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A New Dynamic of Innovation System Based on Local Competitiveness in

Emerging Region in Indonesia: The Case of Cimahi City
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Proceedings of
THE 6TH
INDONESIA
INTERNATIONAL
CONFERENCE ON
INNOVATION,
ENTREPRENEURSHIP, &
SMALL BUSINESS
IICIES 2014
August 12-14, 2014
The Patra Bali Resort & Villas, Bali, Indonesia
6th Edition
Accelerating Techno-Creative Innovation and

Global Collaboration toward Sustainable Entrepreneurial Ecosystem
Editors
Dwi Larso, Donald Crestofel Lantu, Wawan Dhewanto
Organized by
ra
Proceedings of
THE 6TH
INDONESIA
INTERNATIONAL
CONFERENCE ON
INNOVATION,
ENTREPRENEURSHIP, &
SMALL BUSINESS
IICIES 2014
August 12-14, 2014
The Patra Bali Resort & Villas, Bali, Indonesia
6th Edition
Accelerating Techno-Creative Innovation and

Global Collaboration toward Sustainable Entrepreneurial Ecosystem
Editors
Dwi Larso, Donald Crestofel Lantu, Wawan Dhewanto
Organized by
Proceeding of the 6th Indonesia International Conference on Innovation, Entrepreneurship, and
Small Business “Accelerating Techno-Creative Innovation and Global Collaboration toward
Sustainable Entrepreneurial Ecosystem”
Oleh: Center for Innovation, Entrepreneurship, & Leadership, School of Business and
Management ITB.
Hak Cipta © 2015 CIEL SBM ITB
Penerbit: CIEL SBM ITB

Gedung Sekolah Bisnis dan Manajemen
Institut Teknologi Bandung
Jl. Ganesa No. 10, Bandung 40132
Telp. 022-2531923 ext.318
Fax.022-2504249
Desain Sampul: Dini Aprilia Murdeani

Tata letak : Amilia Wulansari, Andra Riandita, Mandra Lazuardi Kitri, Raden Roro Mirna
Astari Magetsari, Mochamad Sandy Triady, Nur Hatta Krisna Triaditya, Suryo
Utomo.
ISBN: 978-602-72342-2-2
Hak cipta dilindungi oleh undang-undang.
Undang-undang Republik Indonesia No. 19 Tahun 2002 Tentang Hak Cipta

Lingkup Hak Cipta merupakan hak eksklusif bagi Pencipta atau Pemegang Hak Cipta untuk mengumumkan
atau memperbanyak ciptaannya, yang timbul secara otomatis setelah suatu ciptaan dilahirkan tanpa
mengurangi pembatasan menurut peraturan perundang-undangan yang berlaku.
Ketentuan Pidana
Pasal 72:
1. Barangsiapa dengan sengaja atau tanpa hak melakukan perbuatan sebagaimana dimaksud dalam Pasal 2
ayat (1) atau Pasal 49 ayat (1) dan ayat (2) dipidana dengan pidana penjara masing-masing paling singkat
1 (satu) bulan dan/atau denda paling sedikit Rp 1.000.000,00 (satu juta rupiah), atau pidana penjara paling
lama 7 (tujuh) tahun dan/atau denda paling banyak Rp 5.000.000.000,00 (lima miliar rupiah)
2. Barangsiapa dengan sengaja menyiarkan, memamerkan, mengedarkan, atau menjual kepada umum suatu
Ciptaan atau barang hasil pelanggaran Hak Cipta atau Hak Terkait sebagaimana dimaksud pada ayat (1)
dipidana dengan pidana penjara paling lama 5 (lima) tahun dan/atau dengan paling banyak Rp
500.000.000,00 (lima ratus juta rupiah)
ii
SCIENTIFIC COMMITTEE
Chair, Dwi Larso, Ph.D.

(Institut Teknologi Bandung, Indonesia)
Prof. Wawan Gunawan A. Kadir Russell Toth, Ph.D.

(Institut Teknologi Bandung, Indonesia) (University of Sydney, Australia)
Prof. Sudarso Kaderi Wiryono, Dr. Dr. Bambang Rudito
(Institut Teknologi Bandung, Indonesia) (Institut Teknologi Bandung, Indonesia)
Prof. Togar M. Simatupang, Ph.D. Yulianto Suharto, MBA. (Ph.D. Candidate)
(Institut Teknologi Bandung, Indonesia) (Portland State University, USA)
Prof. Ian O. Williamson Melia Famiola Hariadi, Ph.D.
(University of Melbourne, Australia) (Macquarie University, Australia)
Prof. Howard H. Frederick, Ph.D. Akbar Adhiutama, Ph.D
(Deakin University, Australia) (Shibaura Institut of Technology, Japan)
Donald C. Lantu, Ph.D. Dr. Dudy Wiyancoko
Mursyid Hasan Basri, Dr. Prof. Dundar F. Kocaoglu, Ph.D.
(Institut Teknologi Bandung, Indonesia) (Portland State University, USA)
Wawan Dhewanto, Ph.D. Prof. Dr. Nawaz Sharif
(InstitutTeknologi Bandung, Indonesia) (John Hopkins University, USA)
Woerjantari Kartidjo, Dr. Prof. Dr. Dennis Cheek
(Institut Teknologi Bandung, Indonesia) (National University of Singapore, Singapore)
Zhenyu Wu, Ph.D. Prof. Dr. Uichol Kim
(University of Manitoba, Canada) (Inha University, Korea)
Hooi Den Huan, Ph.D. Dr. Gerald Lidstone
(Nanyang Technological University, Singapore) (Goldsmith, University of London, UK)
Dr. Brendan Galbraith Dr. Leo Aldianto
(University of Ulster, United Kingdom) (Institut Teknologi Bandung, Indonesia)
Dr. Challoner A. Matero Achmad Ghazali, Ph.D.
(University of San Carlos, Philipine) (Institut Teknologi Bandung, Indonesia)
iii
Dr. Sen Sendjaya, Ph.D. Tezar Yuliansyah, M.Sc. (Ph.D. Candidate)
(Monash University, Australia) (VU University Amsterdam, Netherland)
Yudho Anggoro, MBA, (Ph.D. Candidate) Ubaidillah Zuhdi, M.Eng, MSM (Ph.D.
Candidate)
(University of North Carolina at Charlotte,
USA) (Tokyo University of Science, Japan)
Sonny Rustiadi, MBA. (Ph.D. Candidate)
(Goldsmith, University of London, UK)
iv
ORGANIZING COMMITTEE
Conference Chair
Dwi Larso, Ph.D
Conference Co – Chair
Donald C. Lantu, Ph.D
Organizing Committee
Chair, Andra Riandita, Co-Chair, Mandra Lazuardi Kitri
General Secretary, Olva Patriani, Riyadhusolihah
Public Relation, Raden Roro Mirna Astari Magetsari
Treasurer, Suryo Utomo
IT, Web & Design, Epri Triyono Saputra
Program, Marina Natalia Tampubolon
Paper and Submission, Amilia Wulansari
Publication & Documentation, R. Bayuningrat Hardjakaprabon
Logistic, Bob Situmorang, Fathurrohman
v
PAPER REVIEWER
Akbar A. Utama, Ph.D Mia T.D. Indriani, MSc

Akhmad Ghozali, Ph.D Prof. Dr. Dennis Cheek
(Institut Teknologi Bandung, Indonesia) (National University of Singapore, Singapore)
Ana Noveria, MBA Prof. Togar M. Simatupang, M. Tech., Ph.D
Anggara Wisesa, MM Robbin Serrano
(Institut Teknologi Bandung, Indonesia) (De-La Salle College of Saint of Benilde, Philippines)
Atik Aprianingsih, DBA Russell Toth, Ph.D
(Institut Teknologi Bandung, Indonesia) (University of Sydney, Australia)
Donald Crestofel Lantu, Ph.D Salfitrie Roos Maryunani, ST, MBA
Dr. Bambang Rudito, MSi Santi Novani, Ph.D
Dr. J.E. Sutanto, MM Sian Prime
(Universitas Ciputra, Indonesia) (Goldsmith, University of London, United Kingdom)
Dr. Tugrul U. Daim Sonny Rustiadi, MBA
(Portland State University, USA) (Goldsmith, University of London, United Kingdom)
Dr.Sen Sendjaya, Ph.D Suyin Chew
(Monash University, Australia) (University of South Australia, Australia)
Dwi Larso, Ph.D Ubaidillah Zuhdi, MSM
Eko Agus Prasetio, MBA Wawan Dhewanto, Ph.D
Hary Febriansyah, Ph.D Yuanita Handayati, MSM
Isti Raf’aldini Mirzanti, MBA Yudo Anggoro, ST, MSM
Lenny Martini, ST, MSM Yulianto Suharto, MBA
Leo Aldianto, MBA, MSc Zoel Hutabarat, MBA
vi
PREFACE
Constant innovation is the key to economic stability and development of entrepreneurship

ecosystem pave way for economic growth. Researches have long recognized innovation as the
driver of sustainable and thriving business ecosystem. In the dynamic economic environment where
knowledge is vastly distributed, companies can no longer rely on their own research and are pushed
to utilize outside sources to sustain growth. This understanding inspires the theme of IICIES 2014,
accelerating techno-creative innovation and global collaboration towards sustainable
entrepreneurial ecosystem. Creating a business environment where all stakeholders can share
knowledge, collaborate, operate and spread on a global canvas is a vision we would like to share.
With a purpose to generate and share knowledge in supporting innovation, entrepreneurship, and
small businesses, The Indonesia International Conference on Innovation, Entrepreneurship, and
Small Business (IICIES) was initiated in 2009 by the Center for Innovation, Entrepreneurship, and
Leadership (CIEL), School of Business and Management (SBM), Institut Teknologi Bandung
(ITB). Throughout the years, we constantly challenge ourselves to learn, study, and create local
knowledge with global mindset and to promote the development of new entrepreneurs and small
businesses. This conference provides platform for Indonesian and international scholars to present
their research on this vital subject network as well as to collaborate.
Held in the beautiful island of Bali, 12-14 August 2014, the 6th IICIES has attracted more than 200
abstract submissions; all of which were reviewed and 80 accepted papers will be presented. Topics
are ranging from entrepreneurship, creativity, innovation, management of technology, managing
small business and start-up, and leadership. At least 200 researchers and participants from esteemed
universities in Indonesia and more than fifteen other countries were attending the conference.
Selected papers are published in International Journal of Entrepreneurship and Small Business and
Asian Journal of Technology Management. As our conference proceeding, selected ones are
published in the special issue of Procedia - Social and Behavioral Science. Continuing previous
conference publication, we are also proud to present you the IICIES 2014 Proceeding by CIEL
SBM ITB.
In this occasion, we are honored to thank all contributors to the conference including all authors,
reviewers, speakers and program facilitators, participants, and sponsors. This proceeding is
expected to be the dissemination tools of our fruitful meeting, thus we would highly encourage you
also to take part in spreading the words.
Dwi Larso, Ph.D

Conference Chair
vii
viii
TABLE OF CONTENT
Scientific Committee iii

Organizing Committee v
Paper Reviewer vi
Preface vii
Table of Content ix
The Application of Value Systems Prevailing in the Community on the Development 1

of Entrepreneurship in College (Case Study of PTS)
Wahyu Susihono
Sultan Ageng Tirtayasa University, Serang, Indonesia
Pattern of Appropriate Technology Development of Processing of Pineapple Fruit in 5

Together Business Group of Alam Sari Subang
Sukirno
Center of Appropriate Technology Development - Indonesian Institute of Sciences
A Course on Idea-to-launch Process with Emphasis on Experiential Learning 13

Odi Akhyarsi, Jonathan Gultom, Burhan Primanintyo
Surya University, Tangerang, Indonesia
The Effect of Tweet Ads Through @infobdg Twitter Account toward Bandung 21
People Buying Interest
Athira Setira Adil, Rah Utami Nugrahani
Telkom University, Bandung, Indonesia
Empowerment Strategy Small Medium Entreprises (SMEs) Creative Industry to 31

Increase Competitiveness in Dealing Free Trade
Sri Hartati, Kartib Bayu, Edwin Karim
School of Business and Management, Institut Teknologi Bandung, Bandung, Indonesia
Sekolah Tinggi Ilmu Ekonomi, Bandung, Indonesia
Determining Customer Satisfaction by Analyzing Price in The Case of Small 41

Medium Enterprises in Internet Cafe Business
Wardah Naili Ulfah, Qorri Aina
Applications of Psychology in Business Context: An Innovative Approach of 51

Entrepreneurship Education
Cicilia Larasati Rembulan
Universitas Ciputra, Surabaya, Indonesia
Small ICT Enterprises Development Based on Community Entrepreneurship 57

Rendra Chaerudin, Sri Hartati
Management Understanding in Small and Medium Enterprises 63

Aris Budi Setyawan, Ichwan Suyudi
Gunadarma University, Jakarta, Indonesia
ix
Servant Leadership Practices: Case Study in Indonesian Workplaces 69
Sanchia Arindhita, Donald Crestofel Lantu
Developing Competitiveness of Small and Medium Scale Industries in Magelang and 79

Salatiga City: An Innovation Policy Perspective
Anugerah Yuka Asmara, Purnama Alamsyah
Pappiptek LIPI, Jakarta, Indonesia
Implementation Policy of Acquisition Intangible Assets in Government Financial 89

Statements
Tommy Hendrix
Center for Innovation – Indonesian Institute of Sciences, Indonesia
Identification for Biological Resource Based Creative Industry Cluster 95

Developmental Model in the Province of West Java, Indonesia
Sudrajati Ratnaningtyas, Wawan Dewanto, Sri Herlina
A Course on Idea-to-launch Process with Emphasis on Experiential Learning 107

Sri Hartati , Rendra Chaerudin, Kartib Bayu
Batik Solo Tourism Cluster Ecosystem: A Qualitative Approach Problem Analysis 115
Pri Hermawan, Ghita Yoshanti, Santi Novani, Utomo Sarjono Putro
Innovation for Mutual Funds Investment Strategy in Indonesia 129

Wirata Adi Dharma, Subiakto Soekarno
Application RF Module for Safety Helmet 137

Pola Risma, Yurni Oktarina, RD. Kusumanto
Politeknik Negeri Sriwijaya, Palembang, Indonesia
Innovative Model in Determining the Capital Structure Target in State Owned 145
Enterprises
Subiakto Soekarno
Competitiveness Strategy Analysis of Women Entrepreneurs: A Case Study of SMEs 155

in Indonesia
Sri Herliana, Wawan Dhewanto, Grisna Anggadwita
Creativity and Innovation: “Asli Bali” New Destination 161

Gai Suhardja
Maranatha Christian University, Bandung, Indonesia
Ecosystem for Indonesian Creative Industry: Case in Design Subsector 165

Achmad Ghazali, Nadinastiti, R. Bayuningrat Hardjakaprabon, Mandra Lazuardi K.
x
Designing Photography Industry as Subsector in Indonesia Creative Economy 173
Achmad Ghazali, Wijayanto B. Santoso, Nur Arief R. Putranto
A New Dynamic of Innovation System Based on Local Competitiveness in Emerging 183

Region in Indonesia: The Case of Cimahi City
Lutfah Ariana
Center for Science and Technology Development Studies, Indonesian Institute of
Sciences, Jakarta, Indonesia
Abstracts of Publication in ELSEVIER Procedia – Social and Behavioral Sciences 193

ISSN 1877-0428, Vol. 169, Pages 1-410
xi
xii
The 6th Indonesia International Conference on Innovation, Entrepreneurship and Small Business,
12 – 14 August 2014
The Application of Value Systems Prevailing in the Community

on the Development of Entrepreneurship in College
(Case Study of PTS)
Wahyu Susihono*
Sultan Ageng Tirtayasa University, Serang, Indonesia
Abstract
Development of entrepreneurship in college to nowadays is very sluggish, whereas the government has been giving a big
opportunity to create an educated young entrepreneur and convenience in accessing capital, training and assistance. Development
model of entrepreneurship from one college to another could not be equated. uniqueness and local wisdom become one of
consideration in business development. In 2009, PTS passed 40 groups of student entrepreneur in university level. There are
66,7% business units that running to actualize their new business, and only 40 % that running continuously. In 2010 new
entrepreneur reached 605, while in 2011 new entrepreneur even could not be identified. This condition happened because the
project leader had not had seriousness and commitment in implementing the project, and ignore the impact of value system in
college environment starting from the selection of proposal to business assistance. The aim of this research is to evaluate
implementation of value system applied in the environment of college PTS to obtain model and recommendation of development
mechanism of entrepreneurship in the college. Analysis method applied is qualitative descriptive by using data which is result of
evaluation of implementation “Entrepreneur student program (PMW PTS) for 3 years and evaluation of Implementation of
Knowledge and technology for entrepreneurship”. Result shows that new selection consider business experience, psychology of
tenant, and portfolio of proposal. While the management of entrepreneurship program is still partial. The are no mechanism of
integrated regulation of interest between parties. Learning entrepreneurship model in PTS has not characterized value system.
The alternative solution given to this value system is a student entrepreneurship which produce not only for profit but also
oriented to imaging college environment in PTS, product that offer local wisdom, product that could stimulate idea of new
business in college environment. The entrepreneurship center in university level is needed.
© 2014 The Authors. Published by Center for Innovation, Entrepreneurship, and Leadership (CIEL), School of Business and
Management (SBM), Institut Teknologi Bandung (ITB).
Keywords: value system; entrepreneurship; college
* Corresponding author.
E-mail address: wahyu.susihono@ft-untirta.ac.id
© 2014 The Authors. Published by Center for Innovation, Entrepreneurship, and Leadership (CIEL), School of Business and Management
(SBM), Institut Teknologi Bandung (ITB).
2 Wahyu Susihono / IICIES 2014 Proceeding
1. Introduction
Spirit of entrepreneurship for young generation and education institution is very strong. Students have strong
willingness to be an entrepreneur, especially for male students (Mazzarol et al.,1999). In some education institutions
of university level, entrepreneurship included as one of subject that have to be taken by the student. This condition
stimulates students to entrepreneur seriously (Swierczek, 2003). Even some education institutions apply field
practice in order to give comprehensive understanding and experience in entrepreneurship. The entrepreneurship
practice also supported by some funding, from internal study program, institution, or other stakeholders which
cooperated in form of CRS or banking. These networks could convince the students to create new business (Aldrich,
1986). Students are given some fund to run their business. Success is not only measured by return of investment, but
more to up and down and the process of leadership in running the business and which business strategy that has been
chosen to reach the success. The student business whether in category success or failed are assessed. The key of
work performance instrument is the process. Because business is not just a theory but it needs experience
(Kolvereid, 1996).
Up to this time, implementation of student entrepreneurships are based on creative idea of the students which
indeed implementation of the project is still in category program finishing. Therefore selection process considered
range of cost and creativity only. Concept or grand design that lead students to create new business that could be run
for long times which is adjusted to mission and vision of university or institution had not been implemented. That is
why entrepreneurship in university is not more than a program only. Since the program accomplished so the
business is finished too. The aim of entrepreneurship here, is only still in learning level for the students, while the
further aim is entrepreneurship could give welfare or even give an opportunity for new business.
Some education oriented entrepreneurship or which give experience to the students in college are quite good,
because education is one of factor in determining the success (Sinha, 1996). But an education without concept and
discontinued will give bad impact to the students. Students entrepreneurship which are based on student creativities
if not adjusted by mission and vision of university could not give positive value in further. The old student
entrepreneur could not be a coach for the new student entrepreneur. While an assistance is very needed in running
the entrepreneurship.
Education institution that have entrepreneurship program or the students will be better if has an organization in
university level which could accommodate some kinds of entrepreneurship problems, beside as organization that
functioned as optimizing funding or capital for the strengthen of student entrepreneurship.
2. Result and Discussion
Implementation of value system is an approach that could become a framework in developing grand design of
entrepreneurship model in education institution. Therefore students with creative idea are given guideline before
preparing entrepreneurship proposal. In that so the sustainability in running the business could be guaranteed. Some
approach related to the value system are tend to culture in college environment whether written information or not
that become characteristic or special condition in college environment. For example, students that want to study in
Banten and want to market their product in Banten should recognize, know, and understand culture of Banten
society. Vice versa, if student want to market their product to college environment, they should recognize, know,
and understand culture in college environment too.
Product which consider consumer needs and willingness will be easier to be accepted than that are produced that
rely on creativity only, without considering characteristic of the main consumers of the market.
2.1. Entrepreneurship Management Cooperation Model in College
Management of entrepreneurship based on student creativity has special charactherstic where student in this case
tenant have to have strong willingness in entrepreneurship. The main activities as a student is learning and finishing
study. But only finishing study is not sufficient without any personal skill. Students are demanded to have
achievement in study but in the other side also have to have knowledge and experience in order to compete globally.
This condition has consequence to different management of entrepreneurship. Below are figure of synergy of
entrepreneurship as an alternative solution which is “closed loop”.
Wahyu Susihono / IICIES 2014 Proceeding 3
Fig. 1. Symbiosis students entrepreneurship activities in college
Business incubator and technology in university level should be synergy with the activity of carrier development
which is known by Partnership Career Development Center (PCDC). Data of student interest to or willingness to be
an entrepreneur could be an input to early selection of business proposal. IT should be avoided that proposal from
student with different interest was approved. In this condition the business will not be running well because student
only thinking about how to execute the program without thinking about sustainability of the business.
Carrier development unit should could take advantage from outside network such as department of industry and
trading in form of cooperation in build commitment to lift up local technology or to market local product. In that so
potential resources could be mingled by student in college environment. This strategy will effect to utilization of
local resources and will give advantage to local income indirectly.
Related department is expected could be cooperated with education institution to socialize programs which are
related to development of region to college environment. In that so some kind of opportunities and potential
resources could be an input and base of study program or lecturer in determining kind of business that will be run.
Since there are relations or synergy from one party to another, sustainability of student entrepreneurship could be
guaranteed. of policy could give broader impact in business (Licht, 2007).
Bank as an institution that have capital to strengthen funding, take important role in “closed loop” system. Bank
as capital resources, even in one side institution as capital resources, it still need bank in process of disbursement.
This mechanism give consequences to students as the business actors that funding of business is need to be proposed
from Bank, not only rely on institution. The system applied recently is that students are given some fund from
institution and they don’t have consciousness to pay it back. The mindset that should be develop is that institution
should support the student to make their business sustainable. If the capital from institution is very limited, student
could make loan to Bank. Therefore student will be more responsible in running their business.
2.2. Value system Approach
Some consideration in implementation of value system activities approach, those are (Sastroasmoro, 2011):
a. Value system to cost: by considering consumer need and will, it is expected that cost of product development,
promotion, and other could be minimize. Since the product has meet consumer need and will.
b. Value system to profit; profit is not only measured in rupiah, but also the advantage of the product. Since the
product could give much advantage to consumer, it will make consumer interest to buy it more and more. The
advantage could be hygiene product, interested packing, after sales services or health guarantee and quality of
product.
4 Wahyu Susihono / IICIES 2014 Proceeding
c. Value system to effective: product is meet the targeted market so targeted profit could be reached.
d. Value system to utility: product are give value added to consumer.
2.3. Steps of Entrepreneurship in College
There are some models of steps of entrepreneurship as following (Indarti, 2008):

Starter business level
In this step, students are given basic business training. Students are given opportunity to make business plan with
some certain capital and run their business. In the end of the program, students will evaluated whether their
business succeed or failed. This evaluation become lesson learned and personal experience to run next level.
Student are not pushed to bay back the capital.
One start level
In this level, student has already run starter level. Student are given opportunity to make business plan without
determined capital but its limited below Rp5.000.000,00. In the end of the program, students will evaluated
whether their business succeed or failed. Student are pushed to bay back the capital.
Two stars level
In this level student already run one star with uncertain capital whether who succeed or failed. Student are given
opportunity to make business plan without determined capital in the end of the program, students will evaluated
whether their business succeed or failed. For those who can develop their business, so bank will give additional
capital.
Advance business level
In this level, students can take their coach to cooperate to create business unit managed together with capital
from some parties. Students are given opportunity to make business plan with some capital that depend on their
need. In the end of the program student evaluate all of effort to be succeed.
3. Conclusions
Grand design of entrepreneurship model is needed in education institution that is by including value system.
Different treatment which based on characteristic and experience in running the business could make student
creative. Bank role in disbursement of capital as assistance and coach to student business. Government as policy
maker give impact to harmony in running entrepreneurship program and guarantee sustainability of program.
References
Aldrich, H. Zimmer, C. 1986. Entrepreneurship through Social Network.in D. L. Sexton and R. W. Smilor (eds.) The Art and Science of
Entrepreneurship. (Cambridge): Ballinger Publishing. 3-25.
Kolvereid, L, 1996. Prediction of employment status choice intentions. Entrepreneurship Theory and Practice 21 (1): 47-57.
Licht, A. N. 2007. Entrepreneurial spirit and what the law can do about it. Comparative Labor Law & Policy Journal. Vol. 28 No. 4
Mazzarol, T. T. Volery, N. Doss. Thein, V. 1999. Factors influencing small business start-ups. International Journal of Entrepreneurial Behaviour
and Research 5 (2): 48-63.
Sastroasmoro, 2011. Dasar-dasar metodologi Penelitian Kinis. Edisi ke4. Sagung Seto. Jakarta. Sinha, T.N. 1996. Human factors in
entrepreneurship effectiveness. Journal of Entrepreneurship 5 (1): 23-29.
Swierczek, F. W., dan T. T. Ha, 2003. “Entrepreneurial orientation, uncertainty avoidance and firm performance: an analysis of Thai and
Vietnamese SMEs”. International Journal of Entrepreneurship and Innovation 4 (1): 46-58.
12 – 14 August 2014
Pattern of Appropriate Technology Development of Processing of

Pineapple Fruit in Together Business Group of Alam Sari Subang
Sukirno*
Center of Appropriate Technology Development - Indonesian Institute of Sciences
K.S. Tubun No.5, Subang, West Java 41213, Indonesia
Abstract
Indonesia is one of center of variety of tropical biologic and has kinds of specific fruits. Fruits production of Indonesia in 2010 is
around 13,852,462 tons (BPS, 2011). Exporting value on January till September 2011 is as high as Rp. 1.6 trillion. The fruit that
the most exported are for example mango, orange and pineapple. Subang is one of the producers of pineapple fruit with farm area
of around 6,400 hectares in 2012. The yield result is in the average of 46 tons per hectare. The yield of pineapple crop in Subang,
as much as 42% goes into food processing industry, 30 % fulfill local need and 28 % goes into retailer. Pineapple fruit (Ananas
comosus) is easy commodity to get damage if there is no preserved treatment. Processing is one of alternative to give added value
of pineapple fruit product and prevent loss. The activity that conducted within the development of pineapple fruit processing
effort for example: forming of together business group (KUB: Kelompok Usaha Bersama) Alam Sari with bases of pineapple
fruit processing activity becomes product: dodol pineapple, wajid pineapple, pineapple crispy and pineapple juice. Production
process equipments that has been introduced: vacuum fraying, pulper press, filter press, extractor, screw press, mixing tank,
packaging tool and other supported equipment. Raw material needed of pineapple as much as 6000 Kg per month and involved
labor as much as 18 people. Marketing pass by grocery, retailer in Bandung, Yogyakarta, Bali and Subang region and its
surroundings. Pattern that applied in business development is: conducted observation, identification and character building,
institute forming and partnership, training and process production attendance through scheme of Science & Technology activity
for Region (Iptekda) – Indonesian Institute of Sciences (LIPI). Methodologies that used by ”action research” and analytic
descriptive that aimed at how process of technology innovation is implemented to grow and develop the Micro Small Medium
Business (UMKM: Usaha Mikro Kecil Menengah) which sustainably competitive. The result that obtained: Group of Alam Sari
Business Subang (Kelompok Usaha Alam Sari Subang) becomes prior UMKM in West Java.
Keywords: alam sari; appropriate technology development; pineapple processing.
E-mail address: sukirnosuki@yahoo.com
6 Sukirno / IICIES 2014 Proceeding
1. Introduction
Indonesia is one of the biggest centres of variety of tropical biologic and has kinds of specific fruits from facet of
taste, form and colour. Fruits product occupies of vital importance position in the case of accomplishment of
nutrition substance requirement for human, especially vitamin of A, B and C, mineral and food fibre. Fruits
production in Indonesia in 2010 around 13,852,462 tons that disseminated in some production centre areas (BPS,
2011). The reached exporting value at January till September 2011 as high as 309,981 tons that got of improvement
as high as 60.43 % from 2010 that is as high as Rp.1,6 trillion become Rp.2,7 trillion (Surabaya Post, 2012). The
mostly fruits which are produced are banana that is 5,755,073 tons, orange 2,028,904 tons, and pineapple 1,306,445
tons (BPS, 2011).
Fruits is very easy commodity to become damage, this condition are caused by physiological, chemically and also
microbiologic change. If not followed with correctly handling and preserving, in range of 5 – 10 day fruits becoming
not fresh anymore, that eventually will result the quality of fruits easily destroyed, decayed and easy lessened its
weight. This damage amount is predicted can reach 5 – 25 % at developed countries and 20 – 50 % at developing
countries (Anonym, 2012). Because of its character of easy to become damage, then fruits processing is one of
alternative to anticipate the abundantly of crop harvest and it can not be marketed consequently, due to its low
quality.
With this highly harvesting of pineapple fruit, it is required a processing technology such as the process and its
equipments to process pineapple fruit which becomes product that has higher selling value and competitiveness. On
the other hand, its low level of technology acquirement becomes constraint for society to be able to participate in
activity of technology development to process existing resources. Natural resources owned by Subang for example
production of pineapple fruit is 238,098.72 tons (BPS Kab. Subang 2012) is one of potency for its developing of the
prior middle small business (UKM) in this region.
The problem that is faced by pineapple's farmer is in harvesting season. Pineapple fruits inundates marketing, as a
consequence price sells go down and detrimental the farmer. Lack of processing industry which can absorb
harvested pineapple will cause this product marketing is limited and the price is also fluctuated. From the result of
study that has been conducted, it has been known that pineapple fruit with the process technology and certain
additional material, it can be processed become multifarious kinds of natural food and beverage product at profitable
small scale business. One of the prior products of the pineapple processing in KUB Alam Sari Subang is pineapple
juice beverage. As for this article aim is to assess pattern of technology ability improvement of agribusiness business
unit of juice pineapple processed of the KUB Alam Sari Subang.
2. The Methodology
The method which is used in application of technology at business activity KUB Alam Sari Subang as follows:
analytic description which is instructed to how the growth of pineapple juice processing business based on local
resources can become object of empowerment activity and productive business development and sustained. The
method of action assessment is conducted through group approaching in the form of together business for execution
of technology implementation activity, strengthening of business group institution of processing of pineapple juice
which is located in the Tambak Mekar village, sub district of Jalan Cagak, district of Subang, and West Java
province.
The data collecting Method is conducted with active participation in activity of business group and utilizing
method of focus group discussion (FGD). The secondary data which is collected from several of related institutions
is used as reference materials in analysis and interpret it which is connected to FGD result. The analysis of SWOT is
conducted specifically for see the positive factors that must be defended, built even improved. See weakness that
must be repaired, altered or desisted. Opportunity must be given high priority, caught, built and optimized. The
threat must be overcome or minimized and managed.
Sukirno / IICIES 2014 Proceeding 7
3.1. Profile of KUB Alam Sari Business
KUB Alam Sari has run its business for 12 year. At its early stage was under advisory of Industrial Service of
Subang district and also West Java province. Furthermore its advisory is continued by Center of Appropriate
Technology Development - Indonesian Institute of Sciences. With its multifarious product of processing food based
on pineapple for example, pineapple dodol, pineapple wajit, and pineapple flaky. The members of its business group
consist of 12 people. Production capacity is 77.52 kg per day or equivalent to 204 kg of pineapple fruits per day.
3.2. Raw Material Procurement
Pineapple Raw material is indigenous from the farmer in surrounding of business location with its centre of
pineapple raw material in sub district of Jalan Cagak, district of Subang. Pineapple's price is very fluctuate, at peak
harvest season, the pineapple's price in farmer level can till Rp. 40,000.- per quintal on month June- July, and on
September- October can till Rp. 200,000.- per quintal. The pineapple raw material requirement is fulfilled from
pineapple farmer that become customer. For this pineapple processing necessity, this alam sari business group uses
principle of efficiency comparability which is by combine the pineapple fruit that not enter the grade of fresh fruit
merchant. Or accommodate the remaining pineapple fresh fruit merchant of which its pineapple fruit has been
assessed too ripe for sold fresh. Thus it can get lower price of pineapple raw material around 50% from the market
price.
3.3. Activity Description
Activity is executed in together business group (KUB) Alam Sari which is located in Simpang street No.72,
Tambak Mekar village, sub district of Jalan Cagak, district of Subang or by distance around 15 km from Subang
city or around 45 km from Bandung West Java.
Introduction of juice processing technology and production process advisory is expected can improve business
capacities through operational of the existing machine equipments. Improvement of business development capacities
and improvement of production capacities are expected can improve the existing raw material utilization. The
development of food agro industry business with local raw material by UKM especially its processing of pineapple
juice beverage, its understanding has been not yet acceptable. Thus it needs advisory in equipments operation,
formulation, management system and marketing.
Activity that conducted with steps as follows:
1. Activity socialization is conducted with benefit receiver that is KUB Alam Sari, Office of Industrial & Trade and
Market Management as partner, partner of machine equipments provider and stake holder.
2. Technical and managerial training for business development and business strengthening.
The activities of technical supervise covers:
- Inventory of equipments / machine which is required to support production process
- Purchasing / supporting tool order of production process, equipments installation and testing.
- Design of packaging and label it, design of form and size of packaging unit.
- Raw material procurement and supporting materials of production process.
- Settlement of business management (raw material, processing and marketing)
- Business advisory
- Commercial production and evaluation
3.4. Production Process Technology
From pineapple fruit (Ananas Comosus (L) Merr) can be produced variety of forms and product type with wide
variety for example product of pineapple juice beverage (juice pineapple). Processing aim is to give added value to
local product, to lengthen the durability of its preservation, so it can be consumed widely by society.
Materials that used in process of producing are pineapple fruit, sugar, citron zuur, water, food additive material
that admissible by BPOM.
Process of making pineapple juice as follows:
1. Sorting and grading; pineapple is selected (sorting and grading) with optimum matured, that is with evenly
colored. Better selected good and no deformity (decay, contusion)
2. Peeling; peeling is conducted by using stainless steel knife. Furthermore, leaf crown and eye of pineapple fruit
are thrown away, afterwards split become 2 or 4 parts (depend on its extractor tool).
3. Fruit Washing; washing is conducted by soaking and spraying with water.
4. Pulping; pulping is conducted by pulper press equipment.
5. Extracting; extracting is conducted with filter press and by means of extractor equipment (screw extractor).
6. Mixing and conditioning ; fruit juice from extraction process is collected, then added sugar in accordance with
appetite (organoleptik test, if less acid then at fruit juice the citron zuur can be added little by little till the
desired acid taste is reached. To enhance level of C vitamin, it can be also added C vitamin around 100 mg/litre
of fruit juice.
7. Pasteurizing; pasteurizing of pineapple fruit juice is conducted in cooker tank. Pasteurizing is conducted at
temperature of around 95 oC for 15 minute to take care of fruit juice from damage. Besides by pasteurizing, it
can be also added with organic preservative that admissible by BPOM
8. Packaging; pineapple juice that already pasteurized then packed in cup plastic that already prepared and
packaged in hardboard package which is content 20 cups.
Pineapple Fruit
Peeling-washing
Cut into four part
Throw away its liver
Squeeze with screw press
Filtered with filter press

Sugar
Citrat acid Mixing
Na Benzoat
Water Essence
Cooking in tank colourant
Packaging
Pineapple Juice
Fig. 1. Process of making of pineapple juice

3.5. Production Capacities and Loss-Profit Projection
Capacities of pineapple juice processing production for once processes (8 hour) is 800 kg of pineapple fruits
with required other materials compound will produce 1,600 litre of pineapple juice. From 1,600 litre of pineapple
juices will be packed become 8,000 cups. For this explanation of loss and profit projection can be seen in Table 1.
From table 1, it indicates that business of pineapple juice beverage production with production capacities of
1,600 liter of juice will produce 8,000 cups of juices @ 200 ml with its price of Rp.1,200.-/cup will get rough
advantage of Rp.1,436,460.- per process / day. Within 1 month can produce 10 times, and will obtained a rough
advantage of Rp. 14,364,600.- so this business is quite competent to be developed.
Table 1. Projection of Loss-Profit of pineapple juice product of KUB Alam Sari.

