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The Models of Developing Networking Strategies to Increase the UMKM Degree of Competitiveness

Arif Dwi Hartanto Faculty of Economics and Business Brawijaya Univerity arief.pelukis@yahoo.com Ermita Yusida Faculty of Economics and Business Brawijaya Univerity Yusi_chic@yahoo.co.id

ABSTRACT

One of issues in the world of micro, small and medium enterprises (Usaha Mikro, Kecil dan MenengahUMKM) in Indonesia is how to create certain networking characteristics that promote competitiveness, considering the fact that it is the ultimate key for surviving in tighter business competition in recent days. Therefore, the present study is aimed at estimating the impact of networkings and exploring networking strategies in relation with the income levels as the main determiner of the UMKM degree of competitiveness. The method employed in this study to estimate the impact of networking activities towards the income levels through gross margin is the Treatment Effect. The result from depth interviews with 100 UMKMs shows that those engaged in a mutual networking managed to earn higher income. Moreover, those with higher level of capital and raw materials accessibility are not interested in joining any networkings, while those with higher market accessibility tend to participate in a certain networking. The results of the data analysis also tend to clarify the weakness of the neoclassic perspective which viewed companies as an exclusive unit of analysis, neglecting the aspects of entrepreneurship as a collective enterprise. This, in conclusion, proves that the empirical evidence can be a proliferation for the models of policy formulation and development of UMKMs. Key words: UMKM degree of competitiveness, networking strategies, UMKM income levels, Treatment Effect Model

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