-module-interfacing-without-microcontrollers/

http://people.seas.harvard.edu/

http://www.ele.uri.edu/Courses/ele436/labs/ASKnFSK.pdf

http://maxembedded.com/2011/09/06/rf-module-interfacing-without-microcontrollers/




Innovative Model in Determining the Capital Structure Target

in State Owned Enterprises

Subiakto Soekarnoab

*

aSchool of Business and Management, Institut Teknologi Bandung, Jalan Ganesha 10, Bandung 40132, Indonesia bPadjadjaran University, Bandung, Indonesia

Abstract

This research is a descriptive and verificative study and aimed to determine the variables that influence capital structure either

statically or dynamically and how capital structure moves toward the target optimal. This research is using a secondary data from

annual reports, financial statements audited SOE (audited) to the period since the IPO until 2013. The data source of this study is

from the IDX Watch, Indonesia Stock Exchange, icamel, yahoo finance, and websites of each company in a unit of study, then

the data is analyzed using Eviews V8.0. The new variables which are rarely found in previous studies of capital structure are

dividends and initial leverage, those are specific to SOEs. Other variables that affect the SOEs capital structure significantly are

profitability, growth opportunities, the level of government ownership, and firm size. Behavior of SOEs is following the trade-off

theory. The variables that significantly influence the target capital structure are profitability, firm size, non-debt tax shield,

liquidity and past leverage.



Keywords: capital structure; innovative model; capital structure of state owned enterprise

1. Introduction

Referring to Damodaran (2001) there are three important decisions in the financial management of the company,

namely: investment decisions, financing decisions that affect the capital structure and dividend decisions. The

investment decision is a decision that must be made by the company to invest in assets that will provide a higher

yield than the specified minimum yield previously. The financing decision is a decision about how to finance the

previous investment decisions whether through debt or equity. The composition of debt and equity the company

selected will affect the company's capital structure. The proportion of debt and equity have been such that it makes

the cost of capital (cost of capital) of the company to a minimum so as to maximize the value of investments that

lead to maximizing the value of the company.



146 Subiakto Soekarno / IICIES 2014 Proceeding

This research will increase understanding about the SOE’s capital structure and will enrich the capital structure

literature. Many studies in the literature on international capital structure does not separate the SOEs (State Owned

Enterprises) of the study sample because it assumes that they have the same characteristics as with private

companies.

There is an interesting phenomenon in the SOEs management in Indonesia, particularly in the dividend decision.

Usually in the private companies, dividend will be paid after all the investment opportunities has been taken and

funded. In case of SOEs, it seems like the opposite, dividend first and uses the remaining fund for investment. The

shareholder decision on the amount of dividend is driven by the need to fund the government budget deficit. This

dividend decision will lead to insufficient internal fund to finance the investment opportunities. Eventually it may

force SOEs to seek external fund for their investment funding need.

Based on the above background, this research will answer the following questions:

a) What factors are the determinants of SOE capital structure?. Is there any new determinant which is specific

to the SOE?

b) Does the SOE manager manage the company with a target capital structure or manage randomly so it does

not have a target capital structure?

c) If the SOE has a target capital structure, then the what are the factors that influence the adjustment towards

target capital structure?

d) When the SOE has a target capital structure, how quickly firms adjust their capital structure towards the

target capital structure ?

2. Literature Study

The objective of the company is to maximize shareholder wealth. The task of financial executives is how to

create economic value in the company through various financial policies include investing policy (capital

budgeting/investing), financing policy (financing), and dividend policy. Management must make decisions and

perform in such a way that they will have an impact on the long-term increase in the market value of the company.

The market value of the shares of the company are variables that can not be controlled but can be influenced by

management.

The development of the theory of capital structure literature initiated by Modigliani and Miller (1958) which

assumes perfect capital markets. Perfect capital market conditions that include no taxes, no transaction costs,

individuals and companies can obtain a loan with the same interest rate. With these assumptions, Modigliani &

Miller (1958) concluded that the value of the firm is independent of its capital structure so that the capital structure

is irrelevant. Furthermore, Modigliani and Miller (1963) in subsequent study, they stated that if one important

assumption is relaxed, which is tax condition, then the company starts enjoying the benefits of having more debt as

borrowing costs could reduce the tax payment obligations. They argue that the company can increase its value by

increasing the level of debt so that the capital structure is relevant. With this model, the optimal capital structure of

the company is having 100% debt.

After the seminal research of Modigliani & Miller (1958 and 1963), there are a lot of capital structure research

conducted to better understand the problems of optimal capital structure. MM proposition does not include the cost

of bankruptcy and financial distress. Modification of the MM proposition by including the cost of bankruptcy and

tax saving benefits / tax shield, which is known as static tradeoff theory.

Jensen and Meckling (1976) introduced the concept of agency costs which begins with identifying two kinds of

conflicts that may occur in every public company that is a conflict between shareholders and managers as well as

conflicts between lenders and shareholders. Myers (1984) introduced the pecking order hypothesis. He argues that

based on certain conditions, then issuing new equity may not be optimal for the company. Myers argues that internal

capital is preferred more than external capital when companies need additional capital. He gives an explanation for

why a company does not use debt as proposed by the trade-off theory. Titman and Wessels (1988) found that the

higher the profits the lower the leverage will be and this result is consistent with the pecking order model. Rajan and

Zingales (1995) with a sample of G7 countries also found similar facts.

Subiakto Soekarno / IICIES 2014 Proceeding 147

Fama and French (2002) analyze dividend policy and capital structure in the context of the trade-off theory and

the pecking order. They found that companies are profitable and companies with smaller investments paying higher

dividends. However, they found a variety of conflicting results in relation to the debt. They found that a profitable

company will use less debt, which in this case supports the pecking order theory. Furthermore, Frank and Goyal

(2003) reexamine the pecking order theory and find that internal funds are not sufficient to finance investments and

companies also use equity financing.

Market Timing Theory explains the behavior of companies trying to get additional equity when the stock price is

relatively high. At a time when companies need external funds and stock price is high then the company will most

likely sell shares rather than issuing debt. Market Timing Theory is introduced by Baker and Wurgler (2002).

Similar as the case with the pecking order model, they argue that the company does not have a certain leverage

target.

Alti (2006) tested the market timing model and stated that market timing is important in explaining changes in

short-term capital structure but has limitations in explaining long-term changes. He concluded that the policy of

long-term capital structure of a company appears to be more consistent with a model of trade-offs.

Capital structure research lately evolves from static model towards research into dynamic model. In the static

model, the capital structure of the company is always in the optimal point, while in the dynamic model allows the

company leverage to fluctuate until the extreme point which prompted the company to adjust the leverage back.

Dynamic capital structure research basically wants to test the theory of trade-offs. In general, the trade-offs literature

can be grouped into two models of the trade-offs which is static and dynamic trade-off models. Both models imply

that there is an optimal capital structure which is a combination of debt and equity at a certain level considered to

provide a minimum weighted average cost of capital. Thus the assumed corporate managers will attempt to adjust

the company's capital structure to the optimal level. With a static model, the company's managers considered

adjusting the capital structure towards the target immediately. However, the adjustment of capital structure

immediately to the optimal level would be unrealistic in reality. Therefore in alternative model, which is dynamic

trade-off model, companies adjust their capital structure toward the optimal level partially each year. The speed to

achieve this optimal level is called speed of adjustment.

Huang and Ritter (2009) stated that how firms adjust their capital structure towards optimal targets becomes an

important issue in the current capital structure research. Why companies do not adjust their capital structure towards

the target immediately is because of the adjustment costs. When adjustment costs are too high and exceeds the

benefit of operating in the optimal capital structure, the company will make adjustments relatively slowly implying

that the pecking order theory is in force as mentioned by Myers (1984). If adjustments to the target is conducted

relatively quickly then this indicates the force of the trade-off theory. This is the essence of dynamic capital

structure research, especially in relation to the speed of adjustment to the target capital structure.

Based on the literature review, it is known that the traditional determinants of capital structure is as follows:

profitability, growth opportunity, assets intensity, and the size of the firm. In this study, new determinants will be

investigated to see if they are specific related to the SOEs. The new determinants are dividend, government

ownership, and initial leverage.

Research hypothesis are developed to answer the research questions:

1. Dividend, profitability, growth opportunity, government ownership, asset intensity, firm size, initial

levverage influence significantly to capital structure partially and simultaneously.

2. Past dividend, past profitability, past growth opportunity, past tangibility, past firm size, past non debt tax

shield, past liquidity influence significantly to target capital structure partially simultaneously.

3. State Owned Enterprises have target leverage and adjust to their target partially so it will support trade off

theory.



3.1. Research Design

Taking into account the purpose of the study, the limited number of SOEs and unequal observation periods

(unbalanced observations), this research will use panel data regression technique.This research is a descriptive and

verificative study and aimed to determine the variables that influence capital structure either static or dynamic and

see how capital structure moves toward the capital structure target.

3.2. Data Collection

The research population, sample, unit of analysis and research period of this research are:

a. The population is all SOE companies which have listed their shares on the Indonesia Stock Exchange. The

research sample is taken throughout the SOE companies listed in Indonesia Stock Exchange to exclude financial

based firms.

b. There are 19 SOEs which have been listed in the exchange. However this research excludes 5 financial firm

companies which are not relevant to capital structure study. Therefore this research will use final sample of 14

companies.

c. Period of Study, this research covers the period from 1995 where the first SOE shares went public (PT Semen

Gresik) until 2013. There are 14 non-financial SOE companies have listed their shares in that period. SOEs

companies are privatized in a different time so that the data sample included here is the unbalanced data panel.

3.3. Research Model

There are two models in this research. The first is Static Model to test the influence of all research variables to

the capital structure. The second is dynamic model to test the influence of lag variables that may influence the

adjustment of capital structure to the target level.

Static Model:

(3.1)

where:

X i,j,t = independent variables for firm I, variable j and for time t.

J = dividend, profitability, growth opportunity, government ownership, tangibility, firm size, and initial

leverage.

e i,t = random error term for firm i and time t.

= the leverage of firm i at time t.

α = the intercept coefficient. Regression intercept (α i + α t ) can vary inter firm and inter temporal.

Dynamic Model:

To test whether SOEs have target leverage, this research will use partial adjustment model of Flannery & Rangan

(2006) as follows:

(3.2)

Coefficient of λ will show the speed of adjustment toward the optimal capital structure. The coefficient of λ is

expected between 0 and 1. Very small or zero λ tend to show that firms do not have target capital structure and vice


versa.

Where:

= leverage of firm i and time t.

= capital structure determinants at t-1 (lag) consisting of dividend, profitability, growth opportunity, asset

intensity, firm size, non-debt tax shield, liquidity and past leverage.

= speed of adjustment to target leverage.

= coefisient of determinants

e i,t = random error term for company i and time t.

The Dynamic model is derived from the hypothesis that target leverage of is impossible to oberve but can

be estimated. Target leverage is a function of lag variables of its determinants which can be written as follows:

(3.3)

The leverage evolves every time toward its target partially which can be written mathematically as follows:

(3.4)

After combining eq. 3.3 and 3.4, we can get the dynamic model which is used for this reach as follows:

(3.5)

3.4. Data Analysis

The data used in this study is a secondary data from annual reports, audited SOE financial statements of the

period since IPO until 2013. Secondary data needed is related to the components on the annual financial statements

of the issuer. The data source of this study is from the IDX Watch, Indonesia Stock Exchange, icamel, yahoo

finance, and websites of each company. Data processing used Eviews V8.0.

4. Results

4.1. Hypothesis Test Results of Static Model

To test the hypothesis dissertation research, we used the t test statistic and F statistic. Statistical t-test is used to

determine the effect of independent variables on the dependent variable partially, while the F-test statistic is used to

determine the effect of independent variables on the dependent variable simultaneously.

Based on the results of data processing on static capital structure model, then the value of the t test statistic can

be seen in the following table.

Table 1. The Value of the t-test Statistic


From the table above, it appears that for the variable dividend (DIV), profitability (PROF), growth opportunities

(GROW), the level of government ownership (GOV), firm size (SIZE) and initial leverage (INLEV) are all

significant at various α. The variable of asset intensity (TANG) is not significant.

To understand the effect of independent variables simultaneously on leverage, then the F test statistic can be seen

below. Table 2. Results of F test statistic Static Model of Capital Structure

The estimation results from the static model of capital structure has a value of 17.49891. F test statistic is higher

than the F table value of 2.57 (17.49891> 2.57) at a significance level of 1%, so Ho is rejected. Variable dividend

pay out ratio, profitability, growth opportunities, the level of government ownership, asset intensity, firm size and

initial leverage simultaneously have significant effect on the capital structure at the confidence level of 99%.

The coefficient of determination shows how much variation of the dependent variable can be explained by the

independent variables. For the static model of capital structure, coefficient of determination shows how the capital

structure variables can be explained by dividend, profitability, growth opportunities, the level of government

ownership, asset intensity, firm size and initial leverage. The coefficient of determination (R2) for the static model is

a 0.791533.

Table 3. The coefficient of determination (R2) Static Model of Capital Structure

4.2. Results of Dynamic Capital Structure Hypothesis Testing

Based on the results of data processing in a model of dynamic capital structure, the value of the t test statistic can

be seen in the following table

Table 4. The results of t-test statistics Dynamic Capital Structure Model

From the table above, it appears that past profitability, past asset intensity, past firm size, past non debts tax

shields, past liquidity, and past leverage have significant influence to the capital structure adjustment toward its

target either partially.

To understand the effect of independent variables simultaneously on leverage, then the F statistic test is

conducted with the following results:


Table 5. Results of F test statistic Dynamic Capital Structure Model

The estimation results from the static model of capital structure has a value of 33.41772 F test statistic is higher

than the table F value of 2.57 (33.41772> 2.57) at a significance level of 1%, so Ho is rejected. Variable past

profitability, past growth opportunities, past size, past non debt tax shield, past liquidity and past leverage

simultaneously affect the capital structure at the confidence level of 99%.

The coefficient of determination shows how much variation of the dependent variable can be explained by the

independent variables. For the static model, determination coefficient shows how the capital structure variables can

be explained by the variable past profitability, past growth opportunities, past firm size, past non-debt tax shield,

past liquidity and past leverage. The coefficient of determination (R2) for the dynamic model model is 0.889138.

Table 6. The coefficient of determination (R2) Dynamic Capital Structure Model

5. Result Discussion

In this discussion section will analyze the influence of each independent variable on the dependent variable,

especially regarding the direction of influence is shown by the coefficients of the regression equation generated.

This is done to see and compare what the rules theory and the results of previous studies have been consistent with

the findings in this study or whether there are different results compare to previous study.

5.1. Capital Structure Static Model

There are three new determinants to capital structure that are found to be significant in addition to the traditional

determinants. Dividend, government ownership and initial leverage are new determinants that can be added to the

capital structure literature. The finding of these new determinants confirms that SOEs have different characteristics

compare to those of private firms.

In this study it was found that the dividend is an important determinant of capital structure for SOEs. This

variable gives significant effect even more significant than profitability which is considered as the main determinant

in the international literature. The higher profitability of the SOE, the higher the availability of internal funds

(retained earnings) so it is likely enough to finance investment activity. This finding is is in contrary to what Harris

and Raviv (1991) argue that the higher profitability of the companies have easier access to debt financing which will

increase leverage.

The traditional determinants of capital structure such as: profitability, growth opportunity, government

ownership, and size in this research give consistent result with previous literatures. The only different result is

regarding the effect of asset intensity (tangibility). It is found that the effect is not significant. It can be explained

that SOEs do not use their asset to secure higher debt because they have enough retained earnings and equity to

support their capital expenditures.

The result of firm size effect is in line with the findings of Rajan and Zingales (1995), namely the existence of a

positive relationship between firm size and the level of debt (leverage). Large firms tend to have large debt which

can be explained that the large firms enjoy a high capacity of loan borrowing.


From the regression equation it appears that the coefficient of initial leverage is 0.735564 which means that the

effect of initial leverage on capital structure is positive. The higher the initial leverage, the higher the target leverage

will be. Variable initial leverage is rarely found in the international capital structure literature and not so known to

be an important determinant of capital structure.

The results of this study indicate that the initial leverage is an important determinant of capital structure and

significant in SOEs. The only study found to be associated with the initial leverage is the study by Lemmon,

Roberts, and Zender (2006) which states that the initial variable leverage is an important variable in explaining

changes in the capital structure in the long run.

5.2. Dynamic Models of Capital Structure

The results showed the effect of firm size on the target capital structure is positive. Thus concluded that the effect

of firm size variable is positive and give significant impact to the target capital structure. The results are consistent

with the findings of Flannery and Rangan (2006), Fama and French (2002) and Rajan and Zingales (1995). The

coefficient of past non-debt tax shield is negative which shows that the higher the past non-debt tax shield then the

lower the leverage. This result is consistent with the findings of Flannery Rangan (2006) which states that

depreciation (non-debt tax shields) is a determinant that affects adjustment to the target capital structure.

Effect of past leverage to the following year target leverage is positive and significant. In accordance with the

theory of partial adjustment, the adjustment to the target capital structure is done in stages depending on the benefits

and costs of adjustment. Past leverage is an important variable because the estimated magnitude of the speed of

adjustment to the target capital structure is lay in this variable coefficient.

In general, the research variables that influence the adjustment to capital structure target is in accordance to the

results of past studies. Past profitability, past growth opportunities, past firm size, past non-debt tax shields, and past

leverage give effect in the same direction with the findings in previous research.

Liquidity influences adversely with the results of previous studies. It seems that SOEs use their liquidity to secure

higher debt instead of reducing their debt level. This is due to the fact that SOEs still have lower level of debt

generally or excessive equity position.

Dividend and tangibility does not affect the capital structure adjustment towards the target. Dividend shows a

significant effect to capital structure under static model. It means that the influence of dividend has a short term

effect so that after one year period it does not influence capital structure decision any longer. This support once

again that the high level of dividend payment in SOEs does not force the SOEs to get external financing for their

capital expenditures. In terms of tangibility, SOEs do not utilize their fixed asset to secure higher loan. Having SOE

status gives a perception that they are backed up by the government so the risk of giving loan to them is low.

6. Conclusion

The new variables that affects the capital structure significantly is dividend, government ownership and initial

leverage. These three variables are rarely found in previous studies of capital structure so that it can be concluded

that these are new determinants of capital structure that is specific to SOEs.

Other variables that affect the SOEs capital structure significantly are: profitability, growth opportunities, the

level of government ownership, and firm size. The influence of the profitability and the level of government

ownership on capital structure are negative which supports the pecking order theory. While the influence of the

growth opportunity variable and firm size is consistent with the trade off theory.

Based on the Dynamic Model of capital structure adjustment used in this research, it can be concluded also that

SOEs have a target capital structure. The managers adjust the capital structure toward its target partially each year.

Therefore the behavior of SOEs is following the tradeoff theory. SOE adjust the capital structure towards the target

at the speed of adjustment of 11.21%. The relatively slow speed of adjustment indicates that the cost of adjustment

is high for SOEs.


The adjustment towards target capital structure can be done by weighing the benefits companies operating in the

optimal capital structure and adjustment costs (cost of adjustment). The variables that significantly influence the

target capital structure are profitability, firm size, non-debt tax shield, liquidity and past leverage.

7. Recommendation

Practical advice addressed to SOEs management and the government to address the results of the research as

follows:

1. The government can make any decision at the Annual General Meeting of Shareholder as the top decision-

makers in companies concerning investment decisions and dividend decisions, so they must do it carefully. All

decisions should be based on the added value that can be generated by the company so as to support the

achievement of corporate value or wealth maximization of shareholders.

2. SOEs management are expected to make decisions that drive capital structure towards the target capital

structure faster. When the capital structure of SOEs to be around the optimal point, the cost of capital

(weighted average cost of capital) of SOE will be minimal so as to support the goal of maximizing the value of

the company or shareholder wealth.

3. The debt capacity of SOEs is still large. Therefore SOEs should actively seek new investment opportunities

that can be financed with external debt.

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Competitiveness Strategy Analysis of Women Entrepreneurs:

A Case Study of SMEs in Indonesia

Sri Herlianaa*, Wawan Dhewanto

b, Grisna Anggadwita

c

abcSchool of Business and Management, Institut Teknologi Bandung, Jl.Ganesha 10, Bandung 40132, Indonesia

Abstract

The development of women entrepreneurship in Indonesia has the potential to improve the economic communities. In the face

of market competition, especially in preparing AEC 2015 (ASEAN Economic Communities), the women entrepreneurs should

have a strategy to achieve competitive advantage. Women entrepreneurs in Indonesia are mostly involved in small and medium

enterprise sector, where the sector is able to survive amid the economic crisis hit Indonesia ever. The purpose of this paper is to

analyze and discuss the competitive strategies undertaken by women entrepreneurs in small and medium enterprise sector.

Analysis of competitive strategy using Porter's Five Forces Model approach. This study uses a case study approach to examine

and understand the phenomenon. Primary data were collected through semi-structured interviews with five women

entrepreneurs. The study found several competitive strategies of women entrepreneurs in Indonesia.



Keywords: competitive advantage, Porter’s five forces, women entrepreneurs

1. Introduction

In business, the process of creating, producing, selling, and providing a product or service is the basis of

competitive advantage. The process related to their operational way of doing business, an entrepreneur tends to

follow the operations of the companies that are already established, giving rise to fierce competition among them

because of the similarity of operational way they run. To generate competitive advantage, every company should

have a strategy to differentiate the business with others. Strategy is a process to understand and overcome the

problems.

The purpose of most of the business strategy is to achieve a sustainable competitive advantage. According to

Porter (1987), companies can gain a competitive advantage if it is able to create value for its customers. A company

can gain a cost advantage through economies of scale, technological advances, cheap raw materials, etc..