No Cost Amount Unit Price per unit (Rp.) Total Price (Rp)
1 Pineaplle 800 kg 1,200 960,000
2 White sugar 192 kg 11,000 2,112,000
3 CMC 0.48 kg 85,000 40,800
4 Citrat acid 0.48 kg 20,000 9,600
5 Food colorant 0.16 kg 95,000 15,200
6 Benzoat 0.48 kg 25,000 12,000
7 Esence 0.16 kg 120,000 19,200
8 Plastick cup 8,000 pcs 250 2,000,000
9 Cup cover 8,000 pcs 30 240,000
10 Straw 8,000 pcs 7 56,000
11 Packaging box 400 pcs 2,000 800,000
12 Local Labor 8 man/day 70,000 560,000
13 Processing expert 2 man/day 150,000 300,000
14 Diesel fuel 25 l 6,000 150,000
15 Electricity 400 kva 1,250 500,000
16 Depreciation of equipment 388,740
(5%)
Total 8,163,540
Sale 8,000 pcs 1,200 9,600,000
Rough profit 1,436,460
3.6. Introduced Technology
The challenge which was met that is how can utilize the equipments of juice production process that already exist
in KUB Alam Sari (aid equipments from Directorate General Industry of Agro and Chemistry, Department of
Industry in 2010). The equipments has been installed and tested by researcher staff and technician of Center of
Appropriate Technology Development - Indonesian Institute of Sciences, with competent result to be operated and
must be supported by other additional equipments if it want to produce juice.
Center of Appropriate Technology Development - Indonesian Institute of Sciences- Subang has had experience in
developing and applying of appropriate technology for society (UKM) and provide appropriate technology needed
for society, especially area of food processing and juice beverage.
Besides the need of process equipments installation, raw material and packaging, product quality is continues
monitored with mini laboratory making to conduct testing and evaluation of product quality. Technology that will be
introduced trough this activity, to equip the equipments that already there is for example: Pulper press, Refractor
Meter Digital, pH meter and Digital Weighing-machine. Hereinafter in running and developing KUB Alam Sari are
required business management that cover process management (raw material, equipments, production process),
financial management (recording and transaction bookkeeping, job contracts and cash flow) and marketing
management.
3.7. Management Pattern of Transfer Technology Funding
The fund of technological transfer which is used for business management will be realized in the form of
additional equipments which is required, raw material and packaging material that suit with the need. The fund of
technological transfer hereinafter will be managed by KIAT (Intermediacy Group of Technological Transfer) that is
KIAT Mitra Tena Abadi with notarial document of Dian Wardianto SH, MM. Kiat has function as the container of
provider / equipments procurement, mediator of business development. Profit sharing is done by advantage sharing
of 60 % for KUB Alam Sari and 40 % for KIAT Mitra Tena Abadi. The fund that come into KIAT will be used for
working capital additional and develop other UKM on an ongoing basis. The management scheme of the technology
transfer fund can be seen at Figure 2 as follow:
Fund owner Technology Provider and

technological transfer fund.
Supervisor its activity runs.
Fund aid
Provider of UKM required
equipment.
Organizer of technology transfer
KIAT fund.
Mitra Tena Abadi Advisory of production and
business management.
UKM Aid user and technology

Alam Sari implementation and business
development
Market
Fig. 2. Management scheme of the technology transfer fund
3.8. Market Potential and the Way to Sell the Product
As has been written in introduction part, where the market potential of food processed product such as fruit juice
is very big along with the improvement of society earning and more awareness on their health.
As for marketing strategy that taken by UMKM Alam Sari, that at this moment with prior product of pineapple
juice, is through direct selling to sale agents that have come to its customer that spread out in some areas for
example: Subang, Purwakarta, Bandung, Cirebon, Indramayu, Cianjur, Bogor, Yogyakarta and Bali. Nevertheless
some of its product is sold through the shops of business partner and at retailer for specific gift from Subang.
3.9. SWOT Analysis of Together Business Group (KUB) of Alam Sari
SWOT analysis is identification of various factors systematically to formulate the pattern of business
development strategy of KUB Alam Sari. This Analysis is based on logic to develop strength, overcome weakness,
utilizing opportunity and overcome or threat minimization.
Strength in business development in KUB Alam Sari for example:
Raw material (pineapple) available as long as season
Available enough human Resources
The Technology which is required is simple technology
Strong support from stake holder by promote the area prior product
Product of genuine fruit juice (natural) by utilizes the local resources product
Weakness in business development in KUB Alam Sari:
Production Capacities and its capital are limited
Mindset or awaits aid culture has been sticked
Product of natural fruit juice has average higher price
Technical and managerial ability are remain limited
Market range still rely on local market
Opportunity in business development in KUB Alam Sari:
The siding of stake holder to KUB Alam Sari is high enough
Society need of natural beverage product is growing up
Business location is relatively close to tourism place (Ciater, Lembang, and Tangkuban Perahu)
Product marketing Network is much opened
Threat in business development in KUB Alam Sari:
Competition against big company that has been recognized
Pineapple plantation of society property tends to convert to people settlement
Increasing of electricity and fuel tariff and
ASEAN Economic Community (AEC) 2015.
Based on SWOT analysis result to KUB Alam Sari, then the alternative strategy pattern that can be developed for
example:
Strategy to maximize the internal strength to utilize external opportunity that is: extend the marketing network by
recruit the experienced person, maximize the sale by multiply the customer. Thus this strategy is conducted by
maximize the existing strength to get the advantage, market compartment to reach sustainable business
development.
Strategy to overcome the internal weakness to utilize the external opportunity is conducted by improve the
promotion/advertisement, apply managerial system assistance, especially in the field of standard record and
bookkeeping.
Strategy to maximize the strength and effort to overcome or threat minimization, conducted by improve
innovation, product competitive ability and product quantity, product certification and waste management.
Strategy to overcome the internal weakness for external threat minimization is conducted by care of productivity,
hygienist and production cost efficiency and improve skill and human resource prosperity.
4. Conclusion
The conclusion that can be taken from this study is: the production of fruit juice processing with raw material
from local farmer harvesting product can help stabilize the market price. Business on production of pineapple juice
beverage of KUB Alam Sari, is competent for developed it, this condition is strengthened by analysis that show this
business can give competent reward that is with advantage of Rp 14,366,600.- per month. Give local product added
value, create employment and make pineapple processed product become the prior product in the region.
Pattern of local partnership is functioned as technical assistance and management assistance with container of
Intermediacy Group of Technology Transfer - Kelompok Intermediasi Technological Transfer (KIAT) as advisor,
technological transfer, working capital and promotion of production result and extend the market network.
Acknowledgment
Utterance thank you addressed to Center of Appropriate Technology Development - Indonesian Institute of
Sciences Subang and KUB Alam Sari Subang, especially to: Ir. R. Ismu Tribowo, MSc, Ir. Agustriyono, MSc,
Sutrisno, Dedi Sumaryadi, Wawan Setiawan and Ade Patas to the all aids that already given.
References
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Surahman D. Nanang, 2007, Nanas dan produk olahannya, Lembaga Ilmu Pengetahuan
Indonesia(LIPI), Balai Besar Pengembangan Teknologi Tepat Guna (B2PTTG),Penerbit LIPI Press,Jakarta.
Dipta.I.W. , 2010, Strategi Penguatan Usaha Mikro Kecil(UMK) melalui kerjasama kemitraan pola CSR, Infokop Vol.16., September 2008,
Jakarta.
Fankel E.G., 1990, Management of Technological Change :The Great Challenge of Management to Future. Dordrecht:Kluwer Academic
Publishers.
Prakati,J., 1999, Participatory Rural Development and Technology Tranfer: Empowering Small Scale Farmers With Appropriate Technology
Skills, Http://www.atnesa.org, 3 April 2010, India.
Suparyanto, 2012, Kewirausahaan Konsep dan Realita pada Usaha Kecil, Penerbit Alfabeta, Bandung.
12 – 14 August 2014
A Course on Idea-to-launch Process with Emphasis

on Experiential Learning
Odi Akhyarsia*, Jonathan Gultomb, Burhan Primanintyoc
abc
Surya University, Gading Serpong Boulevard O/1, Tangerang 15810, Indonesia
Abstract
This paper presents a course designed for undergraduate students enrolled in The Department of Technopreneurship at Surya
University, Indonesia. The course, Technology and Innovation 2, was given to first year students. The course aims on giving
experiential learning to the students, regarding the process of innovation and new product development. During the course term,
students were given a series of lectures pertaining to the well-known Stage-Gate process and then asked to simulate the process,
with some modifications. An outcome-driven innovation method was embedded to the process. The students gained knowledge,
skills and experiences on how to generate ideas, evaluate the ideas, make prototypes, and provide strategies to bring products into
the market. The implementation of the course has been gratifying for the lecturers and at the same time the students‟ progress has
been promising. Findings and challenges which appeared during the course are described in this paper. In addition, samples of
two projects carried out by teams of students are also discussed. It is recommended that the course, or any similar courses, should
be offered to more undergraduate students, especially students majoring in entrepreneurship, business, and engineering.
Keywords: product development; Stage-Gate process; innovation; entrepreneurship education; experiential learning.
1. Introduction
Entrepreneurship education has been introduced and promoted in many educational institutions around the
world. The term entrepreneurship education can be interpreted in two ways; either learning about entrepreneurship
as a phenomenon, or learning useful skills in order to become an entrepreneur (Rasmussen & Sorheim, 2006). One
of the skills mentioned in the latter should refer to the ability to develop new products. In order to foster the skill,
educational institutions need to provide a proper teaching course that combines exposure to a proven new product
development method and an appropriate teaching environment. In a paper (Marion, Friar, & Cullinane, 2011), the
authors stated that “a teaching environment that is action-oriented, encourages experiential learning, problem
solving, project-based learning, creativity, and peer evaluation is essential for creating fledgling entrepreneurs”.
E-mail address: odi.akhyarsi@surya.ac.id
14 Odi Akhyarsi / IICIES 2014 Proceeding
This paper describes a course designed to teach students on how to conduct the process of new product
development, from generating ideas to developing a launch strategy through a modified stage-gate process, with a
course structure that emphasizes experiential learning.
The Stage-Gate process is a widely known method for new product development and was developed by Robert
G. Cooper. The Stage-Gate process (Cooper, 2011) breaks the product development process into a number of
predetermined stages, where an assigned team undertakes activities needed to move the project forward. Each stage
is followed by a gate, where the results of the activities in the stage are reviewed and go/kill decision is made. In
every stage, the assigned team needs to collect customer or user feedback. A standard idea-to-launch Stage-Gate
process consists of six stages: discovery, scoping, build business case, development, testing and validation, and
launch. The Stage-Gate process, with some customization for the purpose of the course, is illustrated in Figure 1.
According to studies by the Product Development and Management Association, nearly 60 percent of firms use
some type of Stage-Gate process to manage their new product development process (Schilling, 2013). The benefits
of the Stage-Gate process have been reported in literature (Cooper, 2011; Schilling, 2013). Among the benefits are
shorter product development cycle times, lower development cost, improved teamwork, and a smoother launch.
2. The Course
The course is named Technology and Innovation 2. In its precursor, Technology and Innovation 1, the students
are exposed to the roles of technology and innovation in business as well as some innovation techniques like Mind-
mapping and SCAMPER. In the Technology and Innovation 2 course, students are guided to understand and
experience the process of new product development. During the course term, students are given a series of lectures
pertaining to the Stage-Gate process. They are then asked to simulate the process, step-by-step in a team, with some
modifications. The two courses, Technology and Innovation 1 and 2 are two major courses offered to the first-year
undergraduate students of Technopreneurship Department, Surya University, Indonesia. The courses have been
offered for the first time in the academic year 2013/2014.
2.1. Stage-Gate in the Course
In the beginning of the course, the students were given a lecture highlighting the importance of developing new
products, how companies conduct their new product development, and the introduction of the Stage-Gate process.
Fig. 1. The Stage-Gate process (adapted from Cooper, 2011) implemented on the Technology and Innovation 2 course
Odi Akhyarsi / IICIES 2014 Proceeding 15
Then, students were asked to do a course-long project activity to simulate the Stage-Gate process for developing
their own product. Lectures and guidance related to each steps of the process were provided. Figure 1 shows the
schematic diagram of the Stage-Gate process with some additional information related to the course. In the
Discovery stage, students were asked to form a team (3-4 students per team) and discover opportunities and generate
new-product ideas, as many as possible. The list of ideas were then reviewed by the gatekeeper at Gate 1, or also
called Idea Screen, in order to make decisions on which ideas (2-3 ideas) that were worth spending resources on. In
Stage 1, the Scoping, students were asked to conduct a preliminary investigation in technical feasibility and market
potential. The results of the Scoping were reviewed by the gatekeeper at Gate 2, called as Second Screen. The
Second Screen would decide which idea(s) were to be approved for further investment. Some were recycled, held, or
even killed. It was designed that the gatekeepers for Gate 1 and 2 are their peers. Teams that could not get an
approval at the gates were allowed to reiterate their work.
In Stage 2, Build the Business Case, students were asked to conduct a more detailed investigation, in which they
should clearly define the product and verify the feasibility of the project before more investment was made. The
main guidance for the students to conduct the activity is the outcome-driven innovation method developed by
Anthony W. Ulwick (Ulwick, 2002; Ulwick & Bettencourt, 2008). This method guides product developers to define
the “desired outcomes” based on customer inputs and prioritize them based on an opportunity algorithm. The results
from Stage 3 were reviewed at Gate 3, or Go to Development. The approval at Gate 3 means that the business case
was sound and product developers were allowed to continue to Stage 3. It was designed that Gate 3, as well as Gate
4 and Gate 5, are kept by lecturers.
In Stage 3, Development, the team began the actual design and development of the product. The development
involved iterative loops of product prototyping and internal assessment. Some other activities were designing the
manufacturing process, developing external-test plan, and mapping out a marketing plan. It was designed that the
Technology and Innovation 2 course takes place in parallel with the Entrepreneurial Marketing course. The students
were asked to conduct activities related to the marketing plan based on the theories they learned from the
Entrepreneurial Marketing course, under supervision of the course‟s lecturers. The results of the activities carried
out in Stage 3 were reviewed at Gate 4, or Go to Testing. The gatekeeper had to ensure the developed product is
consistent with the previously agreed definition. The manufacturing process, the external-test plan, and marketing
plan have to be well constructed.
In Stage 4, Testing and Validation, the teams were asked to test and validate the viabilities of the product, the
production, and the marketing aspects. The results from activities undertaken in Stage 4 were reviewed thoroughly
at Gate 5, called as Go to Launch. The evaluation criteria at this gate was the quality of the testing and evaluation
results, the solidity of production plan and launch strategy, as well as the readiness of all other aspects for the
launching. Gate 5 opens the door for Stage 5, Launch, and in turn to the Post-Launch Review. However, it should be
noted that in this course students were not obliged to simulate the Stage 5 and Post-Launch Review activities.
2.2. Experiential Learning Gained by Students
As mentioned earlier, the Technology and Innovation 2 course was designed to allow the students to simulate a
process of new product development. The simulation of activities for each stage and gate should give them new and
concrete experiences. Table 1 lists the experiential learning that the students should gain during the duration of the
course. For instance, the activities performed in Stage 3, Development, should make the students experience the
process of making prototypes. They should make efforts to select and purchase materials, process the materials in
order to form required parts, assemble the parts, and post-process the prototype for a proper appearance and/or
function. Besides the experiences listed in the table, the project should also give the students some other experiences
such as in managing resources, setting up communications with many stakeholders, and handling conflicts.
It is believed that the experiences will be beneficial for their future studies and, in turn, their future business. By
experiencing the processes through this course, it is expected that it will be easier for the students to picture the
relationship between new knowledge they will receive in the future and the flow of new product development.
Table 1. Experiences to be gained by students from simulation of Stage-Gate process in Technology and Innovation 2 course
Step Experience
Discovery: Ideas Generation Team formation, brainstorming
Gate 1: Idea Screen Idea evaluation (as peers)
Stage 1: Scoping Desk research
Gate 2: 2nd Screen Designing scorecard (as peers)
Stage 2: Build Business Case Interviewing users, salespersons, experts,
designing a questionnaire, distribute, and
analyze the results based on outcome driven innovation method
Gate 3: Go to Development Presenting product definition
Stage 3: Development Prototyping, prototype improvement, designing production plan,
designing marketing plan (synced with Entrepreneurial Marketing course project)
Gate 4: Go to Test Presenting product and plans
Stage 4: Testing and Validation Product testing, collecting feedback, product improvement,
developing marketing materials (synced with Entrepreneurial Marketing course project)
Gate 5: Go to Launch Presenting the justification for product‟s commercial launch
Thus, the experiences should help the students in recognizing the importance of the knowledge. In case the students
develop new products for their company in the future, the experiences gained from the project should help them in
solving the problems. Many of the problems faced by the students during the project are most likely to be similar to
problems in actual business.
2.3. Course Environment
In Technology and Innovation 2 Course, the lecturer is responsible to deliver comprehensive teaching material,
assign product development project, oversee students‟ performance, and provide mentorship during the course‟s
duration. The project is team based. Teams are formed in the first meeting of the course. Each team comprises of
three to four students, where the composition of the teams should be kept the same during the course duration.
Students‟ performance is evaluated based on the quality of their projects. It was designed that there are no written
examinations. Gate 3 and Gate 5 are perceived as the midterm test and final test, respectively. For course evaluation,
after completing Gate 5, the students were asked to fill an on-line questionnaire.
In the academic year 2013/2014, the Technology and Innovation 2 course was taken by 123 students. The
students were then divided to 3 classes, administered by 3 lecturers. In total, 36 new product development projects
were carried out. On average, one lecturer handled 12 teams of students.
3. Course Outcomes
3.1. Students’ Progress
It is obvious that the students gained knowledge and experiences from the course. The qualities of the
prototypes, documents, and presentations delivered at the end of the course were admirable. These qualities imply
that their knowledge and skills have significantly improved. Furthermore, based on student feedback received upon
the completion of the course, in majority (confirmed by more than 80% of the respondents):
Students have a clearer picture on how to generate ideas and transform them onto market-ready products
Students feel inspired and confident to develop innovative product in near future
Students know how to be a gatekeeper.
Considering the points above, the students‟ progress has been promising, especially in terms of the students‟
potential in digesting new knowledge in their future studies, generating customer-driven and innovative ideas,
producing patents, and developing new products for their company.
3.2. Lecturers Feedback
The lecturers, i.e. authors of this paper, agree that the implementation of the course has been successful. It was
gratifying to realize that the students enjoyed the course, put lots of effort on their projects, and most of them were
able to deliver a good prototype and marketing plan. Some prototypes, with their marketing plan, are high-quality
and almost ready for commercialization. In addition, some of the product ideas, designs, logos, and brands created
are believed to have great potential for being transformed into valuable intellectual assets.
3.3. Project Samples
Two of the 36 new product development projects delivered by students in the Technology Innovation 2 course
are Kitchenic composter and Aleurre bio-shampoo by, let say, Team A and Team B respectively. The process of
brainstorming, desk researches, and idea screenings led Team A to pursue the development of a small-scale
appliance that converts domestic organic wastes into compost. Based on their investigation, using the outcome
driven innovation method, they discovered that the appliance should provide some features that can produce the
following outcomes, „faster composting‟ and „easier composting‟. In order to satisfy the outcomes, Team A
developed the Kitchenic composter. The composter is equipped with a rotating blade for breaking down entered
waste. It was also equipped with apparatuses for releasing effective microorganism and collecting liquid and
powdered compost. The composter is 47 cm in height and 24 cm in diameter. The prototype of Kitchenic composter
is shown in Fig. 2a. A series of internal tests on the early prototypes revealed some defects like liquid leakage and
unfavorable blade size. A series of external tests, conducted after some improvements on the prototype, confirmed
that the prototype is acceptable for customers. Twenty out of 20 respondents reported that they liked the prototype,
had the intention to buy, and preferred the Kitchenic composter rather than other products.
Fig. 2b shows the prototype of Aleurre bio-shampoo. Team B developed the shampoo using the oils extracted
from watermelon rind, orange rind, aloe vera, and rice straw. Aleurre bio-shampoo was positioned as an
environment friendly shampoo for urban women. The idea was to produce a shampoo that is effective in cleaning
scalp while at the same time is environment friendly. The shampoo is rich in vitamins and substances that are good
for scalp and hair. The shampoo does not contain chemicals like sodium lauryl sulfate, formaldehyde,
diethanolamine, or parabens which are believed to be toxic.
Fig. 2. Prototypes produced by students in Technology and Innovation 2 course (a) Kitchenic composter; (b) Aleurre bio-shampoo
4. Lessons Learned
After reflecting upon our experience in designing and implementing the Technology and Innovation 2 course, we
identified three lessons learned.
4.1. Support is Crucial
Given that the course required the students to develop new products based on customer needs, it appeared that the
students, in most cases, had to provide a solution that is not straightforward. The difficulty was high. We could not
simply announce the project assignment, provide and deliver some teaching materials, and let them do their work. It
was noticeable that the students needed continuous support from the lecturers, whether in the forms of clarifications
on assignment details, further explanations on the theories, or in the form of advice in solving technical problems.
Inevitably, the teams that asked and received sufficient support from the lecturers tended to get excellent marks
while teams that carried out the project on their own tend to be less than satisfactory.
4.2. Synchronization is Beneficial
As mentioned earlier, it was designed that the Technology and Innovation 2 course took place during the same
term with the Entrepreneurial Marketing course. Once the students decided their product definition, i.e. in the
beginning of Stage 3, they could start drafting a product marketing strategy, based on theories provided in the first-
half of the Entrepreneurial Marketing course. The student feedback revealed that synchronization of both courses
helped them to understand the contents of each courses.
4.3. Students’ Interactions with Many Stakeholders are Valuable
In doing the project, the students were urged to interact with many stakeholders. Students had to collaborate with
team members, discuss with other fellow students, and interviewed some potential users, sales person, and experts.
It was observed that these interactions improved their communication skills. The interactions with unfamiliar
external parties have broadened their network. The student feedback confirmed that the interactions with many
stakeholders during the project had been valuable for them.
However, given that the course is new, some work still need to be done. The authors plan to improve the scheme
of supports provided to students in order to assist them in solving technical issues during prototyping. Another
future work is to collect more data to determine long-term effectiveness of the course, for example the numbers of
intellectual property and commercialized products that can be attributed from the course.
5. Conclusions
A course on new product‟s idea-to-launch process emphasizing on experiential learning has been designed and
implemented. The course provided the students with the concept of the Stage-Gate process in new product
development and inquired them to simulate the process, with some modifications. It was designed that the students
who took the course would gain several concrete experiences by playing the role as a product developer as well as a
gatekeeper.
Prototypes, reports, presentations, lecturers‟ observations, and feedback from students regarding the
implementation of the course have shown positive indicators. Considering that we have successfully implemented
the course at an undergraduate level, majoring in technopreneurship, it is our hope that this course, or any similar
courses, should be offered to more undergraduate students, especially students majoring in entrepreneurship,
business, and engineering.
References
Cooper, R. G. (2011). Winning at new products: creating value through innovation (4th ed.). New York: Basic Books.
Marion, T. J. , Friar, J., & Cullinane, T. (2011), Lessons learned from developing and teaching a multi-disciplinary new product development
course for entrepreneurs, NCIIA Annual Conference. Washington, DC, USA.
Rasmussen, E. A., & Sorheim, R. (2006). Action-based entrepreneurship education. Technovation, 26, 185-194.
Schilling, M. A. (2013). Strategic management of technological innovation (4th ed.). New York: McGraw-Hill.
Ulwick, A. W. (2002). Turn customer input into innovation. Harvard business review, 80(1), 91-7.
Ulwick, A. W., & Bettencourt, L. A. (2008). Giving customers a fair hearing. MIT Sloan Management Review, 49(3), 62.
12 – 14 August 2014
The Effect of Tweet Ads Through @infobdg Twitter Account

toward Bandung People Buying Interest
Athira Setira Adila, Rah Utami Nugrahanib*
ab
Telkom University, Telekomunikasi Street, Bandung, Indonesia
Abstract
Today, the utilization of social media like Twitter is not only as a means of communication but also as a medium for marketing
purpose. The account of @infobdg is one of many Twitter utilized by many local and national companies as their promotion
medium.
The purpose of this study is to determine the effect of advertising tweets through @infobdg Twitter account toward Bandung
people buying interest. The variables are tweet ads as independent variable (X) and buying interest as dependent variable (Y). .
The writer used quantitative method with descriptive research and causal. It should use instrument testing, validity and reliability
testing. The data are primary and secondary data. Primary data were obtained through validity and reliability survey using
questionnaires for 40 respondents with convenience sampling technique. To answer all issues contained in the formulation of the
problem, the writer used several data analysis techniques, such as descriptive statistical analysis, classical assumption test, simple
linear regression, determination of coefficient commission calculation, and hypothesis testing.
The result was shown that @infobdg ads tweets through Twitter effected Bandung people buying interest. Coefficient of
determination 0.210 indicated that independent variable trough Twitter account effected Bandung people by 21 % and the rest
was 79 % effected by other factors outside of variable.
Keywords: tweet ads; interests buying; twitter; social media
1. Introduction
Today, the use of media for advertising is one of the important considerable factors. It can be from conventional
media which encountered every day, or either through newspapers, magazines, television, and radio. It also includes
social media as we all know in many parts of the world.
As time goes by, social media has changed its way and motive in the field of marketing. It is challenging to
create effective advertising at this industry. We do it by utilizing innovative technology, sniper tactics, and
E-mail address: rutamin@telkomuniversity.ac.id
22 Athira Setira Adil / IICIES 2014 Proceeding
following consumer interests. Based on the data above, these issues are taken to generate further effective
advertising and affect public interest strategy. Surely, it needs a well-arranged design strategy. Not only physical
appearance or visual impressive, but it can also communicate hidden message. It takes brilliant and wise strategy to
be well-captured. Especially if the media like Twitter is just a text with the use of 140 maximum characters.
Other media usage to advertise in many companies has been used generally, but the new media like Twitter is
mentioned as the fastest information media. It becomes unusual opportunity to the companies in advertising their
products, as seen by Twitter user all around the world and the effectiveness of 140 characters.
The amount of public response to Twitter has made it a strategic field for the business actors. Many strategic
advantages gained by promoting through Twitter. We have to understand how to use it first. The easiest way to do
that is to create the account. Business owners or companies simply create an account on Twitter; follow public
account or other accounts that can help promoting, and writing attractive status by the goal of promotion. As an
entrepreneur, Twitter has many advantages. People can easily recognize new products and seek information from
the product by advertising it through Twitter. In addition, business owners can also easily figure out how to respond,
comment, criticize and suggest he products that they offer to the public. If you get negative comments from
customers about a product or company, we can directly find the solution.
Social media still needs much time to be adapted in Indonesia. Not only the medium of technological factors or
companies ability, but also the main focus is on the users themselves. When the users do not understand how to run
social media, it will certainly be difficult to communicate with consumers.
However, the trend of social media usage continues to grow, and companies should begin to explore and analyze
the extent of which social media help companies in making engagement with consumers.
Twitter has been popular in Bandung. It is the eighth biggest twitter user’s city after Jakarta, Yogyakarta,
Surabaya, Semarang, Medan, Bali and Makassar, but the number is possible to grow. Based on the data above, it is
unsurprisingly that businessmen from Bandung participate to create their own company account. In addition, many
of them use paid tweet facility by using the most influential account in Bandung.
Paid to tweet is a term for tweet that containing particular brand promotion. Usually, the promotional sentence
issued by a buzzer who doesn’t concern whether the user will use the brand product or not. The term of buzzer /
influencer is considered as a medium party to deliver the message, as similar as what the advertisement lips of radio
broadcaster does. But it has the difference from classified ad because the buzzer conveys subtle and interactive
messages to interact with followers in the form of conversation.
The selected twitter account to be brand or company buzzer usually has a lot of followers. It does not have
personal account, group account can be the buzzer too by the assumption of tweet brand message containing. The
message issued by the buzzer will appear at follower timeline. Then, it appears two possibilities. First possibility is
the tweet will be read, and given positive response, i.e. followers eventually open twitter account to be mentioned at
tweet, so they will get direct information from the Twitter account company. The second possibility is precisely
ignored. The ignorance of paid tweet is due to the tweet without regarding the affected tweet.
It should keep in mind that assessing the effectiveness is not counting the number of tweets, but assessing how it
influences to the audience. In connection with the influence of a buzzer at the effectiveness of paid tweet, a
company must also select the buzzer by its power to influence the followers. People who influence the audience or
followers are usually referred to key opinion leader or influencer.
One fairly successful influencer Twitter accounts and key opinion leader in Bandung is @ infobdg. There are
many other interesting account information in other cities to be the buzzer, but when it compared to other similar
account, @ infobdg considered to be more influential. It is seen from the number of followers, re tweets, its and
social relationships. From the data obtained, @ infobdg score of Klout is higher than @ infobandung twitter account
and @bdgupdate. Klout Score is usually used as reference to compare the effect of the account as a buzzer.
Talking about people buying interest is a sense of interest which experienced by the consumers to a product
(goods or services). It is influenced by the external consumer attitudes outside and inside consumer attitudes. If I
review about the emergence of an interest, it can be understood that buying interest is a combination between
stimulus (marketing) and consumer response. When a stimulus provides the attraction to consumer, it will create a
positive response. How strong the buying interest is very dependent on the strength and weakness of a stimulus. It
provides consumer interest that implicates to the purchase decision. So, it can be concluded that buying interest is a
Athira Setira Adil / IICIES 2014 Proceeding 23
passion or personal shoppers desire to purchase some amount of things, particular product or brand within specific
time period. The plan is established through decision or selection process.
From the data obtained globally, Asia Pacific customers more likely to love shopping online if it compared to
customers in other parts of the world. The customer is categorized into people who like to order the products and
ship it to customer house.
Talking about Bandung people interest in purchasing the product, there is not any specific data that showing
specific number of it until now. But seeing from the number of Internet users, social media Twitter, and the
widespread of online shop in Bandung, the chances of the people shopping online are quite large. Moreover, Google
Adwords has gained 165.000 searching to online shop keyword in the past month.
Meanwhile, the result shows that Bandung is the third city with the most internet users who search the keyword
of online shop. It followed by Internet users in Surabaya and Jakarta. It is more than just reading @ infobdg timeline
on Twitter, tweet advertisement from @ infobdg will also attract public interest to buy seeing how consumptive
Indonesian society is.
@infobdg is quite concerned to take the advantages in increasing their income. So, the biggest source of revenue
is through the account number of a advertisement. To gain more trust for prospective clients and retain old client,
@infobdg should provide information to public perception about tweet advertisements through Twitter @infobdg.
Unfortunately, there is no statistical evidence regarding to public perception to the tweet advertisement until now.
2. The Purpose of The Study
To know the perception of @infobdg Twitter account followers about the tweet advertisement component at @
infobdg timeline.
To know the buying interest of Bandung people to the products offered by the advertiser through @infobdg
Twitter account.
To know the effect of tweet advertisement through @infobdg Twitter account of buying interest in Bandung.
3. The Method
In this study, I use the descriptive studies to answer the research problems. They are the explanation of @infobdg
Twitter account perception about @infobdg tweet advertisement component at @ infobdg timeline and the interest
of Bandung people in purchasing the products offered by the @infobdg Twitter account advertiser.
Table 1. Profile of Respondents by Sex

Sex Respondent
Men 223
Women 177
Total 400
Table 2. Profile of respondent by age

Age Respondent
< 17 year 30
17 – 20 year 124
21 - 24 year 161
25 - 34 year 71
> 34 year 14
total 400
Table 3. Profile of Respondent by education level

Education Level Respondent
SMP 9
SMA 224
S1 125
S2 6
others 36
Total 400
Table 4. Profile of Respondent by income

income Respondent
< Rp 1.000.000 214
Rp 1.000.001 – Rp 3.000.000 145
Rp 3.000.001 – Rp 5.000.000 32
Rp 5.000.001 – Rp 7.000.000 5
> Rp 7.000.000 4
total 400
Table 5. Profile of Respondent By the Duration of Following @infobdg Twitter Account

Duration of following @infobdg Respondent
< 1 month 22
1 – 6 month 92
6 – 12 month 85
1 – 1,5 year 101
> 1,5 year 100
Total 400
Table 6. Result of Descriptive Statistic Test to the Variable of Tweet Advertisement

No. Item Sub Variabel Total Ideal Percentage
Score Score Average
IT1, IT2 Short and Catchy Text 2594 3200 81,06%
IT3, IT4 URL Shortner 2792 87,25%
IT5, IT6 References Other 2666 83,3%
IT7, IT8 Hashtags / Keywords 2609 81,53%
Total score 2665,25
Total Percentage 83,28%
Very Low Low High Very high
25% 43,75% 62,50% 81,25% 100%
83,28%
Table 7. Result of Descriptive Statistic Test to the Variable of Purchasing

No. Item Sub Variabel Total Ideal Percentage
Score Score
MB1, MB2 Perception 2611 3200 81,59%
MB3, MB4 Affective 2459 76,84%
MB5, MB6 Kognitif 2424 75,75%
MB7, MB8 Association 2062 64,44%
MB9, MB10 Persuasion 2227 69,59%
MB11, MB12 Behavior 2137 66,78%
Total Score 2320
Tota Percentage 72,5%

Very Low Low High Very High
25% 43,75% 62,50% 81,25% 100%
72,5%
Table 8. Result of Simple Linear Regression Test

Model Unstandardized Coefficients Standardized t Sig.
Coefficients
B Std. Error Beta
1 (Constant) 17.135 2.259 7.584 .000
IT .760 .074 .459 10.298 .000
Based on the result of regression test, it can be seen that the price of zero beta (a) is 0,760 and the price of one beta
(b) is 17.135. From the results, it can be determined the equation of linear regression line between tweet
advertisement through @infobdg Twitter account toward Bandung people buying interest as follows:
Ŷ = 17,135+ 0,760X
The equation of Linear regression can be used to predict or forecast the effect of the independent variable change
(tweet advertisement through @ infobdg twitter account) to dependent variable (Bandung people buying interest).
With 0.760 values can be interpreted that the effect of variable tweet advertisement through @ infobdg twitter
account to Bandung people buying interest is positive. It indicates that the increase of tweet advertisement variable
will be followed by an increase of buying interest at 76%. It can be interpreted as follows:
a = 17,135 : It means that if the tweet advertisement (X) is zero (0), so the buying interest (Y) will be
worth 17.135.
b = 0,760 : It means that if the tweet advertisement (X) increases by one unit, so the buying interest (Y)
will increase by 0.760 units.
Table 9. Result of Regression Test
Model R R Square Adjusted R Std. Error of the

Square Estimate
1 .459a .210 .208 6.00143
a. Predictors: (Constant), Tweet Adv (TA)
b. Dependent Variable: Buying Interest (BI)
KD = 100%
KD = 100% = 21%
Based on the calculation table above, the acquisition value of determinant coefficient is equal to 0.210 or 21%. It
can be interpreted that the tweet advertisement variable ability in explaining the behavior of buying interest is 21%,
while the 79% remaining is explained by other factors which is not examined in this study. The unexamined factor is
the behavior of consumers toward the brand.
5. Hypothesis Result
The hypothesis of this study aims to investigate the influence of tweet advertisement through @infobdg Twitter
account buying interest is as follows:
H0: Tweet advertisement thorugh @infobdg Twitter account doesn’t have the effect toward Bandung people
buying interest.
H1: Tweet advertisement through @infobdg Twitter account has the effect toward Bandung people buying
interest.
Decision rules by using the t test (α = 0.05 error rate):

If t value ≤ t table (n=400, α=0,05) 1.65, so H0 is accepted and H1 is rejected. It means that there is no effect
between tweet advertisement through @infobdg Twitter account and Bandung people buying interest.
The score of t value is 10,298, and the score of t table from t distribution table with α = 0.05 and the score of t
table is 1,65. If it is stated by the decision rule, so the t value score is 10.928 greater that t table score by 1,65. It can
be stated that H0 is rejected and H1 is accepted.
The significance test on the results of calculation output data with the SPSS version 20 shows the number of
significance (Sig.) 0.0001 ≤ 0.05, which can be interpreted that the influence of variables X and Y are significant. It
concludes that @infobdg Twitter account affects Bandung people buying interest.
F test on the concept of linear regression is a test to examine whether the regression model is totally acceptable. F
test aims to test whether the dependent variable (X) and bound variable (Y), or at least one of variable X with
variable Y has linear correlation. The elaboration for the F test can be found in the table of ANOVA (Analysis of
Variance) below:
Table 10. Result of F Test

