The Development of Small and Medium Entreprises Clusters in Indonesia

Abstract

Small and Medium Enterprises (SMEs) in Indonesia are very important not only for employment creation, but also as important sources of economic growth and foreign currencies generation through exports. Since the early 1980s, the Indonesian government has adopted SME development policy through a clustering approach. This paper reviews the existing empirical studies on development of SME clusters in Indonesia. This paper deals with two main questions. First, what are the critical success factors of development of an SME cluster. Second to what extent this policy has contributed to the dynamic of SME clusters in the country. The paper argues that in many cases, the development policy has not been so successful. In essence, most failures can be attributed to the fact that one or more critical factors for successful SME cluster development were either not existing or not addressed correctly. Neglecting cluster linkage to markets is one reason of the failure. Prerequisite for successful cluster development is the cluster's potential to access to growing market, either domestic or abroad.

The Role of Export Clusters in Export Performance of SMEs: The Case of Iranian Energy Industry

“…One of these actions is the formation of export clusters. Export clusters can have a positive contribution to the growth of export in companies, especially the SMEs (Tambunan and Hendrawan, 2004).…”

“…There are certain reasons that cause deterrence of SMEs to entre international markets; including difficulties in finding international partners (Masurel, 2001), meeting foreign regulations and standards, achieving economies of scale and division of labor (Tambunan and Hendrawan, 2004), and finally; lack of international knowledge and managerial experience, capability (Masurel, 2001) and required financing knowledge (UNIDO, 2003).…”

“… Export clusters should maintain a proper and long term relationship with their internal network by having a well-developed link between members in various areas. As well as their external network such as governmental, technical, educational and financial service providers (Tambunan and Hendrawan, 2004).…”

The Development of the Cracker MSME Cluster in Garut Regency, Indonesia

“…Various views on cluster development in small businesses are still being debated (Tambunan & Supratikno, 2004). Many analyzes related to general factors and their influence on cluster development have been carried out, but studies have not provided a definite model for implementing cluster success (Shakib, 2020).…”

“…Like in other developing countries, the development of MSME clusters in Indonesia faces various obstacles. Tambunan & Supratikno (2004) states that the failure to develop MSME clusters in Indonesia is due to the nonoptimal handling of one or more critical success factors of cluster development. One or more factors are essential for the successful development of the MSME cluster.…”