Differentiation strategy involves offering different products, different delivery systems, or using different



156 Sri Herliana / IICIES 2014 Proceeding

marketing approaches. The "Five Forces" diagram captures the main idea of Porter's theory of competitive

advantage. Five forces determine the rules of competition within any industry. Five forces model highlighting the

aspects most important to long-term profitability.

Competition is not only experienced by large industry, but also experienced by small and medium

entrepreneurs. SMEs are more vulnerable in the face of competition because of capital and limited business scale.

The number of SMEs in Indonesia, 55.5 million units (BPS, 2013), but the data is not separated between men and

women entrepreneurs. The focus of this study are women entrepreneurs, where the population of women in

Indonesia currently account for 49.96% of Indonesia population (242 million) (BPS, 2013), so that the

empowerment of women are expected to economic contribution both to their life and the country.

The many challenges faced by women entrepreneurs raises a lot of questions of how their strategy of running

their business in the SME sector in Indonesia. Thus, this paper aims to analyze and discuss the competitive

strategies undertaken by women entrepreneurs in small and medium enterprise sector. This paper will also analyze

the relevant literature related to the competitive advantage.

The structure of the paper is as follows. First, the literature review highlights the context of women

entrepreneurs in SMEs in Indonesia. Conceptual insights from previous research that has focused on competitive

advantage are also discussed. Then, the results and discussion of the competitive strategies of women's

entrepreneurship in the context of SMEs in Indonesia. Finally, implications of the study for further research are

discussed, and the overall conclusions of the study.


2.1. Women Entrepreneurs in SMEs in Indonesia

Research on women entrepreneurs strongly related to micro and small enterprises (MSEs). Women

Entrepreneurs in the MSE sector is important for almost all countries in the world, especially for developing

countries. Storey (1994) defines SMEs as companies with relatively small market share which is managed by the

owners in a personalized way and not through a formal management structure, and act as a separate entity, which

means it is not part of a group or a large corporation. Small and medium enterprises (SMEs) have an important role

in the development of the country (Hunjra, 2011). In developing countries SMEs contribute significantly to the

national income and the realization of the concept of entrepreneurship.

Women entrepreneurs in the SME sector has an important role in economic growth, reduce poverty, increase

employment, and provides a variety of items of daily use at an affordable price. In recent years many developed

and developing countries have realized the importance of this sector. The study of women entrepreneurs in SMEs is

very important because SMEs have an important role in economic growth. Impact of SMEs to national GDP is

huge. Based on data from the Indonesia Statistic Agency (BPS, 2013) the number of SMEs in Indonesia reached

56.5 million units and a major contribution to the economy in Indonesia, which accounted for 57% of Gross

Domestic Product (GDP).

MSE sector can improve the social and economic systems in various countries, including the employment

opportunities with low capital costs, make a positive contribution to Gross Domestic Product (GDP), provides an

opportunity to broaden the base of entrepreneurship, and provide the flexibility needed to adapt to changes market.

So that every entrepreneur in the MSE sector needs to build its business in order to have a competitive advantage.

The competitiveness associated with competitors, and the factors that lead to a competitive, so the effect on

business performance for business continuity. Competitiveness in the context of MSEs requires a more proactive

approach, so it is necessary to consider the performance is more precise and more easily operationalized to survive

in a competitive market.

2.2. The Competitiveness Strategy

Currently, entrepreneurs must move quickly to follow the environmental changes that occur where they run the

business's operations. The process of analyzing the changes and determine how they adapt to the changing

environment known as a business strategy. According to Johnson et al. (2009), the strategy is a configuration of

Sri Herliana / IICIES 2014 Proceeding 157

resources and competencies in determining the direction and objectives of an organization in the long term to adapt

to environmental changes. Analysis of strategies are needed both for large companies and small and medium

enterprises. Strategy is closely associated with the decision-making process, so that in making a strategy should

consider all relevant aspects.

Porter's five forces model is a technical framework for analyzing the competitive strategy of a business. Porter's

Five Forces model was first developed by Michael Porter (1980). Porter's five forces helps in knowing the

advantages of today's competitive position and to be faced later. So the company can improve the strength,

anticipate the weakness and will avoid the company in making the wrong decision.

According to Kazeem (2004), the variables that affect the competitiveness of companies including market

structure, strategy and performance. Chaffey (2002) support the classical model of Porter's five forces, and he said

that it still provides a framework that can be trusted to review the threats that arise in the era of e-business. Porter

and Millar (1985) explains that the industrial structure is relatively stable, but may change over time as the industry

is growing, and the strength of the five competitive forces varies from industry to industry. In his book

"Competitive Strategy", Michael Porter (1980) introduced the five things that underlie a company has a

competitive advantage as follows : competitive rivalry; threat of new entrants; threat of substitutes; bargaining

power of suppliers; and, bargaining power of customers.

Fig. 1 Porter’s Five Forces

(Source : Porter, 1987 )

3. Methodology

Women's entrepreneurship still be an interesting issue for further discussion, which with all its responsibility,

especially the women who are married they are able to carry out all activities. Case study approach is used to

understand the phenomenon of the competitive strategies of women entrepreneurs in Indonesia. A case study is

ideal for use in research aimed at answering the question 'how' and 'why' (Yin, 2003). Through these questions, the

basic substance contained in a study that examined can be explored in depth through observation and interview

stages. Five women entrepreneurs involved in the SME sector informants participated in this study. Semi-structured

questions have been used by researchers to ensure that the same information was obtained from each respondent.

This study aims to analyze more deeply about the competitive strategies of women entrepreneurs to survive amid

the fierce competition. Analysis of competitive strategy using a model porter's five forces approach.


Fig. 2 Competitiveness Strategy


4.1. Profile of Respondent

Table 1 is a mapping profile of the respondents in this study:

Table 1. Profile of Respondents

IN EL SM NS YL

Age 35 25 40 38 30

Educational Background Bachelor Degree Senior High School Senior High School Bachelor Degree Senior High School

Current Location Bandung Bandung Bekasi Bekasi Cirebon Business Fashion Culinary Culinary Shipment Trade

Scale Micro Micro Micro Small Micro

Based on data in Table 1, all respondents are included in the category of productive age. Respondents who are

married and have children have a tendency to run her own business. Meanwhile, unmarried respondents doing

business due to the tendency for self-actualization. Educational background was also found affect the competence

and ways of thinking women entrepreneurs, and it affects the performance of their enterprises. But educational

background is not always the reason their business is not growing, because of the fact that many MSE sector in

Indonesia is growing rapidly even in the hands of entrepreneurs who do not have a high education. The business

scale of informants ranged in micro and small scale enterprises, and is engaged in the culinary business and trade.

4.2. Strategy Development

Women entrepreneurs in Indonesia already has a strategy for dealing with competition occurs. Five women

entrepreneurs participated in this study, this section will discuss more about the strategy analysis of women

entrepreneurs in Indonesia. Indonesia has a cultural diversity so every region in Indonesia has different

characteristics and potential, but the similarity of standard business sector to make the results of this study may

represent a general development strategy to enhance the competitiveness of women entrepreneurs in Indonesia.

4.2.1. Competitive Rivalry

Women entrepreneurs who run the business long enough trying to gain a larger market share by continuing to

improve the service and quality of products and services. Several strategies of women entrepreneurs in Indonesia

include:

Developing ideas and innovation. EL is a woman entrepreneur engaged in the culinary field, she tried to

innovate by expanding its target market is children's favorite. She made a variety of cake shapes children's toys

such as dolls, toy cars, etc.

Market expansion by using media technology. NS initially only use print media to promote her business in

the shipment areas, this time she is using the internet to expand its market to overseas shipments.

Increasing numbers of companies and new ideas that make the company more advanced, developed and

qualified so that consumers will be more interested because the company can give satisfaction to the consumer.

4.2.2. Threat of New Entrants

In line with government programs that increase the number of SMEs resulted in higher levels of competition

among entrepreneurs as many emerging new players in the market. Women entrepreneurs in Indonesia have been

aware of all these things. Some of the strategies they had prepared to face competition from new players such as:

Sri Herliana / IICIES 2014 Proceeding 159

Unique. Phenomena that occur in Indonesia, every product and service is unique will be sought by the

consumer. SM engaged in the culinary business, she sells only at night and always crowded with her

customers. Typical menu and design a place that only with candlelight add value the exotic places.

Customer priority. Quite difficult to establish customer loyalty, but IN making strategies to keep customers

loyal with provide benefits to loyal customers in the form of discounts and other shopping convenience. IN also

provide free delivery special for her loyal customers.

Sharing knowledge. EL try to provide more benefits to its customers by providing training and tips make a

cake. It attracted many customers and establish relationships and to improve personal branding her enterprise.

4.2.3. Threat of Substitutes

Substitute products and services is every product and service that has the same functionality and usefulness of

the products and services that already exist but at a relatively competitive price. Some of the strategies undertaken

by women entrepreneurs to overcome the threat of substitutes including:

Competitive prices. All women entrepreneurs in this study makes the strategy by implementing competitive

rates, even among those applying cheaper price than their competitors.

4.2.4. Bargaining Power of Suppliers

Suppliers have a major impact for the company because the company has many suppliers have control over such

suppliers in terms of price, quality and delivery schedule. Suppliers have an important role in which suppliers could

switch to another company if the deal with a supplier is not able to be met by the company. Some of the strategies

they had prepared to maintain good cooperation with suppliers such as:

Establish good cooperation. All women entrepreneurs build a good relationship with the supplier.

Establish partnerships and contract agreements. Contract agreement is very important in business, because

it has the force of law. NS made a contract with the supplier in accordance with the collective agreement and

not to harm.

Good negotiation process. Indonesia is famous for its hospitality, women entrepreneurs tend to be able to

negotiate well to their business processes, of course, in a professional manner.

4.2.5. Bargaining Power of Customers

Corporate profits depend on the number of customers who buy their products because of the increasing number

of customers who buy their products, the greater the profits. So the company must ensure that customers remain

loyal to the product and not switch to a competing product. Bargaining power possessed by the customer has a

large effect on the price offered by the company. Some of the strategies adopted by women entrepreneurs in

Indonesia to face the bargaining power of customers including:

Analysis of trend and lifestyle. Research and development is needed by every enterprises to know the needs of

today's customers. IN and EL conduct research to provide the products and services needed by the costumer. IN

doing business in the field of fashion so that the design and models that are sold must follow current trends.

The use of technology as a marketing medium. Nowadays marketing has been done through the medium of

the Internet to enable customers to obtain needed products and services via electronic devices (smartphone,

laptop, tablet, etc). Almost all women entrepreneurs in this study using the internet to market their products.

They do promotions via social media and personal websites.

Service Excellent. Providing the best service to customers is one of the strategies for dealing with new players,

as it generates customer loyalty. With hospitality will make customers be comfortable to shop. YL implement

these strategies in her business, all employees are given training in how to provide the best service to its

customers.

Sales promotion. Promotion process remains to be done in order to run their businesses. Promotion process can

be done through print, internet, and others. The women entrepreneurs in this study emphasizes the promotion

via word of mouth, they try to provide the best service to its customers so that customers promote to others. The

promotion is very effective to run by women entrepreneurs.


Establish good relationships with costumers. All women entrepreneurs trying to build and maintain good

relationships with customers. It aims to establish customer loyalty.

Friendly. One of the advantages of Indonesian society is famous for its hospitality. This kind of attitude is

needed by an entrepreneur. The women entrepreneurs use this attitude to get customers. Consumers will feel

comfortable when served with friendly.

4.3. Government Supports

The government is one of the strengths in a competitive advantage and supports all five forces in Porter's model.

Here is the role of government to support the process the competition according to the procedure.

Government regulation in managing market competition

Government policy in the formation of new SMEs

Government policy on the distribution process

The government participates to promote products and services of SMEs

The government provides training of management and entrepreneurship to assist SMEs in managing their

business, especially for women entrepreneurs

The government formed a center of creativity as a container to accommodate the creativity of SMEs.

Government helps facilitate SMEs to IPRs register to protect their products are not recognized by others

The government provides ease of SMEs to access loans to banking institutions

5. Conclusions

Women entrepreneurs in Indonesia have had a strategy to maintain and improve their business performance. The

strategy is made simple because of almost all respondents have the small business scale. This study indicate that

women entrepreneurs own readiness to face the global competition. To face global competition, the need for

increased competence and facilities that support women entrepreneurs to generate ideas and innovation.

6. Implication

The importance of this study is to explore the business strategies of women entrepreneurs in relation to the

competition, barriers, and business performance. The implications of this study to provide insights and

recommendations to the government in making policies related to how women entrepreneurs can improve the

performance and competitiveness of SMEs through Porter's five forces model approach, thus positively

contributing to economic development. This study also provides insight into the importance of the phenomenon of

women entrepreneurs in the development of strategies to improve their business competitiveness. Another

implication is the growing confidence of women in developing their ability to self-employment and the increased

role of women in the SME sector.

References

Chaffey, D. (2002). “E-Business and E-Commerce Management: Strategy, Implementation and Practice”. Prentice Hall.

Hunjra,.A. (2011). “Determinants of Business Success of Small and Medium Enterprises”. International Journal of Business and Social Science

Vol. No 20; November 2011.

Indonesia Statistics Central Agency (BPS). (2013). Official websites : www.bps.go.id

Johnson, G., Scoles, K., and Whittington, W. (2005). “Exploring Corporate Strategy: Text and Cases”. Prentice Hall-Financial Times, Essex.

Kazem, A. (2004). “Competitiveness of SMEs- The Influence of Owner’s Entrepreneurial Characteristics and Firm’s Strategies: Case

Study of Egypt”. The International Management Development Association, Thirteenth World Business Congress.

Porter, M. (1987). “From Competitive Advantage to Corporate Strategy”. Harvard Business Review May-June (3): 43–59

Porter, M. (1980). “Competitive Strategy”. New York: The Free Press.

Porter, M. and Millar, V.E. (1985). “How Information Gives You Competitive Advantage”. Harvard Business Review, July-August, 1985.

Storey, D.J. (1994) : “Understanding the Small Business Sector”, Routledge, London.

Yin, Robert K. (2003). “Case Study Research: Design and Methods”. Sage Publications: United States of America.

http://www.bps.go.id/




Creativity and Innovation

“Asli Bali” New Destination

Gai Suhardja*

Interior Design Departement, Faculty of Art and Design, Maranatha Christian University, Jl.Prof.drg.Suria Sumantri No.65, Bandung 40164,

Indonesia

Abstract

Putting effort is a way for humans to improve the quality of life, particularly in the pursuit of profit in order to increase

purchasing power . Then entrepreneurship is the path to the chances of success, but it is necessary for creativity in the idea so that

business becomes attractive. Former sand mining area that has long been abandoned by residents because it has been exploited to

become damaged areas of scarred pit, an issue for the government in Klungkung regency of Bali. This paper shall discuss an idea

that has been taken positively by the Local Government and is in the process of preparing a conceptual design to plan the

realization of the master plan as an innovative idea that holds great promise for increasing local revenues, profits for investors,

citizens , and especially to create it to be integrated tourism area which is capable of reclaiming the area into a new tourism

destination genuine Balinese culture. The planning area will open up entrepreneurial opportunities for residents in accordance

with the program of Klungkung regency government which is empowering the potential of entrepreneurship for the welfare of its

people. Moreover if this area is already realized, it will be the pride of Bali in the native culture. Method of writing this research

using the scientific conception of the analysis of environmental natural resources and independent entrepreneurs.



Keywords: entrepreneurship; destination; culture; concep; genuine.

1. Introduction

Entrepreneurship in Indonesia is believed to be the best way to create community resilience despite the economic

crisis. Small and medium enterprises that have survived this long, now start to move forward, there are many

successful ones and also a few who have not been successful in the world of small entrepreneurs. So

entrepreneurship training programs began to grow like mushrooms in rainy season, because the opportunity

entrepreneurship is likely to achieve business success. This view comes from an effort to improve the quality of life

for many people, not part of an established and large employers who already have assets from upstream to



162 Gai Suhardja / IICIES 2014 Proceeding

downstream in achieving corporate profit maximization. But it should be realized that the role of entrepreneurs who

are already established in an effort to improve the economy of small people indeed necessary, for the sake of

regional equalization of economic progress. Because Indonesia is made up of the islands so the uneven development

is problematic. Because of that local governments should be able to open up good opportunities for cooperation with

emerging entrepreneurs, so that b government’s support open up the third-party employment and business

opportunities for small and medium businesses around it.

2. Entrepreneurial Development

Along with an increased effort in the verification process of a company, when there is an opportunity to reach the

next advancement, speculative calculation is necessary, so as not to be a boomerang amid the already stable

business. Courage in taking a decision to have a sharp mind in finding the best opportunity with the support from

authorities , of course would be an intensive attention which is not to be missed. There is a place that has already

been abandoned by its inhabitants because of the sand quarry which was originally very profitable for the dwellers,

when it ended because it had been exploited on a large scale. Then the area becomes damaged areas of the

environment, the former pit as deep as 10 to twenty feet filled with brackish water. Areas located in the not far from

the coast, and rivers flowed clear, therefore dug holes filled with sea water mixed with fresh water. No more big

trees. There remaining are wild plant, cows graze around artificial lakes. After a communication between

entrepreneurs and creative team, was born the idea of innovation from environmental problems that have been

damaged as it is to be used as a powerful business potential drag. And also an idea that not only will produce

unilateral advantage but benefits many parties, especially also provides opportunities for small and medium

entrepreneurs. Thus this idea will turn on the economy in the area and gives revenue to the local area. This idea

raises a spirit from the beginning to the synergistic cooperation with the parties that may be associated as a triple

helix, Government, Business, Academic professionals. So the best plan would require the synergy that comes from

expertise of various related fields.

3. Tourism Area

Bali is an international associating gate for anyone to relate to, the location of this area is located on the island of

Bali, and the south side is a stretch of beach while the northern part is hilly which drain the water from the natural

source that produces crystal clear river through the area and then ends at the mouth of south coast. This area is

geographically a very powerful attraction, despite being damaged by sand excavation. The idea is to be applied in

this area is an integrated tourism facility consisting of: Resort edge of the lake, floating restaurants, floating market,

water tours, water sports, culinary centers, play centers, educational facilities, health centers, point of sale products,

etc. The entire region has an area of about 400ha, and will contain a conception based on traditional Balinese

culture, it is considering the situation of development in Bali, famous in the world famous yet affected by

modernization that affect the traditional values that may be eroded by modern currents, then the regional

government and employers will be agreed by the experts conception designed to faithfully preserve traditional

cultural values. And the potential appeal of this tradition will actually bring in foreign tourists who want to know the

Balinese tradition closely. Clear architectural concept will continue to utilize traditional Balinese materials

consistently even with costly consequences of adequate maintenance. From a survey of foreign tourists visiting Bali,

expressed their desire especially to see directly how is the life of original Balinese culture. Then move from the

prospect of the tourist to visit which will be integrated tourism area it will be destination for entrepreneurs to get

profit. In line with there will be environmental benefits for the area that once took reclamation due to sand quarrying

before, now would be a new area that is a very attractive tourist destination. Balinese culture will live in this area

and be the main attraction. Opportunities for native communities and migrant entrepreneurs in this area are great to

succeed. Creativity of the people is expected to be a source of strength for the economic progress of local

communities.

Gai Suhardja / IICIES 2014 Proceeding 163

4. Planning

A good idea needs to be communicated to the parties concerned in order to make it happen, when the rest of the

network connection as required is reached, then the planning of work on paper is the next process. Condition and

conducive circumstances to support the idea and this area has become the first step, which has received approval

from the Regional Head for the realization of development in the area of Environment and socio-economic growth

of local culture. While the employers of the investment process is run in stages in accordance with the system of

venture capital investment. Investment is likely to be opened to foreign investment is the next, as a priority the

development this area according to the policy of the Regional Head prioritize on local entrepreneurs. The results of

the field survey the situation through the study and measurement of land area and the character of the soil conditions

in the physical construction feasibility plan. Due to the water resources in a way that a lot of excavation made lake,

there is a necessary safeguard to prevent situations of disaster. In the rainy season the state of groundwater discharge

will increase, this becomes a major issue that should not be an obstacle for the safety of the activity in this area.

Experts of waters and watershed managers and also support of construction of architectural planning would also

give priority to safe prevention, not merely designing sheer aesthetic architectural space, this condition of mutual

concern regarding the local government and national disaster mitigation, for spatial planning and regional

development plans and provincial governments areas concerned to cooperate in this area planning team.

5. Culture

Bali as the famous island in the world, its name is better known than the name of the Indonesian state, as foreign

tourists have long been captivated by the culture of Bali who live in the form of art everyday by residents of Bali,

the various cultures that have religious ceremonies, important celebrations such as the cremation process called

Ngaben especially in patrician families of the kingdom, they are still respected by the people. Even in areas such as

Ubud, the royal family of Puri Ubud is still charismatic in the community and was known to the ancients Abroad

since they were pioneered in bringing foreign tourists in first tourism era, the artists in the history of Western art and

culture of Balinese painting tradition led to the mixing of cultures and influences contemporary Balinese artists.

Puri Ubud family policies guide regional head for people to build physical buildings not taller than coconut tree

height, this makes the region a distinctive area in Bali without high buildings, except in big cities like Denpasar and

others. Based on the success of the policy, the idea of making an integrated region in this area will be one of the

regional planning guidelines architectural aesthetics.

For the sake of maintaining a green environment, building a culture of traditional Balinese tropical architecture

characterizes the planning area as a tourist area, the construction of the building was made in such a way not visible

directly or camouflage material of wood and bamboo, while the natural rock would be dominant too, because the

natural formation of green materials combination, wild grass, bamboo and wood is the traditional material of this

region. Site plans are prepared according to the zone of neighbourhood areas that guide the physical development,

plan of activities and grouping areas in order to provide comfort and convenience for activities in the region.