ANOVAa
Model Sum of Squares df Mean Square F Sig.
1 Regression 3819.842 1 3819.842 106.056 .000b
Residual 14334.841 398 36.017
Total 18154.683 399
The testing is done by using numeric significance or Sig. It is used with the following conditions: If the number
of research significance <0.05 and F count> F table, then H0 is rejected and H1 is accepted. If the number of
research significance> 0.05 and Fcount ≤ F table H0 is accepted and H1 is rejected.
Based on the calculations, the number of significance is 0.000 <0.05. It also obtained Fcount score is greater than
F table at 106,056 > 0,00393. Hence, H0 is rejected and H1 is accepted. It means that there is a linear relation
between the tweets variable through @infobdg Twitter account with Bandung people buying interest.
6. Research Discussion
The perception @infobdg Twitter account respondent about tweet advertisement components containing at
@infobdg timeline is very good. Its high position indicates that @ infobdg has fulfilled the effective tweet
advertisement component in writing the tweet ads.
The effective tweet advertisement components include: short and catchy text, URL shortener, references others,
and hash tags/keywords. The result from the respondent will be discussed one by one regarding to their perception
about the ad tweet component. For the first component, short and catchy text is obtained at good result where the
two item statements are rarely disagree. The statement intended to tweet advertisement @ infobdg displayed by
@infobdg with no more than 140 characters. The characters are a maximum limit of 140 characters at micro blog
Twitter account. The written tweet with more than 140 characters will be truncated.
There is now a wide variety of sites that provide services to allow Twitter users writing more than 140 characters
(example: Twitlonger). But if the tweet advertisement wants to look more interesting, the ad tweet must meet
maximum character limit. @Infobdg is aware of this thing. So, the tweet advertisement will be seen as a whole
without being interrupted by tweet link extender.
For the next statement, the considerable components are the attractiveness of tweet content. @ Infobdg has been
receiving tweet material directly from advertisers, but the editing it still done by @ infobdg in order to attract people
who read it. The very good position in the continuum line indicates very interesting. Things that @infobdg should
do is by keeping it. It is done to get the follower attention.
The second component is the inclusion of URL shorten where it can be used to clarify the displayed information
at @infobdg tweet advertisement. Tweet advertiser typically includes additional links to provide more information
to tweet reader. The links are intended to be the official company website advertisers, link images and video product
advertisers, and so forth. And the link address displayed should be accurate, because if the destination address is a
link that does not conform to the tweet advertisement, then the advertisement will mean nothing. Respondents see it
as something that can enhance their confidence in the advertised product. Therefore @ infobdg has been included
the link and use link shortened like Bit.ly. It is used to limit the maximum character.
References others has been one of the most important components at the next component. Every generated tweet
generated tweet advertisement should include Twitter account/advertiser company that can be contacted, and it is
necessary to check twitter account accuracy. This twitter account/company contact function is to facilitate the
followers if they have questions or comments regarding to the tweet advertisement. The respondents strongly agreed
on the importance of inclusion and twitter account accuracy/advertiser company contact. It can be seen from the
very high obtained result through descriptive statistical analysis.
The use of hash tag / keywords should be the last item equipped to acquire effective tweet advertisement.
According to the majority of respondents, @ infobdg has succeeded using its tweet advertisement hash tag. Besides
that, hash tag usage apparently has made the respondents easier to obtain the information they needs. It is seen from
a very high position on the continuum line.By looking at the results of positive respond, it means that @ infobdg has
successfully written a good tweet advertisement. Not only that, the effects of tweet advertisement should be found
out. The effect would find out the effect of people buying interest or just simply the fulfillment of effective tweet
advertisement component. Therefore, we can see the results of respondent to Bandung people buying interest on the
products offered by twitter account advertiser first.
There are six factors of the advertising effect to measure the impact of buying interest and the effect cause of the
tweet advertisement, there are: perception, affective, cognitive, association, persuasion, and behavior. At the first
factor, the respondents’ perceptions were aware of and read @infobdg account. The tweet advertisement should be
concerned to make it effective. The tweet advertisement should be read, even though the effect is minimal. And if its
presence had been realized by the respondent, the minimal effect of advertising tweet has been reached.The next
factor which may be the effect of advertising is affective. Affective respond reflects our feelings about something.
From the two statements, respondents respond it positively. The tweet advertisement has caught respondent
attention, and some tweet advertisements are appropriate to respondent wants. It indicates that tweet advertisement
has been able to stimulate the desire of love or cause certain feelings.
By the appearance of attractive tweet advertisement and respondent wants, the respondent cognitive response has
raised to search and evaluate more information about the products offered through the tweet advertisement. The
positive response can be seen from the high position on the continuum line. By studying the process and
understanding product information, it means that they become interested and get the effects of cognition in the
products of the tweet advertisement.
Association is the next response. It should be able to build a connection between respondents and products
offered through lifestyle and respondent personality of the respondent. The respond about association factors is more
neutral. There are tight competition among the respondents who agree and disagree with the statement that the
product ads displayed tweets reflect their lifestyle and personality. The respondents characteristic are adolescents
and adulthood. Because of that, @ infobdg should adjust the language, product filtration, lifestyle and personality of
respondents majority to obtain better response. Sub variables of persuasion and behavioral are the response to
describe overall respondent buying interest through infobdg tweet advertisement. It mentioned that the majority of
respondents have agreed with the statement that says that the respondents have desires to try, buy or see the products
offered. The respondent shall include it in their shopping list which means they are interested to buy these products.
The action was proportionally taken to the desire of respondents. They usually respond / ask questions about the
information contained in the advertisement tweet, either by way of replies/ re tweet or call the company directly. In
other words, it indicates the seriousness of respondents who are interested in buying, and made buying decision.
After seeing the results of respondents about the two variables, the influence of effect generated by tweet
advertisement on buying interest is seen. The high value of the correlation between tweet advertisement and buying
interest showed the substantial degree of relationship. According to hypothesis testing testing result using t-test with
α = 0.05 level of error, it can be concluded that H1 is accepted and Ho is rejected. It means that tweet advertisement
through @infobdg twitter account affects Bandung people buying interest.
From the coefficient of determination test results with simple regression analysis techniques, the effect of tweet
advertisement through @infobdg Twitter account to Bandung people buying interest is 21%, and the rest 79%
influenced by other factors which is not addressed in the present study. In addition to the answer of research
problems, the adaptable respondents’ characteristics to their answer need to be concerned. From the data obtained,
follower with high school education and the monthly income less than Rp. 1,000,000 are the highest majority of
respondents. They mostly assume that the components of @infobdg tweet advertisement result are very good and
completed. Their responses to buying interest from the advertisement tweet are also good. By the level education at
senior high school, the respondents are already mature enough to see, judge and decide which tweet advertisement
attracted their interest to see or seek out the offered products. It includes the decision to put the product in their
shopping list. The respondents should think carefully about the product they want by the fact their minimal income
and wages. They do not necessarily just buy it, but they adapt to their needs. Therefore, most of the respondents do a
little research about it.
The association of sub-variables is related to the characteristics of respondent majority. It is matched with the
majority data that shows the tendency of advertising products displayed is ranged from 17-24 years at senior high
school education level. But it remains a tendency that cause them do not feel suited to their lifestyle and personality.
This can be seen from the number of respondents who disagreed with the statement claiming that the ads displayed
product is in conformity with the lifestyle, personality and their income. By the criteria of age, and education level,
the respondents are more likely to have a modern advertising product, but it is not so expensive and can be useful for
their daily life. Therefore, it can be used as a suggestion for @infobdg in choosing corporate advertisers and proper
language to be used in advertising the products.
7. Conclusion
1. The results of @infobdg twitter account respondents perceptions about tweet advertisement components at
@infobdg timeline is very good, because it rated at very high position in the continuum line with the average
total score of 2665.25 and total percentage average of 83,28%. The averages are: short and catchy text sub
variable at 81.06% total percentage, URL shortner at 87, 25%, references others at 83.3%, and hastags/keywords
at 81.53%. According to respondent, it can be interpreted that @infobdg has fulfilled effective component tweet
advertisement in writing its ads. If it is seen from the length of their following, it can be drawn that content tweet
is pretty informative. It is also effective at the tweet informative content and can attract people to fulfill effective
weet component.
2. The results of @infobdg twitter account respondents perceptions about tweet advertisement components at
@infobdg timeline is very good, because it rated at very high position in the continuum line with the average
total score of 2665.25 and total percentage average of 83,28%. The averages are: short and catchy text sub
variable at 81.06% total percentage, URL shortner at 87, 25%, references others at 83.3%, and hastags/keywords
at 81.53%. According to respondent, it can be interpreted that @infobdg has fulfilled effective component tweet
advertisement in writing its ads. If it is seen from the length of their following, it can be drawn that content tweet
is pretty informative. It is also effective at the tweet informative content and can attract people to fulfill effective
tweet component.
3. The influence of tweet advertisement through @infobdg twitter account to Bandung people buying interest is of
0.21. Score of 0.21 means the influence of @infobdg twitter account to Bandung people buying interest is 21%,
and the rest 79% influenced by other factors which is not addressed in the present study.
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12 – 14 August 2014
Empowerment Strategy Small Medium Entreprises (SMEs) Creative

Industry to Increase Competitiveness in Dealing Free Trade
Sri Hartatia* Kartib Bayub, Edwin Karimc
a
School of Business and Management, Institut Teknologi Bandung, Jl. Ganesha No 10, Bandung, 40132, Indonesia
b
School of Architecture, Planning and Policy Development, Institut Teknologi Bandung, Jl. Ganesha No 10, Bandung, 40132, Indonesia
c
Sekolah Tinggi Ilmu Ekonomi, Bandung, Indonesia
Abstract
SMEs have a very important role as the support for the national economy. Important role mainly contributed by SMEs in job
creation, employment, contribution to national income and growth spirit of entrepreneurship. One of the SMEs that have
contributed the creative industries are SMEs. Creative industry is an industry that is loaded with creativity and innovation to the
products of creative industryi currently expanding rapidly. In line with the development of creative industries growth and creative
industries must be able to maintain its contribution to the improvement of the national economy. Several challenges must be
faced ole h SMEs creative industries, among others, in the face of free trade in the Asian which will apply from 2015 in which
creative industries must produce products that can compete with other countries. Creative industries must strive to optimize
strength and minimize the weaknesses that are owned. The method in this study is Descriptive Comparative Method. Technique
studies using three approaches, namely (1) Literature (Desk Study); (2) The use of Participatory Rural Appraisal (PRA), and (3)
Survey (interviews and observations). The type of data consists of primary data and secondary data. Primary data were collected
with a three (3) ways: through PRA (Participatory Rural Appraisal), and that is through an interview survey using questionnaires,
and direct observations. Secondary data were collected through literature, documentary review and the results of previous
studies.The results show that the strategy should be done by the creative industries is of Corrections and Growth Entrepreneurial
Motivation, Reinforcement and Improvement of Human Resource Competency, Improvement Products Market Attractiveness
Crafts Precious Stones, Resource Capacity SMEs Crafts Precious Stones, Extension Upgrades and guides SMEs Precious Stones,
Strengthening and Improving SME Research and Development of Precious Stones
Keywords: empowerment; Small Medium Enterprise; creative industry; free trade
* Corresponding author
E-mail address: sri.hartati@sbm-itb.ac.id
32 Sri Hartati / IICIES 2014 Proceeding
1. Introduction
Sukabumi has potential industrial precious stones scattered in several districts by the number of 1600
entrepreneur. Business activities in precious stones largely a business hereditary (inherited) from parents so its
management is still family-run, the owner as manager and financial management has not done using good
accounting standards. Equipment or production machines used are simple this result low production capacity and
product quality less than the maximum, especially for export is still semi-finished materials and raw materials, this
has resulted in low value-added products. Product design,
packaging, and coasters are still relatively monotonous; there is no variation in the product so that consumers are
less attractive due to the lack of the ability to design and innovation the product.
Given the potential for raw materials, and precious stone products market in Sukabumi is promising, there are
companies that make investments in Korea .Sukabumi using technology and equipment / machinery is quite modern
and adequate financial support, so that local SMEs in the Sukabumi rivalry is quite tight, and if this is allowed to be
feared local SMEs precious stones be unable to compete and will go insolvent. Knowledge and skills of labor
production techniques, as well as management (administration) is based on the experience (instinct) have not
attended formal education or training relevant to the field at hand, resulting in the power of creativity and innovation
is still relatively low.
Demand precious stone products for export to Saudi Arabia, the Netherlands, Taiwan and Korea can not be
fulfilled, this is because the product is required of the four countries require the design, specification, quality, and
certain variations have not been able to be produced by Mustika Alam Putera SMEs and also the amount of product
required enough. Have not been able to fulfill the request due to HR products and technical production design
inadequate and also requires specific machining. SMEs in marketing their products just waiting for buyers to come
to the place of production or showroom, this resulted in most SMEs can not determine price; this resulted learning is
determined by the price of the product. In marketing the product has not been done in a professional, yet do
promotion (product catalog, brochure), and also have not been able to use information technology (Internet) in
promoting its products.
Production precious stones made will determine the type and quality of product produced. The resulting product
will depend on the raw materials, technology, equipment, and skills of Human Resources. The selection of raw
materials has not done carefully; sometimes there are errors in determining the raw materials to be processed.
Cutting raw materials depends on the size of the stone and the equipment used. In the cutting direction and cutting
accuracy will determine the results processed. Product formation so ultimately determine the form of the product to
be produced, it also depends on the design of products that have been made. In forming the required special skills
and accuracy. Based on the real conditions faced by SMEs craft gems and promising market opportunities, to meet
market demand, the required breakthrough strategies and efforts to empower SMEs craft precious stones, precious
stones so that the products of SMEs to compete for local market and exports.
2. Literature
2.1 Conditions precious stones SMEs
Industry precious stones and jewelry industry is part of a group of small and medium field of handicrafts. Jewelry
products are jewelry items that use the main raw material in the form of gold and silver alloys and materials such as
copper or brass and other alloys. Precious stones are a mineral formed by natural processes without human
assistance or effort. Precious or gemstone is a rock, mineral or other natural materials which when processed have
the beauty and resilience sufficient to be used as decorative items and jewelry. The rock has a high value is a rock
that has a certain hardness and luster beautiful. Precious Stone / Stone Honor / gemstone is a general sense that
includes rocks or minerals that have undergone treatment if it would reveal the beauty that has a high selling price.
The price of a precious stone is determined by the level of hardness, color, clarity, pattern / shape, rarity and
sometimes the values contained believed in the precious stones. Stone initially worthless, but because they have high
hardness and may also complexion interesting, if it has been processed will has high added value to the sale price
multiplied double precious stones industry and the Watch is part of a group of small and medium industries
Sri Hartati / IICIES 2014 Proceeding 33
handicraft sector . Jewelry products are jewelry items that use the main raw material in the form of gold and silver
alloys and materials such as copper or brass and other alloys.
2.2. Small and Medium Enterprises (SMEs)
Used to define the limits of Micro, Small and Medium Enterprises is the Law of the Republic of Indonesia No 20
Year 2008 on Micro, Small and Medium Enterprises are:
1. Small Business, is a productive economic stand-alone, carried by an individual or business entity that is not a
subsidiary or branch company is not owned, controlled, or a part, either directly or indirectly from the medium or
large business that meets the criteria Small Business as defined in the Act. Criteria for Small Business, described in
Chapter IV as follows:
a. has a net worth of more than IDR. 50.000.000, up to IDR. 500,000,000, excluding land and buildings,
premises, or
b. has annual sales of more than IDR. 300. 000. 000, to IDR. 2.5 billion,
2. Medium Enterprises, is the economically productive stand-alone, carried out by an individual or business
entity that is not a subsidiary or branch company is not owned, controlled, or a part, either directly or indirectly from
the business to the total net assets and results sale as provided in this Act. has a net worth of more than IDR.
500.000.000, - to IDR. 10 billion, - not including land and buildings, premises, or has annual sales of more than
IDR. 2.5 Billion, - (three hundred million) to IDR. 50 billion,
2.3 Strategy
According to the perspective of Porter (1990), the determinants of 'internationally competitiveness' is the
interaction of four specific factors (country-specific determinants) and two external factors, mix 'diamond' is a
domestic source of competitive advantage for a company. The four specific factors are (1) Condition Factor, (2)
Conditions Demand, (3) Related and Supporting Industries, (4) Corporate Strategy, Structure, and Competition.
FIRM STRATEGY,
STRUCTURE AND RIVALRY
Chance
FACTOR DEMAND
CONDITIONS CONDITIONS
Government
Source: Porter, 1990
Fig 1. Complete System Competitiveness Diamond Advantage (Porter, 1994)

Two external factors that also contributed to the creation of the nation, but not direct competitiveness are:
1. Opportunity (chance), which can be caused by several factors such as: (a) a new discovery, (b) the opportunities
unleashed by political decisions of other countries, (c) war, and (d) significant changes in the financial industry
and the exchange rate.
2. Government factor in the creation of situations 'competitiveness' in a country, such as: (a) the provision of
subsidies, (b) intervention through financial markets (capital market), (c) the implementation of product
standardization and regulation of the industry, (d) tax regulatory instruments and (e) anti-monopoly regulations.
3. Relationships between to all the local factors in the creation of competitiveness can be seen in Porter's Diamond
Framework. As shown in the chart above, that the relationship between each of these factors interplay and
mutual interaction and augmented by two external factors that also contributed to the creation of
'competitiveness'
4. To assess the competitiveness of a company, need to learn the sources of lead. One device (tool) to do this is the
value chain (value chain) that provides a systematic way to examine all activities performed by the company and
its association with one another. Outlines a company's value chain into a set of activities that have a strategic
impact, through an examination of these activities was traced and found to be tried behavioral cost (what factors
influence the cost and how it affects). In addition, the investigation also things that can be a source of
differentiation (differentiation) either already present, or potential. Basically a company competitive advantage
gained by performing key activities in a way that is cheaper or better way than by its competitors. Conceptually,
Porter (1994) defines the value chain of an organization (company) consists of a series of activities that create
and build 'value', in which a whole series of activities will reflect the overall value generated by an organization.
The objective of the activity is to produce products that are offered to the customers / users with a value in
excess of costs / expenses (cost) to produce, so the excess value of the added value generated by the
organization. Within this concept the parts of an organization is separated into (1) Main activities and (2)
supporting activities.
5. Logistics Log (Inbound Logistics) is an activity that provides input (either in the form of goods and / or services)
for the company.
6. Operations is the input processing into finished goods or services.
7. Exit Logistics (Outbound Logistics) is the activity of delivering products to customers.
8. Marketing and Sales (Marketing and Sales) are conducting marketing activities and sales to customers.
9. Service (Service) is an activity that provides service to customers.
Figure 2.2 Value Chain generic Major Activities (Primary Activity management and other technology development efforts)
(Porter, Competitive Advantage, 1994)
Support Activity Procurement: This activity relates to the provision of support (goods and services) needed to run
the main activity.
1. Human Resource Management (Human Resource Management): relating to the activities of recruitment,
appointment, training and development of human resources to run the main activity.
2. Infrastructure (Infrastructure): relating to the provision of infrastructure activity required by all parts of the
company, such as management information systems, financial management, and planning and control
mechanisms.
3. Margin or profit depending on an organization's effectiveness in performing major activities and support them
efficiently. Competitive advantage can be achieved by adjusting / setting the value chain in such a way that the
activity can produce (a) run as low cost or (b) create a different product (no differentiation) of the resulting
competition.
In an effort to accelerate the development of SMEs needs to be viewed from two interrelated elements, namely
the element of businesses and entrepreneurs as an element of business or sought commodity. Elements entrepreneur
seen from the element of commitment and competence. Elements of the business in terms of market attractiveness
factors and resources. To determine the pattern of development of SMEs Development and the factors those are
analyzed as follows:
1. Elements of Employers
a. Commitments include: Motivation (Economic, Social, and Psychological), Learning, and Experience
b. Competencies include: Human Skill (Training), Experience (Development) and Managerial Skill (ability to
manage)
2. Elements of Business
Market attractiveness include: potential consumers, intermediaries, suppliers, competitors, changes, and policy.
Resources include: natural resources (processing), human resources (skilled labor), capital, technology, and
institutional (organizational). In general, the pattern of accelerated development of SMEs can be done in two ways:
a. Development of the vertical scale MSME business development small business be directed to medium and
large enterprises with a commercial motive.
b. Horizontal development in the development of SMEs with small but numerous.
The businesses usually do not have the desire to be great because managerial constraints. Large enterprise
typically weak but strong in managerial entrepreneurship, instead of the small businesses that strong but weak in
managerial entrepreneurship. The business is expected to have competence in running the business that includes
education and experience in accordance with the currently practiced field and other business sectors as well as
entrepreneurial competence (technical skills, expertise, concepts and expertise in managing human resources).
The balance between commitment and competence will grow their entrepreneurial spirit in business as well.
Business is expected to have flexibility in the face of environmental demands in order to have a competitive
advantage. To create excellence, then the businesses are required to achieve a balance between internal resources
owned by the turbulence changes in the external environment SMEs, need to master information about the
development of environmental factors such as economic, technological, political, social, cultural, government
policy, competition and consumer demands.
These factors could be at any given moment chance and could be a threat to firms. In the face of these conditions
need to be improve the ability of internal resources such as human resources, management and operations and
provision of facilities .The success of small and medium enterprises is determined by the extent to which the
businesses are able to create market appeal. The creation of market attractiveness is inseparable from the ability of
businesses to determine the position in an increasingly competitive market competition. Therefore, businessmen
need to establish competitive strategies. In conducting its business in order to become a winning effort, it is
necessary to pay attention to the potential of the resources that would be the advantage for Small and Medium
businesses. Potential resources include natural resources, human resources, capital, the availability of technology
and institutional businesses. Balance between market appeals with a potential resource will foster a winning effort.
3. Methodology
The method in this study is descriptive Comparative Method. Engineering studies using three approaches, namely
(1) Study of literature, (2) use of Participatory Rural Appraisal (PRA), and (3) Survey (interviews and observations).
The type of data consists of primary data and secondary data. Primary data was collected by 3 (three) ways is
through PRA (Participatory Rural Appraisal), and the survey through interviews using questionnaires, and direct
observation (observation). Secondary data was collected through literature, documentary review and the results of
previous studies.
4. Results
4.1 Existing Condition SMEs Precious Stone
4.1.1 Raw Materials
Raw materials are used to make ornaments and jewelry of Honor by Stone Company Mustika Alam Putra are
Agate jasper resd stone, wood fossil, wasp nest, yellow stones and obsidian. Condition of material is enough and
good. Raw materials are used to make ornaments and jewelry from Noble Stone by Stone Mustika SME Company
Majesty as in Table 2.
4.1.2 Equipment Production
Equipment production owned by SME Mustika Alam Putra still relatively simple and there are still done
manually. Type and Value of Investment Capacity Machine Tools SMEs precious Stone Mustika Alam Putera
namely small cutting saws, chain saw medium, polishing machine and good machine. Condition for facilities are
good guarantee the product with equipment is a relatively simple and some work still use manual (hand skills), the
quality of the product is less stable. Less stable product quality caused equipment / machinery that has not been
designed automatically, also depends on the emotional stability (mode) of the workforce to avoid human error
4.1.3 Production
The products by SMEs Precious stones Mustika Putera basically a good indoor and outdoor ornaments and
jewelry (accessories) are accessories 1 ton with condition are good quality and for Jewlry have production 100
peaces with quality are enough.
4.1.4 Management
Mustika Alam Putra is a business hereditary (inherited) from parents, managing the work done by the family. The
owner cum manager of business ranging from planning, execution, organization and control is carried out by the
owner. Financial management is still using relatively simple opening.
4.1.5 Marketing
Company Mustika Alam Putera in addition to the production process also has media to market their products.
Marketing products to meet local demand (domestic) and also to meet export demand. The company markets its
products in Mustika AlamPutera just wait for buyers to come to the gallery or to the factory. The resulting product
marketing company Mustika Alam Putera held domestically and for export to several countries. Marketing
techniques buyers who come to the site, asking for product orders.
4.1.6 Human Resources
Number of employees in the Mustika Alam Putra 20 people comprises 18 technical personnel and 2
administrative staff consisting of 6 people section production technical and 2 administrative staff.
4.1.7 Financial Condition SMEs precious stones
Mustika Alam Putra SME for investment and for working capital is still using their own capital has not been used
outside capital (loans). The amount of venture capital for investment and for working capital to SMEs Mustika Alam
Putera 2.1 billion. Revenue generated from the business at 125 million per year. Revenue generated from the
business is $ 300 Million per Year.
4.2 The pattern of development and empowerment of SMEs Stone Crafts Noble
The results of analysis of employer commitment Precious shows the average value of 6.67, while the average
value of the precious stones competence businesses an average of 5.11. Viewed from the aspect of business that the
businesses of stones have an average market value of the attractiveness of 7.08, which means that the market
opportunity is highly prospective precious stone products. While the resource value 5.73 averages, which means the
resources to develop the business in the category of precious stones was thus sufficient support to develop the
handicraft precious stone. Based on Figure 2. Then the position of the business of precious stones are in cell 4,
which means that the light of the business, craft business is considerable potential precious stones or included in the
seed business.
High Medium Low

9 6 3 0
M High
A 1 2 3
R 6
K 5,73
E Medium
4 5 6
T 3
Low 7 8 9
0
7,08
RESOURCES
High Medium Low

9 6 3 0
B High
U 1 2 3
S 6
I 5,89
N Medium 4 5 6
E 3
S
S Low 7 8 9
0
6,41
ENTREPRENEUR
Fig 3. Position between the entrepreneurs and businesses

Based on Figure 3. Position between the entrepreneurs and businesses that are in the four cell means that the
empowerment to develop precious stone handicraft business in Sukabumi done within the Medium Term. Position
on Tue 4 means employers are reliability and business excellence has also been high.
4.3. Strategy, Policy and Methods
Empowering SMEs precious stone Empowering SMEs are power sharing effort between the builder for SMEs
who have access to and control over the sources of power (government, universities, NGOs, etc.) with a group of
SMEs that have some limitations. The process of sharing power (empowerment) is done by increasing the power
(empowerment) to those who do not / less powerful, and reduce the power that is too powerful (disempowering). In
an effort to empower SMEs, as far as possible the SMEs as objects and fully participate in empowerment, so that
outside parties such as governments, NGOs or universities only act as a motivator, facilitator, and dynamic. Thus the
goal of empowerment will run effectively and efficiently. SME empowerment strategy Crafts precious stones that
can be implemented as follows:
1. Corrections and Growing Entrepreneurial Motivation
2. Strengthening and Improving Competence of Human Resources
3. Increased Product Market Attractiveness Stone Crafts Noble
4. SME Resource Capacity Stone Crafts Noble
5. Capacity extension and Batu Mulia SME Guides
5. Conclusions and Recommendations
Management efforts are made by the family. The owner cum manager of business and financial management are
still using simple opening. Sources of raw materials crafting gems are imported from various regions. Equipment
production owned by the SMEs is still relatively simple and there are still done manually. The products produced by
SMEs Crafts precious stones form both indoor and outdoor decorations and accessories. Product Marketing held
domestically and for export to several countries.
Precious stones craft business is a business that potential to be developed. However, improvement efforts should
continue to be considered, especially in the provision of production inputs and infrastructure as well as increased
potential for entrepreneurship.
Pattern Empowerment for business development craft gems in Sukabumi done within the Medium Term.
In an effort to empower SMEs precious stone crafts, all SMEs should participate in empowerment, so that outside
parties such as governments, NGOs or universities only act as a regulator, motivator, facilitator, and dynamic. Thus
the goal of empowerment will run effectively and efficiently.
Strategy Empowering SMEs Noble Stone craft can be implemented as follows:

Correctional entrepreneurial strategies and Growing Entrepreneurial Motivation, Strengthening and Improvement
Strategy Competence (Ability) HR,Strategy Improvement Products Market Attractivenes,Resources Capacity,
Development Strategies of SME, Capacity Strategy Officer, Extension and guides SMEs,Strengthening and
Improvement Research and Development of SMEs Batu Mulia.
Recommendations for empowerment Mustika Alam Putera:

Required commitment of the government and relevant stakeholders in the implementation of development
programs for SMEs Stone Craft Honor to be able to improve the competitiveness of products both for the domestic
market and for export.
Need to improve the competence of SMEs Stone Craft Majesty that business activities carried on getting better
and developing competencies supported by the SMEs precious stones reliable craft.
Government should conduct more intensive coordination with the government of West Java Province and the
Central Government to empower SMEs Stone Craft Majesty, so that the synergy of policies and programs in an
effort to accelerate the achievement of empowering SMEs precious stones.
In support of empowering SMEs precious stones government should craft more intensive socialization SME
financing program, both program funds (KUR, KCR, revolving funds, etc.), funds from corporate CSR (SOE,
BUMS) as well as funds from the banks.
It is hoped the strategy, policies and methods of empowerment and the role of each stakeholder can be
disseminated to stakeholders and implemented in an effort to empower SMEs precious stones craft to support
regional and national economic development.
References
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12 – 14 August 2014
Determining Customer Satisfaction by Analyzing Price in The Case

of Small Medium Enterprises in Internet Cafe Business
Wardah Naili Ulfaha, Qorri Ainab*
ab
Abstract
This paper investigates satisfactory level of Indonesian customers. There are some researches in evaluating customer
satisfaction. However, this paper provides the analysis of price alteration and price adjustment related to customer satisfaction.
Survey method was conducted in this paper, the researchers use quantitative research methodology. The data was gathered by
using the questionnaire in 4 case study of small and medium enterprise in internet cafe business. The case study is conducted in
sub-district of Indonesia. The district is represents the area of potential market for internet cafe. The phenomenon that occurs in
Indonesia as a developing country, that the internet cafe was very popular recently as the popularity on internet uses. But most of
the cafe cannot hold and a lot of them are closed down. The owner of the cafe should aware of the rivalry among others cafe. So
this study was conducted to determine price alteration and price adjustment related to customer satisfaction. The method used in
this study is a survey method with the approach of descriptive and verification methods. Data collection techniques derived from
primary data collected directly in the field through survey method and questionnaires. To determine the influence and the
relationship of price, both alteration and adjustment, on customer satisfaction processed using multiple regression method. This
researcher found that in Indonesia, price is the attracted factor of customer satisfaction.
Management (SBM), Institut Teknologi Bandung (ITB)
Keywords: price; customers satisfaction; SMEs; internet cafe business
1. Introduction
Entrepreneurship has been one career path that has been hot around these years. Young ventures arise and went
big rapidly like Mark Zuckerberg with his Facebook and other ones are just about to come. Other Silicon Valley’s
built everywhere to handle the flood of the young entrepreneurs all over the world. But, how many do succeed? The
fact shows that there’s a lot more that failed then the ones that succeed.
E-mail address: qorri.aina@sbm-itb.ac.id
42 Wardah Naili Ulfah / IICIES 2014 Proceeding
In order to solve geographic problems in communication people now use the internet. Since 20th century interne
already change so many people in the world (Dickinson et. al., 1999). Internet derived from the abbreviation of
interconnection networking. Many experts and companies innovate, so the internet has a function that can be
unlimited. As a tool for communication, whether through email, social media, even as the search engines the
required information.
Clearly the Internet is one of the most important and powerful creations in all of human history. Indonesia itself
as a developing country has adopted this technology since the late 90's era. Central Statistics Agency (BPS) and the
Association of Indonesian Internet Service Providers (APJII) states that internet users in Indonesia has continued to
grow since 2007. In the year 2012 has reached its 63 million people. Households indicate that more computer
communications have become a part of their daily lives (Dickinson et. al., 1999).
Based on these facts can be seen that the real opportunities for Internet business is very large. As every year the
number of users of Internet services is growing and will continue to grow, along with the evolving technology and
innovation fast enough. The Internet is also reshaping the corporate workplace, by spawning a growing list of
exclusively online businesses and is becoming a tool for traditional businesses to meet with millions of potential
customers (Davis, 1999).
Indonesia is a developing country market potential. Internet is becoming one of the businesses that are considered
very promising. Because of the internet eventually become the Indonesian people, many local entrepreneurs who
glanced providing internet services business. Since the 2000s many internet cafes have sprung up in response to
public demand for the provision of internet services.
However, the fact nowadays Internet business can be said to be weakened. It turns internet cafes businesses
cannot survive long. This can be based on various factors, one of which is the price factor that is not able to compete
with competitors. In this case the competitors are another technological medium that makes it easy for people to
access the internet. However, the internet business are equipped with internet gaming was still promising, especially
in certain areas, especially in rural areas.
Despite the relatively rapid growth of mobile internet, for some classes of Indonesian society cafe is still a
popular location to be visited. Especially in areas that are located around the area of education. Nielsen report says
that 67 percent of Internet users in other Southeast Asian countries accessing the Internet from home, 66 percent of
Indonesia's population went to the cafe to access the internet.
To resolve these problems is not easy. Research is needed that can provide insight to solve the problems faced by
the owner of the internet cafe. Therefore, this study wanted to assess whether the price factor either price alteration
or price adjustment can influence the customer satisfaction in small business and enterprise, in this case the
Indonesian internet cafe. This research is also expected that to provide richer picture of the price adjustment and
price alteration to the customer satisfaction. This research also expected to be used as additional information and
reference for the development of marketing management in particular and science in general. For companies, the
expected results of this study can provide feedback or input for the company concerned in connection with the
implementation of price adjustment and price alterations as well as customers to buy.
2. Literature Review
1.1 Marketing Mix to Develop Service
There are not only one problem faced by business’ owner while running their business. The business owner
should be able to assess what the problem is and then decided how to solve the problem. To solve the problem, first
we should make the problem analysis. So we can understand what main source of problem that affect the declining
of customer of internet cafe. In problem analysis there are several variations, but reverse brainstorming is the
commonly used technique.
Company service providers can increase productivity by designing to make services more effectively. Customers
satisfaction is very important for business owner. The componay used to give specific objectives for each employee
including the costumer satisfaction (Hauser, 1994). Business in the services sector is very complex because there are
many elements that affect. Until now the lags behind service manufacturing company in the field of marketing.
Wardah Naili Ulfah / IICIES 2014 Proceeding 43
Along with intense price competition lately, marketing services often complain about the difficulty of differentiating
their services with the services of competitors.
The key to success in the marketing of services is to fulfill or superiority of the target customer expectations for
the quality of services to be provided. Marketing mix can become a tool used by the company to achieve their
objectives. Marketing mix is a collection of marketing variable, which can controlled by the company and used to
achieve the objectives in the target market (Saladin, 2003).
Marketing mix in product has differences from marketing mix in service. Although in both types of business price
is the only elements of marketing mix that generates revenue. Price the olny one flexible elements in marketing mix
which can changed quickly (Kotler, 2001). If the revenue in the company increase, it does not represent the customer
satisfaction.
1.2 Price Determination
The definition of price is simply defined as the total of the amount of money which expenses for a product or
service (Armstrong, 2000). It is means that the amount of money will become more valuable if we can barter it in to
products or services. The only element in marketing mix which can lead the company to the revenue is price, in
rever on the other way the other elements represent costs. Price also the flexible elements of marketing mix, that can
changed quickly (Kotler, 2001). It is means that none of element in marketing mix can represent the form of money
form revenue except price. From those statements, we can generally conclude that from the perspective of the
customer, the price is the amount of money needed to obtain the desired product or service. Meanwhile, if we look at
it from the standpoint of the company, the price of an element of the marketing mix that generates revenue.
Price in the narrower sense is the amount of expenses for a service or product. However, in broad the term of
price is the tota of value that custumers gave to the benefit after having the product or service (Amstrong, 2000).
Policies for price are sets in a period of time by company (Alma, 2005). Price is one of the significant factor in
giving the value of buying respond and affected decision to buy from customers (Lupiyoadi, 2001). To optimize the
price of product, the posibility of production scenarios must be considered with a range of product prices.
From the statements above can be concluded in general. Seen from the point of view customer, the price is the
amount of money needed to get the desired product or service. Meanwhile, if we look at it from the standpoint of the
company, the price of an element of the marketing mix that generates revenue. Pricing strategies are very significant
in providing value to the customer and affect the image of the product, as well as the customer to buy. Decisions in
the price must be consistent with the overall marketing strategy.
1.3 Customer Satisfaction
In a large company, there is usually a division and product line managers who possess the authority to determine
the price of their product. The pricing according to market segment and sales strategies that have been set as well.
However, in small companies, prices are generally set by top management. The pricing is determined based on the
needs of the company, especially in determining the price for a new product. A company should set prices for the
first time when the company is going to sell a product (Susanto, 2001).
The rationale for starting the marketing of human needs and desires, a person's interest arises because of the
influence from within and from outside himself. At a time when customers will buy a product will certainly pay
close attention regarding the product to be purchased.
The literature about pricing is very broad and diverse. Though some literature are focus in the area of fostering
and test the appropriate measurement scale in customers loyality. While some other literatures are discussing on the
correlation of satisfaction and quality to future sales. Future sales also can be determined by the the buying interest
of the customers, the interest could determined by satisfactory experience (Hauser, 1994). Based on those literatures,
this paper wanted to understand how the price alteration and price adjusment can influeced the custumer satisfaction.
Understanding customer buying interest as a buying interest is an impulse, desire, passion and driving force
others from your-self to do something that he wants and will set the goal in the direction of his behaviour (Griffin,
1993). Customer buying also could be states that the appetite is the desire for a specific product that is supported by
the Traffic and willingness to buy.
Customers buying interest consists of (Alma, 2003):
Attention (attention)
Interest (Attracted)
Desire (Desire)
Action (Action)
Satisfaction (cause satisfaction)
Price is very significant in providing the "Value" to the customer and affects the image of the product and the
customer's decision to buy According (Cengiz, 2010). Usually companies do not set a single price but rather a
pricing structure that reflects differences in demand and other factors, these things we are familiar with the term
price adjustment and price alteration (Susanto, 2001).
The starting point of knowing and understanding the function of price as corporate strategy is by find out if it is
influence customer buying interest trough repurchase activity or not. Customers overstepping to several stages,
which are attention, interest, desire, action and satisfaction (Alma, 2005). These steps are need to determine
customer proclivity to price alteration and price adjusment of a business and customer satisfaction within the result
of rebuying action to the business. These model called AIDA+S is determine to attract customer’s (attention), and in
further decision for price alteration and price adjustment in small and medium enterprises this model is implemented
to know customer’s prespective in trying (interest). Which then can arouse customer desire to buy product (desire),
before ultimatel ecourage customers to buy the product (action). It does not have to stop the action in the purchase
only, but the model will perfectly complete if in the end the customers are satisfied with their purchase (Satisfaction)
so that the customer is willing to repeat their purchase.
By those explanations, the researchers found a research framework as in figure 1. Indirectly figure 1 shows us
about the relationship between variables, which are price alteration, price adjustment and the customer satisfaction.
Price alteration (X1)

 Increasing price
 Decreasing price
(Kotler, 2001)
Customer Satisfaction (Y)

 Attention
 Interest
 Desire
 Action
(Alma, 2005)
Price adjustment (X2)
Geographic price
Promotion price
Discount price
Discrimination price
(Kotler, 2001)
Fig. 1. Research Framework

3. Methodology
There are 16 internet cafe found in the district of research, but then only 4 internet cafe were chosen. The criterias
are already made in order to choose this multiple case study. The respondents were the customer of internet cafe,
which has survives for more than three years. Instead the age of the small and medium enterprise, the location is also
determined to be the criteria. Strategic location of internet cafe, which places in the side of main road or not too far
from the main road is chosen, and the owner of the business is not changing very often. Table 1 shows us about the
average customers per day for all internet cafe in Bandung, Indonesia. From those 400 respondents, the researchers
gain 120 valid questionnaires.
Table 1. Respondents
No Internet Cafe Average Customers per Day Samples
1 IC 1 150 45
2 IC 2 70 21
3 IC 3 110 33
4 IC 4 70 21
Total 400 120
The data was collected by using the quantitative methodology. Observation and survey was conducted before the
researchers spread the questionnaires. Every single question in the questionnaire were analyzed the satisfactory level
of customers in internet cafe. To understand the appraisal the questionnaire were used likerts scale.
To evaluate the impact of price alteration and price adjustment related to customer satisfaction. This paper also
used the multiple case study. It is chosen because the authors were focus on more than one actions which already
occurs (Yin, 2002). The data were processed using multiple regression, in order to know the relationship between
these three variables, and to understand how important the relationship between the independent variables to
dependent variable.
Hence the hypothesis conjectured in this study are :
H1 = Price alteration influenced customer satisfaction partially
H2 = Price Adjustment influenced on customer satisfaction partially
H3= Price adjustment and price adjustment influenced on customer satisfaction simultaneously
4. Finding
Based on the calculation, the samples were chosen based on the calculation of sample fraction (f) by comparing
numbers of element in every sub-population. So it is necessary to find the comparison of every element of each sub-
population with the sum of all of the elements of the population, in order to get each sample fraction.
After that, from the gathered questionnaires we can calculate the profile of the customers as table 2 shows us. The
sample characteristic consists of the customers of internet cafe in Indonesia. The respondent are overwhelming
concentrated in male respondents (60,83%). Most of the respondent who loved to come to internet cafe is in ages of
between 18 to 23 years old (54,17%), with the occupation of the respondent mostly as students (79,17%). So, that is
why the ages of the customers are 65% in range 18 to 23 years old, with the expenses per month are 44,2% in range
of IDR 300.000 to IDR 600.000, but most of the are not the member of the internet cafe (70,83%). Level of
education are concentrated in bachelor degree (55,8%), with frequency to visits is 2 days a week (32,50%).
Table 2. Respondent Profiles

Gender Frequency Percentage Ages Frequency Percentage
Man 73 60,83% < 18 10 8,33%
Woman 47 39,17% 18 – 23 65 54,17%

24 – 27 37 30,84%
Occupation Frequency Percentage > 27 8 6,67%
Student 95 79,17%
Civil Servants 4 3,33% Level of Education Frequency Percentage
Employees 12 10% Elementary - -
Entrepreneurs 6 5% Junior High School - -
Others 3 2,5% High School 23 19,17%
Dilpoma 30 25%
Bachelor 67 55,8%
Expenses per Moth (IDR) Frequency Percentage
< 300.000 12 10% Frequency of Visits Frequency Percentage
300.000 - 600.000 53 44,2% Everyday 10 8,33%

600.000 - 900.000 40 33,3% 6 days a week 6 5%
>900.000 15 12,5% 5 days a week 7 5,83%
4 days a week 12 10%

3 days a week 11 9,17%
Membership Frequency Percentage 2 days a week 39 32,50%
Member 35 29,17% Once a week 16 13,34%

