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Recent evidence of the development of micro, small and medium enterprises in Indonesia

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  • Tulus Tambunan

    (University of Trisakti)

Abstract

This paper examines the development of micro, small and medium enterprises (MSMEs) in Indonesia. It has three research issues, namely the role of MSMEs, their constraints, and the importance of MSMEs for the creation of business opportunities for women. More specifically, the study aims to answer the following research questions. First, how important are MSMEs in Indonesia? Second, what are their main constraints? Third, how important are they, especially micro and small enterprises (MSEs), for the creation of business opportunities for women? Fourth, is the growth of MSEs a sign of increased entrepreneurial spirit or a reflection of poverty? This study adopted descriptive analysis using secondary data. It shows that MSMEs in Indonesia are dominated by MSEs, and accounted for almost 100% of all existing firms but only contributed between 58 to 61% of gross domestic product (GDP). About 42.84% of MSEs are owned by women, although the ratio of female to male entrepreneurs in MSEs varies by province. Poverty seems to be the main force behind the growth of MSEs. This study ends with some policy recommendations that the government should: (i) conduct trainings that focus on online marketing, entrepreneurship, management, and improving the quality of product and business efficiency; (ii) provide alternative funding facilities with low interest rates and non-burdensome requirements; and (iii) provide assistance directly in the production site for new entrepreneurs in their first years of running businesses. In addition, all gender discrimination treatments that have been burdensome for women to run own businesses must be eliminated. This study has, however, several limitations, especially with respect to the third and fourth research questions. Secondary data used does not have information about the main/initial motivation of MSME owners to run their own business and their socio-economic profiles.

Suggested Citation

  • Tulus Tambunan, 2019. "Recent evidence of the development of micro, small and medium enterprises in Indonesia," Journal of Global Entrepreneurship Research, Springer;UNESCO Chair in Entrepreneurship, vol. 9(1), pages 1-15, December.
    • Handle: RePEc:spr:jglont:v:9:y:2019:i:1:d:10.1186_s40497-018-0140-4
    DOI: 10.1186/s40497-018-0140-4
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    References listed on IDEAS

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    1. Juhi Raghuvanshi & Rajat Agrawal & P. K. Ghosh, 2017. "Analysis of Barriers to Women Entrepreneurship: The DEMATEL Approach," Journal of Entrepreneurship and Innovation in Emerging Economies, Entrepreneurship Development Institute of India, vol. 26(2), pages 220-238, September.
    2. Manning,Chris, 1998. "Indonesian Labour in Transition," Cambridge Books, Cambridge University Press, number 9780521594127.
    3. Aderemi Ayinla Alarape, 2007. "Entrepreneurship programs, operational efficiency and growth of small businesses," Journal of Enterprising Communities: People and Places in the Global Economy, Emerald Group Publishing Limited, vol. 1(3), pages 222-239, August.
    4. repec:idb:brikps:publication-detail,7101.html?id=23575 is not listed on IDEAS
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