6. New Destination

With the establishment of the integrated Tourism area in Bali, tourists visiting the island of Bali will have a new

option, because the area of tourism in general is a beach, mountains and typical regional food served in the hotel

restaurant with a dance and cultural arts. Indeed there are other tourism business efforts, but this area is built from a

former mine that has been damaged, usually abandoned by everyone because it seems no longer attractive. But by

innovative idea this region could turn into a character of its own location, and also become the work of creative

social, economic and cultural masterpiece nurturing presence of the arts and Balinese cultural value. Hopefully what

became the blueprint in this plan materialize soon for the sake of the realization for economic progress and the

dignity of the Indonesian people in the eyes of the world.

164 Gai Suhardja / IICIES 2014 Proceeding

7. Conclusion

In planning a place of business that produce profits for the company, of course what shall be calculated ae

considering the results providing the welfare of not only the owner of the company, but for the welfare of the

workers of the company. It is not complete if the business plan do not provides an opportunity for the benefit of the

business environment where business activity needs to be built and provide the best opportunities for network-

related relationships that led to the economic progress of poor people who are often excluded by the big business.

The local government has a program of poverty alleviation and economic improvements in small and medium

businesses, people who have been successful entrepreneurs in advanced economies need to pay attention to the little

people who are often oppressed in helplessness. Because it's integrated tourism business innovation will provide

opportunities for small entrepreneurs as a foster child of the entrepreneurs who have established in order to increase

economic opportunity for advanced family of entrepreneurs SMEs, so that they can feed their children and their

children of high school to higher education. The concept of the region as a basic example of an effort to implement a

democratic economic system that would fix a weak economic conditions that always need to gain access and

opportunities for empowerment and self-improvement of entrepreneurial success. Hopefully all these plans would

materialize soon for the sake of our future.

References

Shalini Singh, Dallen J. Timothy, Ross Kingston Dowling. (2003). Tourism in Destination Communities, Publisher CABI Dayton Duncan Ken

Burns. (2009). National Park: America’s Best Idea, Publisher Alfred A.Knopf

Rosalie A. Schnick.(1982). Mitigation and enchancement techniques for the upper Missisippi River system and other large river systems, Publisher University of California

Made Wijaya .(2013). Architecture of Bali: A Source Book of Traditional and Modern Forms, Publisher University of Hawai John Howkins,

(2013). The Creative Economy how people make money from ideas,Publisher Penguin Primadi Tabrani, (2006). Kreativitas dan Humanitas: Sebuah Studitentang Peranan Kreativitas dalam Perikehidupan Manusia, Penerbit Jalasutra

Pengelolaan Daerah Aliran Sungai,Penerbit Perpustakaan Kementrian Pekerjaan Umum.

Peraturan tentang Reklamasi Tambang, Seminar Nasional Rehabilitasi Lahan Tambang, 11 Februari 2006, UGM Bulaksumur Yogyakarta.




Ecosystem for Indonesian Creative Industry:

Case in Design Subsector

Achmad Ghazalia*, Nadinastiti

b, R. Bayuningrat Hardjakaprabon

c, Mandra Lazuardi K.

d

abcdSchool of Business and Management, Institut Teknologi Bandung, Jl. Ganesha 10, Bandung, 40132, Indonesia

Abstract

The initiation of Indonesia Creative Industry has started in 2007 by the launching of The Mapping of Indonesian Creative

Industry. However after 7 years of the program, the understanding of creative industry itself is different between each

stakeholder. Therefore it’s important to have the same understanding of creative industry definition, its scope and the ecosystem

of this industry. This paper is focus on creative industry in subsector design. Using secondary data, in-depth-interview and focus

group discussion as basis data in designing the ecosystem and the scope of creative industry, this paper aim to add the knowledge

about design subsector as one of Indonesia creative industry and helps the stakeholder understand about it. The result shows

design definition in Indonesia creative industry, the scope of design subsector, and the ecosystem that supported design industry.

Those results will help government and player in design industry in developing design subsector in the next five years of

planning.



Keywords: creative industry; design; ecosystem; scope of industry

1. Introduction

Currently, the interpretation of the word "design" can be different for each branch of the science and profession

because coverage is fairly broad sense. For example, the design can be defined as the process of designing a product,

both symbolic as well as software as a building material, as well as the process of thinking to solve a problem.

However, in the development of the creative economy, "design" has a distinct meaning that is quite unique. The

design became one of the sub-sectors of creative industries and regarded as a driver of other industries. In addition,

the design becomes one of the roots for the whole creative industry, marked by numerous parts of the design which

now has grown into its own industry because of developments in technology, science, and social culture. An

understanding of the meaning is certainly very important to help understand the design sub-sector in its development



166 Achmad Ghazali / IICIES 2014 Proceeding

MeioticSocrates

DiairesisPlato

Deductive/Inductive

Aristoteles

HeuristicArchimedes

Problem Formulation

Exploration

Analysis

Conclusion

Decision Making

Product

Design Plan

Group of Thoughts Group of Decision Making

plan. Therefore, it’s important to clarify the definition and scope of design as one of the sub-sector of the creative

economy in Indonesia.

1.1. Defining Design

Discussion regarding design starts from thought of the Greek philosophers who introduces the method of rational

thinking, trace, transparent, logical, and methodical. The method begins by thinking of the Greek philosophers such

as Socrates, Plato, Aristotle, and Archimedes. Socrates introduces the meiotic method who questioned the nature of

the goods. Plato idea contributes in the form of dialectics, i.e. acuity analysis in finding the relationship between the

various terms. The method is called "idea decomposition" or diairesis the basis of analysis to draw up complex

problems into easy to understand. On the other hand, Aristotle contributes a scientific method that is based on the

logic of deductive or inductive thinking. Other philosophers thought that also famous as the complement forethought

is heuristic methods of Archimedes. Heuristic method of thinking is done by analogy and the hypothesis. Those four

methods of the philosophers then creating a new method which is design thinking methods (Widagdo, 2011).

Fig. 1. The relation between classic philosophy and design process.

Figure 1 shows that the four methods that have been discovered by the Greek philosophers developed into an

outline design method or methods of design. The design process is divided into two major groups, namely the group

of thoughts and group of decision-making design. The study group consisted of several stages, as follows.

1. Formulation of the problem, i.e. determining the nature of the problem, the scope of the problem, the purpose

of the problem, and so on. At this stage, gathering as much information then used as the basis for the

formulation of the problem. This stage is the stage meautik found by Socrates.

2. Exploration and analysis, which is taken from Plato diairesis method, is a stage to parse and detailing the

problem. After that, the development of the concept solution according to the selected design strategy.

3. Conclusions drawn by using method of deductive or inductive by Aristotle to determine further direction for

the development of the design.

Achmad Ghazali / IICIES 2014 Proceeding 167

Furthermore, the design decision-making group is the final stage of the design process. At this stage, combination

of elements of the objective with the subjective elements such as aesthetics, market trends, and factor for the user

has to be conducted. Because it uses a heuristic method that relies on Archimedes' analysis and hypothesis, then the

decision is based on the design aesthetic sensibility, creativity, and creativity of designers. In other words, the

heuristic method is crucial in the design process. Design thinking methods are then developed in accordance with

the time, period, and applied to many fields of science and professionalism so that changing the design paradigm

itself. The design was applied to the fields of science such as art, computer science, architecture, engineering, and

design itself. Here is a conceptual mapping relationship design adopted from Tether (2005).

Fig. 2 Conceptual Mapping of Art, Science, Design and R&D (adopted from Tether, 2005)

In Figure 2, the horizontal axis states the mode of production of goods, which were divided subjectively

emotional to rational objective perspective based manufacturers. The vertical axis express the type of output,

ranging from symbolic goods to material goods. Both axes divide the diagram into four quadrants, namely the

Abstract Function, Function Material, Material Expression and Abstract Expression. Based on research Tether,

which includes design is located in the Abstract Expression and Function of Material consisting of visual

communication design, fashion, interior design, product design, architecture, design materials, engineering, and

design components. Explanation of Figure 2 shows that the design or the design itself has a very broad sense as

covering many disciplines and professions. Some examples of the use of design science is fashion design, building,

machinery, components, and so on.

The design has a broad scope, but the meaning is sometimes directly collapsible by known it as art, because

people thought design very close with aesthetics. But in fact both of these come from different things. Making

artwork artist departs from the need to express themselves, while the design work is always initiated from the user's

needs and problems. In addition, the design of which is absorbed from the word "DISEGNO" (Italian language) has

the meaning of drawings, sketches, plans, illustrations, or scheme. The meaning of the word is clear that the design

has a meaning more than the art itself because it involves the ability to create images and the ability to create

designs.


1.2. Design in Indonesia Creative Economy

Based on the original meaning of the word, its development, study of literature, according to the definition of the

design world organizations such as Icograda (International Council of Graphic Design Association), ICSID

(International Council of Societies of Industrial Design) and IFI (International Federation of Interior Architects /

Designers), and the results of focus group discussions, the design blueprint is defined as follows:

"The objective problem solving process for human and its environment based on collaboration knowledge and

creativity by adding the values including the value of cultural identity and added value (added value) both

economical, functional, social, and aesthetic so it can provide a subjective solution"

Source: Focus Group Discussion Subsector Design, Ministry of Tourism and Creative Economy Indonesia (May-

June 2014)

The following is an explanation based on the key words in the above definition.

1. Objective problem solving process. Efforts in identify, explore, analyze, and draw conclusions from a problem

with a view to taking a decision. The problem to be solved is a technical nature such as the function of an item;

2. Humans and the environment. The basis of the design process is a problem that occurs in the fulfillment of

human needs and the environment to improve the quality of life. Problems or needs that depend on the scope of

each field of design;

3. Collaboration of science and creativity. Process design requires a variety of related disciplines, among them

psychology, informatics, architecture, and engineering. In addition, the design with a deep understanding of the

issues and ability to create new design solutions appropriate;

4. Value of cultural identity is local wisdom that can be a source of inspiration for the design, for example

through the motif, processing methods, and materials. Each region in Indonesia has the local knowledge which

is the result of the dynamics of the local culture. Value of cultural identity can change and differ according to

location and time. Serves as a medium of design preservation by making the value of cultural identity as the

inspiration which is then adjusted to the present;

5. Added value. The results of the design process must add value to the economic, functional, social, and

aesthetic of a product and not just as an expression of a designer. For example, ordinary wood has a value that

is much different when compared to wood that has been processed into a radio Magno;

6. Subjective solution is the solution that comes from the taste, aesthetics, experience, and knowledge of each

designer.

Today, design development in the world and in Indonesia is supported by the development of software

technologies that facilitate the design process and allow for more collaboration. With the collaboration, product

design will have more values for commodities that can be further developed and utilized in industry by society to

provide a better quality of life in accordance with their respective functions.

2. Methodology

The study of defining design sub sector as one of industry inside Indonesia creative economy were using

literature review, in depth interview, and focus group discussion (FGD). The literature review that we use in this

study were coming from the previous document that published by Indonesia government, published material about

creative economy in the world, and specific books or paper about design. In depth interview were conducted in three

months between April-June 2014, with the expert that we choose for interview coming from practitioner, educator,

and design community. Focus group discussion was held between June and July 2014, we invited earlier expert from

in depth interview and additional member that known as stakeholder in design industry. The number of expert that

coming to attend the focus group discussion is 10 experts. The FGD were conducted three times, the first FGD to

explore our understanding about design as one of the sub sector in Indonesia creative industry and its scope. Second

FGD is to mapping the design industry ecosystem and problem identification inside the ecosystem. And the last

FGD is to confirm the results from the first and second FGD.


3. Scope of Design

The concept of design thinking is a concept that prioritizes the needs and desires of consumers (such as the

workings of the designer) in the development of a product, service, process, up to the strategy. Parties applying this

concept to understand the needs of consumers by communication with a regular basis to produce the best product

that suits the needs. This concept is similar to the method of trial and error to produce a product that is expected by

consumers (Brown, 2008).

Currently, both the tools used and products generated by the industry is still not meeting the needs of the people

of Indonesia. For example, many Indonesian raw materials sold abroad, processed, and resold and consumed by the

people of Indonesia. Sales of raw materials that would be detrimental to Indonesia because of its potential to be lost

and used by others. This is because the current manufacturers are more concerned with customer needs rather than

the needs of consumers who are the end users of a product. Hence the need for the application of the concept of

design thinking that prioritizes the needs of consumers as a whole and promote efficiency but still produce added

value.

Danish Design Centre (2003) expressed design as a hierarchical. There are four levels in the hierarchy of the

organization's commitment to design:

1. Non-Design. Design becomes a dominant part in the development of products and done by people who are not

professionals in the field of design. Design solutions obtained from the functional and aesthetic perception. The

end user of the product is not involved in the design process.

2. Design is Styling (Design for aesthetics). Become part of the aesthetic design of a product. Professional

designers might do this, but other professions may also be involved.

3. Design as Process (Design as a work process). Design has become the method of work adopted since the

beginning of the product development. Solution design focuses on the end user and requires a multidisciplinary

approach, for example, from the marketing, material experts, and expert process.

4. Design as Innovation. Designers collaborate with owners and managers in adopting an innovative approach to

doing business. The design process combined with the organization's vision.

The study of the Danish Design Centre shows that the scope of the design concept not only as matters of aesthetics

and art, but further into the design of capital in terms of innovation.

Other research conducted by Tether in 2005 that has been discussed in Figure 2, In the diagram that has been

drawn up, covering the design of visual communication design, fashion, interior design, product design, architecture,

design materials (design of capital goods), engineering, up to design components. However, according to the

definition of design that has been written in section 1.2 which states that the design is "the process of solving

objective problems with subjective solutions", then the scope of the design according to the context of the

development of the creative industries are located on the subjective emotional scope. Therefore, the design that

included in the context of the creative industries based research Tether include four areas, namely visual

communication design, fashion, interior design, and product design.

Of the four areas, the current fashion industry is a mature industry from downstream to upstream that

characterized by periodically changing trends. The fashion show is always done on a regular basis, and a large

number of industry revenue. Seen conjunction with the fourth field, fashion is a wedge between product design and

interior design. Due to the maturity, the fashion (mode) is not included in the scope of the design itself. Thus limits

the field of design in the creative economy in Indonesia are visual communication design, interior design, and

product design.

The third field of the relevant design is also reflected in the agreement stated by the international design

associations. The main actors in the design industry has developed a special code of ethics developed into

professional organizations respectively called the Model Code of Professional Conduct For Beginners published by

Icograda, ICSID, IFI and in 2012 the code in the document, the word "designer" defined as individuals who either

freelance design practice or work, or a group of designers who have partnered and scope as follows: (i) visual

communication and graphic designers, (ii) designers products and goods, and (iii) the interior designer / interior

architect.


4. Design Ecosystem

Fig. 3. Ecosystem for Creative Industry

Modeling ecosystem (Figure 3) of the design as sub-sector industry is the ideal state that describes the activities

at each stage of the creative. In each of these stages, there are actors involved and the linkages between components

as an ecosystem. Modeling is done to map ecosystem consists of four components, namely as follows.

1. Creative Value Chain. Chain creative components (creative chain) is the main process that occurs in each sub-

sector of creative industries, in the creative process of this happening is the beginning of the creation of the

output in the creative industries to the output displayed or absorbed by the market. In the design sub-sector, a

common process chain is creation - production - distribution and presentation of adjusted back to their

respective areas of design;

2. Market - Audience (Market-Audiences). Products or works of industrial design is then displayed and absorbed

by the market. The market component describes the character of the market, audience, and consumers in each

sub-sector of creative industries. In the design sub-sector, generally the market is paying client services to the

designer to create a masterpiece, the target community or consumer of a work, to design experts who have the

competence to criticize a design;

3. Development Environment (Environment Nurturance). On the other hand, to support the creative process of

the chain, necessary nurturance environment or development environment that consists of two main activities,

namely the appreciation and education.

a. Appreciation activities aims to give recognition to the creative industry and also gives an understanding of

the industry sub-sectors. Appreciation activities can be initiated through the literacy process which aims to

provide knowledge and understanding of the creative industries to the community so hopefully after getting

a good understanding, then the appreciation will be much easier to do. Activities can be undertaken

appreciation awards, incentives, and public appreciation of the IPR (Intellectual Property Rights) of

creative people. With the appreciation of good activity, the creative people will be encouraged to continue

to be creative;

b. Education is one of the main tools in creating a creative person. Education is considered very important as a

place to hone the ability of people to be able to become qualified and creative people capable of running the

creative process with a good chain. This educational activity can be done through formal, non-formal, and

informal. In the design sub-sector, dominated curriculum education about aesthetics and design;

4. Archiving. The purpose of this archiving process is as a medium that can be accessed by the public to obtain

information and data related to the creative industries sub-sectors. Archiving can be used as a source of

Creative Chain

Nurturance Environment

Archiving MarketDevelop

Public Access

Public Access

Public Access

Appreciate

Consume


inspiration and as a medium of instruction in educational institutions. For example, many sites now have a

portfolio of service providers for the designer. Archiving process is generally carried out through the collection

phase - restoration - Storage - preservation. The process of restoration is only done if the documents or things

that need to be archived are already experiencing damage or mismatch repair process that needs to be done

without changing the original meaning or value prior to storage and preservation process.

5. Conclusion

Developing design industry in Indonesia is on-going-process. The common understanding about this industry

should be communicate to the stakeholders and the communities. This study shows different perspective in defining

the design and its scope. The ecosystem shows there are four area that we should consider in understanding design

industry, which are: creative chain, market, nurturance environment, and archiving. Those four has their own

problems but they are very important in developing design industry. Therefore, this study will help Indonesia

government to focus, make priority, and help government and player in design industry in developing design

subsector in the next five years of planning.

Acknowledgements

Ministry of Tourism and Creative Industry, Indonesia, Ahmad Rifqi Anshorulloh, Agus Windarto, Andar Bagus

Sriwarno, Andi Abdulqodir, Bima Shaw, Cokorda Dewi, Dika Despanhi Sulaeman, Dona Saphiranti, Eko

Priharseno, Francis Surjaseputra, Hanny Kardinata, Hastjarjo Boedi Wibowo, Hilton Kurniawan, Intan Rizky

Mutiaz, Irvan Noe'man, Iwan Sastrawiguna, Mizan Allan de Neve, Reindy Allendra, Widagdo, Widihardjo, Yudi

Amboro

References

Brown, T. (2008), Design thinking. Harvard business review, 86(6), 84.

Center, D. D. (2003), The Economic Effects of Design. National Agency.

Tether, B. (2005), The role of design in business performance. ESRC Centre for Research on Innovation and Competition, University of

Manchester.

Widagdo (2011), Desain dan Kebudayaan (4th ed.), ITB Publisher




Designing Photography Industry

as Subsector in Indonesia Creative Economy

Achmad Ghazalia*, Wijayanto B. Santoso

b, Nur Arief R. Putranto

c

abcSchool of Business and Management, Institut Teknologi Bandung, Jl.Ganesha 10, Bandung 40132, Indonesia

Abstract

At the beginning of Creative Industry in Indonesia, Photography is representing in one sub-sector, which is Film, Video, and

Photography. However to look at in Photography itself is also interesting, since the stakeholder in this area yet the same

understanding about this industry. Therefore it is important to make the same understanding about the photography as industry,

the scope of the industry, and the ecosystem of photography, so the growth of this industry will contribute the development of

Indonesia creative economy. Literature review, in-depth-interview, and focus group discussion were using in designing this

industry. And the results shows a new understanding of this industry in Indonesia context and some initiatives that may be the

answer in developing photography in Indonesia.



Keywords: creative industry; photography; ecosystem; scope of industry

1. Introduction

Photography evolved not only as an image or an image capture technology. Photography is also growing due to

the increasing benefits of photography in human life (Sharples, 2000). Both processes are equally important in the

view of the development of photography, because basically both are interrelated and affect each other. The definition

of photography is inseparable from the technical side of photography technology development itself. It can be seen

from the development of technology from analog to digital photography. This development led to changes in the

elements of photography that makes the definition of photography requires adjustment. In the era of analog

photography for example, a film has dual role as the recording medium and as information storage media. Both of

these roles can then be replaced by different devices in present digital age. Therefore, advances in technology of

photography can change the definition of photography itself.


E-mail address:[email protected]


In addition, advances in technology may affect the scope of photography which is now more widespread and also

had an influence on the development of photography in terms of economic, social, and cultural. Understanding of the

definition and scope of photography is necessary to be able to determine the focus of the development of

photography in the contextual development of the creative economy in Indonesia.

1.1. Defining Photography

The term "photography" was widely introduced by Sir John Herschel in 1839 to refer to some of the experiments

were done in a moving image of an object into a two-dimensional medium. However it turns out, the word

"photographie" has been raised in 1834 by Brazilian inventor named Antoine Hercule Romuald Florence in a note.

Note from Hercule Florence successfully inspected by Boris Kossoy in 1976. When viewed from word origin,

photography is derived from the Greek word composed of two words, photos meaning light, and graphé which

means drawing. So when the two words are combined, photography can be interpreted literally as painting with light

(Monteiro, 2007).

According to The Hutchinson Dictionary of the Arts (1994), photography is defined as follows:

“Process of reproducing images on sensitized materials by various forms of radiant energy, i.e. visible light,

ultraviolet, infra-red, x-rays, atomic radiations, and electronic beams.”

Definition of Hutchinson is able to answer the substance of photography in the development of technology. The role

of light-sensitive films and surfaces in the analog era has been replaced by a light sensor that is not only able to

capture visible light, but also be able to capture wave energy in another form. Therefore, these definitions can be

used as a definition of photography today.

When photography was associated with the creative industries in Indonesia, the definition needs to be adjusted,

"An industry that encourages the use of individual creativity in producing the image of an object by using a

photographic device, which includes a recording medium light, file storage media, and the media that displays

information to create prosperity and employment opportunities."

(Source: Focus Group Discussion photography sub-sectors, the Ministry of Tourism and Creative Economy, May-

June 2014).