Not Member 85 70,83% Others 19 15,83%
The researchers analyzed the result of the questionnaire to quantified all the data with using weighting analysis
and determine the highest and the lowest scores (Umar, 2003). The data were analyzed by using SPSS 2.0, and the
results as you can see in below table. The table shows us about the correlation between the predictors to variable
dependent. As we can see the R is 0,844 indicates that the two variables simultaneously correlated to the dependent
variable. From the table 3 below we can see the R square of this research is 0,712. It is means that the predictors are
influenced 71,2% to variable dependent, however 28,8% customers satisfaction were affected by another factors.
Fig. 2. Model Summary
The equation model of R square is :
k
R 2 yxi Pyxi .ryxi
i 1
= 0,712
While the other path coefficients outside X1 and X2 to Y, namely:
py 1 R 2 yx1
= 0,288
The correlation between the other coefficient and coefficient X1 and X2 were show in figure 2.
In this study the results of calculations obtained F (Ftest) amounted to 15.814 and if we compare it with the Ftable
(3.07), then the result will be greater Ftest. That means the price alteration (X1) and price adjustment (X2)
simultaneously affect the dependent variable. In addition, the Researchers also conducted a t-test. The results
obtained from the t-test is equal to 5.248 to 4.981 for X1 and X2. While the ttable is 1.98 it shows that the t-test is
greater than t-table means both X1 and X2 partially affect the dependent variable.
Coefficientsa
Unstandardized Standardized
Coefficients Coefficients
Model B Std. Error Beta t Sig.
1 (Constant) .433 .127 7.470 .000
X1 .260 .148 .394 5.248 .015
X2 .236 .201 .301 4.981 .011
a. Dependent Variable: Y
Fig. 3. Coefficients
Furthermore, in figure 1 below shows how the relationship between the variables X1 (price alteration) and X2
(price adjustment) to the dependent variable (customers satisfaction). This is in accordance with the calculations
have been carried out by researchers through SPSS 2.0 to the data listed in Table 5 which is coefficients table.
Where coefficient of X1 and X2 is 0.394 is 0.301. Therefore based on this, the exact structural equation model :
Y Pyx1 Pyx2
Y 0,394X 1 0,301X 2 0,288

Fig.4 Correlation among Variable
5. Conclusion
This paper correlation wanted to see the alteration between price and price adjustment related to customer
satisfaction. Therefore by observation in the sub-population of 16 internet cafes in the area that has been determined,
and 4 cafe which was determined according to the criteria of the study. With collecting the necessary data through
questionnaires on the deployment of 120 customers of the internet cafe. Study multiple regression method was
considered appropriate to calculate the hypotheses that have been determined by the author. So based on the F test, t
test performed by SPSS 2.0 as well as the calculation of R and R square to see the relationship and how much of the
relationship between price and price adjustment alteration related to customer satisfaction.
Therefore, based on those calculations the Researchers made several conclusion. The Researchers found that the
implementation of the price alteration and price adjustment in Indonesian internet cafe has been cultivated to its full
potential to Attract the Customers' intention. The implementation of price adjustment consists of geographical
pricing, discount pricing and rebates, promotional pricing, and pricing discrimination. While the price alteration
implemented by raising and lowering the price.
This paper turned out to be a partial find the price alteration has an influence on customer satisfaction, as well as
price adjustment which also have an influence on customer satisfaction of Indonesian internet cafe. This is evidenced
by the results of t-test calculation of variable alteration price greater than the t-table (5.248> 1.98). t-test on the
variable price adjustment greater than the t-table (4.981> 1.98). While the alteration price and price adjustment
simultaneously influenced customer satisfaction. This is evidenced by the results of the testing ftest larger than ftable
(15.814> 3.07).
Furthermore, it was found that coefficient of determination of 0.844 (R square) of 0.712 or 71.2%. This figure
means that the price adjustment and price alteration affect customer satisfactory by 71.2% and the remaining 28.8%
is influenced by other factors. This means that the determination of the price alteration and price adjustment in a
small and medium enterprise, especially in a district in Indonesia is very important. Especially small and medium
enterprise located in an area that a lot was left out by the students.
Based on the data processing is done by the Researchers concluded that the implementation of price adjustment
and price alteration in the internet cafe in Indonesia is considered to be good. In order to increase the evaluation to
become more than good, the implementation of price alteration and price adjustment in the region in Indonesia needs
to be improved.
Based on the profile shows the majority of respondents were internet cafe in Indonesian customer is the student
district. The need for the use of the Internet by students is very large, in line with the increasing of internet cafe
existence in the area. So, that more and more customers have many choices. For these conditions, many customers
settled on a set a cheaper Internet cafe’s price. In the implementation of price adjustments need to be re-implemented
and modified in order to increase customer buying interest.
We can conclude that in this case, the increasing price should be avoided due to the presence of majority
customers. The customer’s profile which are form student of university do not like the price increasing. If the owner
of internet cafe wanted to increase the price, then they should figuring gradually raise prices and the reason for the
price increase is necessary to know the customer.
Pricing policies are the core marketing activity that is as giving satisfaction to the customer so that the company
can achieve the desired goal clearly visible. On the one hand, the price set by the company essentially an offer to
customers or the market, the price is acceptable or not customers or the market determines.
This research is also expected that to provide richer picture of the price adjustment and price alteration to the
customer satisfaction. This research also expected to be used as additional information and reference for the
development of marketing management in particular and science in general. For companies, the expected results of
this study can provide feedback or input for the company concerned in connection with the implementation of price
adjustment and price alterations as well as customers to buy.
Reference
Alma, B. (2005). Manajemen Pemasaran dan Pemasaran Jasa. Revised Edition. Alfabeta. Bandung.
Armstrong, R., W., and Seng, T., B. (2000). Corporate-customer satisfaction in the banking industry of Singapore. International Journal of Bank
Marketing. Vol. 18, 3:97-111.
Cengiz, E. (2010). Measuring Customer Satisfaction: Must or Not?. Journal of Naval Science and Engineering Vol. 6, 2:76-88.
Davis, R. (1999). The Web of Politics: The Internet’s Impact on The American Political System.
Dickinson, P., Ellison. J. (1999). Plugged into the Internet. Canadian Social Trends.
Griffin., A., Hauser, J., R. (1993). The Voice of the Customer. Marketing Science, Vol. 12, 1:1-27. Jstor.
Hauser, J., R., Simester, D., I., Wernerfelt, B. (1994). Customer Satisfaction Incentives. Marketing Science Vol. 13, 4:327-350. Jstor.
Kotler, P., Lane, K. (2001). Marketing Management 13th edition, Pearson Prentice Hall.
Lupiyoadi, R. (2001). Manajemen Pemasaran Jasa Teori dan Praktik. Salemba Empat. Jakarta.
Saladin, D. (2003). Intisari Pemasaran dan Unsur-unsur Pemasaran, Linda Karya. Bandung.
Susanto, A., B. (2001). Manajemen Pemasaran Di Indonesia – Second Book. Salemba Empat. Jakarta.
Umar, H. (2003). Metode Penelitian Untuk Skripsi dan Tesis Bisnis. Fifth Edition. PT RajaGrafindo Persada. Jakarta.
Yin, R., K. (1981). The Case Study Crisis: Some Answers. Administrative Science Quarterly, 26: 58-65.
12 – 14 August 2014
Applications of Psychology in Business Context:

An Innovative Approach of Entrepreneurship Education
Cicilia Larasati Rembulan*
Universitas Ciputra JI UC Town,Surabaya 60219, Indonesia
Abstract
Psychology is a science which very close to the entrepreneurship world. The basic principle in psychology is about human
behavior. Meanwhile in the entrepreneurship world, human behavior is also an important issue. However, in Indonesia there is a
few concern focuses on psychology and entrepreneurship (psychopreneurship). Whereas psychology could also contribute to
entrepreneurship education which is one of the most important way to achieve nation’s welfare. Using a contextual approach of
learning, Application of Psychology in Business Context (APBC) there is a way to integrate psychology and entrepreneurship.
The objective of the research is to understand the impact of APBC implementation for psychology students. This research is
descriptive quantitative which using online survey as a collecting data (N =55 in odd semester). The result is majority of the
students realize the connectedness between psychology and entrepreneurship. They understand both sides, the theory and the
application in business context.
Keywords: psychopreneur; entrepreneurship education; innovative curriculum
1. Introduction
Historically, psychology as a science arise when world war. Many psychologist’s had a role as an assessor who
select the soldier to put them in the right man in the right place or division. After war, psychologist had important
role as a therapist who help the soldier to relieve the post traumatic stress disorder they’ve experienced. Therefore it
is not surprising if people recognize psychology as a professional helper, therapist, assessor. In Indonesia,
psychology also known as a curative psychology or clinical psychology. Historically, in Indonesia psychology was
born from medicine faculty, army psychology bureau and later then educational psychology (Prawitasari, 2011).
Until now, majority of psychologist have a few concern in entrepreneurship and or business.
E-mail address: crembulan@ciputra.ac.id
52 Cicilia Larasati Rembulan / IICIES 2014 Proceeding
At this time, in developed countries, psychology is improving. Some indicators are there are association which
concern in psychology and entrepreneurship such as INPERE (international network for psychology and
entrepreneurship), journal of applied psychology, faculty of business psychology, behavioral economics or
psychology economics in some universities. Daniel Kahneman, one of winner nobel prize in economic science in
2002 is one of the proof that psychology is connected with entrepreneurship. His research was about jusgement,
decision making, behavioral economics and hedonic psychology which is very close with entrepreneurship world.
Schleifer (2012) stated that Kahneman’s work have a large impact on applied psychology and policy making.
Psychology have a broader theme about human behavior, not only about healing or curative psychology but plays
important role also in entrepreneurship.
In entrepreneurship world, the human factor is important keys such as the entrepreneur, consumer, stakeholder.
Entrepreneurship is a habitual creating and innovating value to build something of recognized value around
perceived opportunities (Thompson and Bolton , 2004). Value creation can be found if we sensitive to market.
Psychology can have a contribution to understand the human or create opportunities by observing human problems.
Rabin (2002) says applied psychology is and should be going. To support the rise of applied psychology
especially psychology and entrepreneurship in Indonesia, Faculty of Psychology Universtias Ciputra create an
innovative approach of learning which called Application of Psychology in Business Context. APBC consist of :
psychological theory, business example, and creative idea generation. Every single course contextualized with
business context. The aim of this approach is to make the students understand about the integration of psychology
and entrepreneurship. Gielnik, Kramer, Kappel, Freese (2014) stated that someone should be facilitated the
experience and knowledge to influence opportunity identification. By doing this, someone will be capable to
identify an opportunity. If students have a habit to identify and sensitive to business opportunity, their knowledge
structures supported them to detect opportunities and create values. Besides, the students was facilitated to create
idea generation. This is a combination and reorganization of activated pieces of information. Creating idea
generation is important because these ideas may then lead to business opportunities (Gielnik, Kramer, Kappel,
Freese, 2014) e.g :
Observation Course. The basic competence of observation course is to improve student’s skill in planning,
doing, and reporting observation. The implementation of APBC in this course : (a) Psychological theory is
about the purpose of assessment, kind of assessment, observational method, observational record method. (b)
Business example is to make a guideline, observe and make a report to the consumer profile and service quality
In the café. The report should be presented to the stakeholder of café, (c) Creating idea generation is to identify
the opportunities using observational skills, e.g : mysterious shopper
Counseling course.
The basic competence of counseling psychology is to improve the competence to listen and understanding. (a)
Psychological theory is about the basic skills of listening, paraphrasing, attending, understanding, using
empathy, (b) Business example is to identify whether basic counseling skills is important in the customer area
and a lot of awards highlight the customer service satisfaction, (c) creating idea generation is to identify the
opportunities using counseling skills : e.g build a training for customer service excellence
Besides APBC the students work on project innovation psychology from child segment until adult. The basic
competence of these course are to improve the skills of the students to identify human problem during
developmental stages. By identifying the problems, the students create value and idea to solve the problems. As said
by Gielnik, et al (2014) to improve entrepreneurial habit, someone should be taught entrepreneurial alertness.
This is the example of student’s work in project innovation psychology course :
Fig. 1. Illumination Board Game, Student’s Innovation Product

Cicilia Larasati Rembulan / IICIES 2014 Proceeding 53
Illumination board game is game for kids to enhance entrepreneurial skills. This board game production in
collaboration with Gramedia. Later, the board game will be publish and sold in Gramedia bookstore.
Lorenco, Taylor and Taylor (2013) stated that entrepreneurship education enhance entrepreneurial graduate
profile. These approach will help to minimize the amount of jobless person because of the limited job in the market.
Entrepreneurship education could help to increase new job creation and help other people to work. Leitch and
Harrison (1999) stated the pedagogical approach of entrepreneurial education is allowing students to learn the basic
concepts and connecting the concept to the riil problem. This approach will support the students to involved in the
learning process. Learning process will be better if there is a connection between theory and riil context.
The objective of this research is to contribute to the literature on contribution of psychology in entrepreneurship
education and to understand, clarify the impact of APBC (Application of Business Context) for students.
2. Method
Data collecting technique conducted in this quantitative research was by handing out questionnaires with online
survey. A number of 55 students (students in odd semester) had filled out the questionnaires and the data was
analyzed descriptively.
3. Research Methodology
Odd semester 2013 2014
Fig. 2. Demography Chart
Table 1. Demography
Semester Percentage
Semester 1 40 %
Semester 3 13 %
Semester 5 42 %
Semester 7 5%
100 %
Based on figure 1 and table 1 it can be known that the number of students who act as respondents is 55 students.
Based on demography 40 % (22 ) of students are 1st semester and 42 % (23) of students 5th semester.
Table 2. Awareness of students about lecturer who apply APBC in the class
Courses Strongly Disagree Agree Strongly Agree Total
disagree
Introduction to psychology 1 0 (0%) 1(4%) 14(56%) 10 (40%) 25 (100%)
Introduction to developmental psychology 2 (8%) 14(58%) 5(21%) 3(13%) 24(100%)
Statistic 1(4%) 3(13%) 17(71%) 3(13%) 24(100%)
Psychodiagnostic 1 0(0%) 0(0%) 7(70%) 3(30%) 10(100%)
Courses Strongly Disagree Agree Strongly Agree Total

disagree
Psychometrics 1(13%) 1(13%) 4(50%) 2(25%) 8(100%)
Biopsychology 1(13%) 0(0%) 6(75%) 1(13%) 8(100%)
Social psychology 2 0(0%) 0(0%) 2(25%) 6(75%) 8(100%)
Educational psychology 0(0%) 0(0%) 17(74%) 6(26%) 23(100%)
Counseling psychology 0(0%) 1(7%) 10(71%) 3(21%) 14(100%)
Quantitative Research Methodology 0(0%) 4(17%) 15(63%) 5(21%) 24(100%)
Cognitive and personality assessment 2(8%) 9(38%) 12(50%) 1(4%) 24(100%)
Psychology Innovation Project 0(0%) 1(4%) 10(43%) 12(52%) 23(100%)
Psychology of Emotional Wellness 0(0%) 0(0%) 8(50%) 8(50%) 16(100%)
Media Psychology 0(0%) 2(11%) 11(58%) 6(32%) 19(100%)
Innovation project and entrepreneurship 0(0%) 0(0%) 3(75%) 1(25%) 4(100%)
Based on table 2 it can be known most of the students aware of APBC implementation in most subjects except
introduction to developmental psychology, psychometrics, and cognitive and personality assessment. In
developmental psychology 64% (16) students stated they strongly disagree or disagree about the APBC in the
subject. In cognitive and personality assessment 44% (11) students stated they strongly disagree or disagree about
APBC in the subject. In the course of psychometrics 26% (2) students stated they strongly disagree or disagree
about APBC in the subject.
Table 3. Students’ comprehension about APBC applied in the course

Courses Strongly disagree Disagree Agree Strongly Agree Total
Introduction to psychology 1 0(0%) 1(4%) 17(68%) 7(28%) 25(100%)
Introduction to developmental psychology 2(8%) 14(58%) 5(21%) 3(13%) 24(100%)
Statistic 2(8%) 3(13%) 17(71%) 3(13%) 25(100%)
Psychometrics 1(13%) 1(13%) 3(38%) 3(38%) 8(100%)
Biopsychology 1(13%) 0(0%) 6(75%) 1(13%) 8(100%)
Based on table 3 it can be known most of the students understand the APBC implementation in most subjects
except introduction to developmental psychology, psychometrics, and cognitive and personality assessment. In
developmental psychology 66% (16), in cognitive and personality assessment 50% (12), in the course of
psychometrics 26% (2) students stated they don’t understand about APBC implementation.
Table 4. Satisfaction with the APBC approach of learning

Statistic 1(4%) 8(33%) 12(50%) 3(13%) 24(100%)
Cicilia Larasati Rembulan / IICIES 2014 Proceeding 55

Psychometrics 1(13%) 1(13%) 5(63%) 1(13%) 8(100%)
Biopsychology 1(13%) 1(13%) 5(63%) 1(13%) 8(100%)
Based on table 4 it can be known most of the students satisfy with APBC approach of learning in most subjects
except introduction to developmental psychology, psychometrics, and cognitive and personality assessment. In
developmental psychology 67% (16), in cognitive and personality assessment 61% (14), in the course of
psychometrics 26% (2), and in the course of biopsychology 26% (2) students stated they don’t satisfy with APBC
approach of learning.
Table 5. Perception about benefit from APBC given in the class

Statistic 1(4%) 5(21%) 14(58%) 4(17%) 24(100%)
Psychometrics 1(13%) 1(13%) 5(63%) 1(13%) 8(100%)
Biopsychology 1(13%) 1(13%) 5(63%) 1(13%) 8(100%)
Based on table 5 it can be known most of the students get benefit with APBC approach of learning in most
subjects except introduction to developmental psychology, psychometrics, biopsychology and cognitive and
personality assessment. In developmental psychology 55% (13), in cognitive and personality assessment 37% (9), in
the course of psychometrics 26% (2), and in the course of biopsychology 26% (2) students stated they don’t get
benefit from APBC in these courses.
4. Conclussion and Discussion
The aim of this research is to to contribute to the literature on contribution of psychology in entrepreneurship
education and to understand, clarify the impact of APBC (Application of Business Context) for students. The result
of this research is expected to be the basis for curriculum improvement in School of Psychology, Universitas
Ciputra. The research result shows that 11 from 15 courses students aware, understand, satisfy and get benefit from
APBC approach of learning. However, there are 4 courses that students’ perceived as negative ones. The
possibilities about these phenomena are:
Majority students got benefit from this (APBC) innovative approach of learning
APBC can be perceived as positive one by the students in the courses which lecturer have already experienced in
teaching the subject
APBC can be perceived as positive one by the students in the courses which lecturer explore more in APBC
which up to date and relevant to students.
The nature of the subject/course is different from one to another. It needed different levels and exploration to
teach APBC to the students
To teach APBC in the courses it needed experience, exploration and extra miles from the lecturer so the APBC is
updated and relevant to students.
APBC given to the lecturer is a stimulus, however the lecturer should improve and explore by themselves in
order to give the optimal contextual learning using APBC.
References
Gielnik, M.M., Kramer, A.C., Kappel, B., Freese, M. (2014). Antecedents of business opportunity identification and innovation : Investigating
the interplay of information processing and information acquisition. Applied Psychology an International Review, 63, 344-381
Leitch, C.M., Harrison, R.T (1999). A process model for entrepreneurship education and development. International Journal of Entrepreneurial
Behavior and Research, 5, 83-110
Lourenco, F., Taylor, T.G., Taylor, D. W. (2013). Integrating education for entrepreneurship in multiple faculties in half the time to enhance
graduate entrepreneurship. Journal of Small Business and Enterprise Development, 503-525
Prawitasari, J.E. (2011). Psikologi klinis terapan mikro dan makro. Jakarta : Erlangga
Rabin, M. (2002). A perspective on psychology and economics. European Economic Review, 46, 657-685
Schleifer, A. (2012). Psychologist at the gate : Review of Daniel Kahneman’s Thinking Fast and Slow. Journal of Economic Literature, 50. 1080-
91
Thompson, J., Bolton, B. (2004). Defining the entrepreneur, entrepreneurs talent, temperament, technique, 2nd edition. Great Britain : Elsevier
12 – 14 August 2014
Small ICT Enterprises Development

Based on Community Entrepreneurship
Rendra Chaerudina*, Sri Hartatib
ab
School of Business and Management, Institut Teknologi Bandung, Jl.Ganesha 10, Bandung 40132, Indonesia
Abstract
Creative Cimahi Association (CCA) is one of the business community that is formed by the creative industry players in the field
of ICT. The CCA community members realized the need for a forum for creative industries to foster community-based creative
economy.
The development of business community containing four or determinant factor known as the diamond model that leads to the
competitiveness of the industry, namely: factor / input condition, demand condition, related and supporting industries, and
context for the firm and strategy.
To analyze community-based Entrepreneurship development model of Cimahi Creative Association (CCA) is used diamond
model (Porter, 2000) approach. While the research method used is the case study method. Determination of the respondents were
purposively and then using snowball sampling. Necessary Data are qualitative and quantitative the data in the form of the data of
primary and secondary data.
Keywords: community entrepreneurship; small ICT enterprises development; small ICT enterprises
1. Introduction
At this time in Indonesia, many community empowerment program developed ICT-based entrepreneurship.
Through participatory methods to grow the role and the entrepreneurial spirit, community members are encouraged
to participate feel ICT has had, and from what they were developing. In this case there will be more community
decision-making of the implementation of the program, because the purpose of the program is the solution to their
problems.
Business community empowerment strategy in a participatory development paradigm centered on people (people
centered development). This approach emphasizes the importance of community capacity to improve internal
strength in small business management.
E-mail address: rendra.chaerudin@sbm-itb.ac.id
58 Rendra Chaerudin / IICIES 2014 Proceeding
Creative cimahi Association (CCA) is one of the business community that is formed by the creative industry
players in the field of ICT. The CCA community members realized the need for a forum for creative industries to
foster community-based creative economy. According to Charles Landry (2008), networks and creativity are
essentially mutually beneficial, because the greater the number of nodes in a system of greater capacity to innovate.
The business community amid the existing heterogeneity is not easy. Constraints faced at the beginning of the
formation is to build confidence (trust) between the community members. Different backgrounds is not easy to set
up business community of trust capital only, without power and funds. But the spirit of cooperativeness make sense
of it eventually formed Cimahi Creative Association (CCA). Landry (2008) suggests that builds awareness of the
need to network and collaborate much more difficult for a heterogeneous actors with each organization's culture and
its plans.
The phenomenon of CCA as a community-based entrepreneurship is still unexplored. Until now research on how
the individual creative process into a collaborative strength through numbers are still a little networking. Therefore,
how the process of formation of the CCA and how to develop strategies CCA menupakan interesting thing to study.
To analyze community-based Entrepreneurship development model of Cimahi Creative Association (CCA) is

used diamond model (Porter, 2000) approach. While the research method used is the case study method.
Determination of the respondents were purposively and then using snowball sampling. Necessary data are
qualitative and quantitative data in the form of primary data and secondary data. In accordance with the method of
study in-depth case study, the primary data performed with the variety of ways: in-depth interviews (in-depth
interviews), tracing (historical), and observation. Secondary data were obtained by collecting documents and
literature / literature. The analysis technique used is descriptive analysis of qualitative / quantitative descriptive
narrative and analysis.
3. Literature review
Community-based Entrepreneurship has become a topic of discussion for those interested in the development of
the business community for many years (Loveridge 2007, Emery et al., 2004, Rightmyre et al. 2004). The pilot
program launched by the Michigan State University Ekstensipada in 2007, entitled "Creating Entrepreneurial
Communities," particularly involving nine rural communities are geographically dispersed throughout the state.
Each local community-based teams send three to five persons for the training program during the week (using
curriculum Energizing Entrepreneurs) to learn about community-based models / approaches. To assist in developing
a community plan, each community is assigned "coaches" to assist in community planning, identify potential
resources, and offer encouragement while keeping the team on task during the planning process.
Community systems and network engineering related to items such as the creation of support peer-to-peer and
idea generation, one-mission organization focused on climate entrepreneurial community, coordination across
service providers, system for welcoming new businesses, and encourage group knowledge.
Other research has supported the categories summarized by Loveridge (2007). Emery et al. (2004) identified
three primary elements of entrepreneurial communities: (1) enhancing business skills among entrepreneurs; (2)
developing relevant resource centers that focus on entrepreneurs needs in a seamless fashion; and (3) strong
networks and collaborations between and among entrepreneurs.
Loveridge (2007) and Emery et al. (2004) findings supported the establishment of networks to foster
entrepreneurial growth, it was not identified as a key factor for a sustainable community-based approach among the
Michigan coaches. Subsequent interviews with the Michigan coaches revealed that they fully recognized the
importance of networking opportunities to creating a local entrepreneurial culture, but felt that building local
capacity was a necessary first step in creating a sustainable approach. Once the local coordinating committee was
more established and had gained credibility among local entrepreneurs, peer-to-peer entrepreneur networks could
then be better pursued.
Porter's cluster approach is the development of a model of industrial district or industrial area developed by
Alfred Marshall in 1920 (Desrochers and Sautet, 2004). In contrast to Marshall that only focus on similar
companies, Cluster model of Porter is not limiting to just one industry, but more broadly. Diamond Cluster Model,
Rendra Chaerudin / IICIES 2014 Proceeding 59
includes related industries, as well as other companies that have relevance in technology, the same input. By
working together in a cluster, then the companies or related industries will benefit from synergies and efficiencies
are higher than those working individually. According to Porter (2000) Clusters can be formed in the city, region,
and even within a country.
Cluster analyzes Porter diamond industry with a model approach. The elements of the diamond model consists
of: (1) input factors (factor / input condition), (2) demand conditions (demand condition), (3) supporting and related
industries (related and supporting industries), and (4) strategies companies and competitors (and context for firm
strategy).
According to Linde (2004), there are several factors that determine the success of a cluster. These factors are the
presence of venture capital; availability of technical infrastructure, the presence of higher education and research
institutions, entrepreneurs, networking and quality of linkages, social capital and diversity.
Various studies of the cluster is also found that the cluster has a competitive environment, and absence of rivalry
will be more developed than the cluster that is highly dependent on natural resources, weather and geography.
Meanwhile Chen (2005) suggested the important factors that led to Taiwan succeeded in developing Clusters
industry since the 1980s. First, the government's role is very important in the early stages of establishment Clusters
to encourage innovation through research institutions like ITRI and the Institute for Information Industry (III). With
the innovation, Clusters grow rapidly. Government in the early stages also provide fiscal incentives in the form of
income tax-free for 5 years for a company that invests in the cluster causes backward and forward linkages of the
industry vertical, horizontal differentiation as well. Horizontal differentiation promoting healthy competition and
encouraging innovation. Scale economies of the electronics industry in Taiwan got a positive distribution in the U.S.
market. Availability of reliable labor is also a factor in the success of Taiwan's industrial Clusters.
Triple Helix as the main actor should always do a move to form a knowledge circulation spaces, spaces of
knowledge in which the three actors already have an understanding and knowledge equivalent, which will direct the
third actor to create a consensus space, space agreements in which three actors began to make a deal and
commitment over a matter that ultimately will lead to the formation of innovation spaces, spaces of innovation that
can be packaged into economic value of creative products. Circulation is always trying to create novelty
(innovation) and innovation often alter existing structures, or Creative Destruction (Joseph Schumpeter, 1934),
which means, the emergence of new innovations in the industry will displace the old industries that are not creative
and replaced with industry more creative.
4. Result and discussion
Community-based entrepreneurship development models of Cimahi Creative Association (CCA) is used

diamond model (Porter, 2000) approach. CCA is largely determined by the development of the business
environment surrounding the ICT businesses that are members of the CCA.
CCA ICT community development, as defined by Porter (2000), containing four or determinant factor known as
the diamond model that leads to the competitiveness of the industry, namely: (1) factor / input condition, (2) demand
condition, (3) related and supporting industries, and (4) context for firm strategy. Here is an explanation of the
model of Porter diamond:
4.1. Input Factors
Human resources (human resources), capital (capital resources), physical infrastructure (physical infrastructure),
infrastructure information (information infrastructure), the infrastructure of science and technology (scientific
andtechnological infrastructure), administrative infrastructure (administrative infrastructure), as well as natural
resources .
Table 1. Input Factor
No Criteria Condition
1 Human CCA was founded by the Government of Cimahi cooperation with ICT industry players. Currently managed by the
resource ICT industry players who are members of the CCA community. CCA is considered adequate number of stewards in
accordance with the existing workload at this time. Capabilities and skills of managers in the currently considered
sufficient according to the scope kegiataan at this time.
2 Capital resource The initial capital came from government establishment CCA Cimahi. To run its operations, the source of funding is
derived from CCA members independently and government assistance. Fund support from other parties Derived
from the Ministry of Industry, Trade and Industry Department of West Java Province, Government Cimahi, etc. Cca
for development activities, available funds were deemed to be insufficient.
3 Physical CCA Office Buildings and Building to conduct business incubation activities, provided by the Government Cimahi
infrastructure (BITC building space facilitated public service or public service information display space and a place to introduce
the world Information Technology (IT) to the public, trade, and research and development space telematics industry.
room Studio Research and Development field of informatics and telecommunications, computer room access to
technological developments, the IT training space and Community Activities CCA (Cimahi Creative Association),
for indoor display and multimedia simulations (auditorium), where seminars, discussions and and meeting space
infrastructure and animasiyang facilitated movie). Existing building at this time was considered sufficient to perform
the development activities of the CCA.
4 Information Infrastructure supporting information available at this time include Routers, Hubs, Network, InFocus, Multimedia
infrastructure Tools. The facility is considered sufficient to perform the development activities of the CCA at this time.
5 Scientific and Infrastrukrur supporting science and technology are considered sufficient for the scope of the current activity
technological (Servers, Routers, Hubs, Network, Multimedia Tools). The labor while having knowledge in related field with cca
infrastructure activities are considered within the scope of the current work.
6 Administrative Furniture and office equipment for the scope of activities considered Sufficient current (Server, Printer, Scanner,
infrastructure Infocus, Routers, Hubs, Network, Multimedia Tools).
4.2. Demand Conditions
Models according to demand conditions diamond is associated with sophisticated and demanding local
customers. The more advanced a society and increasingly demanding customers in the country, then the industry
will always strive untukmeningkatkan product quality or conduct innovation to meet local keinginanpelanggan high.
But with globalization, kondisipermintaan not only from local but also sourced from overseas.
Table 2. Demand Conditions
1 Domestic market needs Product animations can be produced by cca is significant, as the development of technology and
content development and animation industry is growing rapidly.
2 Purchasing Power Market Industries and companies that utilize animation and content products, have started to choose to use
domestically made animation although foreign products are cheaper.
3 The market demands will be CCA products are required to be able to compete in price and quality products made overseas
the quality of the product animation.
4 Domestic Demand Growth Underdeveloped domestic demand, especially broadcash industry who prefer to use the products
Rate because of cheaper foreign.
5 Effect of International Demand International demand continues to increase, due to the international scale industry, the cost of
production in Indonesia is cheap.
4.3. Supporting and Related Industries
The existence of supporting and related industries will increase efficiency and synergies in Clusters. Synergies
and efficiencies can be created mainly in transaction costs, technology sharing, specific information and skills that
can be utilized by industry or other companies. Another benefit supporting and related industries are going to create
competitiveness and increased productivity.
Table 3. Supporting and Related Industries
1 Availability Local Suppliers The tools support the production activities of more than 90% of import.
2 The ability of Local Suppliers The low availability of local suppliers and quality products.
3 Availability of complementary Not available complementary products made locally (100% Import).
products
4 achievement of efficiency Production cost efficiency has not been achieved because of the cost of production is still dominated
by imported content.
5 Linkages with the business The perpetrators members of the business community still has not made the connection and does not
community technology have any technological development cooperation.
development activities
6 Business community linkages The perpetrators members of the business community still has not made the connection and does not
with market development have any market development cooperation, is still limited to the exchange of information on market.
Rendra Chaerudin / IICIES 2014 Proceeding 61
activities
community development have any manufacturing development cooperation.
activities of manufacturing
8 Linkages with the business The perpetrators members of the business community still do not hold a connection and distribution
community development of development cooperation.
activity distribution
community services have any joint development services.
development activities
4.4. Corporate Strategy and Competitors
Corporate strategy and competitors in the diamond models are also important because these conditions will
motivate the company or industry to constantly improve the quality of the products and are always looking for new
innovations. With healthy competition, companies will always look for new strategies that fit and strive to always
improve efficiency.
Table 4. Corporate Strategy and Competitors

1 Encouragement of Innovation Competition similar industries in domestic and foreign demand must innovate.
2 The company's goal The purpose of business actors in the business community has led to the success and
growth of the business community.
3 The purpose of the individual employee Individual goals of the employees in the company who are members of the business
community, has been concerned with the success and growth of the business community.
4 The influence of national priorities National policy and local governments do not support the development of clusters.
5 Commitment of human resources and HR commitment to the industry is quite high because there is a career and business
capital to the industry interests.
6 HR Commitment to Profession HR commitment to the industry is quite high because there is a career and business
interests.
7 Competition similar local companies HR commitment to the industry is quite high because there is a career and business
interests.
8 The development of new business HR commitment to the industry is quite high because there is a career and business
interests.
Based on the analysis of the diamond determinant factor models it is known that the competitiveness of the
CCA is good because it is supported by the input factors and demand good condition. Competitive conditions in
the animation industry encourages innovation. It's just existence of supporting and related industries are still
lacking support for the availability of local suppliers and the availability of complementary products are still
available and still rely on the supply from abroad.
Of cases of CCA can also note that the power of collaborative arise if the presence of a fusion of thought
through interactive and communicative processes in problem solving and planning. collaborative strength will
also appear if the same commitment from all parties, partnerships are not berhirarkis and all parties have the
same role.
5. Conclusion
Based on the analysis of the diamond determinant factor models it is known that the competitiveness of the
CCA is good because it is supported by the input factors and demand good condition. Competitive conditions in
the animation industry encourages innovation. It's just existence of supporting and related industries are still
lacking support for the availability of local suppliers and the availability of complementary products are still
available and still rely on the supply from abroad.
Essentially networks and creativity are mutually beneficial, Because The greater the number of nodes in a
system of greater capacity to innovate.
References
Birch, D. (1987). Job creation in America. New York: The Free Press.
Emery, M., M. Wall, and D. Macke. (2004). From theory to action: Energizing entrepreneurship (E2), strategies to aid distressed communities
grow their own. Journal of the Community Development Society 35(1): 82-96.
Florida, R. (2002). The rise of the creative class. New York: Basic Books.
Green, G. (2001). Amenities and community economic development: Strategies for sustainability. The Journal of Regional Analysis and Policy 3
1(2): 61-75.
Hanham, A., S. Loveridge, and B. Richardson. (1999). A national school-based entrepreneurship program offers promise. Journal of the
Community Development Society 30(2): 115-129.
Healey, Patsy. (2006). Collaborative Planning. Houndmills: Macmillan Press
Johanisson, B. (1991). University training for entrepreneurship: Swedish approaches. Entrepreneurship and Development 3: 67-82.
Lambe, W. (2007). Small towns, big ideas: Case studies in community economic development. Chapel Hill: School of Government, University of
North Carolina–Chapel Hill.
Landry, Charles. (2008). Creative city: a toolkit for urban innovation. London: Earthscan
Loveridge, S. (1996). On the continuing popularity of industrial recruitment. Economic Development Quarterly 10: 151-158.
Loveridge, S. (2007). Getting started in community-based entrepreneurship. In Creating entrepreneurial approaches to local economic
development, ed. N. Walzer, 255-273. Lanham, MD: Lexington Books.
Marullo, Sam, Roxanna Moayedi, and Deanna Cooke. (2009). “C. Wright Mills’s Friendly Critique of Service Learning and an Innovative
Response: Cross-Institutional Collaborations for Community-Based Research.” Teaching Sociology 37:61-75.
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Oxford University Press, 2001. http://www.isc.hbs.edu/,
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for Entrepreneurship Education, Center for Entrepreneurial Leadership, Inc.
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Walzer, N. (2004). Introduction: Entrepreneurship in community development. Journal of the Community Development Society 35(1 ): 1-4.
12 – 14 August 2014
Management Understanding in Small and Medium Enterprises

Aris Budi Setyawana*, Ichwan Suyudib
a
Faculty of Economics, Gunadarma University, Jakarta, Indonesia
b
Faculty of Letters, Gunadarma University, Jakarta, Indonesia
Abstract
Constraints and problems that are faced in small and medium enterprises can not be separated from an understanding of SMEs to
management knowledge. Management function that starts with good planning , organizing many resources , mobilization of
human resources, and monitoring / evaluating business activity also, should help small and medium enterprises to have a better
business performance.
Research conducted on 200 small and medium entrepreneurs in Jabodetabek (Jakarta , Bogor , Depok , Tangerang and Bekasi)
descriptively, aims to determine the level of understanding and practice of small and medium enterprises of management
knowledge in their business activities .
The results showed that there are still many SMEs who do not yet have sufficient understanding and practice of management
knowledge in their business activities, especially in terms of planning, so this situation does not lead to optimal business
performance. Ongoing training and mentoring is expected to be a solution to this problem.
Keywords: SMEs; knowledge management; business performance
1. Background
There are several research have been done related the constraints and their solutions proposed to the small and
medium enterprises (SMEs). Most of the research done focusing on the financial management (Nurhayati, 2009;
Damaringati, 2012; Apriliani, 2013), productions, and marketing (Rifai, 2013; Suprapto, 2014, ) that are faced by
most SMEs. Instead of the those problems, SMEs also face the followings, such as: determining visions, program
planning, organization, employee motivation, authority delegation, monitoring, and other management activities.
Likewise as the enterprise grows, also grows the necessity for other types of skills needed for survival (Zuzana
Papulová And Matej Mokroš, 2007)
E-mail address: arisbudi@staff.gunadarma.ac.id
64 Aris Budi Setyawan / IICIES 2014 Proceeding
SMEs have significant roles in the Indonesian economy by giving contribution more than 50% of the GDP.
Besides, they also absorb more employees than large scale businesses. These roles can be increased as the
knowledge, understanding, and management functions increase in their daily practice.
This understanding will give significant impact to better management of SMEs. The worse condition may occur
in the long run if such understanding is not implemented soon. SMEs must be able to handle conflict management
unless the business performance will decrease
In a certain point, in the organization level, such conflict will result in negative effects, such as: energy wasting
and unproductive employees (they will loose their concentration to work), lack of collaboration among employees,
the decrease of understanding of other groups of work, lack of group collaboration (this condition may lead to the
conflict between groups), the coordination will get worse (Daft, 1982). Another example can be seen in
understanding the impact of business firm in a good conflict management that it can benefit the performance of the
organization, (Andraeni, 2003). Similarly, the importance of understanding the external environment can
significantly affect the performance of the organization, (Yurniwati, 2003). This research aims to investigate the
levels of understanding towards the management functions of SMEs.
2. Theories
Based on the previous descriptions above, therefore it is a must for SMEs to understand the management
functions. This is because management is a science that tells people how to achieve the goals by employing others.
The followings are the management functions that must be understood and implemented:
Fig. 1.Identifiable Functions in the Management Process
The eight functions above denote a set of activities that will direct an organization to achieve the goals smoothly:
a. Planning Function
This is related with the organization activities, such as determining the long term goals, targets and strategies
that will used.
b. Decision Making Function
This is related with the organization activities such as determining the best alternatives toward every problems
faced.
c. Organizing functions
This denotes the activities of an organization to allocate the resources optimally, so that all jobs can be well
accomplished.
Aris Budi Setyawan / IICIES 2014 Proceeding 65
d. Staffing function
This relates with organization activities to manage human resources, such as recruitment, and pensions.
e. Communicating Function
This is an activity of an organization to build communications and good relationships with all entities in it.
f. Motivating Function
This is related with the activities of organization to support human resources to do their job.
g. Leading Function
This is related with activities to direct the staffs to achieve the goals.
h. Controlling Function
This is related with the activities to determine the parameters and evaluate the activities that have been done.
There are many definitions about SMEs, one of them is, According to the Ministry of Cooperatives and Small and
Medium Enterprises (SME Menegkop), Small Enterprises (SE), including Micro Enterprises (ME), is a business
entity that has a net worth until Rp 200 million, not including land and buildings, and has annual sales do not more
than Rp 1,000, million. Meanwhile, Medium Enterprises (ME) is a business entity that has a net worth greater than R
200 million until Rp 10,000, million, excluding land and buildings.
3. Methodology
This research was done toward 200 SMEs located in Jakarta-Bogor-Depok-Tangerang and Bekasi regions. The
samples were taken randomly in 2013.
The data were taken from the response of the questionnaires given to the respondents. The analysis are done
descriptively toward the variable. The variable of this research is the understanding of the respondents toward eight
management functions, namely: planning, staffing, communicating, motivating, leading, and controlling.
In general, the result of the research shows that the respondent profiles are the SMEs that have been already
established not less than 5 years ago. 50% of the SMEs already had establishment permission from the government
and the owners are well educated. 80% of the respondents have senior high school certificates. More than 75% have
omzet no more than 5 millions. 63.8% of the owners had ever learnt management. Most of them (88.2%) believed
that their business success is also due to other people contributions.
Based on the responses of the SMEs toward the questionnaires about the eight management functions, the results
can be described as the following:
1. Most of the respondents have already made planning for their business activities. 95.8% of the responndents plan
to expand their businesses in the future. This implies that they have understood the importance of planning in a
business activity. However not all respondents have understood the importance of business environment. This
can be seen that 14,8% of the respondents did not evaluate the business environment.
14,8%
Fig. 2 Understanding of Enronment Evaluation

