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Small And Medium Enterprise Dynamics In Indonesia

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  • Albert Berry
  • Edgard Rodriguez
  • Henry Sandee
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    Abstract

    This paper discusses the development of small and medium enterprises (SMEs) in Indonesia before and during the crisis. It argues that SME productivity has risen substantially, at rates not far from those of larger firms. Case studies indicate that various mechanisms are at work, such as technology diffusion through foreign buyers and subcontracting. The prevalence of SME clusters suggests that they benefit small and medium enterprise development. SMEs are found to have been weathering the crisis better than larger companies, though many have been hit hard too. Being less reliant on formal markets and formal credit, SMEs are able to respond more quickly and flexibly than their larger counterparts to sudden shocks. The paper argues that, rather than providing direct assistance to smaller firms, government should concentrate on creating a business environment conducive to small and medium business growth, and promoting provision of business development services by the private sector.

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    Bibliographic Info

    Article provided by Taylor & Francis Journals in its journal Bulletin of Indonesian Economic Studies.

    Volume (Year): 37 (2001)
    Issue (Month): 3 ()
    Pages: 363-384

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    Handle: RePEc:taf:bindes:v:37:y:2001:i:3:p:363-384

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    References

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    1. Lisa Cameron, 1999. "Survey of Recent Developments," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 35(1), pages 3-41.
    2. weijland, Hermine, 1999. "Microenterprise Clusters in Rural Indonesia: Industrial Seedbed and Policy Target," World Development, Elsevier, vol. 27(9), pages 1515-1530, September.
    3. Berry, Albert & Escandon, Jose, 1994. "Colombia's small and medium-size exporters and their support systems," Policy Research Working Paper Series 1401, The World Bank.
    4. H. Sandee & P. Rietveld, 2001. "Upgrading Traditional Technologies in Small-Scale Industry Clusters: Collaboration and Innovation Adoption in Indonesia," Journal of Development Studies, Taylor & Francis Journals, vol. 37(4), pages 150-172.
    5. Anna Wetterberg & Sudarno Sumarto & Lant Pritchett, 1999. "A National Snapshot of the Social Impact of Indonesia's Crisis," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 35(3), pages 145-152.
    6. Yuri Sato, 2000. "Linkage Formation by Small Firms: The Case of A Rural Cluster in Indonesia," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 36(1), pages 137-166.
    7. Sandee, H., 1994. "Promoting small scale and cottage industries in Indonesia : an impact analysis for central Java," Serie Research Memoranda 0010, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
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    Cited by:
    1. Haryo Aswicahyono & Dionisius Narjoko & Hal Hill, 2008. "Industrialization after a Deep Economic Crisis: Indonesia," Departmental Working Papers 2008-18, The Australian National University, Arndt-Corden Department of Economics.
    2. Varum, Celeste Amorim & Rocha, Vera Catarina Barros, 2011. "Do foreign and domestic firms behave any different during economic slowdowns?," International Business Review, Elsevier, vol. 20(1), pages 48-59, February.
    3. Vial, Virginie & Hanoteau, Julien, 2010. "Corruption, Manufacturing Plant Growth, and the Asian Paradox: Indonesian Evidence," World Development, Elsevier, vol. 38(5), pages 693-705, May.
    4. Aloysius Gunadi, Brata, 2007. "Spatial Concentration of the Informal Small and Cottage Industry in Indonesia," MPRA Paper 12622, University Library of Munich, Germany, revised 2008.
    5. Tambunan, Tulus, 2008. "Development of Rural Manufacturing SME Clusters in a Developing Country: The Indonesian Case," Journal of Rural Development/Nongchon-Gyeongje, Korea Rural Economic Institute, vol. 31(2), May.
    6. Irawati, DESSY, 2007. "Strengthening Cluster Building in Developing Country alongside the Triple Helix: Challenge for Indonesian Clusters - A Case Study of the Java Region," MPRA Paper 5831, University Library of Munich, Germany, revised 18 Sep 2007.

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