Based on the above definition, it can be concluded that in photography there are five elements that always exist,

namely:

1. Creativity, in this case is the ability to process ideas to produce creative work, including the skills and talent.

Creativity in photography including the ability to capture an expression or the message of the object to be

photographed. Creativity is certainly owned by creative people. Creative people in photography can be derived

from:

a. Photographer or the photographer, subject or person conducting photography. In the digital age, when

the camera can be remotely operated with the remote assistance, the photographer is the person who set

up or setting the camera to take pictures.

b. Creative director, the person responsible for the creative concept of a creative work.

c. Digital imaging artist (DIA) or the photo editor, the people who have expertise in creating and

manipulating digital images.

2. Object of photos. An object or situation that wants to be reproduced in the form of a picture or image with the

aid of a recording medium or light, or camera.

3. Light recording media. This media is sensitive to light so as to duplicate the image or the image of the object

that emits light. In the days of analog photography, recording medium light can be light sensitive paper; plates

supplied with chemicals to be sensitive to light, and also the movie. In the digital era, the light sensor on a

digital camera serves as the recording medium light.


4. Media file storage (information). It is a medium or tool that saves the file (in this case the image information).

In the days of analog photography, the function of a storage media is represented by a film with a recording

medium light. Such medium are light-sensitive paper, light-sensitive plates, and films. While in the era of

digital photography, file storage media (information) is a form of digital data stored in memory and can be

transferred to other digital file storage media such as CD / DVD, flash disks, memory cards and hard drives.

Media that displays an image or images. It is a medium that shows the end result of the photographic object. In

the days of analog photography, the one that displays the image is printed photo. In the era of digital photography,

image viewer function can be done by a computer screen, camera display or smart phone display.

2. Scope of Photography

Based on the results of the study of literature, photography can be grouped by genre or genres of photography and

the purpose of its use. Genre in photography can be shared by several approaches such as (1) the development of

camera technology and media recorder; (2) the object image; (3) The technique of photographing; (4) the location or

the shooting; (5) the event or events. While photography is based on the purpose of the subject of photography can

be divided into: (1) photography education; (2) amateur photography; and (3) professional photography.

In terms of the development of camera technology and recording media, photography can be classified into

analog and digital photography. Digital photography is growing rapidly since the 1990s, and this then does not

diminish the presence of the old technology, analog photography in this case. With that maintains a unique,

identifying characteristic, and the value of history, analog photography still get a spot on the side of photography

enthusiasts. Both genres can survive, even with all the advantages of digital photography finally able to be the

industry standard at the time of photography this subsector (Datta, Joshi, and Wang, 2006).

Several types of analog photography include: Lomography, an analog-style photography using film that has high

contrast and saturation and color profiles that are characteristic of the picture as printed by cross processing.

Photography pinhole is in the making of photo using a pinhole camera. Pinhole camera is an object that has a light-

tight space, which is then given a very small hole in one side. Pinhole camera can be made of any material. Polaroid,

a type of photography that uses special films that can be printed direct the film results in an instant.

Based on the object, then the genre of photography can be classified into several examples as follows: Astro-

photography, it’s a special photography that photographing celestial objects like the moon, stars, and planets. Portrait

photography (portraiture) is a special photography photographing people. Nature photography is special photography

that photographing the beauty of nature as scenery, flora, and fauna. Selfie is the latest genre in photography, the

special photographic self-portrait or a group of friends. The genre is growing with the increasing use of smart phones

(Kiprin, 2013). Photography food (food-photography) is a special photography in photographing food and drinks.

Based on the techniques of shooting, then photography can be classified into several examples as follows:

Strobist photography is a technique in photography that using the flash or artificial lights separate from the camera.

Long-exposure / slow shutter photography is a technique in photography with a slow shutter speed. The purpose of

this technique is usually to create a subtle effect on the image waterfalls, clouds in the sky, or eliminate the passing

crowd somewhere. Light painting photography is a similar technique with long-exposure techniques, but the

expected effect is the presence of traces of light that can be either an image or text that comes from a light source

that driven by humans or objects. Levitation photography is the technique of photographing someone who is

skipping with a very fast shutter speed, so that the resulting effect of the object in flight or stopped in the air. Macro-

photography is photography technique that produces images of objects enlargement small photo. HDR (High

Dynamic Range) is techniques to combine multiple images that have different high levels of illumination (exposure).

The purpose of HDR photography is to brighten the dark image and darken the bright parts of the image, so that all

ranges of light in the image is normalized so there is no part that too bright (over-exposed) or too dark (under-

exposed) (Inanici, 2006).

The following are some examples of a genre based on the location or the shooting: (i) Aerial photography,

photography obtained by shooting in the air. Usually shooting aided by remote control, or the shooting is done with

the help of a helicopter and (ii) Underwater photography, photography is done in the water. Shooting is usually done

in the pool, lake, river, or ocean.


The following are some examples of a genre based on the event or events: (i) Wedding Photography (wedding

photography), photography that aims to document a wedding party, (ii) Photography pregnancy (maternity

photography), photography documenting a woman during pregnancy. Usually the shooting is done when the

prospective mother's belly already looks bigger, and (iii) Photography birth (newborn photography), baby

photography in documenting the early moments of his birth.

In addition to classification by genre, generally photography is also classified based on the purpose of the

activities of the agents of photography. The following is a classification:

1. Photography as a science education is taught in the formal and non-formal education.

2. Amateur photography is photography that cultivated by photographers who pursue achievement and self-

actualization in the field of photography, and photography hobbyists who do photography for personal

consumption.

3. Professional photography is photography that the photographer sold his expertise in the field of photography

and make photography as his livelihood. Professional photography itself can be divided into four categories,

namely:

a. Journalistic photography is photography that is closely related to the area of production and consumption of

print and electronic media. The main goal of the photojournalist is to take pictures of events and events that

are going to be reported back through the mass media. A photograph obtained is expected to strengthen the

content of articles that are presented in the mass media. The actors in the field of journalistic photography

among photojournalists, photo editor, photo editor, and photo bureau manager.

b. Commercial photography is photography that is closely related to the practitioners of professional

photography. Photography is usually associated with advertising agencies and corporations. The images

created can be based on the wishes of the client (which is made from the initial concept), or the client can

purchase photographs that have been created by the photographer for the benefit of clients. Other form of

commercial photography is photography retailer, which has been providing photographic services ranging

from concept to print photo shoot. All processes in the retail photography have been standardized in the

standard operating procedures of the company. Clients greatly facilitated the use of these photographic

services. In general, this photography photographing people, either individually or together, in the studio.

Wedding photography and photographic coverage of the event are also included in the retail photography.

Actors in the field of commercial photography are a professional photographer, photography studio owner,

entrepreneur photography, school owner and a photography course, and photography bureau managers.

c. Art photography was coming from the encouragement of personal expression. This type of photography is

sometimes difficult to understand by ordinary people because the concept that needs to be understood and the

power of imagination is similar like painting. However, the photographic works of art also has a high value,

although not as high as the relative value of art paintings. Actors in the field of art photography among other

artists who use the medium of photography, art historian, art critic, curator, gallery manager (galleries), art

dealer, collector, and art conservators

d. Special photography is photography that used for specific industry or field of science and technology.

But in the creative industries, not all areas of photography above belong to the scope of photography in the

creative industries. Special photography more widely used in the fields of research and development, making it less

precise when incorporated into the scope of photography as the creative industries. Amateur photography does not

directly provide economic influence to the creative industries, but amateur photography has a role in building the

ecosystem of industry sub-sectors of photography, especially as part of the development environment. It can be

concluded that the scope of Indonesia's creative industries subsector includes photography is professional

photography, namely: Photography journalism, commercial photography and photographic art, which covers all

genres in photography.

3. Methodology

The study of defining photography sub sector as one of industry within Indonesia creative economy were using

literature review, in depth interview, and focus group discussion (FGD). The literature review that we use in this


study were coming from the previous document that published by Indonesia government, published material about

creative economy in the world, and specific books or paper about photography. In depth interview were conducted in

three months between April-June 2014, with the expert that we choose for interview coming from practitioner,

educator, and community. Focus group discussion was held between June and July 2014, we invited earlier expert

from in depth interview and additional member that known as stakeholder in photography industry. The number of

expert that coming to attend the focus group discussion is 10 experts. The FGD were conducted three times, the first

FGD to explore our understanding about photography as one of the sub sector in Indonesia creative industry and its

scope. Second FGD is to mapping the photography industry ecosystem and problem identification inside the

ecosystem. And the last FGD is to confirm the results from the first and second FGD.

4. Ecosystem in Photography Industry

To provide a comprehensive and in-depth understanding of the creative industries, especially in this sub-sector of

photography, it is necessary to map the ideal condition, a condition that is expected to occur and the best practices

from countries that have already developed the creative industry and its competitiveness, and the actual conditions in

Indonesia to understand the dynamics of creative industries in photography subsector.

Fig. 1. Ecosystem for Creative Industry

Understanding between the ideal conditions to actual conditions can provide a big picture of the needs of national

creative industries so that the government can develop this industry properly, taking into account the potential

(strengths and opportunities) and problems (challenges, weaknesses, threats, and barriers) faced in developing the

creative industry in Indonesia. Ecosystem creative industries is a system that describes a relationship of mutual

dependence between each role in the creative process of value creation and the roles of the surrounding environment

that supports the creation of creative value.

To illustrate this interdependency relationship (figure 1), an ecosystem is consists of four major components,

namely:

1. Creative Value Chain as a series creation process. In every process, there is a major activity, support activities,

and a major role associated with each process occurs. In photography industry, creative value chain that happens

is the creation, production, and distribution.

2. Nurturance Environment is an environment that can stimulate and improve the quality of creative value creation

process, including:

Creative Chain

Nurturance Environment

Archiving MarketDevelop

Public Access

Public Access

Public Access

Appreciate

Consume


a. Educational activities include: (1) formal education, (2) non-formal education, and (3) informal

education.

b. Appreciation, a response to the work of creative people and creative process. Appreciation can be

viewed from two perspectives, namely the appreciation by the market (consumers) and appreciation of

the people, the work, and the creative process.

3. Market (Consumer), the person or party who use photographic work or photography services.

4. Archiving, the preservation of creative works and documentation of the creative work that can be accessed and

utilized by all stakeholders (creative people, governments, educational institutions, businesses, communities,

and intellectual) in the creative industries as media ecosystem learning and literacy.

These four components have different roles and interact with each other so as to form a cycle in a creative

industry that can certainly be applied to the photographic industry subsector. Through this ecosystem expected value

creation process, activities and outputs of each process, and the role that involved can be mapped properly, so the

development plan will be made more systematic and focus.

4.1. Creative Value Chain

In the modeling of subsector photographic ecosystem, the approach taken in the creative value chain approach is

a commercial photography. This is due to the creative value chain of commercial photography are very complex, so

that each stage of value chain in this industry can be described as a whole. The model maps in the ecosystem also

could be used in explaining the creative process that happens in journalistic photography and art photography.

4.1.1. Creation process

Before the process of creation, research and studies can be done in advance as a supporting activity. Research

conducted may include identification of the client or target market identification. This activity can support the

creation process step due to the research data obtained will be more and more, so it is expected to produce more and

more new ideas. The model creation process is implemented using the design approach. Because of the design,

especially visual communication design, very strong influence in commercial photography that the message was

well received by consumers.

The process of creation can be done in 3 stages: ideation, design, and planning. Ideation is a creative process in

creating, developing, and communicating new ideas. This stage can be done by various methods such as

brainstorming, mind-mapping, forced association, and Synectics. After determining the photo concept, the next step

is the design phase. In the design phase including the following: (i) Statement of Intent, which is an affirmation of

what will be done. Here the photographer confirms what the early visual idea. For example, a photographer stated,

"I want to produce a portrait of a character who was chatting with street children in Bandung." Or for example give

a statement, "I want to make images that reflect the state that occurs when the floods hit Jakarta's population, and

how residents helping each other with each other." (ii) Sketch, which is the stage where the photographer drew this

sketch with descriptions and notes on what and how the photo will look. Sketches can be done by hand or using a

computer graffiti. In different role, a statement of intent is to give a verbal description and the sketch will give an

overview of the raw visually (iii) Determine the elements and principles of design. In this stage photographer, record

a list of the elements and principles of design that will be used in the shooting (iv) Symbolism, photographers can

also use objects or elements that can strengthen and help communicate the message to be conveyed.

Last stage is planning, that include planning for: time or scheduling, lighting, the location, equipment and

supplies (equipment list), allocation of funds (budgeting), a model, and particular item. The output can be obtained

from this creative process is a design draft concept of the photo shoot that produced the design stage and document

the shooting plan resulting from the planning stage.

The process of creation in commercial photography done by creative people, who in this case than can be done

by the photographer, can also, be carried out by a creative director or a creative team of an advertising agency. In

commercial photography, the creative process is conducting in advance discussions about draft of the shooting.

Discussion conducted by two parties, namely, service users and photographer. The concept of shooting can be

submitted by either of the two sides. And then if there was an agreement, then the concept of production must be


agreed upon. This is slightly different to the commercial photography business that is retail such as a photo studio.

In the retail products such as photography family photo shoot in the studio, or wedding photography, the creative

process has been carried out by business owners with creative people in the company. Thus, the customer or client

can directly select the concepts that have been provided by the photo studio without having to think about the

concept from the beginning again. Business owners usually have to standardize the concepts of shooting in a

standard operating procedure (SOP). Photographer who became employees in the retail photography business

shooting usually only follows the procedures that have been defined in the work.

Careful planning basically is much needed in photographic journalism, although the preparation is not as

complex as commercial photography. In this photography, planning is required by the photographer to anticipate the

events that may occur at the site of the shooting. Therefore, the conditions at the location shooting cannot be

controlled as well as in the studio. In the art of photography, the photographer is the main actor in the process of this

creation. The idea and concept is owned by an artist photo and it is the most important thing of photographic art.

4.1.2. Production

In the production phase, plans have been made to mature in the creation phase will be executed one by one.

Production stage can be divided into 3 parts, namely, pre-production stage, production stage itself, and the

postproduction stage.

Preproduction phase is the preparation phase before production. At this stage, various permits such as location

permits, a model release and property release had to be resolved; photographic equipment needed already borrowed

or rented; makeup artist, hair stylist has been contacted and the contract has been agreed upon; and costumes have

been prepared. After all the preparation is complete, the next stage is production. In this phase, sometimes the

execution is carried out is not as smooth as planned. External factors can affect the sustainability of production. The

weather changed suddenly incompatible forecasts, accidental damage to equipment and other non-technical things

that can cause delays stages of production. For that there are times when photographers do experiments and

modifications to the concept in the middle of shooting. And when do the changes in the concept of the photo shoot,

of course, it must be communicated to the client.

Basically in digital photography, after completion of the production phase is the photos already can be obtained

in the form of digital data. Digital photos can then be directly distributed to digital media such as online news

portals and social media. The same thing happened to Polaroid photography that the picture can directly be

instantaneous because of the type of film that can be printed instantly. In general, postproduction stage is necessary

in stage of the production process of photography. Postproduction stage may include: a review of all the images and

the selection, provision of detailed records shooting, providing technical notes, refinements, editing, and provision

of annotations.

4.1.3. Distribution

Distribution stage is the stage of submission of the work of the photographer to the client, or the opening stage

public access to the photographs. In this stage photographers can submit their work in 2 forms. The first is in the

form of digital data. Photos in the form of digital data can be stored into the storage media such as CD / DVD, hard

disk, flash disk, or can also be sent via email or file-sharing media on the internet. The second is in the form of

prints such as photographs, photo albums, posters, flyers, or photos that have been framed.

Basically the photo works of various genres of photography can be presented at a media presentation (display) of

any kind, but there is a tendency that certain photographic stream only displayed on certain media presentation

anyway. With the development of information technology today, photographers can sell their work through the

personal website or websites that provide space for the photographer to be promote their work. For the amateur

photographer or a beginner, presentation work can be done through social media such as Facebook, Flickr,

Instagram, and 500px.com. This is to attract the people closest to them, or even people who are not previously

known to be able to see and enjoy the results of their photos. In today's Internet era, through social media these

talented amateur photographers can start developing his photography business to the professional stage.


4.2. Market (Consumer)

Consumers in subsectors of photography can be divided into two major groups, namely companies or

organizations, and individuals. Consumer companies usually come from the media industry, advertising industry,

commercial industry, and other industries that require photography services. Individual consumers are divided into

general and special consumer. Special consumer is a consumer expert, galleries, photo collector, and museum. A

gallery even is willing to pay high enough for buying a high-value photograph. Currently works photo that has the

highest price is the work of Andreas Gursky belong titled "Rhein II," which was made in 1999. His work sold for

$4,338,500 in 2011 by Christie's auction house in New York.

4.3. Nurturance Environment

4.3.1. Appreciation

Appreciation can be done in 2 ways, namely, through photography literacy and through the recognition and

appreciation for the work of the photographers. If the function of literacy is to develop photography from the

consumer side, the recognition and appreciation of photography is to develop the creative side. Literacy in

photography is the ability to understand, analyze, create, and use of, or taking a photo. Literacy photography for the

community to have a function as a system controller photographic content (especially for children), improving the

quality of public photography in public space, and can appreciate a photo as the work of a photographer.

In addition to increase public literacy on photography, appreciation also serves as a form of recognition and

appreciation to the photographer on creative work. This is done so that the spirit and the desire to work from the

creative people in the field of photography this can be maintained, thus increasing the quantity and quality. Awards

and recognition for photographers can be done in several ways: competition or photography contest, giving the

award, provision of photography degree, exhibition of photography, book of photography, and copyright.

4.3.2. Education

Education is one important element in the value chain, through the education of photography as competent

photographers born. And to support the competence of the professional in subsector photography, educational

materials is required so that a comprehensive photography education provision can be applied in the real world. In

higher education, schools of photography in developed countries like the United States, there are three aspects of

education taught in photography education. These three aspects are (1) knowledge of discourse in photography

whether it is related to art, design, technology and history, (2) technical knowledge about photography, and (3)

professionalism.

In addition to formal educational institutions such as vocational schools and colleges, there are also non formal

schools of photography in Indonesia, i.e. Indonesian School Nikon, Canon School of Photography, LaSalle College

International, Indonesia School of Photography, and Darwis Triadi School of Photography. Nowadays there is a

trend that the photographers who have been successful in the field of photography began venturing into the business

of photography education by offering short classes photography, workshops, and seminars. This could be an

alternative container for aspiring photographers to learn photography without going through formal education.

In addition to formal and non-formal education, photography can also be studied with informal learning. This can

be done by self-taught through apprenticeship in a company or business photography services, read from the media

and the internet, to follow the activities in communities photography. The role of the internet is very helpful in the

process of photography education. With the wide variety of photography tutorials are packaged in various forms

(text, images, audio, and video) on the internet. Novice photographer or someone who wants to learn about

photography can choose the method and form of tutorials which according to their interest.

4.4. Archiving (Archiving)

In today's digital era archiving can be done in various forms and ways. The works of photos can be stored either

in the form of data or in printed form. Archiving in the form of data can be done by storing it in the CD / DVD, flash

drive, hard disk, or memory cards. Besides stored in physical form, the photographer can also store it in photo


sharing services on the Internet such as Flickr.com, 500px.com, Picasa, Instagram, Facebook, and others. In the

United States, the one that responsible is US National Archives and Records Administration. Archiving is also done

by the academics through a library owned, or by the private sector.

One of the national institutions that perform functions of archiving images, especially in photojournalism, is the

Gallery of Photography between Journalism (GFJA). GFJA is non-governmental organization which is owned by

Antara news agency. In terms of photo restoration, GFJA has been helped by Japan and the Ford Foundation to

restore old photographs owned by GFJA. Not only archiving, GFJA also organizes trainings photojournalism. In

Indonesia, government agency that does archiving photos is the National Archives of the Republic of Indonesia. In

addition, we can find historic photographs in museums in Indonesia, such as in the National Museum of Indonesia in

Jakarta, National Monument in Jakarta, Asian-African Museum in Bandung, Fort Rotterdam Museum in Makassar,

and others. Because of the archiving location were scattered, it make us realized the need for archiving institutions

for photography in Indonesia. The institution can also serve as knowledge management center to facilitate

stakeholders to work together in promoting photography in Indonesia.

5. Conclusion

Developing photography industry in Indonesia is still continuing. The common understanding about this industry

should be socialized to the stakeholders and the communities. This study shows different perspective in defining the

photography and its scope. The ecosystem shows there are four areas that we should consider in understanding

photography industry, which are: creative chain, market, nurturance environment, and archiving. Those four has

their own problems but they are very important in developing photography industry. Therefore, this study will help

Indonesia government to focus, make priority, and help government and player in photography industry in

developing photography subsector.

Acknowledgements

Ministry of Tourism and Creative Industry, Indonesia.

References

Datta, R., Joshi, D., Li, J., & Wang, J. Z. (2006). Studying aesthetics in photographic images using a computational approach. In Computer

Vision–ECCV 2006 (pp. 288-301). Springer Berlin Heidelberg.

Inanici, M. N. (2006). Evaluation of high dynamic range photography as a luminance data acquisition system. Lighting Research and Technology,

38(2), 123-134.

Kiprin, B. (2013). Go Selfie Yourself!.

Monteiro, R. H. (2007). Art and science playing on the margins. On the discovery of photography in the 19th century Brazil.

Sharples, M. (2000). The design of personal mobile technologies for lifelong learning. Computers & Education, 34(3), 177-193.




A New Dynamic of Innovation System

Based on Local Competitiveness in Emerging Region in Indonesia:

The Case of Cimahi City

Lutfah Arianaa*

aCenter for Science and Technology Development Studies, Indonesian Institute of Sciences,Building A PDII 4th floor,

Jl. Gatot Soebroto Kav 10. Jakarta, 12720, Indonesia

Abstract

To be competitive, every region needs to be creative. Since the government launched a promising agenda towards Creative

Economy in 2008, there are many emerging regions transform into a new outlook of innovation system. One of the current

policies, Regional Innovation System, has been launched to generate local competitiveness of every region in Indonesia.