2. In determining the strategy to achieve the goals, most of the respondents (more than 80%) have good
understanding of the meaning of strengths, weaknesses, and opportunity.
3. In term of organizing function, for this organization is informal, 50% of the respondednts have not made an
organization structure for the business. However they already determined job descriptions to the employees
(80.9%). This means the allocation of human resources has been made.
4. Respondents have implemented staffing function. This can be seen that 79.6% have recruited employees based
on their skills and 75% of them implemented reward and punishment system in accordance with their
performance.
5. Meanwhile, in describing the understanding toward communication function, it is found that 44.5% of the
respondents avoid conflict in the workplace. From this result, this can be seen that 48.4% still believe in the old
understanding. However, 48.4% of them have good understanding on the conflict. They agree that conflict must
be managed.
6. SMEs already motivate their employees This shows that they already understood the importance of motivation.
7. The understanding of SMEs toward leading function shows that 51.1% of the managers felt that they have not
been good leaders yet. However, they already shared the authorities, and there are 26,5% of the respondents have
not delegated the authorities.
26,5%
Fig. 3 Understanding of Authorities Delegation
8. Almost all of the respondents agree that controlling function needs to be implemented. However only 45,2% of
them state that the controlling need to be implemented to all activities. Such kind of understanding needs to be
changed because controlling functions are needed in all business activities.
45,2%
Fig. 4 Understanding of Controlling Implementation

Aris Budi Setyawan / IICIES 2014 Proceeding 67
The explanation above shows that all eight management functions have been understood and implemented well
by SMEs. This can also be noticed that the attention to the business environment has not been imlemented yet. The
delegation of authority has not been implemented yet. Not all of the respondents understood that all stages in their
business activities need control.
5. Conclusion
From the discussion it can be concluded that in order to run the business well, SMEs must understand all
management functions. The result of the survey shows that SMEs have understood well about the management
functions, however, not all of the 8 functions have been implemented in their daily activity, especially for the
evaluation toward the sustainable environment, authority delegation, and activity controlling.
Therefore, sustainable dissemination, training, and partnership can be the solutions and alternatives to improve
the understanding of SMEs toward the management functions. This is expected to raise better performance of SMEs.
References
Ágnes Szlávicz, Nemanja Berber, 2013, Strategic Human Resource Management at Small and Medium Sized Enterprises in Serbia,11th
International Conference on Management, Enterprise and Benchmarking
Aviation 179, 2008, SJSU, The Management Function
Maria Criveanu and Constanta Iacob, 2011, Role Of Management Control In Small And Medium Enterprises Performance Assurance
Mohamad Efendi, 2013, Pengaruh Kompensasi dan Disiplin Kerja Terhadap Semangat Kerja Serta Dampaknya Terhadap Kinerja Karyawan
Pada EO Di Indonesia, Universitas Gunadarma
Monika Březinová, 2013, Basic characteristics of small and medium sized enterprises in terms of their strategic management, the 2013
International Conference on Business Administration, Marketing and Economics
Ni Nyoman Novitasari Andraeni., 2003, Pengaruh Stress Kerja Terhadap Motivasi Kerja dam Kinerja Karyawan PT HM Sampoerna Tbk.
Surabaya, Thesis
Newton, K., 2001. Management skills for small business, from http://strategis.ic.gc.ca/epic/site/sbrp-rppe.nsf/en/rd00255e.html
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12 – 14 August 2014
Servant Leadership Practices:

Case Study in Indonesian Workplaces
Sanchia Arindhitaa*, Donald Crestofel Lantub
ab
School of Business and Management, Institut Teknologi Bandung, Jl. Ganesha 10, Bandung, 40132, Indonesia
Abstract
Servant leadership is one of the most discussed about leadership philosophies. Many of us are likely to have been familiarized to
its philosophy, practice, and concept in religious education and social institution for centuries. There is a concern that caught my
attention, its recent popularity within the business corporations. It has become one of the most appealing leadership philosophies
in those communities.
This paper is aimed to explore and examine the implementation of servant leadership within big business corporations as well as
small and medium enterprises. The methodology used is qualitative research. The data will be collected through two main ways:
(1) biography and other documents analysis of two great business leaders in Indonesia, named William Soeryadjaya, the founder
of PT Astra International and Jacob Oetomo, the founder of Kompas Gramedia.
The results of this research are expected to provide richer knowledges and insights that are related to the implementation of
servant leadership in the business setting, both big corporations as well as small and medium enterprises, particularly in the
Indonesian context. This research may encourage more qualitative studies on the operationalization of servant leadership model
in the workplaces so that could be useful for practitioners who want to embrace the idea as a meaningful and effective way of
leading knowledge workers.
Keywords: servant leadership; business field; entrepreneur
1. Introduction
Servant leadership is one of the approaches in the philosophy of leadership. Servant leadership defined as a model
of leadership which is oriented on the development of the employee in order to increase their productivity and
upgrade the quality along with the care of many institutions through the unification of team and society. Lots of us
have known about the philosophy, practice, and concept of servant leadership implemented in the religion education
and social institution for over the years. The needs of serving others have been becoming the basis value in religion
world (Polleys, 2002; Sendjaya, Sarros, & Santora, 2008). There are lots of story we have heard about a leader of
E-mail address: sanchia@sbm-itb.ac.id
70 Sanchia Arindhita / IICIES 2014 Proceeding
religion concerned with remarkable extending services, and history also gives the same story in ancient kings‘ life
and their families (Ebener & O'Connell, 2010; Sendjaya & Sarros, 2002).
Robert K. Greenleaf (1977) describes a servant leadership as having focus on serving people rather than himself
and understanding leader role as a servant. On his book, he states that ―The great leader was seen as a servant first,
and that simple fact is the key to his greatness‖. He hopes people can think again about the assumptions about the
connection between the leader and his subordinates in an organization that have been appearing these days. It is
reinforced with the title of his essay, ―The Servant as Leader‖ not ―The Leader as Servant‖. Greenleaf explains that a
servant leader starts by taking steps with high integrity, trying to construct a supportive relationship, and helping
others to grow (Beazley, Beggs, and Spears, 2003). Greenleaf gives more than a clear leadership philosophy for the
leaders who hold servant leadership to be followed. Greenleaf elaborates his view about leadership without
grounding on academic theories or broad inquiries, but it is grounded in very long experience and observation over
the years in the workplace, inside and outside community service institutions (Anderson, 2008). He describes servant
leader as an individual that is able to give a positive impact to society. In order to achieve it, the servants have to
produce a quality that seems different with common leadership concepts. The quality derives from the will to serve
which adheres in each individual. Thus, great outcomes are expected to derive from servant leadership action.
Greenleaf believes that others will consider the individual leader as a great leader.
Greenleaf (2002) found the idea about servant leadership when he met with a conflict that a big organization
which is governed by more than one manager tends to be selfish and dominates the society. They tend to give
priority to their profit and stakeholders. Greenleaf offers the idea of servant leadership as the solution, which
considered as the best form of leadership to be implemented both in business field and organization these days, with
an approach that servant leadership is the highest form of leadership in breaking impersonal and bureaucracy
problems, because it can help them to develop each other. Greenleaf (2002) also states that service for subordinates
is the core of servant leadership. The acts that should be conducted by the leader include: supporting, caring, and
holding a brief of subordinates (Northouse, 2010). The implication of having servant leadership as their managerial
manner is they will be able to get the whole goal in one pack; the success in an economy and spiritual salvation
(Direktur, 1996). The presence of servant leader in a workplace will bring a positive outcome for the organization
and its members. Greenleaf (1977) states that servant leader is able to develop his subordinates to become wiser,
healthier, more free, more autonomous, and be servant for themselves. In other words, the outcome resulted is self-
development of the subordinates and people around them.
Then, it can be seen clearly that servant leadership becomes more popular in the leadership model used in
business field because servant leadership is the best leadership model for an organization (e.g. TDIndustries,
Southwest Airlines, and Synovus) puts the story onto the practice (Levering & Moskowitz, 2000; Sendjaya &
Sarros, 2002). They maintain the principle of the philosophy of servant leadership as it has a main focus on the
workers and costumers‘ needs. The core of servant leadership is serving the workers as the first step, and the success
with client or customers as the following. It is also shown in the case study below that servant leadership can be
used effectively in corporation, for example Southwest Airlines, Kompas Gramedia, and PT Astra International Tbk.
This paper aimed to explain the implementation of servant leadership in those companies.
2. Theoretical Foundation
Some big companies have implemented the principle of servant leadership on their management system.
However, the company which becomes referenced by society resulted in a deeper investigation is Southwest
Airlines. Southwest Airlines is an American flight company located in Dallas, Texas. Southwest is the biggest flight
company both in the United States and in the world according to the amount of passengers taken in domestic routes
in each year (December 31, 2007). Southwest becomes the only company which is able to achieve profits for 39
years in sequences. They are stated as having ‗the best safety record‘ in flight industries and having the highest
consumer satisfaction compared to other flight industries, according to DOT. They are the true success story in the
United States. U. S. Airline Industry experienced a big loss up to $12.8 billion in 1990 to 1994.
Sanchia Arindhita / IICIES 2014 Proceeding 71
2.1. Herb Kelleher, Southwest Airlines Chairman
Herb Kelleher did not start his career by doing business, but instead he became a lawyer. Herb got his law degree
from Wesleyan, New York University. After graduating from the university, he applied his knowledge as a law
practitioner in East Coast and moved to Texas to open a law company. However, he tried to change his luck. Along
with his client, they developed Southwest Airlines. Kelleher said, ―Anybody who likes to be called a ‗professional‘
probably should not be around Southwest Airlines. We want people who can do things well with laughter and
grace.‖ It means that he does not want to disappoint people who have trusted them as professional, not in a serious
and stiff act, but in laughter and happiness. They recruit people with good behavior and train them in order to get
optimal skills. Southwest gives its employees a freedom to show their bright side of personality. Southwest believes
that an employee who is forced to become another person will feel pressure and stressed out in his work life, and the
stress will spread to other employees and customers. Stress is the biggest obstacle to be avoided by Southwest
Company. Southwest must have been ready and adapting for opportunities exists in the flight industries. One reason
why Southwest Airlines can adapt themselves in a short time is because the company believes its employees and
provides them with necessary policy and authority to finish their work. It is the reason behind successful trust that
Kelleher and Southwest Airlines have between them. Kelleher is the kind of person who will do what he says. He
thinks straightforward and speaks directly, caused people to respect and trust him.
2.2. The Implementation on the Company
Create a Legendary Culture

The fact is that the employees of Southwest Airlines extremely avoid industries trend. When the other flight
companies create a big flight route, Southwest tends to fly from one spot to another spot. They do not give luxurious
meal during the flight; the flight stewardesses give customers peanuts. They also use T-shirt and short pants. Their
styles are slowly imitated by other flight companies. People are interested and join Southwest because they want to
be the part of things that give them a meaningful life and significance changes; they want to be a part of something
big inside themselves. The employees of Southwest Airlines have ‗egalitarian‘ spirit in which they believe that they
are on a free, flexible, and unimpeded business world. Their mission is to open the sky‘s gate and give others
opportunities to see the thing, and to do things that they dream of. It is the reason of Southwest keeping the low
price. In implementing the discipline and motivated in all modesty, Southwest never seen as being trapped in self-
achievement or having serious decision. They are success in keeping focus on the goal and the strategic sense.
Having seen it from the surface, people can easily believe that Southwest Airlines does things frivols.
Keeping the Spirit Alive

Right from the beginning, Southwest always thinks that they are a flight company fulfilled by people who care
about the others, so their teams work hard to keeping the high standard. Lots of people in Southwest believe that
their company exists for a reason, not for a profit only. Their focus is to serve the needs and wants from people who
they care of, even if they have to involve pain and self-sacrifice, as if they understand that their needs is also being
fulfilled, not as the impact of chasing after their own importance, but as the impact of serving act. It becomes more
real in each day for them. Besides, with an easy access toward important people, employees indirectly develop their
self-confidence to be involved in the process of decision making. Southwest also fasten the process of employees‘
training with motivating people to understand the others‘ jobs. It is intended to stimulate the trans-functional
communication and to remind people that there lays another perspective rather than themselves. Southwest motivates
the employees to step out briefly in taking risks. In fact, Southwest has done everything that they could in keeping
the value and respect towards the employees who have done mistakes.
Leadership from the Inside Out

In Southwest Airlines, a leadership is conducted through a collaborative relationship. The people from Southwest
Airlines work in a relationship where the leader‘s and collaborator‘s role is being exchanged. The connection
between a leader and collaborator in Southwest Airlines is based on the commitment, not the pursuance. Leadership
is not a high technology for making people do things that they want to do. Leadership is to make people want to do
what they want to do is based on the mission, vision, and values that have been shared. When the priority of a leader
and collaborator is overlapping, it results a long-term commitment. When people are having commitments, they are
emotionally and intellectually tied between each other in order to achieve a goal or to conduct an act.
Great Service Begins at Home

Southwest‘s culture is rooted from the first effort to be ‗upside down‘ or in the modern life called as ‗mblusuk‘.
Their vision to be hold on together has built a family-like culture between them. The dominant values that push the
company and give a significant contribution toward the characteristic of Southwest Company are the profitability,
low prices, family, fun, love, hard work, individuality, ownership, legendary service, egalitarianism, common sense,
simplicity, and altruism. Besides, Southwest Airlines includes a role as a good company which is not only caused by
the obligation to become one, but also because it gives the society something that full of sincerity and love.
Compassion for the Community

Two main values that the company has; love and fun, are the form of the company‘s social responsibilities
towards the employees and its environment. With the values, Southwest Airlines is able to create a comfortable work
environment for the employees which also a part of its social responsibilities. The company is also involved in
several celebration days with showing its core value to the society in general. They give the society something that is
more important. They offer their time, heart, and soul. For instance, they contributed as voluntary in Oklahomat City
Bombing, The Loma Prieta Earthquake, St. Louis Flood Relief, etc.
Kill the Bureaucracy

Observing and discussing about the philosophy of Southwest itself, they also believe that bureaucracy defeats the
entrepreneur motivation, decreasing the development of company, and obstruct their competitive position. It means
that bureaucracy creates a dependent thought. Instead of pushing employees to create a sense of belonging and
responsibilities, bureaucracy teaches them to move the responsibilities away. Southwest gives an opportunity for
each employee to be involved in lots of decision making processes. As likely as each developing companies, a
structure is extremely needed. Indeed, there is a hierarchy in Southwest, but the company operates informally so the
new employees are able to communicate freely to all layers of pyramid structure every time they need it. They
believe that bureaucracy classifies people according to the position, authority, and capacity. It decreases the
productivity and obstructs the fast development of the company.
3. Case Study in Kompas Gramedia and PT Astra International Tbk
3.1. The Turning Point
The journey of Kompas, which was first issued in June 28, 1965 and established by Petrus Kanisius Ojong and
Jakob Oetama, cannot be separated from three turning points. First, Jakob Oetama‘s decision to be ready in holding
the responsibility in signing the apologize letter in February 5, 1978. Second, Jakob Oetama‘s decision of choosing
journalism as the ultimate of life. Last, Ojong‘s death in May 31, 1980 which was very sudden, where the position of
business matters became null, while the editorial matters was being held by Jakob Oetama. Because of the incident,
Jakob had to take over both his position itself and Ojong‘s position, which he did not know at all at the time. From
the three turning points, the second turning point was the one which touched Jakob‘s heart. At the time, he wanted to
move to become a journalist instead of being a teacher. The professions were conducted together, becoming the
teacher and journalist. However, he decided to choose one of the profession, gave a full passion into one, because his
soul is dedicated to be a journalist. For Jakob, the meaning of life is how we apply the faith through daily
experiences, not only based on theories or dogmatic. The gift that he felt was reflected into daily life which is full of
secular enjoyment. It is because he believes that faith was not made to be pure, but told through the life, applied in
the real life. That was the principle of life that he holds a lifetime. It cannot be denied that Jakob seeks for money,
but he hopes that the money he gets can gives the others opportunity to work, gives prosperity to the employees, and
gives social impact for the society around the company.
Back into the discussion about PT Astra International and one turning point experienced by William. There was a
time when Astra attacked by a series of challenges. From corruption accusation, the obligation to pay back the
government in a big amount of money, problem in its colleague with Holland investor, and the collapse of steel
factory which was built together with Canada company. However, William is William. When he heard about
business opportunity, he always reaches it, without any feasibility study like profit or loss analysis and the break
even point analysis. Lots of his decisions to enter particular business are based on ―anxiety‖ of an opportunity which
might not come again, resulted him to be always thirsts for new ideas and opportunities. The rushed decisions
making that he does caused William to be aware that he has to be careful in making a decision of his business. He
finally realized it because some of his decisions fell into loss and problems encountered by his employees and the
company. Since then, every time he wants to make a big decision which might also has a big impact, he will ask
some suggestions from the management of the company and his brothers who always full of calculation.
3.2. View and Leadership in Business and Life
According to Jakob, the profession of journalist and teacher are both have important role in giving values to the
society for human and humanity development. Both professions require an all out attitude and motivation, not only
expertise in its field, but also demand the whole energy, power, heart, and mind to be unaware with the work time.
Jakob has a firm belief that in working on an industry, especially in a media industry like Kompas, working in team
or group is a necessity. It does not mean to finish a work together, but also chain some energy together into one. Any
weakness has to be tolerated and any strength has to be mobilized to any party, in order to achieve an optimal
balance. Observing the profession as journalist, Jakob can be entitled as a productive writer. He sets a high value on
concentration, focus, and effectiveness in working.
At one moment, he got sad news of Ojong‘s death. He felt sad and sorrow. He is the type of person who has big
empathy. It is showed by the condition where he cannot sleep because he keeps thinking about the problems
encountered by this country, as example. The thoughtfulness and fidgetiness that he feels are always brought to
home and even to sleep. Because of that reason, the time when tears dropped form his eyes as he heard about
Ojong‘s death was not a surprising picture. However, his faith and belief have strengthen his heart as he believes that
death is a door toward the eternal life. As he got up from his sorrow, Jakob wiped the tears off directly, realized his
humanity weaknesses. At the same time, something appeared on his mind, ―Faith strength us‖ and he prayed on heart
and came back in a rigid condition. Ojong‘s death left a heavy responsibility in Jakob‘s hands. All this time, Jakob
focused on developing editorial field. However, he realized that the greatest appreciation towards those who have
left is when their creations and inheritance are continued by other people, and Jakob was ready to continue Ojong‘s
work with the help of his colleagues.
Now, he has to carry out business matters, which he does not know about. The strength and talents that Jakob
Oetama has is ngemong only. He tries to apply the concept of ngemong as a habituality implemented in his company
and environment, not as a written theory only. He is a kind of person who does not forget his origin. His attitude and
appearance are still modest even though he is now a successful businessman. His daily life is very wealth and bright,
does not mean that he wastes his money away every day, but it means that he lives a life where people love him and
he can also give love to other people. He is very discipline; he never comes late to work, even before the time, and
he fulfills all invitations given to him. The thing that makes his employees amaze is his habit to greet the employees
which has adhered on him; he is very friendly. For over the years, he teaches all leaders to do the ‗management by
walking‘, not finishing all duties and problems as the meeting over. In the management system that he implemented
in his company, the factors that are held tightly are the human factor and humanity factor. Both factors are
emphasized and become the key factors because they are the executor of the plan which first established together to
achieve the goal of the company. There is a group responsibility between the company and the employees, in which
the bottom-line is based on the philosophy focuses on human, which is caring people, caring the others. In other
hand, Jakob Oetama very appreciates the hard work of his employees. For Jakob, the measurements of being
successful for a journalist does not change until now, those are: having strong characteristic, working hard in seeking
news, being open, sensitive and caring, having orientation along with beyond and transcend view, always being on
the society and events. Being a journalist means to give high dedication in distributing the effort, energy, mind, and
time.
Meanwhile, William, who indeed has a high entrepreneur soul, occupied some business at the same time in earlier
business, like continuing a rollaway business established by Lily and supplied department needs. Like others
Tionghoa entrepreneurs, William had to maneuver the Program Benteng. He made a business frame ‗Ali Baba‘ with
jobs distribution: indigene people managed the business license while non-indigene people managed the operational
side. However in the middle of its development, one of his colleagues who wanted to take over their business
slandered William by accusation of tax peculation. William was kicked out from the company and sent to Banceuy
prison. At that moment, he felt like he has found the God that was disappearing from him. The change from his
spiritual side was seen in his daily life. Not so long, Lily‘s effort to set him free from the jail was success. He was
out from the jail with a new spiritual spirit. With God on his side, he had a very strong mental foundation, because
the company that was established by him was not his belonging anymore even though he was proven not to have any
finances crime. Actually, William wanted Astra to become a big tree which can give lots of benefits to its
environment, protecting all people who need protection from it, and always refreshing. He explains that, to get the
wish, Astra has to results profits. With the existence of the profits, Astra will be able to grow and extend its business
in order to accommodate more labors, retribute, increase the employees‘ salary and conduct a training session for the
employees so they can develop themselves to become the human resources people can rely on which can also make
Astra become greater than before.
The thinking system which is held by William is a loop effect by using a close loop model, where the output gives
effect towards the input, that is: Astra grows, offers job demands, consumption increases, business grows, and
Indonesia‘s economy grows. That is an interconnected close loop, which results a growing economy that may help
Astra to keep growing. William even believes that a company ownership does not always have to be related with
management. William‘s will is quite big to see Astra‘s growth. William is also lucky because he has some strong
colleagues, his brothers: Kian Tie and Benjamin. William is like a pedal who always seeks for new projects and
business opportunities. Kian Tie is like a clutch who analyzes whether the projects or opportunities are good or not.
His thinking system is systematic according to economy. Benjamin, the brake, is a figure who settles all things
down. He is systematic yet organized in details and perfectionist. Their difference behavior and attitudes are
believed to construct a balance of each other‘s nature.
It has been a general issue that behind his modest and friendly manner, William is very ambitious and tends to be
hard in doing business. If he has a will and particular business idea, he will furiously assist and look after his idea.
Uniquely, even though his expansion passion is always tempestuous, William is capable in managing the emotion.
The same attitude appears when they persuade the outside party/company. William always tries hard to gain trust
from the bank manager. He also teaches and forms cadres for the experts to follow his path. Even though William is
popular as a brave entrepreneur in starting a new business, has a lot of ideas, and has a high reputation, William is a
very friendly, soft, kind, and donor person. Every time he meets with people in his business trip, like security guard
who welcomes him, lift officer, or the hotel manager, he always sticks some money onto their palm, which is called
‘salam tempel’. He also gives his own money to Astra employees who are doing a training program in overseas.
3.3. View and Leadership in Business and Life
Observing the development of Kompas Gramedia, at first they seemed having less of competitors. Now, the
competitors are a lot, especially those with big finance and dynamics, along with high motivation and enthusiasm. It
makes the developments has to be assisted, while the mainstay of Kompas Gramedia is creditability and trust. They
have a mission; that is the strength of the company. Newspapers grow through daily interactions with problems
encounter every day and the vision-mission developed. The serious newspapers have references frames, philosophy,
outlook, but the translation is still professional.
The big changes in the existences of electronic and digital media, which are not only related to the
contemporaneously and rapidity of information delivery, but also the increase of quality and the searching of new
tricks, are also becoming the addition. The delivery framework becomes simultaneous so the press media does not
even know about the history‘s periods; the ways of thinking and work styles are also changing. Kompas has a value
which becomes its base and defined as vision and mission, which runs in their blood, that is historical humanism.
Therefore, on the change of the technology of communication which happens rapidly, they still believe that press
media can last long with a good attention on the young‘s‘ needs. The things that should be concerned in taking the
problem are divided into two principles; first, a commitment on the basic values of journalism, for example is
honesty and ethics which have to be held by the journalists. The second is how the editors or the managements of the
company can arise the inspirations of the journalists so they can result in a better achievement. Besides, one of the
commitments that keeps on being developed by Kompas in giving contribution to the citizen of Indonesia is
motivating the effort in getting back Indonesia even though there are some troubles like the economy, which is not
yet able to give the society a prosperity, and also the law maintenance which is not certifiable. About Kompas
Gramedia, Jakob also emphasizes on the humanity, because the thing served by Kompas is human matters, and that
might be the reason why Kompas Gramedia is open. Through the openness of Kompas Gramedia, various potential
like ethnics, religions, and background are unireable. He also believes if all potential can be unified, Indonesia
united, we all can go forward.
Kompas wants to stand ahead, with giving priority to the strong brand which is able to survive, develop, and get a
first. However, passing more than 46 years old, Kompas realizes their position in this competitive condition.
Nevertheless, Jakob believes that content is the main factor. The growth of internet just as same as its predecessor,
press media, which is not instant, sudden, and definite, but there will be also increase and decrease process. He and
the colleagues in Kompas Company try to survive because they have a good intention and determination to
implement their main mission, which is as a toll for educating the society, as the part of nation and character
building.
Behind all of the ambitions (in positive way) and intentions in giving positive impact to Indonesia, he is sure that
they have to work as a group; it is impossible to work all alone. The company that is held by him has been growing
with the collaboration of many people. The most important thing is that God which always leads the development.
―Eternal thankfulness‖ is not a phrase only; it something that he has always done in his life. In every success or
failure that happens in his life, Jakob always be grateful. It is seen as the wealthy on his life. He even feels the God‘s
work and His miracle upon all of the things that he has done in Kompas Gramedia, as we have known that he was a
teacher who did not anything about business. The only strength he has at the tie is ngemong, which he used to unite
people‘s strengths, motivate them to keep growing and help each other. Along with the growth and development of
the company, Jakob realizes and feels that Kompas Gramedia is a copy of his journey on life. The growth of Kompas
Gramedia is an encounter in Jakob Oetama‘s life. The encounters keep alive, without stopping, giving the motivation
to life from the positive side, and giving the burden from negative side. However, with pray and thankfulness, he
amazingly passed them all. Even though his life is really complicated, he always be grateful. He often says that
everything is done because of Allah. Though he does not deny the fact that there was time when he was very
desperate and disloyal to God, but He is The Greatest with all of His mercy, and he becomes even closer to God.
Going back to William. In Jakarta, William and his colleagues agreed to buy a ‗sleep company‘ and changed its
name to ―Astra‖. William hopes that he will able to bring Astra to its greatness so everything that is considered as
something good for the company will be accepted. William became the one and only owner of Astra International in
1961. He does not want to give up and believes that God always besides him. In the horrible macro-economy
situation, he kept trying to seek for information and business opportunities in order to take care of the company from
busting up. This time, prays are with him.
The development of Astra after getting two offices in Bandung and Jakarta was the issuance of The Warrant of
Eleven March 1966, which states that General Soeharto became The President of Indonesia as the subtitute of
Soekarno. He arranged the New Order government and determined to recover the economy status of Indonesia as
quickly as possible. Done in a flash, William started to point his aim to government projects and success in getting
the trust to imported 80.000 tons of asphalt from Japan. Astra also won a tender to built steel bridge construction in
West Java. At that time, all of employees, who were not a lot, were enjoying the situation where they had to work
very hard and feeling comfortable because William highly appreciated them as humans.
Indeed, luck cannot be separated from William. The internal recommendation from Kamio (The manager of
Toyota in Asia and Oceania) and Indonesia government finally made Toyota to choose William as their colleague.
William was absolutely happy. He felt that all of his luck are gifts from the God and he had to pay all of the gifts
with opening a work field and work hard for the country. He was more than happy to see people working rather than
saw a mounting pile of money in his account. This view is often misunderstood by the outsider when he will
aggressively establish a company-by-company. Astra regarded as octopus, a greedy octopus.
Having managed to hook Toyota, the name of William getting bounced in a range of major companies in Japan.
In just one year, William was able to pick up the giant Japanese corporations to partner with Astra as Fuji Xerox,
Honda Motor Company, Daihatsu, and Komatsu. He never stops looking for wind. He also gone through a major
step by establishing PT Astra Motor Sales in 1976—this is the company that later became the Toyota car dealers
which are very successful, and recently renamed as Auto 2000. During the following years, he pointed to the Astra
dealers and representatives to sell products throughout Indonesia. This is the foundation of a vast distribution
network and become one of the biggest sources of Astra‘s superiority. William vigorous nature and spontaneity is
based on the principle that the opportunity does not always come two times.
Until the final moments in the Astra, he never ceases to be an amazing figure. Especially in overcoming the Bank
Summa‘s crisis which erupted in July 1991 and brought William sucked into the vortex problem. Management of the
bank which has nothing to do with the actual business of Astra was actually handed to his eldest son, Edward
Soeryadjaya, an undergraduate economics graduated from West Germany. In this bank, William pocketed 60 percent
of the shares which are divided equally with Edward. However, unfortunately, Edward was less careful in running
the banking business. Edward was too generous in the credit indulgence. As a result, in 1992 the debt-stricken banks
are so big and to pay it off, William was forced off its stake in Astra. William resigned. He always returned to God.
He has always adhered to the principle: Man tried, God disposes. The most important thing to him was the fate of the
employees and customers of Bank Summa. He was greatly saddened to imagine that many employees have lost their
livelihoods.
In fact, he was even willing to sign a personal guarantee which a number of people were willing for the shackled
hands as it provides. Several top executives of Astra were surprised and shocked after knowing about William‘s step.
This decision was taken in the name of his family, Soeryadjaya. After signing personal guarantees and a statement of
June 1, William tried to move with an accelerated rhythm compared to previous months. In fact, he asked his friend's
willingness, Mu'min Ali Gunawan of Panin Group to manage and bring healthy to the management. There are three
main things he requested to be styled: liquidity, managerial, and solvency. But the available state and funding was
not supporting. Eventually, he was poised to swing a bigger step, which was much earlier had been suggested by a
number of parties and being a subject to many speculations: sell Astra‘s stock. William chose to sell all shares of
Astra to an overseas investor, Jardin, rather than handing Edward to go to jail. In the end, William sought to build
the business back, although it was not as successful as the Astra. However, all the values that he woke up, including
the company's philosophy remains the same as when he was still serving as the owner of the company.
3.4. Relationship of Employee and Company in Performance
Regarding the business field of Kompas Gramedia itself, Jakob asserted that all fields of work are equally
important. Indeed, each part has a different function and role, there are meeting with people outside the company,
and there are some people who prefer struggling with the documents. All are expected to work together. In addition,
he hoped that the "good‖ vote obtained by Kompas Gramedia itself was not only from the environment but from
someone else, which in this case means the Indonesian people as a whole. Jakob also calls attention to all employees
on the issue of honesty in power and authority, finance, and the problem of hard work. He was determined to
continue forwarding the late Ojong‘s discipline, maybe with another style but will not be soft. He wants all
employees to continue the legacy of the late Ojong like the issue of integrity, honesty, frugal, simple, and diligence
work. Jakob‘s simplicity of life which is still applied and is very impressive in the hearts of the employees actually
has been growing since childhood because the simplicity of the teacher family dominates the formation of simplicity
in attitudes and way of life. Last but not least, what would like Jakob bequeathed to his successors in AP are the
values. He always reminded his workers, that be great financially is important, but the shared values will determine
how someone could interpret his life and achieve success in his own eyes.
While the founder of PT Astra International Tbk, William, seeks to bind the employees‘ emotions and to have
Astra in its own way. In addition, as a company owner, William stated that the aspects of openness, equality, and
unity must exist in Astra. He always told his employees, treat people as human. No employee is dismissed because it
violates the principle of the company, because Astra was not built for the money alone. Money is not everything.
Astra‘s main goal is the welfare of the employees and the nation. Another philosophy which William applies and
understands is 'let the flowers bloom'. He was reluctant to interfere in the operations of the business because
basically he did not want to make Astra not going well. He is aware of its limitations. Every time he was in too deep,
just a lot of big problems that caused accidentally due to the high aggressiveness which crashed into the business
opportunity. And it worked, it seems like the dreams and obsession of William during his lifetime have been
translated by his successors in the Astra, namely how to create jobs as much as possible for the people of Indonesia.
Right on the anniversary of William in his 60th, Astra authorized the corporate philosophy which is a manifesto that
has been the soul, breath, and a DNA of nationalist industrialists who are always thinking of the welfare of the
people. William was very happy because of what had been thought, felt, said, and done now could be crystallized.
Since the beginning of building Astra, to the professionals and employees, William was repeatedly conveyed the
message, if Astra is successful and great someday, the success and greatness should not be enjoyed alone. The
success of Astra should be a blessing to many people. Then on May 2, 1980 he established Dharma Bhakti Astra
Foundation. Through this foundation, William wanted it to be able to expand in reaching more people who can be
helped; the main focus is the development of small and medium-sized businesses. He helped create Astra‘s culture
with an approach and distinctive personal style: humanist and fatherly. This was done through a natural process with
a very dominant pattern, which gives an example. For example, hold a joint Christmas celebration, congratulate Eid
directly to the employees one-on-one, and is active in national day celebrations.
3.5. Other Dynamics Life of Jakob Oetama and William Soeryadjaya
Indeed, they both have carved out a marvelous history for the mankind. But it does not mean they are super
humans without the slightest deficiency. Almighty God is just perfect. Jakob and William have a few things which
are rated as "gaps" in their lives, according to the views of others. One weakness that is often criticized by people
related to issues in Kompas Gramedia is an inadequate salary when compared to the time and effort given by the
employee. In addition, the process of becoming the permanent employees of the company is very complicated.
If the constraints related to salaries and hiring process experienced by Jakob Oetama, William Soeryadjaya
experiencing problems in his personal life, more specifically in the way he educates his children. Several parties,
including his own children felt that William pamper them and give whatever they want. Not infrequently, William
provides financial support in a very large number that are often scattered by the children at the club and clubbing
places abroad. Actually there are some reasons why William did it. William, who came from poor families do not
want their children to feel the feelings of lack of money, based on that reason the money which he has are equally
shared to his four children. Consequently, they tend to not have the responsibility.
4. Conclusion
Leadership models applied in Kompas Gramedia and PT Astra International Tbk have been analyzed based on the
pattern of implementation, leader-employees relations, and performance of the company, as well as in the
implementation of every aspects in daily life. Researcher identify linkages between some of these and found that:
a. Individual characteristics that consist of values, leadership styles, traits, personality, and self-learning is a process
that forms a pattern of thinking and leadership implementation of a servant leader.
b. Corporate culture that consist of leader-follower work engagement, productivity focus, and performance focus is
the state in company which leader gives emphasis on self-development employees in order to achieve higher
productivity as well as provide a better end result
c. Systematic decision making which consists of group decision making and tactic decision making is base of
decision making used by the company with reference to the interests of all employees and the company's vision
d. Spirituality that composed of horizontal and vertical relationship is an important factor underlying the entire
decision and thought of a servant leader in all aspects in life, because a servant leader understands that "all of this
back to God". Thus, what he did and what he has decided is for God and others, not for himself.
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12 – 14 August 2014
Developing Competitiveness of Small and Medium Scale Industries

