SME’s development indicators and organizational capability

Abstract

Small and medium enterprises (SMEs) play a crucial role in the economyof Cigondewah, Bandung, West Java, Indonesia. The issues that small-scale garment business owners face include employment, location, marketing and technology. Their main concern is, however, organizational capability development. This research used descriptive explorative research, based on the use of qualitative and inductive approaches. It focused on apparel small businesses and pertinent stakeholder groups, at the Cigondewah center, in Bandung. Research participants were selected based on the essential role they play in organizational capability development. Data collection involved interactive interviews, participatory observations and the examination of related documents. After separating endogenous capability-development indicators from exogenous influences, the results show that apparel small businesses at the Cigondewah center do not develop the professional business skills necessary for their survival and prosperity. The theoretical implications relate to organizational capability-building theory, including both its internal and its external features. The practical implications show opportunities for apparel smallscale business enterprises to enhance their entrepreneurial competence, and the vital role that governance plays in facilitating firms' self-development capability.

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