Small And Medium Enterprise Dynamics In Indonesia
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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Volume (Year): 37 (2001)
Issue (Month): 3 ()
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References listed on IDEAS
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- 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.
- 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.
- Lisa Cameron, 1999. "Survey of Recent Developments," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 35(1), pages 3-41.
- 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.
- 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.
- weijland, Hermine, 1999. "Microenterprise Clusters in Rural Indonesia: Industrial Seedbed and Policy Target," World Development, Elsevier, vol. 27(9), pages 1515-1530, September.
- 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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