in Magelang and Salatiga City: An Innovation Policy Perspective
Anugerah Yuka Asmaraa*, Purnama Alamsyahb
ab
Pappiptek LIPI, Building A PDII LIPI 4th Floor Jl. Gatot Subroto Kav 10, Jakarta Selatan 12710, Indonesia
Abstract
Innovation is a main factor to increase competitiveness of industry. Small and Medium Scale Industries (SMIs) considerably
contribute to reduce unemployment in Indonesia, especially after economic crisis in 1997. Growth of Small and medium scale
industries (SMIs) is very amazing in Central Java. In 2013, the significant increase of SMIs was accounted for 88.505 units in
this area. Both cities in Central Java which are popular with unique SMIs are Magelang and Salatiga City. Both cities do not have
natural resources in which they totally rely on their economy revenue on services and tax. SMIs in Magelang and Salatiga City
are limited at human resource, capital flow, advanced technology, and market access. Even though, a few of those SMIs are able
to innovate by means of way themselves. In Magelang City, innovation of SMIs is very influenced by a role of local government
because each of SMIs does not have a mutual goal. One of prominent government programs which it can promote
competitiveness on SMIs is Krenova Program. Whereas, in Salatiga City, a few of SMIs collaborate each other to achieve a
market access at higher level. Local Government of Salatiga indirectly stimulates SMIs to innovate. However, both local
governments (Magelang and Salatiga City) do not assume innovation as a single factor. In broader sense, innovation is influenced
by three elements which they are interwoven each other (namely: social, technology, and economy).
Keywords: competitiveness; innovation; small and medium scale industries; role of government.
1. Introduction
After economic crisis in 1997, small and medium scale industries (SMIs) have played a prominent role in
economic development in Indonesia. They have been able to persist in economic fluctuation and to accommodate
many people to work in this sector (Asmara and Rahayu, 2013; Ulfa, 2013). In Indonesia, SMIs have approximately
absorbed million people to work in this sector and to reduce unemployment (Tambunan, 2006; Setiawan, 2010).
According to Saedah (2013), total number of SMIs in Indonesia are 3,9 million SMIs which they can absorb a
plentiful amount of work force (9,14 million people). In 2012, SMIs had entirely contributed about 10% of the gross
national product and its contribution will be targeted to achieve about 50% in 2025 (Hidayat, 2013).
E-mail address: yukaasmara1987@gmail.com
80 Anugerah Yuka Asmara / IICIES 2014 Proceeding
Saedah (2013) reveals that the accretion of SMIs is concentrated about 75 % in Java Island, and the remains of
them is about 25% outside of Java. Most of all SMIs are located in Central Java Province. In 1998, SMIs in Central
Java Province were accounted for 3.061 (53,6%) units of 5.715 units in Indonesia, and most of them were specially
existing in rural area (Marijan, 2005). In 2008, the total number of SMIs in Central Java were 64.294 units. In 2013,
the significant increase of SMIs was accounted for 88.505 units or 37,66 percent of the growth of SMIs in 2008
(Strategic Plan of Central Java Province 2013-2018 period).
Thus far, SMIs have contributed in alleviating poverty, reducing unemployment, and minimizing negative impact
of urbanization in Central Java. (www.balitbangjateng.go.id). According to Swastuti (2013) who cites from Agency
for Planning and Development at Central Java (abbreviated Bappeda Provinsi jawa Tengah), SMIs can absorb
unemployment about 5 million people in 35 regions of Central Java. SMIs produce many products such as clothes,
batik, bags or belts made from animal leather, variety of foods and beverages, wood engraving, and the other unique
products. Therefore, Central Java is the heart of SMIs in Indonesia.
Both regions which are popular with unique SMIs in Central Java are located in Magelang and Salatiga City.
Magelang and Salatiga City are highly known as city of SMIs for various foods and beverages. Unlike the other
cities in Central Java, Magelang and Salatiga city do not have a plentiful number of natural resources (mining, forest,
ocean). In fact, most of food-beverage SMIs do not have legal certificates or product standardization. Prasetyo et al.,
(2013) reveals that food SMIs in Magelang City having P-IRT (or health standard from Government of Indonesia)
are 7,34% of 654 food SMIs. While in Salatiga City, according to Ulfa (2013) who cites Disperindagkop and
UMKM’s† data of Salatiga City (2006) mentions that the total number of SMIs in Salatiga are 138 units (updated
data, there are 587 SMIs in Salatiga City). In food-beverage sector, there are only 42 SMIs of 95 total SMIs that
have good quality product and SPP-IRT certificate.
In many countries, governments believe that small and medium sized enterprises (SMEs) require supports, again
due to market failures, such as insufficient information regarding good practice and new technologies. Recent SMEs
innovation policies include subsidies for business consultancy, government supported learning networks and
sponsored programmes which attempt to upgrade SMEs (Hobday et al., 2012). Many problems of SMIs (especially
SMIs on beverage-food sector) lead to role of local governments (Municipality of Magelang and Salatiga) to
increase performance and competitiveness of SMIs by conducting innovation policy in both regions. Castro et al.,
(2013) argue that innovation is a primary instrument of competition for many firms, especially within technology and
knowledge-based industries. Therefore, competitiveness is main prerequisite for each industry to survive in midst of
uncertainty of recent economy development.
In both areas, SMIs grow to achieve their market in a different way. In Magelang City, SMIs compete each other
to grab market niche at local and regional (province) level, while in Salatiga, they collaborate each other to retain old
market niche and also to attract the new consumers. In this case, both municipalities of Magelang and Salatiga play
the major role to promote SMIs growth. Both governments keep an eye on competition among SMIs to avoid a quick
change shift from fair competition to fierce competition. One of the policies which is undertaken by both
municipalities to promote the SMIs development is innovation policy. Either competing or collaborating is directed
by local governments through innovation-based SMIs development to increase their competitiveness at local and
national level. Mani (2002) and Taufik (2005) stress that government role in developing countries is vital to
encourage and accelerate growth of industries which its growth is based on innovation. This study aims to reveal the
type of competition of SMIs in Magelang and Salatiga City as well as to analyze the role of local government in
supporting innovation-based SMIs development in both areas.
†
Disperindagkop and UMKM or Dinas Perindustrian, Perdagangan, Koperasi, dan UMKM is as same as Agency of Industry, Trade, Cooperative,
SMIs of Salatiga City.
Anugerah Yuka Asmara / IICIES 2014 Proceeding 81
2.1. Small-and-Medium Enterprises and Innovation
Small and medium enterprises are much more than simply economic agents; they are social and cultural
conveyors of values, trust, self realisation and welfare. They represent a large part of the population worldwide and
their desires to realise their own autonomous ideals, objectives and aspirations. Supporting their development
process means helping the people to increase their own welfare which may be independent from quantitative
economic success (Parrilli, 2007). Nowadays, many SMIs have evolved to be more innovative to fulfill local and
global demands. In this matter, innovation is defined as an interactive process among a wide variety of actors. It
stresses the point that firms do not innovate in isolation, so that innovation has to be seen as a collective process. In
the innovative process firms interact with other firms as well as with non-firms organizations such as universities,
research centers, government agencies, financial institutions and so on (Malerba, 2002). In line with Malerba,
Kuhlmann et al., (2010) state that innovation is a social, economic, and technological character. It emerges
sometimes spontaneously, sometimes as a result of actors strategic endeavor. Innovations vary according to subject,
location, actors, speed, and numerous other characteristics.
2.2. Competitiveness
Innovation is a must for industries to sustain their own economic activities and to compete with other similar
industries. Porter (1980) defines competitiveness or competitive strategy as taking offensive or defensive actions to
create a defendable position in an industry. In developing countries, to support industry competitiveness, role of
government is absolutely existing. Caniels et al., (2009) argue, over time, public policy has become a factor of some
importance for the sector’s more recent expansion and its future growth potential. Public policy, and in association
with this the role played by public institutions, is therefore an important contextual factor influencing the
performance of the sector. Governments using the concept as policy tool to promote competitiveness by innovation,
clusters and poles of competitiveness, even if they develop on the basis of pre-existing spontaneous industrial
districts, appear as politico-economical constructs at the interface between sciences and technology on the one hand
and production on the other hand (Ganne and Lecler, 2009).
2.3. Innovation Policy
Regarding this study, the term innovation policy is often synonymous with R&D policy, partly because of the
market failure argument. However, it should be noted that the above definition does not capture the incremental
innovations which can lead to large gains in productivity, product and process quality which can be essential to
structural change and economic growth (Hobday et al., 2012). Innovation policy can be characterized as “systemic”
in a double sense: as a system-wide distribution of varieties of innovation-related policies across domains (e.g.
manufacturing, services), or as policies designed to work on system characteristics, such as demand-oriented policies
(Kuhlmann et al, 2010).
Recognized that policy is made in complex interaction processes between a large number of actors which takes
place within network of interdependent actors, the actors involved are mutually dependent because they need each
other’s resource to achieve goals (Klijn and Koppenjan; Scharpf; Benson; Rhodes in Hill and Hupe, 2002). Related
to innovation policy, it means setting up powerful schemes and developments which are attractive and able to use
multiple synergies which can decompartmentalise both sectors and actors (public/private, production/services, basic
and applied research, economic management and management of innovation, etc.) so as to accumulate around a
given sector strong potentialities and broad dynamics which allow the poles to present themselves as major
benchmarks capable of holding their own not only nationally but globally. The key words in this perspective are now
competitiveness, global networks, attractiveness, and especially governance, the main problem of these new poles
being to maintain the coordination of a large number of different actors at all levels (Ganne and Lecler, 2009).
3. Methodology
This research is a qualitative method using a descriptive analysis to explain the phenomena of the SMIs
competition pattern in Magelang and Salatiga City. In addition, this study aims to describe the form of policy which
is undertaken by both municipalities to promote SMIs competitiveness in Magelang and Salatiga City. This research
uses two data sources, namely: the informants interviews (primary data) were derived from the government officials,
entrepreneurs of SMIs, and the consumers. Then, review of books, scientific articles/journals, website, newspapers,
and the other relevant documents are secondary data which used in this study. Data collection had been conducted in
Magelang City by the middle of 2012 year and in Salatiga City by the end of 2012 year.
Analytical framework in this study is innovation policy adapted from Kuhlmann et al. (2010). They state that
innovation policy is not only technological factors, but also social and economic factors which those elements are
strongly embedded in a organization environment.
Technology
(research and development,
purchasing new machines, etc)
Social values: Innovation of industries Economy

(Norm, informal (market, demand, competitor, etc)
agreements, convention,
customary law, etc)
Competitiveness of industries
Fig. 1 Elements of innovation policy

Source: Adapted from Kuhlmann et al., 2010
4.1. General Problem Description
SMIs in Magelang City

According to Bureau of Cooperation, Trade, and Industry of Magelang City (2012), number of SMIs in Magelang
City are 1.357 units consisting of 39 medium industries, 294 small industries, and 1.024 household industries. Most
of them are food industries (654 units) dispersed in three sub-districts in Magelang City (Three sub-districts are
North Magelang, South Magelang, and Center Magelang). They are mainly constrained by capital flow, technology,
human resource, and market access. Low capital is crucial factor to develop SMIs and to compete with other SMIs
from outside of Magelang city. In this case, SMI’s capital flow is stemmed from internal family budget or loan
capital from middleman or small scale bank (In Indonesia, middleman is familiar with “tengkulak”, whilst small
scale bank is popular with “bank kredit or bank cicil”). Most of these SMIs are traditionally operated by people
whom their education level is limited on elementary school or junior high school. Each of SMIs almost uses old or
simple technology to produce products that it only yields a number of limited products. In addition, the restricted
market access influences activities of production and distribution of SMIs and which in turn reduce the profit for
SMIs themselves.
Prasetyo et al., (2013) reveal that SMIs in Magelang city, particularly food industries, have had certificate from
Agency for Drug and Food Control Republik of Indonesia (abbreviated BPOM RI), but most of them have not had
certificate for ISO 9001/ISO 17025, Hazard Analysis and Critical Control Points (HACCP) and Indonesia National
Standard (abbreviated SNI). Many SMIs do not have a legal certificate either national or international (Not only in
food industries, but also in other sector industries). This matter becomes a crucial factor that constrains spread of
SMI’s market access to national or international area. Henceforth, it leads to low competitiveness of SMIs and to
make economic development to be sluggish in Magelang City.
SMIs in Salatiga City
There are thousands of small-medium scale industries (SMIs) dispersed in four sub-districts in Salatiga City. Like
SMIs in Magelang City, SMIs in Salatiga are dominated by beverage and food industries such as crackers, nuts,
soybean, sticky rice, brown rice, and others. Each of SMIs has a distinct character even though one industry
produces similar products with other industry products. SMIs in Salatiga City have problems in extending and in
growing industry capability, especially concerning with worker skill, capital flow, product packaging, and market
niche. Majority of actors or entrepreneurs of SMIs are people who do not have formal job and who have been retired
from their job (low-medium economy actors). Education level of workers is limited at junior high school, senior high
school or vocational high school. Capital flow of SMIs, like SMIs in Indonesia, is very limited on purchasing raw
materials, hiring workers, fulfilling their daily needs and maintaining machines. They cannot buy a new production
machine, to save their profit, and to extend their industry. Some SMIs often receive aids (machines, money,
workshops) from large scale industries which they are interested on SMIs.
4.2. Innovation Policy for SMIs
In Magelang City
According to Kuhlmann et al., (2010), generally there are three elements influencing innovation (social,
economy, and technology). Most of SMIs in Magelang City are categorized into food and handicraft industries.
These elements are truly considered by Municipality of Magelang to promote SMIs innovation in Magelang City. In
case of Magelang City, SMIs capability to innovate is highly influenced by the involvement of Municipality of
Magelang.
External technologies:
Computer/information technology
Internal technologies:
A cutter-tofu tool; a simple accounting
software; a paving block
Social values among SMIs

actors :  Krenova program Economy factors:
 Tend to behave implementation;  Relying on domestic and
individually  yearly program to foreign tourists
 There is no mutual goal increase  There is no specific market
 Competition with one performance of type to sell SMI’s products
another SMIs
Inside of Magelang City
Outside of Magelang City

Competitiveness at local and regional level (Java area)
Fig. 2 Innovation elements of SMIs and innovation policy in Magelang City

Source: Modified from Kuhlmann et al., 2010 and adjusted from field findings, 2013
Picture above can be described as follow. Innovation comprises social, economic, and technological values that
these elements are strongly interwoven with one another. Dankbaar and Vissers (2010) argue that innovation is
created not only to internally satisfy industry needs, but also to externally fulfill demand needs. In other words,
innovation can increase competitiveness of SMIs if it is used by consumers and its benefits are received by SMIs.
Actors of SMIs in Magelang City compete with one another. They generally tend to behave individually and to
develop their own business. Moreover, each of SMIs actors does not have a mutual goal to grow SMIs more
significant in Magelang City. Most of SMIs actors are Javanese ethnic, but in general business environment, this
social tie is less considerate as a main factor to unite SMIs goals.
SMIs in Magelang City have used both external technology and internal technology to support their production
activities. External technologies are advanced technologies like mobile phones, computers, and others. Internal
technologies are simple technologies made by Magelang townspeople or actors of SMIs. Internal technologies are a
cutter-tofu tool to produce tofu snack (Rusdjijati, 2012), a simple accounting software which it is made by lecturers
from Magelang Muhammadiyah University to accelerate works in SMIs, and a paving block to mold the brick and
paving (Aji et al., 2012). These new technologies considerably assist SMIs to increase their products quantity and to
make production more efficient.
Majority of SMIs in Magelang City are mostly relied on domestic and foreign tourists who visit to Magelang City
and its surroundings area. One of the superiorities of Magelang City is where this city is surrounded by various
tourism destinations like Borobudur temple, Merapi Mount, Merbabu Mount, Dieng Mount, Ketep Pass, Kopeng
Area, and Yogyakarta City. In addition, Magelang City is located at an intersection of four close cities namely,
Temanggung, Yogyakarta, Semarang, and Purworejo which brings about Magelang as a transit city in Central Java.
Unfortunately, several SMIs do not have a specific market to sell their products. They generally sell their products to
retail stores and also they directly sell products through their stores. Consequently, there is no a vision which it can
tie actors of SMIs to make SMIs more innovative.
Even though, few of SMIs use technologies made by themselves or university, but most of SMIs still use
traditional technologies (or by their hands) to make a product. Therefore, capital flow, advanced technology, human
resource, and market access are still key problems for SMIs in Magelang City to innovate. In this matter, Local
Government of Magelang City initiates to promote competitiveness of SMIs by means of reducing limitations of
SMIs and to provoke SMIs to innovate more. Agency of Research, Development, and Statistics of Magelang City
(abbreviated Kantor Litbang dan Statistik) in collaboration with Agency of Cooperative, Industry, and Trade of
Magelang City (abbreviated Diskoperindag) arrange and implement many programs to promote innovation
capability on SMIs.
One of the prominent programs supporting innovation is “Krenova Program” (Creative and innovative program).
In Indonesia, Krenova program is initiated by Indonesian Ministry of Research and Technology. At local level, this
program is implemented by Agency of Research, Development, and Statistics of Magelang City. Krenova program is
one of successful programs which it can provoke SMIs to innovate in short period of time, exactly only one-three
years. Amazingly, many of SMIs are involved on this program and most of them are successful to be champion at
national level. One of judgement criteria of Krenova is capability of SMIs or townspeople to innovate. It means that
Krenova program has been able to make SMIs more innovative in Magelang City. Indeed, Magelang City has
received the “Anugerah Ristek award” at national level from Indonesian Ministry of Research and Technology (In
Indonesia abbreviated KRT) as many as three successive periods (2009, 2010, and 2011).
Krenova is implemented by Municipality of Magelang by means of both formal and informal way. First,
Municipality of Magelang formally collects information from SMIs, selects them, and determines SMIs which are
deserved to be engaged on the Krenova competition at local level. Next, Government of Magelang City forwards the
Krenova champions from local level to national level. At national level, Indonesian Ministry of Research and
Technology judges candidates of SMIs (all SMIs in Indonesia) and this ministry announces its champion. Krenova
award is received by few of SMIs in Magelang City which in turn stimulates other SMIs to participate on this
program and to increase SMIs innovation capability. Second, Municipality of Magelang informally invites actors of
SMIs through person-to-person communication and also use of social networks in Javanese culture. The result of this
way is effectiveness of Krenova implementation to jack up desires of SMIs to innovate in Magelang City.
Agency of Cooperative, Industry, and Trade of Magelang City (Diskoperindag) also implements programs to
development of SMIs, but these programs are larger than Krenova program. Diskoperindag’s programs consist of
not only regarding to innovation capability but also regarding to sales, workshops, funding, etc. Diskoperindag’s
programs indirectly contribute and support Krenova Program which it is implemented by Kantor Litbang and
Statistik Kota Magelang to promote innovation on SMIs. In example, Diskoperindag invites SMIs to join in many
fairs at both local level and national level. In addition, Diskoperindag engages few of SMIs actors to be keynote
speaker and to participate in conferences or workshops concerning with a strategies how to develop SMIs. These
programs can stimulate SMIs to open their mind and to give many opportunities for SMIs to innovate better.
However, emergence of Krenova Program is not separable from programs which are arranged and implemented
by Diskoperindag of Magelang City. In an example, a new technology like a cutter-tofu tool is existing because
Magelang Muhammadiyah University (UMM) and Diskoperindag of Magelang City mutually cooperate to turn up
this tool to assist production process on SMIs. Diskoperindag facilitates SMIs by empowering and supporting,
whereas UMM supports SMIs by generating this tool, and by showing how to use it well. The strong and active role
of Government of Magelang City is a key to promote innovation on SMIs and it is a potent way to revive confidence
of SMIs to compete each other. According to Dodgson (2002) innovation policy is important in both developed
countries and developing countries. In the end, it can say that innovation capability of SMIs is triggered by an
innovative stimulation conducted by Municipality of Magelang to promote competitiveness of SMIs in Magelang
City. Nowadays, Magelang City is a pilot project of regional innovation system (abbreviated SIDA) in Indonesia.
In Salatiga City
Municipality of Salatiga, especially “Agency of Industry, Trade, Cooperative, and SMIs of Salatiga City”
(Disperindagkop and UMKM Kota Salatiga), develops competitiveness of SMIs by giving amenities to stimulate
emergence of innovative SMIs massively and qucikly. In line with Manual statement (2005), innovation is not only
limited on products, but also on marketing, organization, and process. In addition, Kuhlmann et al., (2010) state that
innovation is influenced by social, economic, and technological factors. Hence, innovation can be understood as a
broader definition. Although SMIs in Salatiga City face many limitations, however actors of SMIs have innovated
more further than SMIs in other cities.
External technologies:
Computer/information
technology
Internal technologies:
less-oil frying machine (only
food industries)
Social values among SMIs
actors:
 Mutual trust Economy factors:
 Solidarity Yearly government Goal: Modern retail market
 Mutual goal to move program to increase (inside and outside)
forward to market performance of SMIs
access at higher level
Inside of Salatiga City
Outside of Salatiga City
Competitiveness at regional and national level
Fig. 3 Innovation elements of SMIs and innovation policy in Salatiga City

Source: Modified from Kuhlmann et al., 2010 and adjusted from field findings, 2013
Three elements mentioned above are supporting elements to increase innovation capability and competitiveness
of SMIs in Salatiga City. Every actor of SMIs is strongly tied by internal social values such as mutual trust,
solidarity, and mutual goal to achieve market access at higher level. Each of actors is cooperative and responsible to
operate joint agreements one another. Mutual trust is formed by the proximity of location where the SMIs operate
their daily activities in one close area. In addition, mutual trust is also influenced by the “akin clan” (Javanese
people) whom they occupy in Salatiga City in long period. Solidarity is formed by a tie of similar business (small-
medium scale industries). Mutual goal is triggered by similar limitation of human resource, capital flow, and market
access.
SMIs in Salatiga use simple technologies to operate their production activities such as a stove to cook food (food
industries), knife to cut the cloth (handicraft industries), and others. Usage of external technology (computer) is
needed to account revenue and expenditure of SMIs. In addition, one of SMIs actors has invented a new frying
machine functioning to reduce vegetable oil and to measure food maturity level. An inventor of this machine is Mr.
Eko Susilo. He is a new entrepreneur who has passion to be a better person from day to day. Historically, to fulfill
his family need, Mr. Eko produced “kacang telur” (this product is snack which is made from nut, egg and powder) as
a main product to be sold to local consumers firstly. Then, He tried to invent a new frying machine made from a
second-hand washing machine. This washing machine was modified by him to be the frying machine which it
functions to make bean to be more delicious taste, good texture, and low cholesterol. In addition, this machine also
makes more efficient and faster production process. This machine has been recognized by Business Innovation
Centre (BIC) from Government of Indonesia. In line with it, Mr Eko had been awarded as a new 102 innovator in
Indonesia (Asmara and Triyono, 2012).
Social and technological factors unite various interest of SMIs to achieve a mutual goal. Exactly, they move
forward to attain market access at higher level. Each of actors mutually cooperates to represent their interests
through a business community which is led by Mr Eko (an owner of SEHATI). Recently, SEHATI is the most
popular and successful model of SMIs in Salatiga City. Since 2008 year, SEHATI has not only produced “kacang
telur” as primary product but also it has produced soybean powder (raw material for making hot soybean beverage).
Indeed, 50-60% marketing area of SEHATI is in Bali, and its rest is in Central Java (JogloSemar or Jogja, Solo, and
Semarang).
An owner of SEHATI, Mr. Eko, invites and engages other entrepreneurs to emulate his efforts to be successful
SMIs. Mr Eko and the other entrepreneurs built this community in 2009, then they named this community as “Suci
Hati”. Currently, existence of Suci Hati has shifted existence of SAGA (Snack of Salatiga) in which SAGA is an
older community of SMIs than Suci Hati. Formally, Suci Hati has not yet had official unity in Salatiga, but it has had
the broad networks comprising 32 members of SMIs in Salatiga City. They consist of food-beverage industries and
handicraft industries having a mutual goal to penetrate at higher level market. A mutual goal of Suci Hati is modern
retail markets (department stores) located at both local level (Salatiga, Yogyakarta, Semarang, Solo and the
surroundings) and national level (all Java, Celebes, Bali, etc).
Related to development of competitiveness of SMIs in Salatiga City, Disperindagkop and UMKM of Salatiga
does not act solely to promote competitiveness of SMIs. It works together with “Agency of Small-Medium
Enterprises and Cooperative of Central Java Province” (Dinas UKM dan Koperasi at regional level). Existence of
Dinas UKM dan Koperasi of Central Java is very important to assist Disperindagkop and UMKM of Salatiga within
developing SMIs competitiveness. Both agencies have similar programs (innovation policy) to promote innovation
on SMIs in Salatiga by conducting five main programs as follow:
1. Facilitate to join in various SMIs fairs at local, regional, and national level. SMIs are encouraged to expose their
products to consumers. Majority of SMIs receive positive effects after they join in various fairs. (Positive effects
are like new knowledge, innovative ideas, increasing consumers, and new experiences).
2. Assist to SMIs funding either through governmental funds or through bank funds. Municipality of Salatiga often
gives fund‡ to SMIs (loan or full gift). In addition, this government donates machines, tools, and other things to
increase performance and production of SMIs. Unfortunately, maintenance of machines is often neglected by
actors of SMIs because fund to operate machine is very limited.
3. Bridging between SMIs and large corporations either regional level or national level to get corporate social
responsibility (CSR). Few of SMIs have received CSR from large and national corporations. In example,
SEHATI had received fund from the state electricity company (perusahaan listrik negara or abbreviated PLN) to
operate his industry and to buy new machines.
4. Introducing SMIs at national level, Salatiga’s major promises that he would build 1000 SMIs in Salatiga city to
increase local economy and human well-being (sindonews, 2012). This way leads to attract many tourists to visit
Salatiga City and in order to tourists buy various products of SMIs. Nowadays, Municipality of Salatiga arranges
a series of tourism destination in Salatiga City and its surroundings area which one of these series is to visit the
‡
In 2012, Disperindakop dan UMKM of Salatiga City donates (grant-in-aid) amount 2 billion rupiah to SMIs (sindonews, 2012).
SMIs. SEHATI is one of SMIs visited by tourists to see and to learn stages of production directly. Moreover,
tourists can buy SMIs products as a gift to bring back from trip.
5. Keeping alive the positive social values and encouraging capability each actor to always innovate. Municipality
of Salatiga facilitates SMIs to share much information and to interchange experience each other. Municipality of
Salatiga gives a host of large space to SMIs to meet and to express their innovative ideas. This way is very
substantial to promote and to grow innovation on SMIs in Salatiga City. The important thing that innovation is
not static way, but it is more dynamic way. Kuhlmann et al., (2010) say that innovation in a systemic system,
particularly a successful innovation requires transgressing limits.
Innovation programs which are implemented by Municipality of Salatiga have less-positive impacts on SMIs.
Indeed, Most of SMIs in Salatiga almost operate their business activities independently. The key role of local
government emerges when the government has more budget to assist SMIs development. In other one, the
government role in mostly developing countries to develop innovation is limited on funding (Mani, 2002). In
example SEHATI, is mainly assisted by two large non government organisations, namely, state electricity company
(PLN) and Soegijapranoto University in Semarang City. Both organizations had differently contributed to encourage
innovation capability of SEHATI. PLN assisted SEHATI through funding to buy new machines and to maintain
machines, whereas Soegijapranoto University revealed protein content of SEHATI’s products in 2012. Its finding is
44,128% for virgin soybean and 45,235% for fried soybean. In 2010, SEHATI’s products were also tested by
Succofindo. It was revealed that content of protein was 43,72% for soybean powder.
Recognized that government programs to develop innovation on SMIs in Salatiga have not yet been maximal to
trigger SMIs more innovative. Nevertheless, these programs have become a stimulus for accretion of qualified SMIs
in Salatiga City. By conducting these programs, Local Government of Salatiga revives SMIs to compete among
many SMIs in Indonesia. In the similar meaning, it means that policy for development of SMIs indirectly gives
positive effects on SMIs to innovate in Salatiga City.
5. Conclusion
Innovation of SMIs in Magelang and Salatiga City is influenced by social, economic, and technological factors.
Innovation policy implemented by local government is very important to trigger and to make SMIs more innovative.
In Magelang City, the role of local government in collaboration with regional government (at province level) can
influence SMIs directly to be more innovative. On contrary, in Salatiga City, the role of local government has less
influence on SMIs to innovate. Regardless, government policy is highly vital to promote competitiveness of SMIs
because it gives a way in midst of uncertainty of social change and economic fluctuation in a geographic area.
Acknowledgments
We thank a lot to Mr Andjar Prasetyo (Magelang) and Mr. Eko (Salatiga) as a key informant in this research.
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12 – 14 August 2014
Implementation Policy of Acquisition Intangible Assets in

Government Financial Statements
Tommy Hendrix*
Center for Innovation – Indonesian Institute of Sciences
Abstract
The implementation policy of intangible asset has become hot issue to study. In order to makes national regulation more
effective and efficient especially in applying financial statement needs strong commitment to rebuild framework in management
of intangible asset. In order to see more directive portion to patent result in research and development institute. Direction in
implementation policy must be in line with goals that being focus in transparency and accountability particularly in financial
report statement. In progress of Intellectual Property Right seem to be valuable if we see in management of valuation side to find
the value of patent acquisition based on formulation data. Intangible asset policy is needed to be confirm as a obligation in
government institution to avoid many error in reporting performance accountability of government agencies. Mainstream of
intangible asset is how many budget that being used in research activities must be accounted as government expenditure.
Guidelines through BULTEK SAP 11, 2011 give us direction how to manage intangible asset, the problem can be solved by
following the systematic and formulation based on new regulation. R & D institution must prepare many option related to
intangible asset requirement such as supporting document relevant in patent applications.
Keywords: implementation; policy; intangible asset; R&D Institute
1. Introduction
Implementation Policy related to calculation of the value of patent acquisition is a substance that can affect the
valuation opinion on the financial statements of government agencies, through the implementation of patents
registration in research and development. Dynamics implementation of recording up to this time is something that is
required in recording the financial statements where technical philosophy is how much money that is being used in
the registration of a patent it is fitting that it should be accountable to the State through the financial statements.
Development of Intangible Assets is possible be in line with the government program to one of the elements in
E-mail address: tommy.hendrix@gmail.com
90 Tommy Hendrix / IICIES 2014 Proceeding
accelerating national development priority in the national development of Indonesia. Among them through the
research and development of science and technology has been progressing very rapidly. This role is also
increasingly important for economic growth because it can accelerate the development process, improve efficiency,
quality, and quantity of economic development activities. This concept is called the knowledge-based economy or
knowledge-based economy (OECD, 2001). The concept emphasizes how importance the role of science and
technology to economic growth and is now application required in the implementation of the Government
Accounting Standards Board Technical Bulletin No. 11 in 2012.
Intangible assets are non-monetary assets that do not have a physical form that is contained in the balance sheets
of government agencies, which are used to produce goods and services in particular the results of research and
development. In analyzing the intangible assets are various difficulties, such as when he admitted, how the
assessment, measurement and reporting on the financial account. On the other hand, users of financial statements
requires quantitative and qualitative evaluation of the performance of government agencies as well as information
on intellectual capital owned.
2. The Importance of Intangible Assets
Intangible asset becomes hot topic now, especially in developing country that have many obstacle in gaining a
good financial report. How intangible asset can makes direct effect from accountability document becomes live
document that can be access in government financial realization. There is treatment of intangible assets in financial
reporting. The increasing significance of intangible assets has fuelled discussion over their nature and treatment. The
lack of consensus over their treatment leaves scope for manipulation and results in a lack of comparability.
Generally accepted accounting principles were established under a predominantly manufacturing-based,
economic structure. Hence, emphasis has been placed on the tangible assets of an entity and intangible assets have
been largely ignored. It can be argued that due to changing technology, this type of economic structure and the
accounting rules that are derived from it are outdated.
These rules ignore many of the flows of the modern, knowledge-based economy. In the latter half of the
twentieth century, there has been a qualitative transformation to technology intensive industry where different
blends of resources are used. In this environment, value is principally comprised of intangible rather than tangible
factors.
3. Recording Patent in Balance Sheet
Policy related to implementation of Financial Statements on patent recording began with the release of the draft
rules issued by Technical Bulletin Government Accounting Standards Committee (BULTEK KSAP 01) Team
which regulates the management of intangible assets for governmental agencies. Where the application warns that
accountability intangible assets are non-financial assets that can be identified and has no physical form and held for
use in producing goods or services, or used for other purposes, including intellectual property rights. In regard to
reporting on the financial statements of the recording dynamics is related to the amount of the budget that is used in
the registration and maintenance of patents must be registered and accountable.
The recording is meant is mandatory present financial statements with reference to the Government Accounting
Standards. Mandatory financial statements prepared consisted of Budget Realization Report, Balance Sheet,
Statement of Cash Flows, and Notes to Financial Statements. Patent is one of the intangible assets of non-financial
assets which can be identified and does not have a physical form and held for use in producing goods or services, or
used for other purposes, including intellectual property rights.
Recording mechanism on the financial statements is a step to be able to see the level of performance of the
utilization of research and development produced by institution research and development.
Methodology in reporting valuation of intangible asset need many specific data that in line with supporting
document and commonly different in each institution. But all thing finally set up as figure 1. Based on analysis
requirement that being used in generally.
Tommy Hendrix / IICIES 2014 Proceeding 91
Fig 1. Intangible Assets Assessment Process
4. Implementation Policy of Recording Intangible Assets in Financial Statements
Intangible asset has become big issue relating in schematic policy in accounting report in government institution,
in order to make effective policy analysis needs to be done. The analysis was done with the intent to obtain
information relevant to the policy. With the acquisition of a complete and comprehensive information can be
formulated effective policies in the sense that when the policy implementation can achieve the expected goals.
For that, based on that description of Intellectual Property Rights (IPRs) becomes an increasingly interesting
issue to be studied for its role is increasingly determine towards accelerating the pace of national development,
especially in the era of globalization. In this connection, the era of globalization can be analyzed from two dominant
characteristics. First, the era of globalization characterized by widely opening of relations between nations and
between nations are supported by transparency in the information. The transparency of information in such a
condition, then the incidence or discovery in the world would be easily recognized and quickly spread to other parts
of the world. This implication, that at the time any form of plagiarism efforts, piracy, and the like are no longer
getting evicted from the place and the phenomenon of life of nations. Second, the era of globalization opens
opportunities of all nations and countries in the world to be able to know the potential, abilities, and needs of each.
Despite the tendency that may occur in relations between countries are based on the efforts the fulfillment of mutual
interests, but instead states that have more ability to gain greater profits. One important capability is the ability of a
country's technological mastery. Refers to two things, efforts to protect intellectual property rights it is time a
concern, interests and concerns of all parties in order to create conditions conducive to the growth of developing
innovative and creative activities which foster the ability of the boundary conditions in the application,
development, and mastery of technology.
One of them with the process of technology transfer and licensing implications of IPR will bring up a fairly
difficult problem, in which developing countries generally requires IP owners to grant the license transfer
technology that enables the guarantee for holders of such licenses to be able to replicate the technology. This has
spurred many empowerment of R & D results that can be used by the license in the form of technology transfer
especially in using profitable intangible asset based on R & D activities.
In this case R & D Institute especially government, trying to do application performance to be gained by
empowering and socialization among the Intellectual Property Rights to researchers who are in the environment by
trying to develop prospects to get the protection of an effective IPR work in order reduce the occurrence of
negligence, carelessness, early disclosure, or leak or exposure of information that should be protected but not
protected. Where a new technology created by one institute under contract with, or in cooperation with, a particular
company then the problem of ownership of IPRs should be solved explicitly from the initial plan of cooperation and
created a written form. It has been arranged in the internal rules of the mechanism and assessment of an activity to
foster a corporate spirit as stipulated in the Guidelines for Implementation in internal institute and policies relating
to development and seeks to commercialize R & D and R & D results to a reference for the work unit within
enhancing cooperation between units. Issues to be discussed is about the influence of factors namely the
implementation of intellectual property protection of Government Regulation (No. 20, 2005) on technology
transfer, intellectual property, research and development activities by universities and R & D institutions, especially
in terms of elaboration of the Intellectual Property Rights in institute environment, to assess how close a research
and development that can improve the effectiveness of the products produced either in the form of products or
services that benefit the public interest. The process of utilization of the technology has been certified as ought to be
able to add value to the interests of society, both individuals and groups. Other result that can be gain is haw R & D
institution dissemination in reporting valuation of intangible asset in government report especially in financial
statement based on BULTEK SAP no. 11, 2012.
Implementation of policy making process in intangible assets is a complex process because it involves a lot of
processes and variables that must be assessed. However, to assess the policy can be made with reference to the
provisions of propriety in setting processes can theoretically base on several stages made by William Dunn (1984)
are: a) the agenda-setting phase, and the phase is a very strategic process the reality of public policy. In this process
have the space to make sense of what is referred to as a priority issue on the agenda of public and publicly contested.
If an issue managed to gain status as a public issue, and get priority on the public agenda, the issue is entitled to the
allocation of public resources more than any other issue policies (policy issues). Growing issue now is how the
impact of the use of budget associated with the acquisition of patents that should be noted and recorded in the
financial statements, it is becoming a very important issue towards a transparent and accountable system, b) policy
formulation, the problems had been defined for solving the problem and then look for the best. Solving these
problems is derived from a variety of alternatives or options policy. Similarly, the struggle of a problem for the
policy agenda, the policy formulation stage alternative each competing to be chosen as the measures taken to solve
the problem. Follow up of solving the problem by identifying the actual internal conditions where the number of
patent registrations can be calculated through utilization in detail, it is necessary to standard operating procedures
related to the recording of intangible assets. Strategy and process flow created with the assumption that solving the
problem will be solved by translating existing problems working unit sphere ; c) Adoption / legitimacy of the policy
, the goal is to provide authorization on the basis of government. If the act of legitimacy in a society governed by the
rule of the people, the citizens will follow government directives. However, citizens must believe that government
action is legitimate supported. Support for the regime tends to diffuse - a backup of both attitude and goodwill
towards government action that helps members tolerate. The legitimate government can be managed through the
manipulation of certain symbols. Where do these people through the process of learning to support the government.
A strong commitment to follow up the existing problems and implementing good management by mutual agreement
in the internal forum to see the need for data to be used. Beside it also saw the growing potential that can be used as
a reference for existing policies in relation to the management of intangible assets and the impact will happen in the
future; d) Assessment / Evaluation Policy, in general it can be said as a policy evaluation activities regarding
estimates or judgments that include the substance of policy, implementation and impact.
In this case, the evaluation is seen as a functional activity. That is, policy evaluation is not only done at the end of
the course, but the whole process is done in the policy. Thus, evaluation of the policy formulation phase may include
policy issues, the programs proposed to solve the problem of policy, implementation, and impact of the policy stage.
Assessment-related policies that will be used should can touch the basic needs so that the level of formality of the
activities can be recognized as a basic policy to be referred in particular the management and valuation of intangible
assets that can be reported in the financial statements.
Tommy Hendrix / IICIES 2014 Proceeding 93
Fig 2. Patent valuation scheme
5. Intangible Asset Problem
The impact of patent applications in the research and development institutions have implications for the use of
the budget related to the demands of the government in particular, which are required to be able to translate the
value of the acquisition of patent applications used. This is particularly relevant in the case of recording in the
financial statements are required to offer the market prospects in the event of a transaction on the results of research
and development.
To outlined several factors that need to be done a research and development institute in identifying issues on
which the findings of the inspection team the Audit Board Republic of Indonesia. The existing problems including;
1. Institution absence in guidelines that government the research and development management of
intangible assets, which resulted in the orderly management of intangible assets;
2. Absence of the internal designation of institutional management of research and development related to
the management of intangible assets;
3. Patent technical data spread across work units, making it difficult to load the data collection;
4. Completeness of the resulting patent data can’t be traced so that complicates a recapitulation of the
supporting documents that can be used as proof of the validity of the patent is registered.
Many problems rise when the management of intangible assets by government agencies, it can be seen adjusting
the discrepancy in the number of rules that exist with the implementation of the field. It all leads to delayed pattern
of bureaucratic utilization of intangible assets is expected to be used as the basis in developing the research and
development of economically and support national development.
Utilization of the acquisition value of intangible assets is functional for increasing the capability of recording in
the financial statements of government, this is the result of many causes decreased check up on all government
agencies. The core of the problem that arises is how to record the use of state finances into a very powerful asset and
a high potential in generating financial return values related to the state.
6. Conclusion
Intangible assets is the latest issue in recording financial statements, it indicates that the readiness of each
institute of research and development that resulted in the patent to be able to see and measure the level of
productivity of the use of the government budget efficiently and effectively. The steps that should be undertaken
include;
1. Re-identification needs related patent documents;

2. Perform data collection supporting patent;
3. Conduct assessment process patent acquisition;
4. Identify the utility value of patents;
5. Conducting the proposed establishment of the certified value of the acquisition of the patent.
Although intangible assets have been presented in the financial statements, but there is still an unexplained value
is not presented in the financial statements. Unexplained value is typically derived from intangible assets generated
internally by the research and development institutions.
For that there needs to be some provisions that can be used as a guide in assessing intangible assets include:
1. Existence of a shared commitment in management level, to get a common understanding related to the
management of intangible assets;
2. Needs a control of the data access in the research and development unit related to the accessibility of
data to support the needs of the patent;
3. Consideration of the amount of human resources competency in assessing patent;
4. Perform budgeting with regard to patent assessment.
The importance of the role of science and technology in the management of the company's emphasis on the
increasingly important role of intangible assets in research and development institutions. This is according to a
statement Standfield (1999) that the intangible asset is an important component of intellectual capital and have a
very real impact for the company. An example of the role of intangible assets or benefits for research and
development institutions are research and development of new technologies that can produce create a research and
development institution operating more efficiently. Therefore, intangible assets should be getting more serious
attention than tangible assets in the management, measurement and presentation of the financial statements
producing output.
Beneficiation acquisition value of patents is helpful in determining the economic value of the use of the patent
shall be established through the scheme commercialization of research findings and development that generate
royalty and licensing products. Royalty and license is a legal action based on an agreement or obligation. Royalty
and license is one way of IPRs holders choose to give civil rights hereunder economic rights as rights holders
royalties and licensing rights to exploit them. Compulsory license generally is one of the mode of administration of
economic rights that are required legislation, regardless of whether the owner is willing or not.
Acknowledgements
I would like to thank Bambang Subiyanto, Ragil Yoga Edi, Harini Yaniar from Center for Innovation Indonesian
Institute of Sciences, for sharing information and work together in solving intangible asset problems in Indonesian
Institute of Sciences.
Reference
Dunn, William, N, 1984, Public Policy Analysis, Yogyakarta.