However, every region has its own understanding and choice in determining what kind the best practices of innovation system.

This paper will focus on the innovation process and creativity based on industrial cluster development of region-city in Cimahi,

West Java. As an approach of new policy in regional development, cluster has been widely introduced in emerging economies,

especially related to readiness of a region in accelerating its local competitiveness in globalization era. This paper will also

identify the "local factor" as indigenous factor for the region in building innovation system and propose a new recommendation

for the local government in initiating local competitiveness based on cluster approach. By having in depth interview with several

key factors including government, industries, and societies, this paper will focus on regional dynamic capabilities including

leadership capability, network capability, and visionary capability. These capabilities Various problems differ in term of

government understanding in building a new framework for the implementation of such policy. Some impediments are also

analyzed since there is still arising problems in developing a new paradigm in this field.



Keywords: regional innovation system; cluster; innovation; region; competitiveness

1. Introduction

In current globalization and knowledge-based society, every region must be prepared to face highly competitive

environment by encouraging creative economy from its potential resources and intellectual assets. In this emerging



184 Lutfah Ariana / IICIES 2014 Proceeding

economy, Indonesia has shifted towards decentralization system that provides a new way for local government to

initiate its local development. One of the policies related to propose local economic development in Indonesia is

innovation system.

In recent, issues on innovation systems indicates that the region plays an important role at which innovative

capacity is created and economic activities coordinated and governed (Carlsson et al., 2002). Even though the

concept of national innovation system (NIS) and Regional Innovation System (RIS) were developed in 1980s-1990s,

the discussion over the years has been limited on theoretical and concepts of innovation policies (Chung, 2002). In

fact, the first national innovation system policy in Indonesia has been initiated in the early 2000s, it reflected that the

government is still in the process of finding the appropriate building of NIS based on the context of Indonesia.

There has been a shift of paradigm on innovation, from perspective of linear sequential into dynamic and

interactive-recursive model, that is the driver for long term growth by emphasizing the interaction of many actors

and social learning, and also balance development policy between national and regional level (Taufik, 2007).

Therefore, NIS couldn‟t be implemented without the contribution of regional actors as the counterpart. According to

the strategic aspect of regional development in supporting the success of innovation policy, this paper will focus on

Regional Innovation System (RIS) that has been initiated in an emerging regions as a response of NIS policy. RIS is

defined as interacting knowledge generation subsystems, consist of public and private research laboratories,

universities, technology transfer agencies, vocational training organizations and exploitation subsystems that

understood as the regional production structure (Cooke, 2004a, p.3).

In this context, this paper aims to map out the current of innovation system at the level of city, and also

understand the support of national policy on the regional innovation system. One of the implementation of RIS is the

growing of industrial clusters in several regions as centers of innovation and knowledge-transfer. As Porter stated in

his seminal works that the establishments of diamonds clusters will provide competitive advantages for the region. In

further, Asheim et al (2010) also commented that the specialization of firms in a phase of production are regarded as

Marshall‟s localization economies. In this case, the introduction of decentralization system in Indonesia has provided

regions to create its local policies and development goals. However, several studies concluded that the new stream of

development still creates disparities in social and economic among regions (Resosudarmo and Vidyattama, 2006;

Akira and Alisyahbaha, 2002).

Most recently, factor of “locality” is considered to be very important in developing competitive advantage in

many regions. Therefore, regional economic development or local economic development should be based on the

best of local potential resources and it needs a strategic focus that will be a collective agenda for synergizing its

multi-stakeholders. Another condition in viewing the importance of local competitiveness in RIS is related to lack of

readiness and capacity of the local economy in benefiting economic values for the societies. Regional government is

a key actor in initiating the implementation of RIS and responsible in engaging of local development through making

policy decision of innovation system. In the case of autonomy, the regional governments have authority to create and

develop their own regional innovation system that appropriate with their specific condition. In fact, there is some

regional governments follow-up the policy of innovation system, and a few of them could be succeeded in

developing ecosystem of innovation in their local development. Most regional governments initiated the acquiring

condition in building regional innovation system by building industrial cluster development that emphasizing the

local resources.

Policy on regional innovation has been introduced in RPJPN Year 2005-2025 in order to support the local

competitiveness of regions based on knowledge economy. Therefore, this paper will analyze the creating process of

innovation and local creativity of regional government in responding the RIS policy in term of their capability in

innovation. As a lesson learned, this paper will focus on the implementation of RIS policy of city level. By having an

analytical study, this paper is attempted to identify determining factors of innovation system in regional competitive

development based on its dynamic innovative capabilities.

Following the arising problem, this paper is organized as follows: the first section revisits policy context on RIS,

cluster industries, and case studies from advance countries. In the following section the paper explores these

concepts implementation in Indonesia perspectives by providing two case studies and how it progress over time. The

final section addresses research summaries and possible actions to accelerate Indonesia's regional innovation

systems.

Lutfah Ariana / IICIES 2014 Proceeding 185


2.1. Policy Context of RIS in Indonesia

Policy and regulation are the most dynamic factors influencing innovation system. They are the main gate for

political interest to intervene innovation system, could be either positively or negatively. Ratchford and Blanpied

(2008) argued that in many ways competence in science and engineering is the „controllable‟ driving factor. Policy

framework, stable governance, and military power are boundary conditions. They are necessary but not sufficient for

sustained economic growth. But these boundary conditions can help assure a flourishing economy driven by science

and technology (S&T), if correctly structured (Lakitan, 2013).

There are several stakeholders in making decision of S&T policy in Indonesia. Initially, S & T law requires the

National Research Council (NRC) to advice the government in formulating S & T development strategic policies. It

also requires the regions established regional research council/RRCs to advice and to assist regional government in S

& T and innovation system. However, as Taufik (2007) argues, despite the advancement and readiness of legal

documents and research publications, Indonesia‟s innovation has not been a consensus systematic and policy

framework. The documents has not provide clear innovation policy framework that integrate stakeholders (sector-

wise and region wise). As such, a tangible and coherent national-regional and cross-sectoral dimension of innovation

system has not present in Indonesia‟s effort (Aritenang, 2012).

According to the governance of innovation activities, there are 19 RRCs at the provincial level and 5 local

agencies that act as RRCs (Aritenang, 2012). These centers are guided and advocated by several central science and

technology of government institution such Agency for Assessment and Application of Technology and Indonesian

Institute of Sciences. The aims of this centres is providing regional establishment including visions, local expert

recruitment, and network with local government. However, field surveys reveals that these local research councils

has not act as its purpose, advisory and guide for technology and innovation activities, because of the limited

expertise and skill of the members and the unclear relation with the innovation actors (Aritenang, 2006).

2.2. Regional Dynamic Capability

As mentioned in the background, the building understanding of RIS in Indonesia‟s context is started from the

innovation process of local region and creativity of the players in optimizing the local resources. The dynamic

capability of this region is shaped or determined by some factors, includes (i) history which is path dependency as a

key factor influencing future trajectories; and (ii) regional assets and resource configurations.

In further, these factors will be categorized into five dynamic capabilities that are identified as being important in

developing regional dynamic capability: (i) innovative capability; (ii) learning capability; (iii) networking capability;

(iv) leadership capability and (v) visionary capability. First, regional innovative capability means the joint

innovation capability of the enterprises and other supporting organisations in the region. The key link here is

learning, where the ability to learn is decisive for the economic success of individuals, firms, regions and nations.

Secondly, regional learning capability can be defined as an RIS‟s ability to create and manage knowledge in a

collective, interactive and cumulative learning process leading to new settings of resources, competencies and skills.

It relies on network capability as a strategic tool to distribute knowledge and continuous learning of network‟s

actors. Next, regional networking capability emphasizes RIS‟s ability to build interactive networks including field-

specific creative social capital leading to effective utilisation of the resource configurations in the networks.

However, path dependencies can create damaging effects, called as „lock-ins‟ that can prevent the desired

development processes. According to Grabher (1993, in Mc Call, 2013), there are three recognised kinds of „lock-

ins‟ in a regional context: functional; cognitive and political. In this case, the role of leadership is decisive when

preventing „lock-ins‟, because it could influence actions steering the processes and resources of the system in the

desired direction and avoiding harmful „lock-ins‟. „Lock-ins‟ are a real challenge because the knowledge economy

challenge regions – so heavily dependent on their past – to have to continuously make new decisions whilst insecure.

This insecurity can be reduced by using resource-based futures research and visionary capability. Visionary


capability refers to an RIS‟s ability to outline the possible potential development trajectories based on the paths

travelled and utilizing the opportunities emerging through the changing techno-economic paradigm.

In this paper, the stressing point of the competitive advantage of a region is limited to its visionary, networking

and leadership processes, shaped by its specific asset position and the paths available to it. The following variables

are used to describe the three dynamic capabilities need in the regional development:

Table 1. Elements of Regional dynamic capabilities

Visionary Capability Leadership Capability Networking Capability

Initiative activity Combining different opinions Choosing external partners

Visionary thinking Hierarchical methods Building trust relationship Innovativeness Centralized management Increasing interaction

Customer orientation Sticking to decisions achieved together Creating a suppotive atmosphere

Decisions achieved together Internationalization

Specialization

Cooperation

Community

Honest activity

Sources: Pihkala et al., 2007

The processes should lead to building regional capabilities, competences and core competences based on regional

resources, in order to enhance a sustainable competitive advantage.

2.3. Case Studies of RIS in Other Countries

Generally, various studies on innovation systems are dominated from developed countries. In Germany, GRDP

per capita is 34% higher than European Union average of 100 because of the generation of regional economy

system. Most leading companies included automotive, electronic, and mechanical engineering have driven a

collaborative system among core industry, suppliers, universities, research institutes and technology transfer centers

(Cooke, 1996 in Aritenang 2012). As results, it could reveal the emerging institutional industries such as promotion

and finance to support innovation performances.

Another case study from the UK shows that innovations in the country are led by business activities. Different

cases of emerging innovation arise in the case for Yorkshire and Humberside, and there is diversity of innovation

networks and structures. Another region, Strathclyde, likely creates their innovation by promoting internalization of

innovation process in company level. According to Thomas (2000), the common approaches of these regions are the

local government's commitment to culture of innovation and entrepreneurship, the upgrade of ICT infrastructure, and

identify regional universities as the main sources. In brief, there are several points of innovation driver of RIS in

UK; collaborative networks, common awareness in enhancing the role of university and spin out companies, the

application of R&D results for SMEs through knowledge transfer and innovation cultures, and also business

activities that emphasize manufactures, suppliers, customers and supporting agencies.

3. Methodology

Innovation system can be explained by describing the actors and the interaction process among them. It requires

specific information about the key players which is not only exist in the system but also arises from other system. In

order to analyses the working process of innovation system in regional level, this study will perform a qualitative

study based on case study. Case study conducted in the Cimahi City region in West Java is used as an empirical data.

We choose this region suggested by Agency for the Assessment and Application of Technology (Badan Penerapan

dan Pengkajian Teknologi – BPPT) in which this region has been considered to be committed implementing the RIS

policy and directly guided in the process of development by central government (BPPT). In depth interviews with

regional and local governments provided first-hand material concerning RIS policy in city level. Answer reliability

may vary according to the type of question asked. In some cases, problems arise when the informants did not

correspond to the profile requires by the topic researched. In fact, general misunderstanding between interview

participants around the goals of the research resulted in a serious bias. In order to reduce such bias, we conducted


extensive interviews with key informants and collected data from secondary sources. In the following sections we

show the sample characteristics and some preliminary results of the analysis.

In addition, we also investigate the behaviour of regional government in responding RIS policy towards strategic

planning of innovation system and industrial cluster development, and how they develop partnerships in enforcing

the regulation. These interviews represented a further step in order to deepen our knowledge of these processes. We

also visited the actors of innovation that is Cimahi Creative Association (CCA) that consists of local firms in ICT

sectors especially telematics and animation.

Research instrument has been structured based on different key informants (local government, firm, association).

The main point is included in the following sections: the background initiated RIS policy, legal framework,

development planning map in S&T and innovation program, operational policy, and RIS profile (actors and

network). For local firms, the questions emphasized innovation activities includes dynamic innovation capabilities,

firm production activity, the evolution of the innovative behaviour and cooperative relationship for a specific

innovation, and also their linkages with government, customers, suppliers and other organisations (universities,

research centers, etc).


Arising regional innovation system in some regions in Indonesia is initiated by some national policies such as the

National Medium Term Development Plan (RPJMN 2010-2014), the National Spatial Plan (RTRWN) from 2010 to

2030, and the Master Plan for the Acceleration and Expansion of Indonesian Economic Development (MP3EI)

2011-2025. The main aim of these policies is to encourage the economic development in every region for promoting

high local competitiveness. With various complexities of multi-sector and multi-facet perspectives, regional

competitiveness development rests on the potential need and other aspects that support the growth of local industries.

In addition, the introduction of linkage between industries in the district will be the key success factors of

competitive regional development. The role of industries will also be very important especially in enabling an

increase in value added of existing resources in the region.

Joint Decree between Ministry of Research and Technology No. 3 of 2012 and the Ministry of Home Affairs No.

36 of 2012 on Development of Regional Innovation System "instruct" every local official to design the economic

development of the region based on regional innovation system. There is a strong message that the development of

innovation is an appropriate strategy for the region in general. The region is chosen to be the focus of the executor of

policy implementation at the micro level, as well as direct contact with the public and users of science and

technology as well as community that spread across the region. As been explained by Sulaiman (2007) that "local" is

now growing and played a key role in development. This is certainly an important change for the development of

science and technology in the future.

To analyse the dynamics of local competitiveness on regional development, this section identify a case study of

Cimahi city-region using qualitative data of RIS practices.

4.1. The City of Cimahi

Cimahi City is one of the emerging local economies in West Java. Iniatiated in 2002, by amount of population

597,317 people placed at 4,036.45 hectares with less natural resources, this city emphasized the potential human

resources especially in developing creativity for the future. By the limited resource of land, a range of local

government in Cimahi City into sub-districts are relatively short, the average is 1-2 km. Cimahi is at a strategic

location and is located at the intersection of the path of regional economic activity and the core city of Bandung

Raya. This region-city is adjacent to the capital of the province where the distance to the provincial capital of only

10 km. This condition also encouraged the local government of Cimahi City to realize a city based on creative

industries.

As part of her mission, Cimahi City generates economic development based on the local wisdom and cultural of

the societies. In promoting the purpose of local economic development (LED), the local government build up the

economic capacity of the local area to improve its economic future and the quality of life for all (World Bank, 2013).


LED in Cimahi City is encouraged by integrating the sectoral approach and location approach. This approach is well

known as industrial cluster (Porter, 1999). The development of economic activities based on location is necessary for

different regions in Cimahi City because each of them has different characteristics. For example, Sub district of

South Cimahi is dominated by manufacturing sectors (Table 1), while sub-district of Central Cimahi is mainly

dominated by trade and service sectors. Another region, sub-district of North Cimahi, the economic sector that has

been emerged is agricultural sector.

Table 1. Contribution of local sectors in Cimahi City base on constant price, 2007 – 2011

No Sector

2007 2008 2009 2010 2011

Billion

Rp %

Billion

Rp %

Billion

Rp %

Billion

Rp %

Billion

Rp %

1. Agricultures 8.87 0.16 9.24 0.16 9.64 0.16 10.10 0.16 10.07 0.15

2. Mining - - - - - - - - - -

3. Manufacturing 3,462.99 61.41 3,597.31 60.89 3,729.34 60.33 3,832.25 58.87 4,019.59 58.50

4. Electricity, gas, and clean

water

210.00 3.72 213.90 3.62 225.42 3.65 240.01 3.69 251.64 3.66

5. Construction 348.60 6.18 365.17 6.18 385.89 6.24 406.54 6.25 423.94 6.17

6. Trade, hotel. And

restaurant

1,083.34 19.21 1,164.51 19.71 1,243.90 20.12 1,397.54 21.47 1,502.10 21.86

7. Shipment and communication

86.60 1.54 91.08 1.54 95.78 1.55 107.98 1.66 120.54 1.75

8. Finance, rent and company

services

108.35 1.92 119.42 2.02 128.69 2.08 141.66 2.18 149.97 2.18

9. Other services 330.16 5.86 347.44 5.88 362.74 5.87 373.24 5.73 386.55 5.63

Gross regional income 5,638.91 100 5,908.07 100 6,181.40 100 6,509.31 100 6,871.22 100

Source: BPS Kota Cimahi-PDRB year 2010 - 2012

According to World Bank study in 2011, there is four potential industrial cluster in Cimahi City that should be

developed, includes:

1. Industrial cluster in textile and textile products (fashion)

2. Industrial cluster in food and beverages

3. Industrial cluster in handcrafts

4. Industrial cluster in telematics (telematics and animation industries)

These clusters are parts of sub-sector of creative industries that has been defined by Ministry of Trade and

Industry guided in the Road Map of National Creative Industry in 2008. Therefore, in order to develop creative

industry in Cimahi City, the selected approach is driven by industrial cluster. The initiative of local leader of Cimahi

City to build creative economy is supported by the mission of central government towards Knowledge Base

Economy since 2008. Synergizing all the actors in these clusters is needed to improved the value chain of the

economic sectors (Lesego Herr, 2007) started from downstream until upstream sectors.

Instead of identifying the potential clusters, Cimahi City also cooperated with BPPT to create RIS document in

2011. Eventhough the generation of RIS policy has been committed in the document, government of Cimahi City

has not assigned for the formal regulation on RIS because they consider some supporting institutions should be

firstly completed. As the consequence, this document is realized as the draft of Regional Innovation Strategy. This

statement is completely different from RIS policy in other regions, in which most of them stated as Regional

Innovation System.

According to this document, Regional Innovation System is defined as a set of collective actors, institutions,

interactions, and productive process that drive the direction of development and innovative acceleration, and also

learning process in Cimahi City. This document is expected to be a basis for other referred documents and it could

be used for the direction of enforcement and development of innovation in improving local competitiveness of

Cimahi City. In its implementation, RIS will need a high participation of all stakeholders including universities,

government, industries, and societies in Cimahi City to achieve the goal of RIS. In particular, the existing document

of RIS mentioned to support the policy for local government in promoting industrial cluster development especially


animation and film cluster, e-government development, and e-society and also the transformation of innovation

culture in sub-district of Cirendeu.

In recent years, Cimahi City has 400 creative industries driven by various sectors. Out of this number, 67

industries are focus on telematics. Unfortunately, the document arranged in 2011 is still projected for development

of one industrial cluster which is telematics including animation and film in Cimahi City, whereas other clusters are

still in continually designed. The existing document covers sectoral level and has not included development strategy

for other industrial clusters such as food and beverages (cullinary) cluster, textile and textile product cluster, and

craft cluster (World Bank Jakarta, 2011).

One supporting condition created by the local government to foster the telematics cluster is the establishment of

Baros Creative Cyber City Building which projected as a locus of expertise community in ICT sector as well as a

catalisator for the growth of creative industries in ICT sector. Instead of universities, another establishment in human

resources of ICT sector is also emphasized for vocational graduates such as broadcasting. A recent agenda held by

Cimahi city goverment to attract business sectors, governments, students, academician and societies is called Baros

International Animation Festival 2013 (BIAF). This event received widely respons from many countries to join and

to share various knowledge and experiences related to the state of the art in animation and film.

4.2. Dynamic Capabilities and Local Development of Cimahi City

Cluster is defined as a concentration of a business cooperation and business unit, other supporting and related

industries in a certain region. The driver of regional development is based on cluster in industrial sectors. The

successful of cluster in a region is identified from its specialization. In this case, Cimahi city is constructed for

specific clusters based on World Bank study in 2011.

Another condition to be the indicator of successful region in building industrial cluster is the existence of local

networks especially production system networks, and learning networks. Instead of these requirements, human

resources with high skill and knowledge will generate more innovative ideas. A good access to financial institution,

an open cooperation between local firms and other institutions have been also initiated by local government of

Cimahi City by building a new facility that comprehend the objetives of innovation system. Since 2011, after two

years in progress, the Baros Information and Technology Center (BITC) has been supported by several ministries

such as Ministry of Research and Technology, Ministry of Industry, Ministry of Education and other institutions

especially for the infrastructures and information access.

Regional development of BITC is expected to become a brand image for the local identity of the city.

Development strategy of telematics and animation cluster is oriented to generate a new business (start-up firms)

which will attract investment in Cimahi. In case of telematics and animation cluster, the government has already

initiated to give training for start-up firms through business incubators and giving priority in administrative

licensing. This cluster has been managed by special community so called Cimahi Creative Association (CCA)

comprising the local ICT industry, students and societies.

The model of innovation capability developed in this paper is shown in Fig. 2. The model assumes that the

organisation is focused on innovation and innovation outputs as their primary competitive strategy. These framework

conditions substantially affect innovative activities of companies. The relationship between RIS and cluster is

concerned based on the theoretical framework which emphasizes the interactive system which includes four clusters

that can be regarded as a realization of RIS. In other words, RIS makes industrial cluster to be competitive by

offering socio-cultural and institutional environment.

There has been a close relationship among major actors in the governance. For example, the meetings of the

committee were active, regular sessions were held several times and focus group discussions were held two times in

2011. It could be interpreted that network among major actors in RIS has successfully established. Moreover, there

was an intermediary actor from the central government, BPPT. It seems that not only the local government who

initiated, but also is encouraged by the central government. They become aware of the necessity of the horizontal

network because the importance of RIS in generating local competitiveness of the region.


Fig. 2. The Capability Model for City-Regions

(Source: Sotarauta, 2007)

5. Conclusion

From the case study above, Indonesian national and innovation system can be seen as follows, first, limited

understandings of policymakers and stakeholders, which renders their capacities in designing strategic policies in

innovation. Second, disintegrated innovation system polices and efforts that leads to gaps between innovation phases

among regions and unclear national innovation strategies. Third, poor innovation system database and indicators to

monitor, assess, and evaluate as feedback from policies.

