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Internationalisation of Small Medium Sized Enterprises in Indonesia: Entrepreneur Human and Social Capital

  • Diana Sari

    ()

    (Dept. of Management Monash University)

  • Quamrul Alam

    ()

    (Dept. of Management Monash University)

  • Nicholas Beaumont

    ()

    (Dept. of Management Monash University)

Registered author(s):

    Small and Medium Enterprises (SMEs) have played an important role both in developed and developing economies. The research on internationalisation has mainly focused on large companies, especially Multinational Companies (MNCs) and only limited studies have been conducted in internationalisation of SMEs in developing countries. In recent years, the Indonesian government has acknowledged SMEs as a key source of domestic income growth and employment creation. While SMEs have been recognised as a source of domestic income through export activity, Indonesian SMEs only play a small role compared to Large Enterprises (LEs). Indonesian SME exporters represent only 21% of non-oil and gas exports. Policies and programs to assist SMEs to internationalise must be guided by clear understanding of the dynamic nature of SMEs. This paper proposes factors that may influence Indonesian SMEs to internationalise, namely, entrepreneur human and social capital. The study will use qualitative as well as quantitative data analysis. The sample will be drawn from owner-manager manufacturing SMEs (independent, with fewer than 100 employees, and managed by owners) from selected provinces in Indonesia based on a governmental database. It will cover industries such as the garment, furniture, handicraft, leather products and footwear industries. NVivo will be used to analyse the qualitative data while statistical software will be utilised to analyse the quantitative data. This paper argues that financial assistance will be useless for SMEs without an entrepreneurial spirit.

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    File URL: http://lp3e.fe.unpad.ac.id/wpaman/200801.pdf
    File Function: First version, 2008
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    Paper provided by Department of Management and Business, Padjadjaran University in its series Working Papers in Business, Management and Finance with number 200801.

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    Length: 13 pages
    Date of creation: Jan 2008
    Date of revision: Jan 2008
    Handle: RePEc:unp:wpaman:200801
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    Web page: http://lm.fe.unpad.ac.id
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    1. Jan Wengel & Edgard Rodriguez, 2006. "SME Export Performance in Indonesia After the Crisis," Small Business Economics, Springer, vol. 26(1), pages 25-37, 02.
    2. Berry, Albert & Rodriguez, Edgard & Sandee, Henry, 2002. " Firm and Group Dynamics in the Small and Medium Enterprise Sector in Indonesia," Small Business Economics, Springer, vol. 18(1-3), pages 141-61, Feb.- May.
    3. Mitja Ruzzier & Bostjan Antoncic & Robert D. Hisrich, 2007. "The internationalization of SMEs: developing and testing a multi-dimensional measure on Slovenian firms," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 19(2), pages 161-183, March.
    4. Mike Wright & Paul Westhead & Deniz Ucbasaran, 2007. "Internationalization of Small and Medium-sized Enterprises (SMEs) and International Entrepreneurship: A Critique and Policy Implications," Regional Studies, Taylor & Francis Journals, vol. 41(7), pages 1013-1030.
    5. Stan D Reid, 1981. "The Decision-Maker and Export Entry and Expansion," Journal of International Business Studies, Palgrave Macmillan, vol. 12(2), pages 101-112, June.
    6. Finn Wiedersheim-Paul & Hans C Olson & Lawrence S Welch, 1978. "Pre-Export Activity: The First step in Internationalization," Journal of International Business Studies, Palgrave Macmillan, vol. 9(1), pages 47-58, March.
    7. Yu-Ching Chiao & Kuo-Pin Yang & Chwo-Ming Yu, 2006. "Performance, Internationalization, and Firm-specific Advantages of SMEs in a Newly-Industrialized Economy," Small Business Economics, Springer, vol. 26(5), pages 475-492, 06.
    8. Cavusgil, S. Tamer & Naor, Jacob, 1987. "Firm and management characteristics as discriminators of export marketing activity," Journal of Business Research, Elsevier, vol. 15(3), pages 221-235, June.
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