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Strengthening Entrepreneurial Global Competitiveness by Utilizing Local Culture

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  • Erman A Sumirat

    ()
    (Research Division, Laboratory of Management FE UNPAD)

  • Sunu Widianto

    ()
    (Research Division, Laboratory of Management FE UNPAD)

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    Abstract

    In the dynamic world where entrepreneurs compete internationally due to globalization, business decisions are very hard to execute for local entrepreneurs especially when determining sales price for the products. In Indonesia, Asean China Free Trade Agreement (ACFTA), the free trade agreement between Asean countries and China also carries some difficulties to local entrepreneurs especially in small and medium enterprises (SME) as local SMEs still have lack of competitiveness compare with that of Chinese products. Hence, most of the customers have shifted their preferences to Chinese products simply because of its lower price. This phenomenon has impacted local entrepreneurs negatively in terms of competitiveness and losing customer loyalty. To strengthen local entrepreneurs’ competitiveness, one of the alternatives are promoting and implementing creative economy which more utilized cultural aspects which bring clear positioning to the local products. This study examines why creative industries as proposed by UNCTAD Framework (2008) is relevant to be implemented in Indonesia. Besides providing literature studies about creative economy, this study is also presenting the case study of how entrepreneurs who exploit local culture can have significant benefits especially in fashion, art and musical businesses. Bandung, the capitol of West Java as one of major cities in Indonesia is selected as Bandung has been appointed as a creative city pilot project by British Council (2007) as many Indonesian creative entrepreneurs are coming from Bandung. Therefore, the concept of creative industries and creative economy should be transferred and promoted to local entrepreneurs in order to enhance global competitiveness Four Actors-Four Elements model is developed in this study as a framework to successfully implement creative economy to the locals. Four Actors means the involvement of government as a regulator; communities as participants and customers; companies including corporate social responsibility and community development programs as well as creditors or investors through venture capital for micro finance and SME. Also the model has covered four core elements: firstly, culture which must be properly exploited to make an uniqueness in producing goods and services including giving transfer of knowledge to customers; secondly, place where should be set up strategically to attract customers to come; thirdly, economy factor like customers’ buying power and consumer behavior which creates demand as well as entrepreneurs capacity that develops supply; lastly, branding promotion are also important so customers have brand awareness regarding the local products/services. The introduction of four actors-four core elements model is expected to make creative economy works successfully in Indonesia. In the long run, it will strengthen global competitiveness by utilizing local culture and it will make a readiness in head to head competition with Chinese products.

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    File URL: http://lp3e.fe.unpad.ac.id/wpaman/201006.pdf
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    Bibliographic Info

    Paper provided by Department of Management and Business, Padjadjaran University in its series Working Papers in Business, Management and Finance with number 201006.

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    Length: 32 pages
    Date of creation: Jun 2010
    Date of revision: Jun 2010
    Handle: RePEc:unp:wpaman:201006

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    Keywords: creative industry; SME; competitiveness; local entrepreneurs;

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