By industrial cluster approach in the framework of Local Economic Development, it could be expected to create

diagonal inter-connection among different industrial clusters and vertical and horizontal cooperation among creative

sectors (ICT and animation) for every industrial cluster (intra-industry cooperation). Related to the development of

industrial cluster of textile and textile products, development process of telematics and animation cluster could

become the driver for the emergence of other potential industrial clusters in Cimahi City.

Acknowledgements

The present study was carried out with the financial support of the Center for Science and Technology

Development Studies, Indonesian Institute of Sciences. A special acknowledgement for the team of DIPA

PAPPIPTEK 2014 with research project entitled "Policy Analysis on Regional Innovation System" in 2013 for the

support in giving permission for further analysis.

References

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Abstracts of Publication in

ELSEVIER

Procedia – Social and Behavioral Sciences

ISSN 1877-0428, Vol. 169, Pages 1-410

195


A Framework of Affiliation Partnership between Univesity, SMEs,

and Business Sector: A Case Study of PKBL Telkom, Indonesia

Kristina Sisiliaa

1

*, Yahya Peranginangin

b, Retno Setyorini

c, Nadya Moeliono

d

abcBusiness Administration Program, Telkom University (Tel-U), Bandung, Indonesia dContent Business & Data Analysis Research Group, Telkom University (Tel-U), Bandung, Indonesia

Abstract

Increasingly, university continues to seek collaboration opportunities with external parties, industry or business and

Small Medium Enterprise (SME) community, to understand and implement research and knowledge were taught in

college and how it can solve real problems in economic and social environment. The collaboration makes both

parties stronger and university can play a greater role outside campus traditional activities. Partnership between

Adbis Telkom University (Tel-U) and CDC Telkom is to help PKBL Telkom addressed problems, identified and

proposed solutions. PKBL Telkom has a function to deliver Telkom‟s CSR funds to finance thousands of their

assisted-SMEs in Indonesia. Adbis Tel-U will propose a partnership affiliation framework that assist PKBL Telkom

can do feasibility analysis and application assessment more accurate, effective and efficient. The study will used

information from executives of CDC Telkom‟s interviews that oversee all activities at PKBL Telkom units. The

analysis will present a usage of crowdsourcing method and Understanding by Design (UbD) curriculum framework.

The results of this research can be beneficial for university (Adbis Tel-U) and PKBL Telkom in helping them

enhance their loan approval processes for new candidates‟ applications and loan payment collections from their

existing SMEs tenants.

© 2014 The Authors. Published by Elsevier Ltd.

Peer-review under responsibility of Center for Innovation, Entrepreneurship, and Leadership (CIEL), School of Business and


Keywords: partnership; curriculum; crowdsourcing method; affiliation; framework



196


Moderation Effects of Entrepreneurial Self-Efficacy in Relation

between Environmental Dimensions and Entrepreneurial Alertness

and the Effect on Entrepreneurial Commitment

Nur Khusniyah Indrawatia

2

*, Ubud Salim

b, Djumahir

c, A. Helmi Djawahir

d

abcdFaculty of Economic and Business, Brawijaya University, Malang, Indonesia

Abstract

The research aims to examine the effects of environmental dimensions on entrepreneurial alertness, as moderated by

entrepreneurial self-efficacy and its impact on entrepreneurial commitment. Study population was SMEs in Malang at start-up

phase. Sample was chosen by purposive method with amount 26 SMEs. Data was collected by a questionnaire research

instruments. The General Structured Component Analysis (GSCA) was used to analyze the data to overcome disadvantages of

small samples. The research results showed that only environmental complexity and entrepreneurial self-efficacy affect on

entrepreneurial alertness. Effect of environmental complexity was greater than entrepreneurial self-efficacy. The study also found

that entrepreneurial self-efficacy not as moderator, but become a predictor the relationship between environmental complexity and

entrepreneurial alertness. Entrepreneurial alertness affect on entrepreneurial commitment, but in opposite direction. It means

higher entrepreneurial alertness will lower an entrepreneur identifies with and was engaged in new venture creation.




Keywords: environmental dynamism, environment complexity, environmental munificence, entrepreneurial self-efficacy, entrepreneurial

alertness, entrepreneurial commitment.

* Correspondence author.

Email address: [email protected]

197


Barriers in Implementing the Lean Startup Methodology

in Indonesia – Case Study of B2B Startup

Michael Dwianto Nirwana

3

*, Wawan Dhewanto

b


Abstract

Entrepreneurship has been everywhere in the world. From developed countries till developing ones, new businesses have

emerged in a huge number and likely to grow exponentially within time. However, we also notice that there‟s also a lot more

businesses that couldn‟t survive or even come off the ground.

In that case, a new study has been emerging about how to succeed in developing a business idea. It‟s called the lean startup

methodology (LSM). LSM is a methodology that focuses on agile testing and learning cycle to validate hypotheses in the business

idea. With LSM, a lot of companies in United States has succeeded and be well known all over the world. It‟s also been adopted

all over the world as it has slightly acknowledged as the solution to the fear of business failure.

Nevertheless, the methodology may seem obvious and well implemented in developed countries such as the United States, but

how about in developing countries where it‟s only getting in heat for its entrepreneurship to raise like Indonesia. This paper‟s

purpose is to explain and explore the lean startup methodology and its barriers of implementation in Indonesia so in the end could

give recommendations to entrepreneurs for a better chance of success. The research methodology would be by identifying the key

barriers of each lean startup principle and exploring it in a case study analysis.




Keywords: barriers; lean startup methodology; B2B; startup




198


The Analysis of Communication between Friends on Social Media

towards Purchase Intension (A Study Case of Companies in

Entrepreneurship Project of President University, Bekasi, Indonesia)

Bion Aldo Syarief Sa, Genoveva

b4

*

abManagement Study Program, President University, Jl.Ki Hajar Dewantara, Jababeka, Cikarang, Bekasi 17750, Indonesia

Abstract

Communication via social media to be one of the trend in recent years, especially among college students (Brown, 2007). This

study wants to analyze the role of social media, particularly Twitter in communication among friends of the intention to buy the

products offered by students companies who are working on projects Entrepreneurship at the President University. The

communication have two ways ; directly through communication with peers moderated by need for uniqueness and indirectly by

reinforcing product involvement. This research is quantitative descriptive, with total 140 respondents researchers did some test,

questionnaire analysis and data analysis. Researchers found out several results. Pretest on validity and reliability analysis has been

done using SPSS 18 software. The results indicates supported by the data. Descriptive analysis also has been done by calculating

the results from obtained questionnaires, using Likert method in interpreting the scale of value. After that, researchers did

Structural Equation Modeling (SEM) and Confirmatory Factor Analysis. SEM used when in research model there are numbers of

variable with numbers of relationship, and CFA use to find whether the research model valid and reliable.

The Conclusion of the study, from 8 hypotheses being tested, there are 2 hypotesis negative ties and 6 hypothesis positive

relationship.




Keywords: peer communication, twitter, need for uniqueness, product attitude, purchase intention



199


Determinant Factors for Small Business to Achieve Innovation,

High Performance and Competitiveness:

Organizational Learning and Leadership Style

María Isabel Rivera Vargas* 5

University of Guadalajara, Department of Social and Legal Sciences, Periférico Norte No. 799 Modulo M 2° piso, Zapopan, Jalisco

Abstract

Within the globalization context characterized by unstable settings involving strong competition, and taking the dynamic

capacities, as central concept of the resource-based view, this paper argues that organizational learning with an appropriate

leadership style is a determining strategy for small and medium size firms to achieve innovation high performance and

competitiveness.

By using analytical-synthetic methodology, in the first part, after the introduction, this paper provides and analyses empirical

evidence which sustain that organizational learning is an influential factor that enable organizations to respond in an expeditious

way to market opportunities. Following this, in the second section, the paper provides and analyses the arguments and empirical

evidence in favor of competing leadership styles: transformational/transactional or a blend of the two types of leadership and their

impact on organizational learning to achieve innovation, high performance and competitiveness. As an outcome, the following

section discuss the proposition of a blended leadership style as an strategic leadership characterized for being „ambidextrous‟ and

able to simultaneously implement diverse courses of action in order to facilitate organizational learning, as proposed by several

authors, among them (Quinn,1988; Bass & Avolio, 1993; Denison, Hoooijberg, & Quinn,1995; Tush-man & O‟Reilly, 1996;

Avolio, Bass, & Jung, 1999), and conclude proposing the leadership style that according to the analysis of the theoretical and

empirical literature appears as the most dominantly apt to promote an organizational learning process to achieve innovation,

high performance and competitiveness.




Keywords: organizational learning; transformational leadership; transactional leadership; innovation; competitiveness; small and medium size

firms



200


Commercialization of Emerging Technology:

The Role of Academic Entrepreneur

Noorlizawati Abd Rahima

6

*, Zainai B. Mohamed

b, Astuty Amrin

c

abc Razak School of Engineering & Advanced Technology, University Teknologi Malaysia, Kuala Lumpur,54100, Malaysia

Abstract

This paper explores the role of academic entrepreneur in the commercialization of emerging techno-creative innovations. The

discussion is focused on nanotechnology. Universities commonly known as the source of technological innovation play an

important role in transferring university-invented technology and expertise to the market. With sufficient and supportive

infrastructure for technology transfer in place, academic entrepreneurs may form start-up companies and make profits based on

intellectual property generated from these innovations. It is believed that for successful new technology venture, entrepreneurs

should possess a combination of different skill sets to face challenges in various stages of commercialization process. Therefore,

this paper reviews to what extent academic researchers are the right translators of novel science-based technology in bringing

innovations from lab to market, hence the role of academic entrepreneur. Analysis is performed based on case studies and

publications pertaining to learning experiences of successful technology start-ups in developed countries. Subsequent analysis

suggests that entrepreneurship competencies that include risk taking and brave, knowledge, values and self-confidence are vital

for successful entrepreneurs. In addition, a review on the influence of other complementary infrastructures that include

university‟s support to academic entrepreneurs in realizing technology entrepreneurship programme is also performed in this

study. Indeed, we observed that the right entrepreneurial environment and enterprise infrastructure are important contributors in

empowering academic researchers to produce innovations that are both technologically feasible and commercially viable.




Keywords: academic entrepreneur; technology transfer; nanotechnology; technology infrastructure; commercialization.

* Correspondence author.

Email address: [email protected]; [email protected]


201


Strategy for Achieving the Millennium Development Goals 7-10

through Knowledge-Based Sustainable Design Approach

Bambang Syairudina

7

*, Lantip Trisunarno

b, I Ketut Gunarta

c

abcIndustrial Engineering Department-Institut Teknologi Sepuluh Nopember Surabaya

Abstract

The International agreements of MDGs (Millennium Development Goals) have been responded positively by the Indonesian

government as outlined in the Strategic Plan of the Ministry of Health 2010-2014 that contains eight priority focus of development

and road map STBM (Community Based Total Sanitation) acceleration program 2013-2015. One of the most prominent priority

focus is environmental sanitation program and a target for increasing the percentage of people who stop BABS (Open Defecation)

of 71 percent in 2010 to 100 percent in 2014, that number is above the achievement of MDGs 7-10 is to decrease halve the

proportion of people who do not have access to drinking water and basic sanitation that is viable continuously in 2015. The

Concept of strategic formulation applied by the government to achieve these targets, including through changes in behavior, the

creation of sanitation needs and improve the supply market to meet the sanitation needs by involving the communities, the

government and sanitation entrepreneurs facilitated and advocated by the Non-Government Organization (WSP-Water and

Sanitation Program, and APPSANI-Asosiasi Pengelola dan Pemberdayaan Sanitasi Indonesia). This research studied the role of

knowledge sharing between actors who perform collaborative functions and contribute to the triple helix (demand, supply, and

enabling) in relation to the achievement of the MDGs 7-10. This study resulted the proposed model of sustainable design which is

useful as a strategic framework for achieving MDG targets 7-10.



Managements (SBM), Institut Teknologi Bandung (ITB).

Keywords: the MDGs 7-10; strategic framework; triple helix; knowledge-based austainable design approach



202


Permissive, Aggressive or Apathetic?

Indonesian Telemarketing Customer

Amalia E. Maulanaa

8

*, Khairunnisa Nurulfirdausi

b

aETNOMARK Consulting, Jakarta 15229, Indonesia bBinus Business School Bina Nusantara University, Jakarta 10270, Indonesia

Abstract

The resistance of telemarketing in Indonesia is currently mounting but the brand owner using this marketing channel seems not to

worry about their brand image. This research study was aimed to fill in the research gap to provide better understanding on the

dynamic of telemarketing in Indonesia and provide solutions for the brand owner. The method that used in this research

included netnography, mystery shopping and in-depth interview and followed-up with questionnaire survey to 122 respondents.

This study found that there are three types of customer-response toward telemarketing: Permissive, Apathetic and Aggressive.

Permissive type is not dominant and the brand owner has to realize that. The understanding of various customers groups

behavior and their attitude toward telemarketing in Indonesia has great significance for industry, brand owner, and also for

government as a regulator in better and more correctly handling and facing the problem of resistance on telemarketing.




Keywords: telemarketing; indonesia; customer segmentation




203


Organizational Entrepreneurship and Its Impact on the Performance

of Governmental Organizations in the City of Mashhad

Javad Yazdi Moghaddama

9

*, Alireza Khorakian

b, Yaghoob Maharati

c

a Faculty of Economics and Administrative Sciences International campus of Ferdowsi University of Mashhad, Iran.

bc Faculty of Economics and Administrative Sciences Ferdowsi University of Mashhad, Iran.

Abstract

A new wave of change in societies, new technology and innovation has resulted in corporate responsibility, survival, value and

performance to comply with the new requirements. To fulfil their missions and goals, organizations need to be innovative,

proactive and in other words practice organizational entrepreneurship. Also it can be said that increasing new competitors, a sense

of distrust in traditional management practices in organizations, leaving experts and qualified people pursuing their career as

individual entrepreneurs can stimulate organization entrepreneurship. Entrepreneurship can occur in products and services, or

processes. Hence organizations in order to take appropriate action to overcome environmental challenges need entrepreneurs and

entrepreneurship. Since the units in the government sector are bureaucratic and conservative they cannot be considered as

entrepreneurial. Although the governmental sector has no disagreement with the entrepreneurial type structures, in practice, the

dominant culture, bureaucracy and traditional activities prevent organizational entrepreneurship. The present study is an attempt to

present the conceptual model of entrepreneurship and its role in enhancing the performance of governmental Organizations in the

city of Mashhad. The correlation between two variables of entrepreneurial behavior and entrepreneurial management and its

impact on the performance of government organizations in Mashhad was also studied with the emphasis on the importance of

organizational entrepreneurship in these organizations. The study was conducted on 70 government organizations in Mashhad. For

analysis and the statistical tests for the study of relationships between variables, the SPSS and Smart PLS software were used. The

main results of this study indicate that there is not entrepreneurial orientation and entrepreneurial Management in government

organizations in Mashhad; hence, in these organizations, there is no organizational entrepreneurship.




Keywords: organizational entrepreneurship; entrepreneurial behavior; entrepreneurial management; organizational performance; entrepreneurial

organization



204


The Opportunities and Threats of Small and Medium Enterprises

in Pekanbaru: Comparison between SMEs in Food and Restaurant

Industries

Diana Eraviaa

10

*, Tri Handayani

b, Julina

c

a c UIN Suska Riau, Jl. H.R. Soebrantas, Pekanbaru 28293, Indonesia bPoliteknik Negeri Bengkalis, Jl. Bathin Alam, Bengkalis 28715, Indonesia

Abstract

The development of Small and medium enterprises (SMEs) showed growing trend in Indonesia and also in Pekanbaru. Although

small-scale enterprises, but it has very meaningful role to contribute to prop up the national economy and create many new jobs.

The purpose of this study is to identify the effect of entrepreneurial competencies on business performance, and its opportunities

and threats in the two types of small and medium enterprises that is, food and restaurants industries. Data was collected using a

questionnaire. As many as 52 respondents from SMEs in food industries and 58 respondents SMEs in restaurants industries are

participating in this study. Data is processed descriptively and quantitatively. The result of the study showed that both types of

SMEs have high entrepreneurial competencies in their business. Based on quantitative analysis using regression, it was found that

both entrepreneurial competencies have positive and significant effect on performance. Opportunities held by SMEs in Pekanbaru,

among others, are economic growth above the national average, high level of public consumption, the conducive atmosphere to

investment, geographically located close to the neighboring countries and so on. Nevertheless we can not deny the empowerment

of the SME sector is still faced with the challenges, such as limited access to capital, raw material, information technology,

qualified human resources, marketing the product or services, lacked of guidance from government, exchange rate, high interest

rate, and so on. Therefore, increasing competitiveness of SMEs is urgently required especially in dealing with the ASEAN

Economic Community in 2015.




Keywords: opportunities, threats, SMEs, entrepreneurial competence, performance.



205


Change in Energy Consciousness and Spread of Photovoltaic Cells

after the Great East Japan Earthquake

Kazuhiro Fukuyo 11

*

Yamaguchi University, Tokiwadai 2-16-1, Ube, Yamaguchi 7558611, Japan

Abstract

The awareness about the energy security and acceptability of renewable energy ha s increased in Japan since the Great East Japan

Earthquake of March 11, 2011 and the subsequent accident at Fukushima Daiichi nuclear power station. Against this background,

the Japanese government launched a feed-in-tariff (FIT) in 2012. These situations give business opportunities not only to large

enterprises but also to SMEs and start-ups related to the renewable energy. However, if a renewable energy enterprise wants to

establish a solid business foundation, it has to know its internal and external business environment. In this paper, the author

focused on the spread of residential photovoltaic (PV) systems and analyzed its social demand as the external business

environment. The author used internet questionnaires to discover what households think of the conventional and renewable

energy and what they do for energy saving. It was found that that more than half of the Japanese people, especially the people

accepting the PV systems have raised their awareness of electricity and energy conservation and became more interested in the

renewable energy after the 2011 disaster. The level of RET demand is thought to be increasing in Japan. However, at the same

time, the survey shows signs of a decline in the RET demand in the future.




Keywords: renewable energy; photovoltaic; small and medium enterprises



206


Assessment and Planning of Knowledge Management at

PT Dirgantara Indonesia (Persero)

Albert Yosuaa

12

*, Jann Hidajat Tjakraatmadja

b

abCenter of Knowledge for Business Competitivenes (CK4BC), School of Business and Management, Jl. Ganesha No 10, Bandung, 40132,

Indonesia

Abstract

PT Dirgantara Indonesia (Persero) (PTDI) has corporate strategy in 2012 upwards to develop new N-219 aircraft. This strategy

requires employees to have knowledge to work in accordance with their competences in developing aircraft especially in

Direktorat Teknologi dan Pengembangan (Dittekbang) of PTDI, the unit analysis of this study. Currently, no systematic process to

maintain employees‟ knowledge and there will be knowledge loss from going to retire senior employees who have the valuable

knowledge because of their experiences. PTDI management need to create Knowledge Management (KM) plan that could be

brought effectively into Dittekbang. Questionnaire from Asian Productivity Organization (APO) KM Framework is adopted for

this quantitative study. This is to assess current condition of KM and to develop KM plan to improve condition based on the

assessment result. The findings, employees don‟t feel to be valued if they share their knowledge, management does not give

rewards and incentives for knowledge sharing, and critical knowledge from leaving employees is not retained. Based on this, KM

plan should prioritize to get top management commitment to support KM initiatives, to develop trust in knowledge sharing, and to

capture knowledge of leaving employees to avoid loss of company‟s intellectual capital. Three knowledge sharing techniques

emerged: mentoring, subject matter expert interview, and communities of practice. These tactics are assumed to have effective

effect in knowledge transfer based on knowledge types, employees‟ expertise level, and the expected condition to achieve. These

options are proposed to be implemented in combination with each other.




Keywords: knowledge management; knowledge transfer; knowledge management assessment; knowledge management planning; aerospace

industry



207


Risk Mapping on Dynamics Creative Industry:

Case Study at Bandung City, Indonesia

Sudarso Kaderi Wiryonoa, Harry Susatyo

b13

*, Suryo Utomo

c, Barli Suryanta

d, Oktofa

Yudha Sudrajade, Mandra Lazuardi K.

f, and Yuanita H

g

abcdefgSchool of Business and Management, Institut Teknologi Bandung, Jl. Ganesha 10, Bandung 40132, Indonesia

Abstract

Creative industry is a new global phenomena that arise at this information age. It is said that creativity will be the driver for social

and economic change in order to become a new source of competitive advantage. Nowadays, business, government, academician

focus their attention to creative economy. It is about how the content creates creativity and further adds the GDP and job creation.

The purpose of this research are to find the major or relevant risks that have strong relationship to creative industry and creating

policy that support creative industry based on relevant risks in Bandung, Indonesia.

Data collection gathered through structured questionnaire and in-depth interview to digging information from respondents. The

questionnaire contains list of variables which reflected on questions of financial sector, marketing sector, human resource sector,

operation sector, and industry sector where each sector contain detail activities. Assessment of the questionnaire using likelihood

and impact with the scale of 1 (rare and little impact) to 4 (almost happen and catastrophic). Respondents were chosen by

purposive-random sampling method in Bandung and this research using 60 respondents that represent 14 sub-sectors of creative

industry. This research uses factor analysis to summarize the variable of risks and then multiple regression to rank those risks

based on priority level.

The result of this research shows that there are to two sections for risk categorization i.e. the most affecting variable and less

affecting variable, where each variable contains with sum of predictors that have shown by method used in this research.




