Using System Dynamics Approach to Support Sustainable Growth Number of Small and Medium Enterprises in Indonesia: Some Policies Consideration

Subroto, Athor

doi:10.2139/ssrn.1992760

Cited by 3 publications

(3 citation statements)

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“…Rationally, SMEs employ local communities and migrants, thereby supporting superior economic growth (GDP) [91,92]. In turn, economic calm will increase, which is reflected in per capita income [93,94].…”

Section: Literature Reviewmentioning

confidence: 99%

Determinants on Small Scale Business: An Empirical Evidence from Indonesia

Wijaya¹,

Jiuhardi²,

Za³

et al. 2023

IJSDP

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In 1997-1998, the resilience of small and medium enterprises (SMEs) was tested when the monetary recession paralysed Indonesia. At that time, only SMEs were detected as shining and the most prominent from other sectors. This study is oriented to investigate the effect of the quality of human resources (HR), capital, and business length on turnover, labor cost, market share, and profit. The study design is offline survey, where primary data is collected from a sample that invites 285 respondents in three zones of Indonesia. Sources of information focused on and addressed to three SME scales covering the fields of trade, industry, and services. Then, the data is processed, filtered, and set using the structural equation model (SEM). The findings confirm that the HR quality and capital drives an increase in turnover, labor cost, market share, and profit. At one point, the business length actually only stimulated turnover, labor cost, and market share, but did not generate significant profits. But, significant of labor cost, market share, and profit followed the increase in turnover. Similarly, between labor cost to market share and profit, where the results are significant. The market share affects profit. It is important for a country to realize that disruptions in financial access, HR capabilities, and experience attributes trigger the inhibition of domestic market performance. These three alternatives give birth to strong SMEs.

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Section: Literature Reviewmentioning

confidence: 99%

Determinants on Small Scale Business: An Empirical Evidence from Indonesia

Wijaya¹,

Jiuhardi²,

Za³

et al. 2023

IJSDP

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“…In the first perspective, most of the previous studies have been carried out to assess the impact of COVID-19 on SMEs using descriptive statistics (Abu Hatab et al, 2021;Bartik et al, 2020;Humphries et al, 2020;Lu et al, 2020;Lutfi et al, 2020;Ratnasingam et al, 2020;Shafi et al, 2020;Dai et al, 2021) and using multi-attribute value theory (MAVT) (Susanty et al, 2022). In the second perspective, previous studies have been carried out to identify variable linkage in dynamic systems that explain the growth of SMEs (Farouk and Saleh, 2011), modeled the supply chain on a SMEs apparel company (Lidia et al, 2012), supported the sustainable growth number of SMEs in Indonesia (Subroto, 2012), analyzed the business performance (Bianchi et al, 2013;Sek, 2015), increased the value re-creation (Herman, 2016), evaluated the trade and production policy (Haghighi-Rad et al, 2019), modeled the simulation for a manager of SMEs dealing crisis dynamics (Vojtko et al, 2019), increased market share (Sidola et al, 2012;Suryani et al, 2022) and increased the innovation (Clement et al, 2022). It seems that this study will enrich the previous study on the impact of the pandemic on SMEs and the dynamic system modeling on SMEs.…”

Section: Measuringmentioning

confidence: 99%

Measuring the performance of SMEs during the pandemic situation using system dynamic