Keywords: creative industry; risks; policy; GDP



208


An Effectuation Measure of Entrepreneurial Intent

Dave Valliere 14

*

Ted Rogers School of Management, Ryerson University, Toronto, Canada M5B 2K3

Abstract

This article proposes a novel measure of entrepreneurial intent, the “Entrepreneuring Intent Scale”, to address shortcomings of

existing measures. Previous scales have confounded intent with beliefs, attitudes, and expectations, contrary to the assumptions of

the Theory of Planned Behaviour that underpins research in this area. Such confounding of measures can lead to significant errors

in the interpretation of empirical insights into entrepreneurial intent. Secondly, they have treated entrepreneurship as an “all-or-

nothing” decision, ignoring evidence that many prospective entrepreneurs employ effectual logics and formation of intent. This

misspecification of the construct can lead to systematic bias in measurement of entrepreneurial intentions.




Keywords: entrepreneurial intent; effectuation; theory of planned behaviour; methodology; entrepreneuring



209


Management Experience and The Performance of Accelerators

Dave Vallierea

15

*, Sean Wise

b

a,bTed Rogers School of Management, Ryerson University, Toronto, Canada M5B 2K3

Abstract

We investigate the effects that the experience level of accelerator management teams has on the performance of the accelerators

they manage. In particular we examine how the collective business experience of the accelerator managers influences the survival

and growth of tenant firms within the accelerator. The experience of accelerator managers is assessed from two perspectives: their

own direct knowledge from operating entrepreneurial startups, and their ability to access the knowledge of others from their

professional networks. The survival and growth of tenant firms is assessed as the hazard rates for successful exits (acquisitions)

and unsuccessful exits (firm failures). We find evidence to suggest that increased knowledge of accelerator managers reduces the

risk of firm failures and that this reduction is more due to differences in the amount of direct experience the accelerator

management team has as founders in startups, than to differences in connectedness to the ecosystem.




Keywords: accelerator; incubator; hazard rate; performance



210


Planning Community Development Program of Limbangan

Traditional Market Revitalization with Social Mapping

R. Dimas Dwinovanto Putraa

16

*and Dr. Bambang Rudito

b

abSchool of Business and Management, Institut Teknologi Bandung, Jl. Ganesha 10 Bandung 40132, Indonesia

Abstract

Activities which continue to evolve drive human behavior to create trading instruments, some of which are the markets and the

traditional ones, and for narrower geographical scope are traditional markets in Indonesia. It is believed that traditional market is

one of the comprehensive factors of nation‟s economic wheel. The longevity of traditional market is feared for its dying tendency

in the near future. In accordance to that and to preclude elimination, Indonesia‟s government has persistently implied the concept

of traditional market‟s revitalization. Revitalization of Limbangan Traditional Market Project, hosted by the Local Government of

Garut District, engages to establish sustainability development of Limbangan people.




Keywords: relationship revitalization; traditional market; social capital; community development; sustainable development; social mapping;

empowerment



211


Regional Innovation Cluster for Small and Medium Enterprises

(SME): A Triple Helix Concept

Sri Herliana 17

*

School of Business and Management, Institut Teknologi Bandung, Jl. Ganesha 10, Bandung 40132, Indonesia

Abstract

The presence of SMEs make an important contribution to the national economy. In order to enhance the

competitiveness of SMEs, until now, various attempts have been carried out by the Government. One way to increase

the growth of SMEs through cluster approach. Cluster development and growth of small and medium enterprises

(SMEs) support programs Regional Innovation Cluster. Regional Innovation Systems is an integral part of the

National Innovation System. In realizing National Innovation Systems effective and productive, and significantly

contribute to national economic growth necessary to strengthen Regional Innovation Systems. The innovation could

not go partially, he must be collaboration between the academy, the industry/the business and the government.




Keywords: regional; innovation; cluster; SME; triple helix



212


Developing New Ideas & Capability-Based Framework

for Innovation Process: Firm Analysis for Indonesia

Arif Hartonoa,b

18

*

aManagement Department, Faculty of Economics, Universitas Islam Indonesia, Yogyakarta 55283, Indonesia bPhD Student, Warwick Business School, The University of Warwick, Coventry CV4 7AL, UK

Abstract

This paper aims to propose a new holistic measure of innovation that encompasses the various narrow definition of innovation

along three steps of the innovation process, namely new ideas and capability-based framework. The framework consists of three

sequential steps such as news ideas generation, conversion and exploitation. Compared to the previous studies, this framework

will be the pioneer that provides the following contribution such as the integration of new ideas and relevant a firm‟s capability, a

wider range of internal and external new ideas sources and types of innovation as the output of innovation activities. The

developed framework will be tested to measure innovation activities of the Indonesian firms from a wide range of size and types

of industry background




Keywords: new ideas; firm capability; innovation process; firm level; Indonesia



213


Is There Any Possibility for Famous Local Bakery in Indonesia

to make Brand Alliance with AirAsia

Andrea Stevena

19

*, Mustika Sufiati Purwanegara

b

abSchool of Business and Management, Institut Teknologi Bandung, Jl. Ganesha 10 Bandung 40132, Indonesia

Abstract

This paper examines the projected brand alliance for Kartika Sari and AirAsia brands. The result reveals market

awareness, customer satisfaction, and relationship between satisfaction and brand alliance. Findings show there is no

significant difference for customer satisfaction of each ally brands, satisfaction relate to the successfulness of brand

alliance that could make this projected alliance promising.




Keywords: brand; alliance; awareness; satisfaction; relationship



214


The Portrait of Entrepreneurial Competence

on Student Entrepreneurs

Verni Y. Ismaila

20

*, Efendy Zain

b, Zulihar

c

abcFaculty of Economics, YARSI University, Jakarta, Indonesia

Abstract

In the framework of foster new entrepreneurs from universities, there should be an investigation of the entrepreneurial

competencies on the students. Based on psychological and business aspects, entrepreneurial competencies are used to find out the

characteristics and skills of the students so that they can become a successful entrepreneur. This study was designed as a quasi-

experimental research, which is non randomized group pre test – post test. The treatment has been given in the form of

entrepreneurship education with the number of respondent were 30 students. The data were analyzed using the Comparative

Analysis of "t" Test Methods. The results showed that both before and after undergoing entrepreneurship education, research

respondents basically had the pretty good entrepreneurial competencies scores. The results of the study by using a pre-test and

post-test analysis, showed that the characteristics of the respondents with the highest scores both before and after participating in

entrepreneurship education were need of achievement and endurance. While the characteristics that have the weakest scores were

need of autonomy and risk-taking propensity. Overall entrepreneurship education has been followed by respondents indicated a

difference in their entrepreneurial competencies cores (significant at α 0.01). Differences entrepreneurial competence component

scores were significantly occurred on endurance and market awareness components (α 0.01) as well as the need of autonomy and

need of power (α 0.05).




Keywords: entrepreneurship education; entrepreneurial competence; entrepreneurial characteristics; entrepreneurial skills



215


An Evaluation of P3DK (An Acceleration of Development Village

Program): A Reviewing on Failure toward Revolving Loan Fund

System in Kepulauan Riau Province, Indonesia

Raja Abumanshur Matridia

21

*, Dedi Zuraidi

b, Rendra Setyadiharja

c, Endri Sanopaka

d,

Desrian Effendie, Diah Siti Utari

f

abcdefSekolah Tinggi Ilmu Sosial dan Ilmu Politik (STISIPOL) Raja Haji Tanjungpinang, Jl. Raja Haji Fisabilillah No. 48 and 29100,

Tanjungpinang-Kepulauan Riau-Indonesia

Abstract

P3DK (An Acceleration of Development Village Program) is a system or design as an effort of people empowerment to develop

infrastructure and the economic development at village level with the purpose to attract more people participate in development

and to strengthen people in the future. P3DK has been conducted by Kepulauan Riau Province. Totally, there were 169 target

villages and this program was conducted in 2006 to 2011, where each village was allocated fund as of IDR 500.000.000. Every

year, the target village to get the fund has been variety. This program was run by giving fully authority to the head of village and

it‟s people to design an applicable concept of village development through P3DK to start small- medium enterprise in the village.

The main aim is to measure and study the success of the implemented concept by the local government to develop Economic of

the people. The research funding shows that concept has failed in reaching the target which has been set early to develop the

economy of people in village through P3DK. This happened because the tack of intention of the people to return the loan. Another

factor is the punishment was not being taken to those who didn‟t returned the loan. The recommendation of this paper is the

reconstruction of new loan system by focussing on the procedure and mechanism of the program in crucial to be done. Rewards

and Punishments is indeed to be implemented seriously for the shake of program.




Keywords: P3DK; failure; loan funding System; village economic development

* Corresponding authors.



216


Factors Analysis on Knowledge Sharing at Telkom Economic

and Business School (TEBS) Telkom University Bandung

Vina Shabrinaa, Anita Silvianita

b22

*

abBusiness Administration, Telkom University (Tel-U),Bandung, Indonesia

Abstract

Knowledge is a core value that can be differentiates someone with another person. Sharing knowledge is one from many efforts

that can be used in every organization to improve their goals. In academic institution, sharing knowledge become an important

process that must be done to maintain the sustainability and achieving a competitive advantage in its role as a center of science so

was in Telkom Economic and Business School (TEBS) Telkom University Bandung. The aim of this research is to define factors

that create knowledge-sharing activities between lecturers in TEBS and to define how much these factors dominate knowledge

sharing activities. This research adopts six variables as a knowledge sharing factors and using 75 lecturers who work as a

respondent. Through factor analysis can be reduce six factors such as working culture, employee attitudes, motivation to share,

opportunity to share, communication and technology become two dominant factors that inspire the creation of knowledge-sharing

behavior in TEBS Telkom University Bandung. The new factors are opportunity to share knowledge and organizational culture.

Opportunity to share knowledge it represented by opportunity to share, communication and technology. These factor able to

explain 54,8% from all knowledge sharing factors. While 17,4% is explain from organizational culture and it represented by

working culture, employee attitudes and motivation to share. From this result, we can conclude that academic institution have to

improve the communication between lecturer to increase the opportunity to share. The qualities of technology such as Internet

also become important to support knowledge sharing behavior.




Keywords: knowledge sharing; TEBS Telkom University; Factor Analysis



217


Value Orchestration Platform: Promoting Tourism in Batik

Industrial Cluster Solo

Santi Novania

23*, Utomo Sarjono Putrob, Pri Hermawan

c


Abstract

Batik industry constitute of one of 14 classified creative industries in Indonesia. As part of creative industry, batik design and the

batik product is possible continuously develop. In this research, we focus on Batik Industrial Cluster in central Java, Solo. This

research aim is to model value co-creation process and value orchestration platform as a hierarchical service by using service

science perspective. We argue value orchestration management strategies to promote Solo as batik industrial clusters to world

favourite tourist destination. To achieve it, we first examine and express the situation from batik industrial cluster in Solo by using

qualitative approach. Then, we analyze a process model of value co-creation consisting of four phases, i.e., co-experience, co-

definition, co-elevation and co-development. The model describes interactive relationship among stakeholders in Batik industrial

cluster by involving value co-creation process to supporting such collaboration. Finally, we apply three management strategies of

value orchestration platform for orchestrating value co-creation process, i.e., involvement, curation and empowerment strategies.




Keywords: value co-creation; co-experience; co-definition; co-elevation; co-developmen; value orchestration platform



218


Marketing Strategy and the Development of Batik Trusmi

in the Regency of Cirebon which Used Natural Coloring Matters

Tita Borshalina 24

*

Widyatama University, Bandung, Indonesia

Abstract

The trends that customers tend to turn back to nature has so far enhanced Micro, Small and Medium Enterprises (SMEs) of Batik

Trusmi to develop innovation in new products that use natural coloring matters. Borshalina‟s research (2012) proved that there

was an influence of market orientation on the innovation and there was an influence of innovation on the performance of SMEs of

Batik Trusmi and some indirect influence of market orientation on the performance through the innovation of SMEs of Batik

Trusmi. The result of Borshalina‟s research (2012) indicated that the performance of SMEs of Batik Trusmi was influenced by

the innovation of its actors in fulfilled the market orientation or its consumers requirements.

To fulfilled the trends of the consumers and in minimizing the problems of waste material resulting from the synthetic coloring

material, SMEs of Batik Trusmi have innovated using natural coloring materials such as, mango leaves, tree bark, bark of

mahoni, tobacco, indigo bark, bark of jengkol tree. In spite of all those, it was admitted that the price of Batiks colored with

natural coloring materials were more expensive than Batiks colored with synthetic coloring ones. This was the challenges

encountered by SMEs of Batik Trusmi, how to produce batik which were environmentally friendly in line with the concept of

sustainable development.

The research result showed that the selling price becomes higher as it uses environmentally friendly of natural coloring materials

managed or anticipated in inclining quality that it could be accepted by the consumers; the supporting factor of developing the

market of Batik Trusmi with natural coloring materials were many consumers interested in Batik Trusmi which proved to be

environmentally friendly and became the solution over the obstacle of increasing number of labors who were reluctant to work on

batik colored with natural coloring materials that, in this case, SMEs of Batik Trusmi tried to provide inputs for the workers that

Batik with natural coloring materials were quickly sold on the market.




Keywords: batik; coloring materials; innovation; environmentally friendly; sustainable development; marketing strategy




219


Assessing the Effects of e-servicescape on Customer Intention:

A Study on the Hospital Websites in South Jakarta

Lukmanul Hakima, Leli Deswindi

b25

*

abESQ Business School (STIMIK ESQ), Jl. TB. Simatupang Kav. 1, Cilandak, South Jakarta

Abstract

The impact of the internet is very influential in the development of today‟s business world. It is crucial for service

providers to use their official website to seize potential customers‟ attention by creating a website that impresses

them. The role of corporate website in service industry is really important because it can present the intangibility

elements (physical surroundings) of the service itself. The purpose of this study is try to examine which element of

the e-servicescape on hospital websites that significantly influences customers‟ perceived quality to encourage

potential customers to use the services of the hospital. Quantitative method is conducted using a Spearman Rank

correlation for nonparametric data to obtain a significant relationship value of the variables observed.




Keywords: e-servicescape; perceived quality; customer intention; nonparametric test



220


Lesson Learned from Indonesian Biggest Fashion Retailer Company

to Encourage the Development of Small Fashion Business

Ivana Liliani Sugiha

26

*, Subiakto Soekarno

b

ab School of Business and Management,Institut Teknologi Bandung, Jl.Ganesha 10, Bandung 40132, Indonesia

Abstract

Indonesian retail industries for fashion sector continue growing vigorously due to raise of income per capita and rise of middle-up

class people. PT Mitra Adiperkasa Tbk (MAP) is the leader of fashion retailer in Indonesia. The company‟s stock had ever

categorized as a blue chip stock in Febuary 2013 - January 2014 indicates its satisfactory performances. The company

successfully brought many top fashion brands from other countries such as Zara and takes the Indonesian market well. In 2014,

the stock is no longer pinned as a blue chip even some securities dwindled 24% of the stock price and the profit growth reach the

negative area. The issues above trigger a curiosity about the company performance and value. How is the actual financial

performance of MAP compare with other local and global companies? What innovative idea does each brand of MAP have to

captivate Indonesian market? How small fashion businesses in Indonesia should develop themselves to be the fashion leader brand

in the home country? To assess the financial performance, ratio analysis is going to be used. PT Mitra Adiperkasa financial

performance will be compared with PT Matahari Department Store, PT Ramayana Lestari Sentosa, FJ Benjamin Sdn Bhd

(Malaysia), Royal Sporting House Ltd (Singapore), and Giordano International Ltd (Hong Kong). The valuation will use 2

methods; DCF and market approach. The valuation using DCF method confirms that MAP‟s shares will grow 46% in 2029.This

financial analysis is an encouragement either for the entrepreneurs to start fashion business or small businesses to continue

developing since in the future fashion business is always tempting for investors and customers. Small fashion business should

implement effective and efficient supply chain to create fast retailing and become the fashion business leader in the home country.




Keywords: mitra adiperkasa financial position; mitra adiperkasa valuation; fashion industry; ratio analysis; dupont analysis; small fashion business

indonesia; fashion market segment




221


Trade-off Study of Equity Mutual Fund

for Small and Medium Enterprise

Eric Marshall Ting Toyoa

27

*, Sylviana Maya Damayanti

b

abSchool of Business and Management, Institut Teknologi Bandung, Jl. Ganesha 10, Bandung 40132, Indonesia

Abstract

The purpose of this research is focused on equity mutual fund in Indonesia at 2007-2013. From equity mutual fund that active at

2007-2013 this research examined whether selected factors influence the performance of equity mutual fund. Then this research

also investigated which equity mutual fund‟s performance exceeded performance of Indonesia stock index (IHSG). 5 equity

mutual funds that exceed Indonesia stock index (IHSG) is panin dana maksima, schroder dana istimewa, pratama saham, batavia

dana saham, dan BNP Paribas pesona. This research can provide recommendation for small and medium enterprise to allocate

their fund in mutual fund. SMEs usually have a volatile revenue and income stream. In order to reduce the operational risk, SMEs

allocates high cash position as a buffer during difficult situation. This paper aims to increase earning from this cash position

through investment strategy.




Keywords: mutual fund, SMEs; performance mutual fund; variables mutual fund; sharpe ratio




222


Value Co-Creation Process in Small and Medium Enterprise

by Utilization of Viral Marketing as a Branding Tool:

A System Dynamic Approach

Aulia Fadil 28

*

School of Business and Management,Institut Teknologi Bandung, Jl.Ganesha no 10, Bandung 40132, Indonesia

Abstract

People like to talk about their involvement with products and services for a variety of reasons. These include the prestige and

status that may arise through ownership or a need to share their purchase experiences in order to help others. These conversations

are then passed to family, friends and other people in social networks. This reference process is known as Word of Mouth (WoM)

communication and is regarded as a powerful and influential form of communication, if only because of the perceived objectivity

and credibility associated with the parties involved. Viral marketing has emerged as the electronic form of WoM and involves the

principle of passing on or referring news, information or entertainment to another person. Viral marketing is a highly effective

internet marketing communications tool, and will succeed if companies understand their online customer and providing a better

value than those competitors. Unfortunately some studies have shown that SMEs may lack competence and show low level of

awareness and organizational readiness for adopting innovative approaches for interaction with customers. Meanwhile, Internet

technology continuously provides new research tools that enable companies to interact and participate in brand value co-creation

together with customers.




Keywords: viral marketing; system dynamic; brand awareness



223


User Requirements Analysis for Restaurant POS

and Accounting Application Using Quality Function Deployment

Lana Sularto 29

*, Wardoyo, Tristyanti Yunitasari

Faculty of Economics, Gunadarma University, Indonesia

Abstract

The purpose of this study is to identify the consumer requirements and technical requirements that are part of the Quality Function

Deployment (QFD) analysis, as applied to restaurant SMEs in Jakarta, Bogor, Depok, Tangerang and Bekasi (Jabodetabek). The

design of integrated Point of Sales (POS) and accounting applications prepared based on "Restoku" POS and Accounting

applications that has been built and implemented at the restaurants. The draft then used as the basis for preparing a questionnaire

that has been distributed for 200 restaurants.

The research methodology begins with the collection of user requirements and analyse it using QFD. Application design is funded

by the government through a program of Featured Universities Research by the Directorate General of Higher Education (DIKTI).

Conclusions from this research are identified which include the Consumer Requirements of integrated POS and accounting

application. The elements of the consumers requirements consists of 11 elements and 49 elements of Engineering Characteristics

restaurant requirements. Therefore the design of POS and accounting applications that will be built, is designed according to the

findings by eliminating features that are not needed by restaurant based on QFD House of Quality.




Keywords: systems analysis, applications design, point of sales (POS), quality function deployment



224


Batik Solo Industrial Cluster Analysis as Entrepreneurial System:

A Viable Co-Creation Model Perspective

Lidia Mayangsaria

30

*, Santi Novani

b, Pri Hermawan

c


Abstract

This study diagnoses the issues of viability existed in the depth of Batik Solo industrial cluster. Viable System Model (VSM) in

practice would assist the viability investigation process, prescribe, and facilitate the agreed improvements from operation division

to policy management as the highest level of the system. Rather than focusing only on the internal factors, as an entrepreneurial

system, batik Solo industrial cluster has to gain deeper insight from the external aspects like consumer and market. This study also

employs the concept of value co-creation from service science perspective to compliment the powerful internal assessment of the

system by VSM with the external one by using a positive collaborative innovation with customers as a third dimension. The

concept encourages entrepreneurial system to weight more on the role of customers as the crucial element determining business

future performance. The finding is a mapping model of the industry, the roles, and the improvement from viable value co-creation

point of view which consist of five functional and complete working organs: (1) operation, (2) coordination, (3) integration, (4)

intelligent, and (5) brain. The operation represents the executive systems: firms (Kauman batik cluster, Laweyan batik cluster,

Solo traditional market, and travel agencies), research and financial institution (Canting Kakung Community and Bank of Central

Java), and university (Universitas Negeri Sebelas Maret and Batik University). The coordination is a mutual assistance of the

convergent understanding among operation systems: Batik Surakarta Entrepreneur Union (PPBS), Laweyan Batik Village

Development Forum (FPKBL), and Kauman Batik Tourism Village Association (PKWBK). The rest organs are focused on the

government from Culture and Tourism Office of Surakarta as the integration, Local Government of Surakarta as the intelligence,

and Ministry of Tourism and Creative Economy as the brain. The integration of the system also employed Cooperation and Small

and Micro Enterprise Office of Surakarta and Industry and Trade Office of Surakarta. The dominant and overlapping function of

government from different layers caused a bottle-necking in the connecting structure of batik Solo industrial cluster as an

entrepreneurial system.




Keywords: viable system model; value co-creation; batik Solo industrial cluster



225


Physical Evidence of Small Theme Restaurant in Indonesia:

A Case Study of Ramen House

Oktavina Diah Puspita 31

*

School of Business and Management, Institut Teknologi Bandung, Jl. Ganesha 10, Bandung, 40132, Indonesia

Abstract

In order to remain exist in the tight competition in culinary industry, business people have to make a clear differentiation for their

venture. Bandung, the capital city of West Java, is famous for the creative people and it is one of good places to start a culinary

business in Indonesia. This paper observes the elements of physical evidence and the types and roles of servicescape of Ramen

House, a small Japanese restaurant in North Dago, in order to create uniqueness compare to other restaurants in Bandung. Ramen

House has distinctive exterior and interior facilities as well as other tangible things in order to serve the customers. The

servicescape usage of Ramen House is interpersonal service; meanwhile the design of servicescape has three roles, which are

package, facilitator, and differentiator. The important thing for the theme restaurant is the consistency in conveying the concept

through every part of the restaurant‟s physical evidence.




Keywords: physical evidence; servicescape; service marketing; theme restaurant; culinary industry



226


ICT Adoption, Skill and Use Differences among Small and Medium

Enterprises Managers Based on Demographic Factors

Nurhidayati Kusumaningtyasa and Dyna Herlina Suwarto

b32

*

aBalai Diklat Industri Regional IV Yogyakarta, Yogyakarta, Indonesia bUniversitas Negeri Yogyakarta, Yogyakarta, Indonesia

Abstract

The Small and Medium Enterprises in economics are able to develop by Information Communication Technology (ICT) adoption.

The adoption is determined by many factors, one of them is demographic. This research purpose is to examine the demographic

factor differences (age, gender and education level) in ICT (computer and internet) adoption, skill and use among small and

medium enterprises (SMEs) managers at Province Daerah Istimewa Yogyakarta. The research sample is the SMEs that guidance

by Tenaga Penyuluh Lapangan (TPL) Badan Diklat Industri Region IV Yogyakarta as 196 SMEs managers. The analysis is using

Manova Test to find out the age and education level meanwhile the gender variable is investigated by Independent Sample T-Test.

The research evidence found that there is difference of ICT adoption, skill and use based on age and education level. Meantime

there is no difference according to the respondent gender. © 2014 The Authors. Published by Elsevier Ltd.



Keywords: ICT Skill; ICT use; ICT adoption; age; education level; gender



227


Servant Leadership and Human Capital Management:

Case Study in Citibank Indonesia

Andrea

33

*, Donald Crestofel Lantu

b

ab School of Business and Management, Institut Teknologi Bandung, Jl.Ganesha 10, Bandung 40132, Indonesia

Abstract

Servant leadership is one of type leaderships that popular nowadays. Moreover, servant leadership is concept leadership that

suggest leader to serve the employees to improve performance of employee. Human capital Management is systems that support

employees to make sure that employees will increase the performance. Nowadays both of concepts usually implemented in the

company. However, we still do not know that if both of those concepts can be put together in one company or no.

This paper is aimed to explore and examine the implementation of servant leadership and human capital management in business.

The methodology used is qualitative research with case study approach. The data will be collected through two main ways: (1)

biography and other documents analysis of several company in the Indonesia and foreign country such as Unilever, Indonesia Port

Company, Telkom, Bank DBS, IDEO, Netflix, and Blackrock Company. (2) Interviewing and observing one big bank in the

world which is Citibank. Researcher interviews Citibank which located in Indonesia and interviews several important people such

as manager of Citibank, trainer of Citibank, Human Resource of Citibank, and others. From the secondary data which is biography

and other document analysis, research will create a idea concept of human capital and servant leadership. Then, research will

compare the ideal model of servant leadership and human capital management in the Citibank Company. Citibank Company is

multinational company which research thinks that the company has a good system in both leadership and human capital

management.

The results of this research are expected to provide richer knowledge and insights that are related to the implementation of servant

leadership and human capital management in the business, both in the Indonesian and foreign country context. This research may

encourage more qualitative studies on the operationalization of servant leadership model in the workplaces so that could be useful

for practitioners who want to embrace the idea as a meaningful and effective way of leading knowledge workers. Besides, we will

know about the ideal concept of human capital management and servant leadership which may be will be useful for some

company to implant those concept.




Keywords: servant leadership; business; human capital management; ideal



228


Understanding Consumer Decision-Making in Tourism Sector:

Conjoint Analysis

Shimaditya Nuraenia

34

*, Arlavianyssa Pradiva Arru

b, Santi Novani

c

abcSchool of Business and Management, Institut Teknologi Bandung, Jl. Ganesha.10, Bandung 40132, Indonesia

Abstract

Tourism has been key global economic activities and youth is said to be the mind share attainer in which they are the opinion

starter for many movements and trends. This study try to acknowledge the decision making of the youth, how they choose their

tourism destination site using conjoint analysis to evaluate their preference attribute. The result showed that the most youth choose

tourism destination with attributes such as international trip, friendly local people and has local specificity, and the expense in this

trip is focused to enjoy sightseeing




Keywords: decision-making; conjoint analysis; tourism



229


Factors that Influence Student‟s Decision

in Starting-Up Service Franchise Business in Bandung

Shintya Janice Kristandya

35

*, Leo Aldianto

b

School of Business and Management, Institut Teknologi Bandung, Jl. Ganesha 10, Bandung 40132, Indonesia

Abstract

Starting a whole new business often seems to be too risky. There are too many uncertainties pertaining to the amount of capital

required, the sales revenue potentially generated and the right management style required to achieve success. Franchise business,

with an already well-established systems and operating procedures, provides a way for new entrepreneurs to invest in a more

forecastable and profitable future. At the macro level, franchise business is like a vehicle driving the lifestyle and income of a

population in the right direction for long term economics growth. Indonesia, being the one of the largest economies in Asia, offers

excellent market potential for franchising. Having an adequate and proven systems already in place, franchise business is

perceived as an appropriate stepping stone for building sustainable business environment in Indonesia. The allure of starting a

franchise business in mitigating the uncertainties faced by an independent start-up to a large extent, therefore, is worth its weight

in gold.

This research aims to develop the know-how of starting-up effective franchise business to penetrate Indonesian market. The study

hopes to establish a comprehensive guide for the increasing number of aspiring entrepreneurs to boost their confidence in starting

up service franchise business in Bandung. This research uses both qualitative and quantitative research method. Through

quantitative research, the author collected data through several surveys and questionnaires which were distributed among 100

business management students from several universities in Bandung such as Institute Technology Bandung, Parahyangan Catholic

University, Padjajaran University, and Maranatha Christian University. Subsequently, qualitative research was also conducted to

clarify ambiguous situations or discover ideas that may generate potentially-profitable business opportunities. Common data

collection methods used in this qualitative research includes in-depth interview with related franchisor in the service industry.

Researcher performed pre-test analysis to the data collected to ensure the constructs‟ validity and reliability. Data were then

analyzed, computed and presented in various simplified forms (writing, graphics, tables, and numbers) for easy comprehension

and interpretation.

Our conclusion is that with adequate systems of franchise business already in place, it provides a suitable platform for the students

to embark on their entrepreneurial journey. Purchasing a franchise business license is one common option. However, a substantial

amount of attention has to be given to the franchise mechanism model i.e. factors such as: costs, controls, and

termination/renewals of contracts. In the process of selecting the right franchise business, substantiate knowledge and careful

review of the franchise agreement is of critical importance to prevent mislead and confusion. This paper will highlight and discuss

these issues in further details.




Keywords: franchise business; entrepreneur; business model



230


Glass Ceiling, the Prime Driver of Women Entrepreneurship in

Malaysia: A Phenomenological Study of Women Lawyers

Mohmad Yazan Sharif 36

*

Universiti Utara Malaysia, School of Business Management, 06010 Sintok, Kedah, Malaysia

Abstract

The aim of this paper to present some findings on the construct of glass ceiling in organizations and its role in driving women

professionals in Malaysia to venture into business as entrepreneurs. The researcher used the qualitative method known as

„phenomenology” to explore the phenomenon of glass ceiling. The concept was said to be created by Western academics in the

1970s to describe a situation where women professionals found barriers in progressing in the organizational hierarchy in generally

all types of organizations whether firms or governmental organizations. For many women professionals especially in the West, the

lack of promotional opportunities in the corporate world had driven them to involve in businesses. This paper wanted to determine

whether this situation had driven women professionals in Malaysia to venture into business. The samples were women

professionals in the legal firms. Interviews were conducted with 20 women professionals. It was found that 6 professionals had set

up their own legal firms while 14 had set up their business firms not connected to the legal business. In terms of performance,

their firms were observed to be doing well exceeding the three-year gestation period. Generally bankers believe that if a start-up

firm can survive the first three years of its establishment, then it is on its way to become successful in whatever business it is in.

The average length of the businesses that the Malaysian women professionals were involved in was five years. This is an

indication that the said women professionals had successfully transformed themselves into entrepreneurs. It can be said that the

glass ceiling phenomenon has a positive effect in this regard as it had spurred the creation of women entrepreneurs among the

legal professionals.




Keywords: entrepreneurship; gender inequality index; glass ceiling; Malaysia; women entreprenur, women lawyers



231


Searching for Emotional Intelligence Measurement

in Indonesia Context with Innovative Approach

Yuni Ros Banguna, Ken Ratri Iswari

b37

*

abSchool of Business and Management, Institut Teknologi Bandung, Jl. Ganesha 10, Bandung 40132, Indonesia

Abstract

Emotional Intelligence is widely accepted as one of the dominant factors contributing to superior educational and professional

performance. Previous research has determined the contribution of Emotional Intelligence and some factors that influence

Emotional Intelligence. Researchers have introduced measurement tools for Emotional Intelligence. Those that have been

accepted internationally; Multifactor Emotional Intelligence Scale (MSCEIT) of Mayer, Caruso, and Salovey (2000); Emotional

Quotient Inventory (EQ-i) of Bar-On (2002); and Emotional and Social Competence Inventory (ESCI-360) of Goleman, Boyatzis

and HayGroup (1999). These models are generally accepted but constructed for Western empirical setting and written in the

English language.

Moon (2011) suggest that EI cannot be fully or meaningfully understood without consideration of people‟s cultural values and

beliefs due to the existence of cross-cultural differences in EI. Instead of adopting a standard for Emotional Intelligence according

to a western approach, it is important to develop an innovative Emotional Intelligence measurement tool according to the context

of Indonesia because Indonesia is a multi-cultural country in South East Asia with too strong different characteristic when

compared with Western nations. Wang (2009) argues that Eastern and Western cultures have numerous differences because

Eastern and Western people live in different environment and are educated in distinctively different way. As a result, the

characteristics of each culture are shown in its people behaviour, their attitude toward life and love, and their personalities (Wang,

2009).

This research is done by innovatively analyse the current research on Emotional Intelligence in Indonesia and further research

recommendation on innovative Emotional Intelligence measurement for Indonesia context. The purpose of this paper is to learn

about and to compile some research on Emotional Intelligence specific to Indonesia‟s context and its impact on determining

success. The various research components such as literature review, exploratory research and descriptive research have been

implemented. Self Assessment Questionnaires were designed for Indonesian Business School graduates (undergraduates and

master program), leaders of multi-sectors companies, and government employees. At the end, structured equation modelling was

utilized to create a path model.

The findings indicate that in Indonesia, Emotional Intelligence and Competencies have an important role in determining success

and influencing performance. At last, the findings will be a powerful insight to develop innovative Emotional Intelligence

measurement tools in Indonesian version.




Keywords: emotional intelligence; competency; conflict management style; innovative approach



232


Mapping on Entrepreneurship Policy in Indonesia

Isti Raafaldini Mirzantia

38

*, Togar M. Simatupang

b, and Dwi Larso

c


Abstract

Entrepreneurship policy has an influence in creating a conducive environment to support and develop entrepreneurship. A

challenge in developing entrepreneurship policy is that one policy applied in certain areas cannot be applied in other areas

automatically. The number of entrepreneurship policy literature, mostly originates from developed country or few from

developing country. As well as in Indonesia, entrepreneurship policy has not been explored yet. The first attempt of this research

is to define the mapping of entrepreneurship policy in Indonesia. The current research addresses research questions, namely the

objectives of entrepreneurship policy; categories of entrepreneurship policy in different units of analysis; and entrepreneurship

policy programs. Research method is using a qualitative descriptive research. The process includes policy stages, from agenda

setting, formulation, and implementation stage of entrepreneurship policy; while the analysis is conducted based on the principles

of categorization of entrepreneurship policy content. This study contributes to reveal the implementation of entrepreneurship

policy in Indonesia; enrich entrepreneurship policy literature; and suggest recommendation on a more customized and structural

entrepreneurship policy for promoting entrepreneurship.




Keywords: entrepreneurship; entrepreneurship policy; Indonesia; policy mapping; government policy



233


Analysis of Cross Cultural Management Course Pedagogy Methods

in Developing Students‟ Cultural Intelligence

Nur Arief Rahmatsyah Putrantoa

39

*, Aurik Gustomo

b, Achmad Ghazali

c

abc School of Business and Management, Institut Teknologi Bandung, Jl. Ganesha 10, Bandung 40132, Indonesia

Abstract

Preparing students to able to face the globalization when they enter business world is one of business school responsibility. One

way to do that is by increasing their cultural intelligence (CQ) so they can adapt and perform effectively in multi cultural

environment. This experimental research tried to find how a business school course can improve students‟ CQ. This research was

done by measuring CQ of students who attend cross-cultural management course at the beginning and at the end of the course. In

this course, the students got four treatments to improve their CQ (lecturing, reading literature, sharing session, and field trip).

From those four treatments, field trip is the most effective method to learn and understanding about different culture based on

students‟ perception where lecturing is the least effective. Despite that, the combination of these four method in teaching cross-

culture result in the improvement of students‟ CQ and all of its components.




Keywords: cultural Intelligence; CQ; students; cross-cultural



234


Proposal to Improve Employee Engagement in PT Maju Sentosa

by AON Hewitt Model and Mercer Model

Stephaniea

40

*, Aurik Gustomo

b

abSchool of Business and Management, Institut Teknologi Bandung, Jl.Ganesha 10, Bandung 40132, Indonesia

Abstract

Preparing the organization‟s overall performance to compete and reach its future goal in turbulence business environment is one

of the management‟s responsibility. The prior key to do is by improving the employee engagement within the organization, as we

know that employee is the most crucial capital that can props the sustainability of an organization. This research tried to improve

the employee engagement in PT Maju Sentosa. This research was done by assessing current condition about employee

engagement level in PT Maju Sentosa, analyzing factors that affecting employee engagement in PT Maju Sentosa, and also

providing conclusion and gradual recommendation in order to improve future employee engagement that leads to better

performance of PT Maju Sentosa. From the research, it is known that the current employee engagement level of PT Maju Sentosa

is in acceptable and need to be improved level, with average score 3.36 out of 5, and the three significant factors that affecting

employee engagement in PT Maju Sentosa are welfare, career and social support, and work motivation.




Keywords: employee engagement; AON hewitt model; mercer model; factor analysis; multiple linear regression



235


Civil Servants‟ Competence in Indonesia:

Suggestions for Future Research in the Context of Business

Andika Putra Pratamaa

41

*, Achmad Ghazali

b, Nur Arief R. Putranto

c, Ken Ratri Iswari

d,

Anggara Wisesae, Hary Febriansyah

f

abcdefSchool of Business and Management, Institut Teknologi Bandung, Jl. Ganesha 10, Bandung, 40132, Indonesia

Abstract

Driven by the necessity for improving the quality of Indonesia‟s human resources and bureaucratic reform as laid out in the

Master plan for Acceleration and Expansion of Indonesia Economic Development (known as MP3EI), this article aims to

highlight the importance understanding Indonesian civil servants‟ competence, argued as a forgotten enabler for the success of

business. As our selective literature review has shown, research on competence of the civil servants, published in major journals,

has been scant. Our main expected contribution is to make readers aware of the essence of being engaged in the issue of civil

servants‟ competence and offer several potential research directions that researchers may want to pursue.




Keywords: competence; competency; Indonesia; economic development; literature review, research suggestions; public administration;

organizational development



236


Creating Better Education System, Building Stronger Human

Capital: A Creative Industries Perspective

Sonny Rustiadia,b

42

*

aInstitute for Creative & Cultural Entrepreneurship, Goldsmiths University of London. UK. bSchool of Business and Management, Institut Teknologi Bandung, Jl. Ganesha 10, Bandung 40132, Indonesia

Abstract

Education is seen all over the world as the key to enable individuals and nations to meet rapid economic and social changes. This

paper will discuss the findings from the research field work conducted regarding the development of creative industries in the city

of Bandung, particularly regarding issues in education system. Using a mix of research tools, which mainly consist of desk study

and interviews, the research selected sixteen industry practitioners to conduct the interview. The research then explore three

important school of thoughts regarding education system as a way to explore how the same issue found is addressed in different

context. We look at other contexts to learn their experiences and apply whenever appropriate within the Bandung context. On a

practical level the research is also expected to contribute ideas and recommendations to various stakeholders, in particular the

local government to develop strategies in improving and developing the education system.




Keywords: education, human capital, creative industries



237


The Development of Entrepreneurship in Creative Industries

with Reference to Bandung as a Creative City

Salfitrie Roos Maryunania, Isti Raafaldini Mirzanti

b43

*


Abstract

Creative industries have been growing and developing in many parts of the world, especially in developed countries. The

development of creative industries in certain countries more or is less connected to their own cities. The term creative industries

had just been known in Indonesia in the year 2007, when the Ministry of Trade of Indonesia published the Creative Industries

Study of Indonesia. Since then, the area of the creative industries has started to be looked at by not only the government, but also

by academics and practitioners.

As the capital of West Java Province, Bandung is said to be a creative city, and becoming a pilot project that later will become a

model for creative industries in Indonesia. Many theories suggested that Bandung had all the potentials. Previous research

indicated that most of the creative industry businesses in Bandung were categorized as small and medium enterprises, also some

of them were less developed, so the industrial growth in Bandung on the medium and even large scale was not significantly seen.

Considering that, as a country, in order to boost the economic condition, Indonesia needs to increase the number of entrepreneurs

at medium-scale at the very least. Referring to the challenge stated above, we wished to focus this paper on two general questions,

namely on how to develop entrepreneurship in the creative industries in Bandung and how local characters (e.g. quality of life and

the education system) of Bandung will impact the development?




Keywords: creative industry; Bandung; entrepreneurship development



238


Stakeholders‟ Collaboration on Innovation in Food Industry

Mustafa Bombaywalaa, Andra Riandita

b44

*

aFaculty of Engineering, Lund University, P.O. Box 118, SE-221 00 Lund, Sweden bSchool of Business and Management, Institut Teknologi Bandung, Jl. Ganesha 10, Bandung 40132, Indonesia

Abstract

In the dynamic economic environment where knowledge is vastly distributed companies can no longer rely on their own research

and are pushed to utilize outside sources to sustain growth. At the same time food industry involves large number of horizontal

and vertical relationships, the very dynamic nature of these relationships play role in innovation. The primary purpose of the

research is to study interactions and relations between stakeholders in food industry, particularly in Sweden, to gain an

understanding of the driving forces for development in food processing and packaging technologies. Also gain insight into the

innovation process at major Packaging solution provider (PSP) and Process equipment manufacturers (PEM), their interaction,

collaboration and information sharing with food manufacturing companies (FMC). Study shows the views of industry experts

strongly reflect that the role of suppliers of processing and packaging in food industry is “contractual” in nature, whereas

ingredient suppliers tend to be more mature partners in the innovation process. The innovation process at major food machinery

and packaging companies corresponds well to the „food-machinery framework‟ of open innovation (Bigliardi et al., 2010). It is

apparent that food industry is taking steps to integrate external knowledge sources in the innovation process, still suppliers

continues to play limited strategic role in innovation. This study shows that some barriers to collaboration were identified and they

can be grouped into two types: technical and perspective. Technical factors constitute lack of technical expertise amongst food

manufacturer, requirement for legal framework and difficulty in predicting future needs.




Keywords: stakeholders interaction; collaboration; innovation; food industry



239


Applying Interactive Planning on Public Service Leadership in The

Directorate General of Immigration Indonesia

M. Iman Santoso 45

*

Faculty of Law, University of Krisnadwipayana, Jl. Raya Jatiwaringin, Pondok Gede, Jakarta 13077 Indonesia

Abstract

Nowadays, the public sector is being under pressure to improve the service and be able to work with other sectors more

effectively and efficiently. This is due to the high expectations of the people to obtain services from public sector organizations.

As the result, the leaders of public sector organizations are required to carry out bigger duties and responsibilities. It includes the

implementation of Indonesian immigration functions being performed by The Directorate General of Immigration, Ministry of

Justice and Human Rights of the Republic of Indonesia. Immigration in Indonesia itself has a unique character, because in terms

of its geographical condition, Indonesia is a the largest archipelagic state in the world for its large width of seas and numbers of

islands, which affects the expansion of the immigration service. The main question is what kind of leadership that is needed to

control the high dynamics of immigration in Indonesia? This study aims to describe the interactive planning (Ackoff, 2001, Asmui

and Fitriati 2013), which includes the explanations of what things that are needed to be applied in the case of The Directorate

General of Immigration. The results showed that the leadership in the General Directorate of Immigration Republic of Indonesia is

not tied to a position that has formal authority, but rather to the collaboration between management and staff of the organization

(Morse & Buss, 2008). The leadership characteristic needed is the leadership that has mission, create a vision, trust employees,

keep their heads in a crisis, encourage risk taking, has the expertise, know what is essential, become listener, teachers and

mentors. The leadership characteristics determine how the planning is able to answer challenges and overcome various problems

of immigration system in The Directorate General of Immigration. To support the success of interactive planning in imigration

services in Directorate General of Immigration, participative principle, continuity principle, and holistic principle are required.

The recommendations for Directorate General of Immigration are that government needs to conduct further research in order to do

mapping and planning scenario related to the role and position in Directorate General of Immigration, Ministry of Justice and

Human Rights Republic of Indonesia in facing globalization as well as ASEAN Economic Community 2015.



Managements (SBM), InstitutTeknologi Bandung (ITB).

Keywords: public service leadership; servant leadership; interactive planning; Directorate General of Immigration



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