Susanty

Puspitasari

Fachreza

2023

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PurposeThis study aims to create a system dynamics simulation model to forecast the performance of small and medium-sized enterprises (SMEs) if some decision-making is executed to reduce the negative of the coronavirus disease 2019 (COVID-19) pandemic. In particular, this study will focus on SMEs that belong to the furniture industry because the furniture industry is one of the leading industries in Indonesia.Design/methodology/approachThe study develops a system dynamics-based model by using three subsystems, i.e. the “production subsystem,” “demand and revenue subsystem” and “raw material (or wood supply) subsystem.”FindingsThe best scenario is the third scenario which increases the capacity to the normal situation and government subsidy during and after the pandemic. This scenario gives the best performance for industry revenue and gross domestic product (GDP). However, for the government, the most significant expenditure occurs in the third scenario. This seems a trade-off for the government whether to save the wooden-based furniture industry by encouraging the industry to continue operating during the pandemic accompanied by high subsidies or limiting the activities of the wooden-based furniture industry to prevent the spread of COVID-19 by providing low subsidies.Research limitations/implicationsFirst, this study does not try to combine the system dynamics (SD) methodology with the other method or use a multi-methodology since SD has several limitations and the other method may have several advantages compared to SD. Second, the models used in this study do not consider the decline in forest area and quality. Third, the demand for wooden-based furniture is obtained from historical data on domestic and foreign sales and fourth, the model does not include the government budget as a constraint to make any subsidy to help the SMEs.Practical implicationsThis study provides essential insights into implementing the policies in the world pandemic situation when SMEs face lockdown policy.Social implicationsThe study revealed that relevant policy scenarios could be built after simulating and analyzing each scenario's effect on SMEs' performance during the pandemic.Originality/valueThis study will enrich the previous study on the impact of the pandemic on SMEs and the dynamic system modeling on SMEs. The previous study discussed the pandemic's impact on SME performance and the impact's analysis in isolation from the dynamic nature of SME owners' decisions or government policy. In this study, the impact generated from the pandemic situation could be different depending on the decision and policies taken by managers from SMEs and the government.

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“…Micro-, small-and medium-sized enterprises (MSMEs) are drivers of economic growth in many countries [1]. MSMEs have a very important role in economic development as a significant contributor to gross domestic production (GDP) and job creation [2]. Because the existence of MSMEs has a positive influence on development, the sustainability of MSMEs needs to be maintained, especially by the government.…”

Section: Introductionmentioning

confidence: 99%

System Dynamics Approach in Supporting The Achievement of The Sustainable Development on MSMEs: A Collection of Case Studies

Kurniasih¹,

Abas²,

Asmai³

et al. 2023

IJACSA

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Sustainable development in MSMEs is very important to encourage economic growth, improve the welfare of people, and ensure environmental sustainability. However, achieving sustainability in the MSME sector faces many challenges due to the complex interdependencies and dynamic interactions among various factors. The system dynamics approach makes it possible to model and simulate dynamic feedback loops, time delays, and nonlinear relationships between these factors. This paper provides an overview of the system dynamics approach and its suitability to address the complexities inherent in the MSME sector in its application to sustainable development. It explores the issues faced by MSMEs in achieving sustainable development and how the system dynamics approach models and analyzes the behavior of these MSMEs. These issues cover the dimensions of product development, technology and ICT inclusion, supply chain, business development, financial resources, and organizational support. This study was conducted on several case studies from various industries, namely the steel industry, agro-industry, craft industry, tourism industry, plastic molding, manufacturing, cosmetics, and digital companies; who come from various countries. From this study it was concluded that the system dynamics approach has significant potential to support the achievement of sustainable development in MSMEs, because it allows MSMEs to be able to effectively model and simulate the behavior of various factors that affect their operations, such as resource allocation, environmental impacts, and social considerations; proactively addressing sustainability challenges, adapting to changing market conditions, and contributing to broader socio-economic and environmental objectives.

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Using System Dynamics Approach to Support Sustainable Growth Number of Small and Medium Enterprises in Indonesia: Some Policies Consideration

Cited by 3 publications

References 10 publications

Determinants on Small Scale Business: An Empirical Evidence from Indonesia

Determinants on Small Scale Business: An Empirical Evidence from Indonesia

Measuring the performance of SMEs during the pandemic situation using system dynamic

System Dynamics Approach in Supporting The Achievement of The Sustainable Development on MSMEs: A Collection of Case Studies

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