Government Accounting Standards Board Technical Bulletin No. 11 in 2012.
Government Regulation No. 20, 2005 on Intellectual Property and Technology Transfer Research and Development by the Institute of Higher
Education and Research and Development.
OECD (2001), The Well-Being of Nations: the Role of Human and Social Capital, Centre for Educational Research and Innovation, Paris.
Standfield, K. (1999). Knowcorp, http://www.knowcorp.com. October 10, 1999.
12 – 14 August 2014
Identification for Biological Resource Based

Creative Industry Cluster Developmental Model
in the Province of West Java, Indonesia
Sudrajati Ratnaningtyasa*, Wawan Dewantob, Sri Herlinac
abc
School of Business and Management, Institut Teknologi Bandung, Jl. Ganesha 10, Bandung 40132, Indonesia
Abstract
Around 1980 the British began to introduce new thinking that creativity is a resource that should be developed as a major source
for the creative industries. In Indonesia, the creative industry was developed with the involvement of many ministries; but since
2011, those were directly under a single ministry, The Ministry of Tourism and Creative Economy. Since the last three decades
many countries in the world realize that natural resources are diminishing and take a long time to recover, and therefore
alternative resources are needed to be developed in order to keep driving the economy. In realizing creativity, natural resources
both biological and non-biological are still needed. Added value would be gained from the relatively more renewable biological
resources through the creativity of human beings. The government has set two approaches in the development of national
industry, namely: 1) through a top-down approach with the development of priority industrial clusters which followed by the
chosen area participation; 2) through a bottom-up approach to the determination of the core competencies of industrial areas as a
manifestation of the areas specialty, which helped establish the center of its development, so that the region has a competitive
edge. This paper discusses which model is more appropriately used to develop the creative industries in The Province of West
Java, Indonesia
Keywords: biological resource based; creative industry; cluster development model; West Java; Indonesia
1. Introduction
In Indonesia, the creative economy is getting more serious attention since 2008, that is by implementing research
and making the Creative Economy Development Plan 2009-2015 (Ministry of Commerce of the Republic of
Indonesia, 2008). This was done in order to support the vision of 2005-2025 national economic development (UU
no.17 tahun 2007).
E-mail address: sudrajati@sbm-itb.ac.id
96 Sudrajati Ratnaningtyas / IICIES 2014 Proceeding
With the demands of an accelerated transformation of the national economy, then a 2010-2030 economic
transformation grand design was arranged with its action plan. Therefore, economic development based on
competitive advantages in all areas is needed, including the creative industries as part of the creative economy
(Kementerian Koordinator Bidang Perekonomian Republik Indonesia, 2011).
In the beginning Creative Industry was comprised of 14 sectors in accord with UK DCMS classification;
however with the addition of the culinary sector on recent development it has made into 15 sectors. The value of
Gross Domestic Product out of Creative Industry in the year of 2006, 2010, and 2013 can be seen in Table 1. Since
December of 2011, Creative Industry sector is under the management of Kementerian Pariwisata dan Ekonomi
Kreatif (The Ministry of Tourism and Creative Economy). In 2014, The Organizational Structure of the ministry is
comprised of two General Director Handling Tourism, and two others handle Creative Industry: Directorate General
of Arts and Cultures based Creative Economy; and Directorate General of Media, Design, and Technology based
Creative Economy; together with their own Resource Development Agency.
The Performance of creative industries is under the various sectors of other Ministries, as this sector has
overlapping fields with 9 main industry sectors, as the sector distribution according to the Central Bureau of
Statistics. Because of the wide scope of the creative economy, the Government has adopted a policy to involve 23
ministries, the three Heads of Agency, and an Institution, as well as all the governors and mayors / regents, to ensure
the implementation of the integration of creative economic development. (Inpres No.6 Tahun 2009).
The potential problems that will arise in the development of creative industries suspected by the Antariksa
(2013), namely, in the aspect of socio-cultural, economic, and ultimately, legal, hinder a person to create a creative
work. In addition, the lack of clarity regarding the concept of "creative agency" that will be developed by the
Government. One indicator of the success of the Government in the development of the creative economy is the
creation of "creative agency". Creative agencies can be a creative space, Creative Center, Creative Zone, Creative
Village, District / City Creative, and so on (Antariksa, 2013) b.
One approach, which considered being a successful way to develop business, is through group approach. In a
group approach, support (both technical and financial) is channeled to the creative industry business group, not per
individual / unit. Group approach is believed to be better because: (1) Individual Business usually captures market
opportunities less quickly, and (2) formed business network are proven effective in improving the competitiveness
of the business because it can work in synergy. For the supporting donor, group approach is also better because the
process of identifying and empowering business can be more focused and efficient. One of The model / concept
approaches of the group nomenclature in question above is cluster model.
Creative industries in Indonesia were initially divided into 14 sectors, as in the UK, because Indonesia is referring
to the United Kingdom. The UK is the first country in the world which develops creative industries at the level of
the Department, the DCMS (Department for Culture, Media and Sport). Since the end of 2011 the field of creative
industries enterprises is spread in 9 sectors / Main Sectors in Indonesia. Until now, the Agriculture, Livestock,
Forestry, and Fisheries sectors are still the dominant sectors which became the input factors supplier for a wide
range of creative industries, especially the culinary industries, crafts, and also a supporter of the fashion industries
and other creative industries.
Here introduce the paper, and put a nomenclature if necessary, in a box with the same font size as the rest of the
paper. The paragraphs continue from here and are only separated by headings, subheadings, images and formulae.
The section headings are arranged by numbers, bold and 10 pt. Here follows further instructions for authors.
It could be said, the creative industries which are supplied by biological resources / bio industry have great
potential to be developed. One of the provinces in Indonesia which has a major contribution to the national GDP is
West Java. Thus, to develop the creative industries business based biological resources / agro-industry in West Java
which are independent, powerful and advanced certainly requires several stages of the assessment process, including
the determination of cluster models that are effective and in accordance with the characteristics of creative
industries.
Sudrajati Ratnaningtyas / IICIES 2014 Proceeding 97
2.1. Creative Industry and Creative Economy
Indonesia uses the definition of creative industries as defined by UK DCMS Task force 1998: “Creative
Industries as those industries which have their origin in individual creativity, skill and talent, and which have a
potential for wealth and job creation through the generation and exploitation of intellectual property and content”
(Departemen Perdagangan Republik Indonesia, 2008)
Potts and Cunningham (2008) proposing four models of the relationship between the creative industries and the
whole economy, namely: 1). The welfare model, in this model, the creative industries are hypothesized to have a net
negative impact on the economy, such that they consume more resources than they produce, 2). The competition
model, in this model, a change in the size or value of the relative industries has a proportionate (but structurally
neutral) effect on the whole economy, 3) The growth model, in this model the creative industries are a growth
„driver‟ in the same way that agriculture was in the early twentieth century, 4).The innovation model, in this model
the significance of the creative industries is not in terms of their relative contribution to economic value (models 1–
3), but due to their contribution to the coordination of new ideas or technologies, and thus to the process of change.
In this view, the creative industries are mis-specified as an industry per se, and better modeled as a complex
evolving system that derives its economic value from the facilitation of economic evolution and the process of
innovation.
Advocates of the creative industries idea believed that this was too narrow a view – the totality of economic
activity stemming from creativity and culture, including their commercial forms, needed to be considered to
Understand their true contribution. This activity included not just the traditional art forms, such as theatre, music and
film, but service businesses such as advertising (which sell their creative skills mostly to other businesses),
manufacturing processes that feed into cultural production, and the retail of creative goods. It was argued that the
industries with their roots in culture and creativity were an important and growing source of jobs and wealth
creation. British Council Creative Economy Unit. (2010)
Creative Economy is a 4th wave Economy, after Agriculture, Industrial, and Information Economy derived from
scientific creativity, cultural creativity, and economy creativity- driven by technological developments. (Direktorat
Jenderal Ekonomi Kreatif Berbasis Media, Desain, dan Iptek.
2.2. Biological Resources
Biological resources are any Plant Resources, such as Crops, and Timber, and Animal resources both aquatic or
nonaquatic that yields benefit; in the present time or in the possible future. Each category of biological resource in
the SEEA (System of Environmental-Economic Accounting) asset classification is subdivided into cultivated and
non cultivated sub-categories. (United Nationsa, et al., 2003). The SEEA clarifies the SNA definition by stating that
cultivated fixed assets are among others the livestocks for any purposes; and repeat producing cultivated trees which
growth and regeneration are controlled by its responsible cultivator institution.
2.3. Industry Cluster
Porter defines Industry Cluster as network of interconnected enterprises and institutions of a particular sector
which is concentrated in a particular area geographically. This Clustering connect the enterprise inside it both
cooperatively and competitively. The Cluster also includes the government, institutions, and other industries that
provide support in the form of services, training, education, information, research, and technological support.
(Porter, 1998).
The San Diego Association of Governments defines Clusters as inter-related industry groups that through
primarily export of goods and services, could stimulate wealth creation in a region. Using clusters rather than
traditional method as a descriptive tool for regional economic relationships provides a richer, more meaningful
representation of local industry drivers and regional dynamics. An industry cluster is different from the classic
definition of industry sectors because it represents the entire value chain of a broadly defined industry from
suppliers to end products, including supporting services and specialized infrastructure. Cluster industries are
geographically concentrated and inter-connected by the flow of goods and services, which is stronger than the flow
linking them to the rest of the economy. Clusters include both high and low-value added employment
(http://www.sandag.org/rta/transfer/industrial_clusters.pdf)
Forming Clusters means forming a consolidated chain of units. The process of cooperation development
formation process is still in the very early stages. Many Artisanal Clusters are dormant in the way that for some
years there are practically almost no market development, production means upgrade, and product development.
Several writers refer dormant artisanal clusters as survival cluster of micro and small enterprises. However, the other
cluster has grown rapidly in terms of improvement of skills, technology, and successful penetration of the domestic
market and export.
Theoretically, Clusters forms because of two things: (1) Historical Factor and (2) Manipulated/Deliberate Factor.
There two factors shall form (1) Mature Cluster and (2) New Cluster. Mature Cluster usually forms when a region
has many artisans, and in the beginning an artisanal cluster would form in the region.
3. Discussion
3.1. Identifying regions with great potential for the development of biological resource based creative industry
Firstly, it is needed to be mentioned the reasons why biological natural resources have an important role for the
development of creative industries in Indonesia and West Java. Based on the definition of "biological resources"
according to the United Nations, relevant resources are natural resources that have been exploited, the results of
which have contributed to the GDP of the region. The relevant Primary Sector to it is the Agriculture sector
(Agriculture, Livestock, Forestry, and Fishery) which provide a substantial contribution (14:50% to 11:47% for the
National and West Java Province). As an illustration of the role, can be seen in Table 2.
Table 2. Indonesian GDP Distribution of 2013 and the Regional GDP of West Java 2012 According
to Major Business Field Constant Market Prices of 2000
Resources of this agricultural sector, which is the raw material for the creative industry in Indonesia or in West
Java. Agricultural products is a primary biological products in the upstream sector. On the other hand, there are the
creative industries in the downstream sector, therefore, a supply chain is needed between the upstream and
downstream sectors. In addition to the supply chain in the form of primary products, there will be opportunities for
the emergence of agro-based industries which process primary products into secondary products, tertiary, etc.
(derivative products), which create added value benefits for businesses, communities and local governments.
The opening of employment opportunities for the existing participants in the upstream sector, supply chain, and
downstream sectors, which will be able to establish a system that runs continuously and integrated when there are
those who become integrators. Certain parties or local government may take on the role as system coordinator also
provides infrastructure and superstructure required by the parties that exist on the system. When it is done on an
ongoing basis, the comparative advantage of the region can be a success factor for the occurrence of competitive
advantage for products produced in the Agro-based industries earlier. Competitive advantage in the form of strong
competitiveness for the products produced by the creative industries that use raw materials from the agro-based
industry.
If it can happen in a certain region, it will be able to form an embryonic industry cluster based on primary
products (biological resources) specified. From one type of primary products, it will be able to create an "industry
tree" that is a diverse derivatives industry. Thus, it can be concluded, that when have an an area of comparative
advantage in producing certain primary products, due to the support of natural factors and culture-then in the area
has the potential for the emergence of creative industries clusters appropriate, requiring the supply of primary
commodities.
To determine which of the creative industries need a supply of biological products, then here will be used
schemes that have been developed by the Directorate General of Media-Based Creative Economy, Design, and
Science and Technology of the Ministry of Tourism and Creative Economy, Republic of Indonesia (2013), as Fig.1.
By using the existing scheme in Table 2, it is identified that biological resources-which is a tangible resource - is
the raw material for some sub-sectors in the creative industries sector. The main sub-sectors craft, culinary, fashion
and fashion. It also became a supplier partly subsector Publishing & Printing, Art & Antique, and Research &
Development. Then, it provide the supply of other industrial subsectors in tangible resources with lower intensity.
Based on the above discussion, it can be concluded that in Indonesia from 2010 until 2013, there are three
dominant sub-sector of the creative industries sub-sectors ie Culinary, Mode & Fashion, and Craft (Table 1). This
is in accordance with the state Agriculture is the sector as a reliable supplier of biological resources sector (primary
product) for the creative industries (Table 2). Biological resources is a tangible resource that is needed by all three
sub-sectors of the creative industries.
Agriculture sector, sub-sector covers Agriculture, Livestock, Forestry and Fisheries that produced a wide
range of primary products. Keep in mind that the primary product which one is superior product and which areas in
West Java that produce these products. The analysis was used to identify production center is Location analysis
Quotient (LQ analysis). Location Quotient and shift Share Analyses are traditional, simple and cheap method for
regional development analyses. These analyses are used to explain structural change in terms of shift in industrial
(Hodgkinson (2005). The mathematical term in the location quotient equation describe as “the region‟s share of the
total production, or quantity supplied, of the products of industry available to the nation”, and “the region‟s share of
the nation‟s consumption or quantity demanded “(Kiser, 1992). If the definitions above are applied to identify the
central region of a primary product (agribusiness “x”) then can be formulated an equation as follows:
To determine the central region of a primary product produced by agribusiness “x” in West Java can be used the
equation [1] as follows:
Pik = the extent of “x” agribusiness cultivation in a county/city in West Java

Pk = Total extent of cultivation of all kinds in every industrial sector in The county/city in West Java
Pij = the number of “x” agribusiness in The Province of West Java
Pj = the number of all agribusiness in the Province of West Java
As for whether a particular sector is the leading sector in the region, it can be used:
Vik = Added Value (Regional GDP)of “Y” industry of a county/city

Vj = Added Value (Regional GDP) of all Industrial Sector in the county/city.
Vij = Added Value (Regional GDP) of “Y” industrial sector in the Province
Vj = Added Value (Regional GDP) of all industrial sectors in the Province
The criteria used to infer If LQ> 1 means the county or city is one of the industrial base of the "Y" in the
Province of West Java, in other words, potentially serve as Industry Cluster "Y". If LQ≤ 1 means the opposite. Shift-
share analysis (SS) include Shift Differential, namely the analysis to determine how a competitive particular sector
in the region, compared to a higher level. If the value is positive (+) means Competitive and if the value is negative
(-) means not competitive.
Fig. 1Creative Industrial Clusters Based on Dominant Substance and Resource Intensity
Source: Direktorat Jenderal Ekonomi Kreatif Berbasis Media, Desain, dan Iptek. (2013). Kementerian Pariwisata dan Industri
Kreatif Republik Indonesia. (redrawn)
3.2. Biological Resources Based Cluster Development Model in West Java
The Previous description is the potential identifying process of creative industries that developed from the supply
side. To counterbalance it is necessary to see from the demand side perspective as well. One of the cases that can be
used as a benchmark is the case of the economic development of the San Diego area, since this case illustrates the
whole process about how the growth of industrial cluster and how SANDAG as the Local Government Association
in the San Diego area make and implement its development strategy. Territory development in all its aspects would
be based on industrial clusters developed community infrastructure and superstructure supported by the Government
of the capital is accumulated in the SANDAG. The main strategy used is the application of regional economic
development model that positioned Emerging Industries Cluster as the Engines of Economic Activity by orienting
the Simplified Export-Driven Economy, which is a view of the supply side, as can be seen in Figure 2.
Since the early 1990s rapidly growing industry clusters have sprung, which has managed to open up job
opportunities and prosperity for its people. The birth of these clusters at first was natural. Since the establishment of
the San Diego Association of Governments (SANDAG), the development of industries cluster are more integrated.
SANDAG develops design strategies for preparing for the San Diego area to obtain economic opportunities in the
present century. In Region to orient its activities to the markets, both domestic and export markets. Thus planning
began in advance of market demand. Export based on existing foreign demand. Based on this export market
demand, final goods and services produced by industries that exist in corresponding clusters. So foreign markets /
export acts as a pull factor. 1998 in the San Diego region there are 16 clusters. Industrial clusters that grow very
rapidly are Biotechnologies / Pharmaceuticals Clusters, Clusters Recreational Goods, and Communications and
Software / Computer Services Clusters. Modern Export-Driven Economy give directions for all of participants
present in the existing economic system in the San Diego.
Increased demand for products and services from abroad will provide a derived demand for linkage industries /
suppliers in the form of an increase in demand for raw materials from local markets. Thus the final demand for
goods will provide a multiplier effect, by increasing the income of participants that is in linkage industries /
suppliers that exist in the local markets. Derived demand is not only happening in one level, but it is possible occurs
at several levels, depending on the characteristics of the industry. Extreme example, for the cluster horticulture
industry supply chain would have a different pattern with Defense & Aviation.
Inter-industry transactions will increase regional economic activity, employment opportunities, increase the
demand for innovation, increase the demand for skilled labor that fueled the emergence of business and training
institutions and research services both private and government-initiated, as well as relevant schools. This is just an
example, while other activities can be very many, varied sizes, types, properties, and its range. The banking industry
or the various sources of funding will emerge and evolve along with the development of the local economy. The
development and growth of business and the economy of the region would provide increased tax revenues of the
government, which will be used by the government to build public infrastructure and to finance the preparation of
regulations as superstructure. For government to contribute better to provide a better business climate, and can act as
facilitators, intermediaries in the Triple-Helix (Business-Academia-Government) interlinkages role model.
Modern Export-Driven Economy developed SANDAG can be adopted to make a model of cluster-based
development of biological resources in West Java, with some adaptations. Adaptation needs to be done because of
West Java and Indonesia has its own Characteristic of various things, and specifically to the West Java, It have three
flagship creative industry using biological resources as their raw material, that is the Culinary Industry, Mode &
Fashion Industry, and Craft Industry. Therefore, in Figure 3 can be illustrated how the development of the third
industry in West Java Region in the "Model Domestic and Export-Driven Economy: Culinary-Mode & Fashion-
Craft Creative Industries Cluster are Emerging as the Engines of Economic Activity".
Orientation of Cluster Industries (combined three of Creative Industries Culinary Industry, Mode & Fashion
Industry, and Craft Industry) in West Java for Export oriented in addition, also for the domestic market. Indonesian
domestic market for which is growing with large number of people, and increasing per capita income, a high
appreciation of fashion products and the diverse tastes of the culinary products is still a viable market to be supplied.
To that end, the "promote model" in Figure 3, the domestic market is still the main orientation other than the export
orientation.
Demand for the products and services in all three sub-sectors of creative industries-that is the Culinary Industry,
Mode & Fashion Industry, and Craft Industry or to the products and services that occurs as a result of the interaction
between the three industries will bring a derived demand for products and services produced by the industry in
upstream sector. Industry referred in the discussion in this paper is Agro-based Industry, and the further will cause a
multiplier effect on other sectors that exist in West Java and the surrounding territory. Agro-based Industry may well
result in a final product that can be marketed directly to the end consumer, but would be better if used as raw
materials or components of the complement of the three creative industries earlier. Thus by creating added value in
the third level, the creative industries would be able to provide profit to the entrepreneurs, the people and the
government.
Increased demand on Agro based-industry will lead to "secondary derivative demand" that is the increasing
demand of raw material in the form of biological resources in the form of primary products, which In this case is
agricultural production. Increased demand for primary products is also expected to increase the income of farmers
and the agricultural community centers. Thus the rural area also develops.
So far it is frequently found that the supply chain of agricultural products are very complex and the laden with
problems. With the development of creative industries clusters which integrated and unified, it is hoped these
problems can be reduced. Mechanisms in the cluster development model, as was done by SANDAG can be a
comparison and learned as lessons. Here we could take the benefits of the Success factors in the implementation of
existing models in Figure 3.
Fig. 2 Modern Export-Driven Economy: Cluster Industries are Emerging as the Engines of Economic Activity
Source: San Diego Regional Technology Alliance, compiled by SANDAG (San Diego Association of Governments, 1998). (redrawn)
Fig. 3 Biological Resource Based Creative Industry Cluster Developmental Model in The Province of West Java : “Domestic and Export-Driven
Economy Model , Culinary- Mode & Fashion, Craft Cluster Creative Industries are Emerging as the Engines of Economic Activity”
Mixed industry results from a combination of the three earlier creative industries will be illustrated in the form of
"Mixed Matrix Creative Industries", as shown in Table 3 below. In table 3 can be made of various examples of
creative industries other combination that can be developed.
Table 3. Mixed Creative Industry Matrix
The Ministry of Industry has set two approaches in order to build the competitiveness of national industries,
which synergized and integrated between the central and the regions. First, through a top-down approach to the
development of 35 industrial clusters priorities, planned from the Central Government (by design) and followed by
the participation of selected areas based on international competitiveness as well as the potential of the Indonesian
nation. Secondly, through a bottom-up approach, with the establishment of core competencies that are the area
industrial hallmarks, which the central government helped, develop, so that the region has a competitive edge.
Development of core competencies at the provincial level, referred to as the Leading industry in the province and
district / city level, called the Core Competence Industrial District / City. The second approach is an approach that is
based on the spirit of regional autonomy. Determination of industrial development through the establishment of a
priority industrial clusters and industrial core competency area is needed to provide certainty and have the support of
all sectors in the economy including banking support. (www.kemenperin.go.id/).
Based on the above discussion, it is what has been and will be done by the Government is in line with already
existing model in Figure 3, although not exactly true. In Figure 3, the approach taken is to combine top-down and
bottom up in an integrated way - not a choice of "zero sum game" or "mutually exclusive". Indeed the formations of
existing models in Figure 3 regard more from the aspect orientation, not in the position of the government versus the
people. In Figure 3, instead of each party have their respective roles which complementary and mutually reinforcing
as the underlying philosophy of the Triple Helix model, namely the alignment between the role of Business,
Academia, and Government. Therefore, the right policy is not a "bottom-up" or "top-down" only but can be
regarded as "Bottom-Around".
4. Conclusion and Suggestion
4.1. Conclusions
Based on discussion of the results, it can be taken some conclusions as an answer to problem statement, as follows:
1. The regions that have great potential for the development of biological resource-based creative industries can be
identified with first understanding what natural resources which included in the criteria of biological resources. It
was only then look for data that can support the sector to be-determining what business field that produces the
aforementioned biological resources, and how the role (contribution to GDP of West Java Province), and Based
on that, the identification of which of the dominant creative industry requires the supply of biological resources.
Based on the results, we conclude that the identification of Culinary Creative Industry, Mode & Creative Fashion
Industry, Creative Industry and Craft are three creative industries which is a downstream industry that requires a
supply of raw materials of biological resources.
2. Domestic and Export-Driven Economy Model: Culinary-Mode & Fashion- Craft Cluster Creative Industries are
emerging as the Engines of Economic Activity is a model of cluster development which can be utilized to
develop biological resources based creative industries in West Java.
4.2. Suggestion
1. More detailed analysis are needed to determine which county and city in West Java that are the biological
resource center that are able to support the development of Culinary-Mode & Fashion- Craft Cluster
Creative Industries.
2. More detailed research are needed that can examine the hypothesis model. In this case the “Domestic and
Export-Driven Economy Model: Culinary-Mode & Fashion- Craft Cluster Creative Industries are Emerging
as the Engines of Economic Activity” model is the proposed one to be empirically examined.
References
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12 – 14 August 2014
A Course on Idea-to-launch Process with Emphasis

on Experiential Learning
Sri Hartatia*, Rendra Chaerudinb, Kartib Bayuc
ab
c
School of Architecture, Planning, and Policy Development, Institut Teknologi Bandung, Jl. Ganesha 10, Bandung, 40132, Indonesia
Abstract
In business supplying products by SMEs to major retailers in general SMEs become the weaker party. Almost all of the terms set
by major retailers, while SMEs just as the receiver only. This is due to the weak bargaining position SMEs. One of the obstacles
faced by SMEs in supplying products to major retailer is a matter of working capital. Payments period made by major retailers to
SME supplier is usually between 1 (one) to 3 (three) months. With a relatively long period of payment, then the SMEs requires
relatively large working capital to supply major retailers. On the other side of the ability of SMEs are generally only able to
provide working capital is less than one-third of the amount required, and then most of the capital is filled by borrowing on the
other with relatively high interest rates. However, if the working capital loans are not available, the SMEs can stop the supply,
and waiting for payment from major retailer. This condition causes uncertainty for both SMEs and for retailers. Models that have
existing loans can not protect and fulfill the needs of SMEs supplier to major retailer. Financing for SME suppliers to major
retailer has specific characteristics that can not be accommodated on the existing funding model. This is caused by 1). Financing
schemes that have been there are still concentrating on the financing for the production process. 2). Credit in the amount of the
existing schemes is low. 3). There are some credit schemes that require collateral / guarantee 4). Credit scheme is oriented to the
business groups / cooperatives. 5). There is no special funding scheme for the payment of bail major retailers. The purpose of
research is to obtain an exact formulation financing model for SMEs supplier to major retailers. The method used is descriptive
comparative and technique analysis using two approaches, Desk Study and Survey . The results showed that: 1). SMEs suppliers
require addition working capital to carry out its business operations. This is caused because the pattern of payments made by the
retailer to SMEs supplier to maturity (15 days, 30 days, 45 and 75 days) depend on the negotiation of each SMEs supplier to the
retailer.. 2). SMEs suppliers tendency patterns utilizing a conventional loan. 3). Financing model for SMEs suppliers to major
retailers have a synergy between SMEs suppliers, major retailer and financing model management agency. 4). Institutions
alternative to manage the financing model of SMEs are suppliers to major retailer a) Managed by revolving fund management
agency b). Cooperatives. c). Bank.
Keywords: SMEs; supplier; wholesaler; finacial scheme model
E-mail address: sri.hartati@sbm-itb.ac.id
1. Introduction
In business supplying products to major retailers by SMEs generally become weaker party. Almost all of the
terms set by large retailers, while SMEs just as those who follow the rules set by the course. This is due to the weak
bargaining position of SMEs. One of the obstacles faced by SMEs in supplying products to major retailers is a
matter of working capital. It is given that the period of payments made by large retailers to suppliers typically
between 1 (one) to 3 (three) months. With a repayment period of "relatively long", then SMEs need working capital
"relatively large" to supply large retailers.
The ability of SMEs are only able to provide working capital is less than one-third of the amount required, then
most of the capital is filled by borrowing on the other side with a relatively high rate. However, if the working
capital loan is not available, then the SME can stop the supply, and wait for payment from Major Retailers. This
condition causes uncertainty for both SMEs as well as for retailers, who in turn can move the Big Retailers source of
supply to another party or competitor SMEC.
SMEs generally use more of their own capital to meet financing needs. This leads to limited funds can be raised
by SMEs for business development. Some of the finance schemes available in the market, in general, are also
difficult to access by SMEs. Bank loans, for example, though it is more easily obtained by the SMEs is through the
People's Business Credit (KUR), but in general is still quite limited bank credit accessible to SMEs. This is because
there is a difference in perception between banks and SMEs in several ways, among others:
The number of SMEs are relatively small loans unattractive for banks,
Administration of the banks that are sometimes difficult to understand by SMEs, melting of a relatively long
time,
The rate of interest, and
Collateral requirements.
Skim another example of venture capital financing, are also less suited to SME suppliers because of the nature of
business is not in accordance with the requirements for venture capital and also obtain relatively greater burden on
SMEs. The aggravating factors include collateral requirements that must be provided SMEs. Financing products
provided by finance companies, for example, factoring is actually very interesting as a source of working capital.
But would still need to find a suitable model for SMEs to access the finance factoring. Credit Unions and Savings
and Loans Cooperative Unit (KSP / USP Cooperative) and Microfinance Institutions (MFIs) else is in many ways
preferred by SMEs, among others because the service is fast and relatively easy to access. However, a limited
amount of capital from the MFI has led to limited funding can be provided for the development of SME business.
In accordance with Act No. 20 of 2008 on Micro, Small and Medium Enterprises (SMEs) where Article 21 is
essentially assigning the Government and the business community to develop financing for SMEs, and the financing
constraints of SMEs aware of the supplier, and the pivotal role played by SMEs in the absorption supplier
employment and local economic growth, it would need to be sought financing schemes that can satisfy the needs of
SME suppliers to major retailers so that SME suppliers are protected. SME suppliers need funding in an amount
sufficient, easy, fast, accurate and inexpensive. Hopefully with this financing scheme, the supplier can meet the
needs of SME financing for working capital purposes, so that the real sector, especially in the area can be developed
more quickly, which in turn will benefit the local and national economy.
Small Business, is a productive economic activities that stand alone, which is conducted by an individual or
business entity that is not a subsidiary or branch company is not owned, controlled, or be a part either directly or
indirectly from a medium or large businesses that meet the criteria Small Business as defined in this Act (Act No. 20
of 2008).
The preparation scheme for the protection of the SME Financing suppliers to major retailers, in principle, is a
series of activities that aim to protect the stability of the capital of SMEs in the operations associated with the
marketing cooperation with the major retailers. Traditional markets are markets that are built and managed by the
government, local government, private, state-owned enterprises, and local state-owned enterprises, including co-
operation with the private sector, with a place of business like stores, kiosks. Los, and tents are owned / managed by
small traders, medium, non-governmental, or small-scale cooperative effort, little capital, and with the process of
buying and selling merchandise through Modern bargaining. Bargaining with the system is a self-service store, sells
a wide range of types of goods at retail in the form of Minimarket, Supermarket, Department Store, Hypermarket,
Grocery shaped or wholesale.
Terms of Trade (trading terms) are the terms of the cooperation agreement between the Supplier and Modern
Stores / business-related mini network supplying products that are traded in the relevant Modern Store. Shop the
sales floor area limitation Modern is as follows:
Minimarket, less than 400 m2 (four hundred square meters)
Supermarket, 400 m2 (four hundred square meters) to 5,000 m2 (five thousand square meters);
Hypermarket more than 5000 m2 (five thousand square meters);
Department Store of more than 400 m2 (four hundred square meters) and 5. Grocery Stores more than 5,000 m2
(five thousand square meters).
Classic problem that always arises in order to empower small and medium enterprises and cooperatives, one of
which is the problem of capital, the growth is normally recorded due to limited access to capital resources,
especially access to formal financial institutions such as banks, in addition to lack of knowledge or ability to provide
for the procedure / banking requirements. As a result, the practice of moneylenders (loan shark) despite having high
interest will remain a place for SMEs because aspects of the service that is easy, fast and on time as required.
Law No. 5 of 1999 on competition that is designed to protect SMEs as suppliers with inadequate capital, was the
exploitation of SMEs for the benefit of retailers. However, with the presence of the Regulation No.. 53 of 2008
providing for the "Term Trading"-the relationship or the purchase agreement between the retailer and the supplier of
the substance are adequately pro Permendag SMEs. Any two buy-sell relationship model SME suppliers with
department stores and hypermarkets.
Suppliers displaying their products in the store on consignment and are responsible for sale level. Maximum
repayment period of 1 month after the retailer of goods sold
Suppliers are selling items dropping, retailers and payment is done 2-4 months ago.
Micro Business
Financing System
Micro-financing System
Modernization
(SWAMITRA)
Small Business
Bank Financing
System
Multi-finance
Financing System
Medium Business
Capital Market
Financing System
Previously the government has initiated the factoring financing system through the "National Single Window" for
SME suppliers to large retail goods, to help overcome the problem of liquidity for SMEs. There are two institutions
involved in the idea that the Coordinating Ministry for Economic Affairs and the Ministry of Cooperatives. The
pattern of cash payments factoring suppliers can be done by working with post office banks, and cooperatives.To
coordinate the implementation of the single window factoring into the electronic system. Factoring application is no
different from a payment system for this, namely through a debit card or check. Both products were perceived still a
luxury for SMEs. This can be simplified via invoice or proof of receipt (bill of modern retail) then the supplier can
freely withdraw cash directly to the post office, or bank cooperative program participants factoring for SMEs
suppliers Large Retail Company.
3. Research Method and Question
3.1. Method of Implementation
The method used in this study is Descriptive Comparative Method. Engineering studies using two approaches,
namely (1) Literature (Desk Study); and (2) Survey (interviews and observations). Stages of Implementation of
activities starting from the design phase of the study, drafting instruments, sampling (sampling technique), field data
collection, data tabulation, selection and sorting of data, data analysis, data interpretation and preparation of reports.
Location of the study in West Java. Implementation research preparation for the Protection of the SME Funding
Schemes Supplier to Major Retailers implemented with the following approaches:
Approach to the field, which was conducted to obtain data and information through observation of primary (field
surveys), interviews with the perpetrators of SMEs and Entrepreneurs Large Retailers.
Institutional approach undertaken to obtain data and secondary information coordination and consultation
followed by a discussion of the concept and Protection Schemes for SME Financing Suppliers to Major Retailers
to related parties
Approach literature conducted through literature review (desk study), which contains provisions that are
regulations and legislation, the wisdom, the results of research studies, and ideas (concepts) related.
3.2. Problem Formulation
The problem in this study are as follows:

SMEs Shortage of working capital to maintain continuity of supply of goods / products to large retailers
Bargaining position (Bargaining Position) SMEs against large retailers are still relatively weak
Process payments for goods from major retailers require some time between 30-75 days
Existing Credit Scheme can not accommodate funding needs of SMEs to support transactions with major
retailers.
Yet no specific financing schemes to protect SME suppliers to large retailers who supported the mechanism of
financing schemes are simple and easy to access.
4.1. Financing Scheme for Financing SMEs
SME venture capital often patterned according to typical financial planning itself. SMEC will first use its own
savings and then try to gain access to the family and friends of savings. If these sources are insufficient, SMEs will
seek more formal channels such as banks and investors funding from outside the company. Most of the funding
sources of debt / credit is from individual investors, dealers, commercial banks, government-funded programs and
public financial institutions.
Sources of financing of SMEs is still very limited own capital to expand its business , on the other hand to access
a funding from outside , SMEs still face many obstacles , which limited banks willing to serve the needs of capital
for UKMM with easy terms and procedures , and lack of knowledge and skills in associated with the bank . For the
government to seek a variety of alternative sources of capital more accessible to SMEs.
One form of independence of SMEs in implementing its business is its ability to access capital money from
certain sources . However, many SMEs face constraints , which limited banks that are willing to serve SMEs and on
the other hand there are many SMEs are dependent on access to capital provided by the government through
designated banks . Not to empowerment SMEs in accessing capital due to limited knowledge and skills in dealing
with formal financial institutions require certain terms and procedures.
To help SMEs overcome these obstacles, the government through the Ministry of Cooperatives and SMEs, the
Ministry of Agriculture, and the Ministry of State Enterprises and other departments have been providing various
forms of alternative capital schemes, so that SMEs are able to access capital. there are a variety of facilities capital /
loan programs provided by the government for SMEs. Some existing finance schemes are now as follows:
Skim Credit Strengthening Microfinance institutions
Skim Micro And Small Business Loan (KUKM) of the Fund SUP-005
Skim Commercial Bank Linkage with KSP / USP and KJKS / UJKS
Skim Business Credit Households (Krista)
Agribusiness Credit Scheme of Rural Business Development (PUAP)
Skim Credit Food Security and Energy (KKP-E)
Skim People's Business Credit (KUR)
Skim Through Pattern Warehouse Receipt Loans
Existing financing schemes both from the Ministry of cooperatives and of several other departments have not
been able to meet the needs of large retailers UKMMK suppliers. This is caused by several things:
Existing financing scheme is still concentrated on the financing for the production process.
Plafond Credit on existing schemes is still relatively small
Still some credit schemes that require collateral / guarantee
Skim Credit is still oriented business groups / cooperatives.
Yet there is a special financing scheme for the bail payment of large retailers
4.2. Funding and Supplier Transactions SMEs to Retailer
Micro, small and medium enterprises (SMEs) is a supplier of SME businesses who partner with major retailers /
supermarkets in the process of selling a product (goods) that result. In the process of the supermarket partners
should contribute in building business partnerships and provide real empowerment to micro-small and medium-scale
producers. On the other hand, SMEs are responsible partner need a continuous supply of quality products and
appropriate prerequisites modern shop Thus, both parties (shopping centers / stores modern and SMEC) is able to
realize the role and function of each sort. Some SME financing by the production process ie procurement, personnel
costs, operating costs (including post) and the cost for the "wait" payment from large retailers (bailouts). The cost of
production until the post can be predicted from the beginning, which is contained in the draft budget as data from
PT. Lyco farm (vegetable supplier to the department store company Yogya / Griya, Hypermart, Papaya Fresh
Gallery and Asiana Freshmarket) ie total cost of data, revenue andnet profit (Gain) to supply Hypermart and
Department Store Yogya / Griya.
The sorting of vegetables (tomatoes) to three markets namely Hypermart, Yogya / Griya and traditional markets,
should be done to maximize profits. If based on the price of tomatoes from the garden itself, will be different from
the purchase price of the partners (contract price) and non-contract farmers. So SMEs should have its own funds for
the procurement of three sources of tomatoes. Difficulties will arise when:
Price of tomatoes at the farm level is high and production is not optimal in the garden
Big retailers hold discount program / promo so it does not adjust the price of admission prices at the farm level,
Contract Farmers sell their produce out so UKMMK should have a reserve fund for the purchase of tomatoes and
Must have specific inputs such as green house that not all the perpetrators of agribusiness have it, because Lyco
san tomato farm produce pesticide-free vegetables.
The solution of this problem is the SME should have a self-managed fund for planting tomatoes and do not rely
on goods from outside. To maintain continuity of supply, it should be planted 5 periods x 2 x Rp 54.11 million
hectares of USD 541.1 million. Just as fresh product supplier, supplier of cleaning products must have a reserve
fund for the production of goods stored in the warehouse / indirectly sold or supplied to retailers. Another difficulty
in the transfer of SMEs to large retailers is to be held long before the process of shipment packaging, such as PT
Lyco farm for three "brand" that is Lyco farm, INAgreen and MOCITO FRESH. Manufacture of plastic packaging
tomatoes require considerable cost which is about 180,000 pieces @ Rp 200, Rp 36,000,000 . Cardboard packaging
by 6,000 @ Rp 7,000, Rp 42,000,000. Plastic container 200 pieces @ Rp 90,000 , Rp 18,000,000. Total $ 96 million
for the two months before the vegetables are sent to other retailers such as labor besar.Biaya packaging and ship
could reach Rp 800 to Rp 1,000 per pack. Cost per month with shipments of about 20,000 packs per month could
reach Rp 20 million per month. Difficulties arise if the payment of large retailers has been delayed. This led to
increased funds should be reserved.
4.3. SME Financing Scheme Implementation Mechanism Major Retailers Supplier
Mechanism of action, the implementation of SME financing schemes for the protection of a large retailer supplier
broadly involves three institutions namely SME, large retailers and Institutions business / Implementing financing
scheme. The third institution is a system of interlinked to each other. Third, the agency has different roles and
functions, but it should be mutually supportive, and interdependence that is necessary to synergize among the three
institutions. Therefore, it is necessary to develop a clear mechanism of action among the three institutions. For these
synergies, the initial stage can be initiated or initiated by the government in this case the Ministry of Cooperatives
and SMEs.
5. Conclusions and Recommendations
5.1. Conclusion
Based on the analysis and discussion on SME finance schemes for the protection of the Supplier to Major
Retailers, we can conclude the following:
1. The SME suppliers in desperate need of additional capital in the conduct of its business operations. This is
caused because the pattern of payments made by the retailer to the supplier SMEs due (15 days, 30 days, 45 to
75 days) depending on the negotiation of each SME suppliers to retailers. With the pattern of many SMEs are
experiencing problems in meeting its operational expenses. It is therefore necessary financing model that is right
for the SME suppliers to supply continuity can be maintained.
2. SMEC Supplier relatively wear patterns of conventional loans (credit system with a commercial interest)
compared with the pattern or existing credit schemes. This is due to schemes that have been there have not been
able to accommodate the needs of SME suppliers to large retailers
3. Financing scheme for the protection of the SME Suppliers to Major Retailers need for synergistic cooperation
between SME suppliers, major retailers and institutions managing finance schemes. Financing schemes designed
specifically to protect the SME suppliers to large retailers, because the scheme has specific characteristics and
different financing schemes that already exist.
4. Alternative institutions to manage the SME financing schemes are suppliers to large retailers:
 Managed directly by the Institute of Management Revolving Fund (LPDB)
 Cooperative which has been feasible to implement schemes of financing MSME suppliers to large retailers
with the type of bailout loans to SME suppliers cooperative to retailer.
 Bank financial institutions as finance schemes implementing SME suppliers to large retailers with a special
credit scheme that trade credit scheme for SME suppliers to large retailers.
5. Software that is made in this work is a model of financing schemes with the intention of simplifying calculations
and selection of SME suppliers in determining the pattern of their business credit.
5.2. Recommendation
Based on the above conclusions, it can recommend the following:

Needed stronger legal foundation level of government regulation (PP) as well as the president's decision to
regulate finance schemes to protect the SME suppliers to large retailers.
To expedite the process of implementation of the financing scheme, should be facilitated by the Government in
this case the Ministry of Cooperatives and SMEs.
Preferably finance schemes to protect the SME suppliers to large retailers supported the budgeted costs of the
state budget.
The financing to implement its schemes and programs should be done first Pilot Project, so that the
implementation can be better and more perfect.
Further development of the performance of the software can be developed by applying a multi-network and
multi-user system with the involvement of a wider network of data between stakeholders involved in the
activities of SMEs supply goods to retailers.
References
Ina Primiana. Moving Real Sector Small Medium Enterprises and Industry. Alpabeta. Bandung.(2009)
Kasmir. Bank Marketing. Kencana. Jakarta(2004)
Mulyadi Nitisatro. Entrepreneurship and Small Business Management. Alpabeta. Bandung (2010)
Peraturan Kementrian Perindustrian dan Perdagangan. Peraturan Perudang- Undangan No 20.tahun 2008. Tentang usaha kecil menengah dan
koperasi(2008)
Sigit Triandaru dan Totok Budisantoso. Bank and Funding Institution. Salemba Empat. Jakarta.(2008)
Suhardi,Taufik Makarao dan Fauziah.Cooperative Law, Small, Micro and Medium Enterprises. Akademia. Jakarta.(2012)
Sunaryo.Financing Institution Law. Sinar Grafika. Jakarta. (2009)
12 – 14 August 2014
Batik Solo Tourism Cluster Ecosystem:

A Qualitative Approach Problem Analysis
Pri Hermawana*, Ghita Yoshantib, Santi Novanic, Utomo Sarjono Putrod
abcd
School of Business and Management, Institut Teknologi Bandung, Jl. Ganesha 10, Bandung40132, Indonesia
Abstract
Surakarta or Solo has the reliable manufactured and commercial commodities for hand-drawn, stamped, and printed batik. Batik
has been the trademark of this city and renowned for its two primary Batik villages Laweyan and Kauman. The richness of Solo
heritage, combined with Batik legacy, has become the energy for Solo to foster their tourism. Therefore, starting in 2012, the
government of Solo aimed to make the city acknowledged as The Capital City of Batik, and pointed Batik as the commodity and
asset to attract more tourists for visiting Solo. This paper is a study based on prior field study in form of interviews with some
informant, to grasp some issues, stakeholder identification, and, their concern toward initiative of Solo as The Capital City of
Batik. This paper reports the problem qualitatively, and applies the concept of Industrial cluster and Tourism Cluster as its
framework. This is an important preliminary study of a larger project in the future. The result of this study are seven problem
identification after conducting interview with key stakeholders; and based on the interview result come up several other relevant
stakeholders with their concern, then this study map the concern by using stakeholder concern mapping. These results are
important for the researcher’s team as the basic foundation to continue the study in higher step of the whole research about Batik
Solo integrated tourism and promote Solo as The Capital City of Batik.
Keywords: batik; solo; qualitative approach; problem analysis; industrial cluster; stakeholder concern mapping
1. Introduction
Solo is renowned as a commercial city, which is located in Central Java province in the mountainous slopes of
Merapi and Lawu mountains with the height of approximately 92 m above sea level, and the area coverage 44 km2.
Solo consists of more or less 500 thousand people, where most of them are Batik trader and worker. The city has
reliable manufactured and commercial commodities, namely: hand-drawn batik, stamped batik, and printed batik. In
the early years of the twentieth century at batik villages of Laweyan and Kauman, the hand-drawn batik home
industries and stamped batik factories developed. (Wijaya, 2009).
E-mail address: prihermawan@sbm-itb.ac.id
116 Pri Hermawan / IICIES 2014 Proceeding
1.1. Background
Laweyan derives from Lawe means yarn. Laweyan is rich of its historical background since 1500s. Laweyan
have existed since 1950s from spinning yarn into cloth. Laweyan also related to the history of Brawijaya V from
Majapahit. The history of Laweyan can be seen from the table below:
Table 1 History of Laweyan Batik Cluster, adapted and improved from (Novani, 2013)
Years History
1500s Laweyan Batik village was emerging with spinning yarn into clothes and related to Brawijaya V from
Majapahit and spreading of Islam
1745 The popularity of Laweyan Batik Village was decreasing since the existence of Keraton (Palace)
1900s Samahoedi movement to keep the private business was conquered by foreigner. The era of batik glory in
Solo. Contribute to the independence of Indonesia
1970s The industry was decreasing by the invention of printing technology which cheaper than hand-drawn
and stamp.
2004-now The industry has reborn and Laweyan officially became Batik cluster and FPBL was developed.
Nowadays, the pattern of batik in Laweyan is following the market demand from the consumer. Kauman derives
from kaum or abdi dalam related to Keraton (palace) as the center of business and industry. Kauman more stresses
in effort to maintain the inheritance of ancestor culture according to Keraton Solo. If Laweyan from the history
consist of big entrepreneurs, Kauman is only consisting of one or two big entrepreneurs, with the rest small
entrepreneurs. The pattern of Kauman Batik is related to moslem and the pattern which is used by Keraton people.
Mostly consumers prefer to buy Batik from the showroom with cheaper price but request for qualified product.
They do not consider or even do not know about the value of the batik pattern and the history behind the pattern.
The government roles still not satisfy because the uniform that is used by the government still printed batik, instead
of hand-drawn batik. Moreover there is no specific law made to accommodate the welfare and safety of the batik
artisans. There is no integration and collaboration between Laweyan, Kauman, and other supporting partner in
fostering batik potency for tourism purpose, not like what is happened in Bali. In Bali has been already happened
collaborative tourism among stakeholders like travel agency, transportation, government, entrepreneur, financial
institution, and so forth. Trust among stakeholders are successfully developed and maintained in Bali.
Today, to follow the success of Bali, to give some tourism destination alternatives for the tourist, preserve Batik
as Indonesia’s culture heritage, and as positioning for Solo, the government of Solo wants to develop the city to
become demand generator for culture and creative industry development especially for Batik commodity. Solo
wants to be branded and acknowledged as capital city of Batik by giving the visitor experiences of Batik Tourism in
all package. Collaboration becomes the important agenda, by maintaining Batik Cluster Kauman and Laweyan with
their own uniqueness and completed by full support from other stakeholders. However, there are some challenges
for the collaboration. Current condition the consumer who have visited one of cluster, they felt enough, and not
necessary come to both cluster. In seeing Batik itself, the consumers just see it as variation of clothes pattern and
abandon the richness of cultural value behind Batik, which is intertwined with Solo’s history.
The result of this research is very important for Solo’s future tourism and solving problem of decreasing amount
of tourist who is visiting Solo recently. Through the data of Indonesia statistic bureau (2013), the amount of foreign
tourist who visited Solo in 2013, lesser 5.451 people than in 2012. [2] If we just let the condition like this, we will
lose the opportunity to grab the pennies from Solo’s potency. By conducting this research, we will analyze the root
causes by conducting important elements of qualitative research and in the next research will raise the certain
solution for fostering Batik Solo Tourism Industrial Cluster, manifested in Solo and approved by all stakeholders,
including the contesting stakeholder like Laweyan and Kauman. This is the preliminary study of a larger project to
promote Solo as the Capital City of Batik and integrated tourism in Solo. The result of this study is important as the
basic foundation for the researcher’s team to continue in higher step for proposing solution to achieve the project’s
output. The result of the study will be confirmed again to each of stakeholder in the form of focus group discussion
until all the stakeholders agree upon these seven problem identification and their portion in every problem based on
Pri Hermawan / IICIES 2014 Proceeding 117
stakeholder concern’s mapping graphs. Without having a clear and conform problem description, so it will be
difficult to find the solution. That is the benefit of this preliminary research.
1.2. Research Objectives
The objective of this paper is to describe the problem in Batik Solo Tourism Industrial Cluster quantitatively
toward Solo as The Capital City of Batik. This paper reports the finding based on previous field study in Solo Batik
Cluster Ecosystem. This paper will provide the basic finding to continue to the higher step of whole research
objective for Solo as the capital city of Batik and integrated tourism.
1.3. Research Questions
This paper is hopefully can answer these several questions:

1. Who are the relevant stakeholders involved in promoting Batik Solo as the capital city of Batik and integrated
tourism?
2. What are the common issues according to the interviewed stakeholders and their level of concern?
3. What are the suggestions derived from the interviewed stakeholders about Batik Solo Tourism Industrial
Cluster?
2. Theoritical Framework
This research will be dealing with the concept of industrial cluster, tourism system, and the linkage between these
two concepts into tourism industrial cluster. Several researches have been conducted within these concepts that will
be described below to enrich the understanding about the concept and also to differentiate the existing research with
this paper.
2.1. Industrial Cluster
(Porter et al. 2000), gave definition to an industrial cluster is the geographic concentration of interconnected
companies, specialized suppliers, service providers, firms in related industries and associated institutions. Industrial
clusters are widely considered to be an important means to promote regional innovation, entrepreneurship and high-
tech industries.
In Indonesia, the agglomeration of manufacturing SME industrial cluster is observed in both rural and urban
areas (mostly surrounding big cities). According to (Weijlan, 1999), rural clusters in Indonesia have a seedbed
function for the development of rural industries, demonstrating that clustering can improve for rural producers to
outside markets, through dense networks of traders. (Klapwijk, 1997) argue that clusters are important for the
development of rural industries because productivity in clusters appears to be higher than in dispersed enterprises.
One of the main reasons is that clustering stimulates active involvement of traders and LEs in agglomeration of
SMEs. A more interesting finding is research from (Sandee, 1996), which shows that enterprises in clusters are in a
better position to adopt innovations in products as well as production process than dispersed enterprises.
According to (Tambunan, 2000) most clusters in Indonesia were established naturally as traditional activities of
local communities whose productions of specific products have long been proceeding. Based on comparative
advantages of products they made, at least with respect to the abundance of local raw materials and workers who
have special skills in making such products, many of these clusters have a large potential to grow. Take for example
the clusters of batik producers that have long been existence in various districts in Java (e.g. Yogyakarta,
Pekalongan, Cirebon, Surakarta, and Tasikmalaya). Various studies show the importance of clustering not only for
the development of SMEs in the clusters, but also for the development of villages or towns in Indonesia.The benefit
of industrial cluster will help the stakeholder to overcome their constraints; succeed in more competitive market;
building external and internal network; and horizontal-vertical inter-firm cooperation-competition (co-opetition).
2.2. Tourism Cluster
Tourism cluster is using the concept of cluster in tourism sector. (Cunha& Cunha, 2005) mention the several
stakeholders who are included in Tourism Cluster. The stakeholders are inside the system and outside the system.
Inside the system are Lodging, tourism product, travel agencies, traders, restaurants, tour guides, and craftsman. In
the external system, the stakeholders are universities and research institutions; Government; Tourist; and Federation-
Association. The concept can be seen in Fig. 1.
Fig .1. Tourism Cluster Representation from (Cunha and Cunha, 2005);
in (Imali& Long, 2012)
The tourism cluster has four influencing factors: core resources and attraction; destination management;
complementary condition; and demand condition. Core resources and attraction represents the main resources that
attract tourist to visit the destination, and main factor that creating the tourism products. Core resources and
attraction is also classified into two, endowment resources and created resources. Endowment resources are the
resource, which already available as it is like mountain, lakes, beaches, rivers, cultural and heritage. Created
resources are the resources, which made by the people, like festival, special events, and exhibitions. Destination
management factor focus on activities that can enhance the appeal of core resources; strengthen the quality and
effectiveness of complementary factors; and best adapt to constrain imposed by the qualifying determinant. This
including the DMO activities like marketing the destination, service dimension, information and technology, human
resources management, and environment management.
The complementary factor consists of the contribution to add value of core resources. Complementary factor can
be categorized into tourism superstructure and supporting elements. Tourism superstructures are accommodation
facilities, food services, transportation facilities and other resources, which may view as the private sector
component of the tourism industry (Crouch and Ritchie, 1999 in Kim and Wicks, 2010). Supporting elements are
general infrastructure, accessibility to a destination beyond the physical facilities such as regulation and entry visas,
hospitality, and market ties. The demand condition is the conditions of tourist demand, including demand awareness,
perception, and preferences (Dwyer and Kim, 2003 in Kim and Wicks, 2010). Fig. 2 shown this relationship.
Fig. 2. Tourism Cluster Development Model for Global Competitiveness (Dwyer and Kim, 2003 in Kim and Wicks, 2010)
3. Qualitative Approach Methhodology
Qualitative approach is used to generate important information and mapping the issues and challenges that
hamper the effort to integrate the stakeholders in a common goal for succeeding Batik Tourism Cluster.
Cresswell(1998) defines qualitative research as an inquiry process of understanding based on distinct
methodological traditions of inquiry that explore a social or human problem. The analyses are complex, holistic
picture, analyze words, and report detailed views of informants, and conduct the study in natural setting. In this case,
qualitative method will use interview, observation, and secondary data to analyze the real phenomenon in the field.
The interview was conducted on August 19th-20th In Solo. The interviewers were the Decision Making and
Strategic Negotiation (DMSN) team from Institut Teknologi Bandung.
The processes of qualitative approach, which illustrated in Fig. 3, are:
1) Research Design: In this step, decided the topic, scope, and research objective, research question as the initial
process of conducting the research.
2) Research Framework: Actually researcher will get a lot of insights in the field through data collection, but
before doing data collection; we also need to limit our study in some specific concept. This framework can be
the basic frame before researcher goes further to the field in collecting data. In this case this paper is using the
concept of industrial cluster and tourism to create the tourism cluster.
3) Preparation before go to the field, it is including choosing the relevant informant, site, finding access to get the
relevant informant and site. After that researcher can compose the tools, which is needed for data collection like
creating list of questions to be asked in interview session.
4) Data Collection, researcher choose the suitable method here, it can be interview, observation, FGD, simple
questioner, and so forth. In order to make the informant communicative to the researcher, researcher should
build rapport by being close to the informant, and construct good relations with them. In this case the DMSN
team were using interview with several informants.
Fig. 3. The Qualitative Method Scheme
5) After the data are collected and stored in recording format, we process the data by making transcription, and
coding the data based on some categories. Collected data than transcript and based on that transcription then we
can find several issues mentioned by all informants. After identifying the found issues, then we filter it into
several key issues. This step is illustrated in Fig. 4.
Fig. 4. Data Processing Scheme Created Based on Creswell, 1998
6) After getting some categories, then we analyze and elaborate them to create some insightful conclusion.
7) Making report to deliver our findings to the scientific communities or related research stakeholders. If the
research is still preliminary research, then the researcher into further research can continue the research. We
also can ensure the validity and reliability of our finding by confirming our research finding in Focus Group
Discussion Forum.
Table 2. The Coding or Issues Categorization

Informant* Important Notes Issues Found Key Issues
(1) (a) Different values and characteristic between Foster Batik as the icon of Solo to Attracting Local and
Kauman and Laweyan Worldwide International Tourist
Scale of Batik trader in both Kauman and The package to attract more tourist
Laweyan
Trading, Economy, Visit are influenced by Cultural activities and Events

Cooperation and Financial
In group should help each other but have limited Tourism as Solo 2nd line potency
capacity to intervene, to survive in facing a
condition of " the strong will win, the weak have
barrier to entry”
Physical development are not optimal Tourism Blueprint
Solo creative community with legal binding History and characteristic of Batik Increasing Batik Value
Kauman
Keep the status quo, survive in the competition History and characteristic of Batik
Laweyan
Conflict of Interest Complete understanding about
Batik
(1) (b) There are a lot of problem faced, especially Historical building and Keraton as
competition among Batik Trader in Solo, Java, the supporting elements
Indonesia, World
Definition of cluster, cluster or sentra (center)? Differentiation of Batik Solo
among other Batik producers in
Java
The phase: prasentra-sentra-cluster Branding Kauman and Laweyan, as
Batik Solo competitive advantage
Clothing standard by government Spatial problem to create Batik Utilization of urban
center spatial
Consumer are very sensitive with price Solo spatial area is already 98%
utilized
The funds are in supplier to ensure the Area included in tourism packages
availability of raw materials
The availability of raw materials Kauman and Laweyan location and
its condition
Complex history of Batik Solo are very essential IPAL
(2) The history of Kauman and Laweyan The funds in supplier to ensure Fulfillment of Raw
availability of raw material (Mori) Material
Earlier, government still did not consider to Imported raw material, the price of
develop integration among Batik Village raw material also determined the
price of Batik product
The grouping of Kauman and Laweyan naturally The supply of raw material and
created based on their historical and competition to get raw material
characteristic values
Government initiative of OBOP (One Believe
One Product)
Solo Ibu Kota Batik (Solo the Capital City of The clear definition about cluster Standard and Supporting
Batik) with event Solo Batik Carnival, and sentra Policy about Clothing
Ngarsopuro Exhibition
Government of Solo have interest to foster Batik The role of government in
as the icon of Solo to worldwide advocating the Batik producer
Need to think a package as the competitive Clothing standard, like food and
advantage of Batik Solo among other Batik housing standard
producers
The spatial problem to create center of Batik Batik Solo Carnival Event and Program about
Batik
Integrated KampungWisataKauman (Keraton- Ngarsopuro Exhibition
Kauman-Ps. Klewer-PGS-MesjidAgung)
Keraton agreed, but market trader disagree Solo International Performing Art
because afraid of losing customers
The difficulties to collaborate, each of Kampung Batik Solo Fashion
Batik should be equipped with specific branding.
(Kauman with Keraton and Laweyan with
historical aspects)
Needs a further research and takes time Tourism Integration Integrated Tourism
From Bappeda, City has been very crowded 98% Collaboration of Kauman and
utilized, and IPAL should be developed. Laweyan
Tourist who come to Solo have complete Fostering Kauman and Laweyan
understanding about Batik potency
(3) (a) Solo batik pattern already old, need to do some Complete understanding about
improvisation Batik
The cultural activities are initiated by the citizens Experience, Shopping, Historical,
and Cultural Tourism
Not only see the batik product but also Collaborate and cooperate with
experience the process of making batik tourism stakeholder to maintain
Kauman and Laweyan are having economics and customer
tourism potency
Kauman and Laweyan are not compete each
other but synergized under the guidance of
government by making some batik event
together
Competition and Cooperation
Tourist feel enough only visited either of

Kauman or Laweyan
Tourism as Solo 2nd line potency under Tourism
agency and Bappeda
The concept of tourism integration to attract
more tourist visiting Solo
(3) (b) Develop and preserve the art and culture of Solo
Government facilitating, coaching, coordinating,

regulating, stimulating
Batik Carnival and Annual Calendar Event
Customer Management
Solo international performance arts
Ecoculture 2025
Tourism Blueprint
*) 1(a) Laweyan 1(b) Laweyan 2 Kauman 3(a) Tourism and Creative Economics Agency 3(b) Tourism and Creative Economic Agency
with Education and Cultural Agency
4. Key Issues Analytical and Tourism Cluster Stakeholders

Solo as Ibu Kota Batik actually initiated by the people of Solo of their belief that Batik actually rooted in Solo,
then after that by trade from the entrepreneur who moved from one place to another place to distribute batik, then it
spread around Java. At first the government stressed in economic motive from development and planning agency
(Bappeda) and Industrial agency as the first layer, then in the second layer the tourism and creative economic
agency. Laweyan or Kauman itself cannot initiate the collaboration because each of them still struggling with their
own interest in business. The government, in this case Solo government have potential position to create value co-
creation from both side by branding and equipped them with program due to Solo as Ibu Kota Batik.
Here are various point of issues generated from the interview that have been conducted so far with some
stakeholders. The graph shows the level of concern of the actor toward the issues.
a. Attracting local and international Tourist: The output of making the Solo tourism more attractive is to attract
more local and international tourist visiting Solo. Several events are made to increase Solo attractiveness.
Tourism is important for Solo as the 2nd line potency for Solo’s economy. But the new package of tourism
should be design to collaborate Kauman and Laweyan potency to support Batik Solo differentiation among
other cities, which also produce Batik. The concerned stakeholders are tourism and creative economic agency,
and also Kauman and Laweyan.
b. Increasing Batik Value: Batik is not only seen as a cloth with interesting patterns, but behind those patterns
there is very potential value and meaning to be explored. Kauman with the relation toward Keraton and
Laweyan with the historical richness. The concerned stakeholders are almost the entire interviewed
stakeholders.
c. Utilization of Urban Spatial: The spatial of Solo has been utilized 98%, the possible development or program
have to consider this depletion of free area, and have to maximize the existing artistic building and artefacts.
Now the artistic and artefact building is not really utilize maximally. The concerned stakeholders are
development and planning agency, Kauman and Laweyan.
d. Fulfillment of raw material: The mori fabrics still obtained by importing, and the one who get the cheaper
material will ensure their product owning competitive price. The strongest will win the competition. The
concerned stakeholders are Laweyan and Kauman.
e. Standard and supporting policy about clothing: The entrepreneur of batik still argue that the standard of cloth
and supporting policy toward the entrepreneur and artisans still not enough both material and immaterial. They
hope more advocacy and support from government. The concerned stakeholders are Laweyan and Kauman.
f. Event and program about Batik: Tourism and Creative Economic Agency promoting some event related to batik
named Solo Batik Carnival and Solo Batik Fashion, Ngarsopuro Exhibition, Solo International performing Art,
for the sake of hope to promote batik national and international. The Concerned stakeholder is tourism and
creative economic agency.
g. Integrated Tourism: The tourism experience where the tourist not only consider Solo as the place to buy batik
but also the place to experience and grasp the full education about batik in depth from the potency owned by
Kauman, Laweyan, and Solo tourism as a whole. The concerned stakeholders are tourism and creative
economic agency, Education and cultural institutions, and Kauman.
The scale between 0-10, where 0 indicates the lowest concern and 10 indicates the maximum concern of the
stakeholder.
Fig. 5. Concern of Laweyan FBPL (Batik Cluster Laweyan)
Fig. 6. Concern of Kauman PGBK (Batik Cluster Kauman)

Fig. 7. Concern of Solo Tourism and Creative Agency
Fig. 8. Concern of Development and Planning Agency (BAPPEDA)

Fig. 9. Concern of Education and Cultural Institution (UNIBA)
5. Conclusion
Qualitative problem description gives a preliminary picture based on the previous interview to be processed
further in the future research. The description of the study is illustrated through the interpretation of the researcher.
This description is requiring confirmation and validation of relevant actors in connection with the most current
conditions through focus group discussion because the interview was done almost a year ago. It can be concluded
that the actors involved in the cluster Batik Solo when referring to the concept described (Cunha&Cunha , 2005) is
very complex , but the last interview in 2013, still included limited key actors like: batik cluster Laweyan (FPBL),
batik cluster Kauman (PGBK), Solo Tourism and Creative Agency, Development and Planning Agency
(BAPPEDA), and educational institution (UNIBA).
Issues of concern include: efforts to attract domestic and foreign tourists to visit Solo; Increase the value of batik
in the eyes of tourists; utilization of urban spatial structure to support tourism; fulfilment of raw materials; standards
and supporting policies regarding clothing; activities and events themed Batik Solo; and integrated tourism. The
level of attention from each actor is also varies, projected from the interview by taking a scale of 0-10. Laweyan
(FKBL) pay more attention to issues related to efforts to attract domestic and foreign tourists to visit Solo; increase
the value of batik in the eyes of tourists; fulfilment of raw materials; and advocates policies and standards on
clothing. Kauman (PGBK) pay more attention to issues that are relatively the same as FKBL, which are an effort to
attract domestic and foreign tourists to visit Solo; increase the value of batik in the eyes of tourists; fulfilment of raw
materials; utilization of urban spatial structure to support tourism, as well as an integrated tourism. Tourism agency
pay more attention to attract domestic and foreign tourists to visit Solo; increase the value of batik in the eyes of
tourists; and activities and events themed Batik Solo. BAPPEDA is more interested in the issue about the utilization
of urban spatial structure to support tourism. UNIBA is more interested in the issue of increasing the value of batik
in the eyes of tourists.
There are some suggestions to support Solo Tourism Cluster from the informants include: first, the possibility of
collaboration to form an integrated tourism ecosystem, but because of having the same commodity of batik, so it is
necessary to consider the potential and uniqueness of each batik village. For example Kauman further highlight
more the palace, and Laweyan, which further highlight the value of the history. Second, to ensure the supply of raw
materials and competition of batik fair price, then there is a suggestion for self-sufficiency in raw materials upstream
to provide it. Third, provide the complete package for tourist to experience and learn about batik. The results of this
study are very beneficial for the researchers team as the basic finding to step higher in the further elaboration and
researches by using more complex methodology and methods in the future to come up with solution to promote Solo
as the capital city of Batik and integrated tourism.
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12 – 14 August 2014
Innovation for Mutual Funds Investment Strategy in Indonesia

Wirata Adi Dharmaa*, Subiakto Soekarnob
ab
School of Business and Management,Institut Teknologi Bandung, Jl. Ganesha 10, Bandung 40132, Indonesia
Abstract
Investment condition in Indonesia gets better year by year. One of the most interested instruments in Indonesia is mutual funds,
mostly conventional mutual funds. Investor put their money in a mutual funds with an expectation to get a maximum return.
However, a mutual funds does not always perform well for every time frame. There is an economics or macro condition that
affects the time frame of investment activities in one country. To figure out the macro circumstance in a country, it can be seen
from the business cycle pattern. Business cycle have 3 phases of cycle; early expansion, late expansion, and recession. Based on
the fact above, authors want to know the performance from each of conventional mutual funds for each phase of business cycle
and make a portfolio strategy to maximize investors return. Authors use an average return data from mutual funds index in
Indonesia to cover all mutual funds for each category; equity, balance, and fixed income. Then, all the data will be divided based
on the business cycle phase to be analyzed. Finally, from those analysis will be made an optimal portfolio for each phase as the
strategy. Authors find out that equity mutual funds is better for early expansion and late expansion phase while proportional
combination of fixed income mutual funds and equity mutual funds best on recession phase. It is also founded that with the
portfolio strategy based on the business cycle phase, investors can maximizing their return.
Keywords: mutual funds; business cycle; investment strategy
E-mail address: wirata.adi@sbm-itb.ac.id
130 Wirata Adi Dharma / IICIES 2014 Proceeding
1. Introduction
This research was aim to find out whether there is an influence from business cycle to mutual funds performance.
From the performance measurement based on business cycle phase, it will be conducted an optimal portfolio for
each phase of cycle. This proportion of portfolio will be proposed as an investment strategy for mutual funds.
1.1. Research Background
Investors put their money in a mutual funds with an expectation of future benefit that they will get. They want
value of their wealth will not get decrease because of inflation. It is in accordance with meaning of investment itself.
Based on Bodie and Kane, investment is a commitment of current money or other wealth with an expectation of
future benefit so investor has a willingness to always maximize the return of mutual funds to meet the maximum
future benefit of an investment.
In stock market, it is known a method called sector rotation to maximize return in stocks market investment.
Sector rotation is a method which investors do a change composition of their stocks portfolio build upon sectors that
outperform in each of business cycle in a country. Sector rotation has been proved to maximizing the stocks
investors return in Indonesia compare to if investors do not perform sector rotation and only rely on several or
certain stocks (Ambarita & Soekarno, 2014)
While sector rotation can be performed in stock market to maximize, the method does not suitable for mutual
funds. It is because mutual funds is a diversified portfolio that is managed by investment manager so investors are
not able to alter composition of the portfolio as their wish. Nevertheless, the role of business cycle still has an
influence for investment area as a whole in Indonesia. When define a business cycle, it is needed a GDP and
inflation data. For calculating GDP there is an investment component there.
It shows that investment and GDP has a relation one and another. Since mutual funds is a part of investment, it
can be said that GDP also affects the mutual funds performance. Inflation also gives an impact for investment area
especially for mutual funds. Inflation gives a significance negative impact for mutual funds performance (Maulana,
A., 2013). In summary, It can be said that business cycle also affect the mutual funds performance.
Mutual funds investors indeed are not able to perform a sector rotation like stocks market. However, since the
business cycle affect mutual funds, investor can change their type of mutual funds investment based on the business
cycle. Although a mutual funds has already diversified, yet it does not always perform well as we expected
(Harsanto, P., Kompasiana, 2013). For example, based on www.investasi.kontan.co.id, in 2008, average return for
equity mutual funds get decrease about 53.75%. On the other hand, the average return of fixed income mutual funds
recorded positive about 4.12%. It is showed a mutual funds not always performed as we wish.
1.2. Methodology
The methodology for conducted the research follow the conceptual frame of input, process and output. For the
input it is needed an average data that can represent data from certain stream of mutual funds. Based on that, it will
be used mutual funds index that exist in Indonesia as representation of mutual funds performance. The types of
mutual funds that is used for this research is equity mutual funds, fixed income mutual funds and balance funds.
The next steps is processing the data. The data will be processed based on each phase of business cycle to find
out how the mutual funds perform. The business cycle will follow the conventional model of business cycle
identification from the past study. The performance measurement will see daily return, variance, standard deviation
and Sharpe ratio from each mutual funds.
When the performance measurement from each phase has finished, the process will continue to build an optimal
portfolio for each phase. Optimal portfolio for each phase will aim to maximize Sharpe ratio. This is because Sharpe
ratio shows the reward from volatility that investors will get.
Wirata Adi Dharma / IICIES 2014 Proceeding 131
This optimal portfolio will be an output as investment strategy to maximize investor wealth. Nevertheless, before
it can be proposed as an investment strategy. The portfolio will be simulated and tested to find out how effective it
can maximize return. Finally after run the test for the portfolio, it can be proposed as the investment strategy for
mutual funds.
2. Indonesia Business Cycle With Conventional Method
According to the previous study by Albert, it has plotted the business cycle of Indonesia using both conventional
and proposed method that he was created. In this research, It will be used the conventional method of business cycle
identification to see how business cycle in Indonesia going through since the method The business cycle had
completely constructed and can be used for further study. The business cycle of Indonesia can be seen below.
Table 1. Indonesia business cycle with conventional method

Start Finish Phase Duration (quarter)
Q1/2000 Q4/2004 Early Expansion 16
Q1/2005 Q3/2008 Late Expansion 15
Q3/2008 Peak
Q4/2008 Q4/2009 Recession 5
Q4/2009 Through
Q1/2010 Q4/2012 Early Expansion 12
Source: Sector Rotation Investment Strategy in Indonesia Stock Exchange, Ambarita and Soekarno 2014
Based on the table, there are 2 early expansions, 1 late expansion, 1 peak, and 1 through. The cycle stated in the
first quarter of 2000. The phase was an early expansion. At this time Indonesia’s economy grew rapidly along with
the reformation era after the monetary crisis in 1998. Early Expansion phase went for 16 quarter from Q1/2000 until
Q4/2004 then it was followed by late expansion phase. The late expansion phase went for 15 quarter from Q1/2005
until Q3/2008 and Q3/2008 become a peak point (turnover point) before the phase move to recession phase.
However, it does not always a late expansion phase. As Albert said in his research, the phase could change directly
from early expansion to recession phase.
From Q4/2008 until Q4/2009, Indonesia ran into a recession phase. The phase went for a 5 quarters and then
move to early expansion. The recession phase in this period was followed by the condition from global market.
There is a sub-prime mortgage case in U.S that triggered a crisis in that period. After the global crisis, Indonesia
once again moved into early expansion phase. The early expansion phase went for 12 quarters from Q1/2010 to
Q4/2012.
2.1. Late Expansion (Q1/2005 – Q3/2008, 15 Quarters)
Late expansion phase went from Q1/2005 until Q3/2008 however, it is runs for 15 quarters during this phase. In
the late expansion phase, the equity funds shows the best performance among all followed by the balance funds and
fixed income funds. As the figure 2 above, the performance of equity funds is the best among all at the beginning of
phase however, along with the change of phase from late expansion to recession, the performance get worse. The
fixed income funds has the least growth compare to equity and balance funds with only 21.04%. The equity funds
has the highest growth about 60.59%. On the other hand, balance mutual funds get in between equity and fixed-
income performance with 34.68%.
Table 2. Late expansion performance analysis
Fixed
Equity Balance
income
Funds Funds
Funds
Daily
Average 0.0663% 0.0230% 0.0379%
Return
Daily
0.0202% 0.0002% 0.0071%
Variance
Daily
Standard 1.4218% 0.1572% 0.8451%
Deviation
Daily
0.01146 -0.17161 -0.01427
Sharpe
Fig. 2. Late expansion performance
In the performance measurement table, it also shows that in daily average the return from those mutual funds are
positive. However, fixed income funds has the least average daily return. The average return for fixed-income
mutual funds is 0.0230%. The variance for fixed income funds also shows the least number compares to the others.
The variance for fixed-income funds is 0.0002%. It is really small number of variation that showed the daily return
that we get will close to the average return. With the small amount of variance the risk to invest in mutual funds also
get decrease. Risk indicator can be seen from the standard deviation. Fixed income standard deviation is 0.1572%
while equity funds 1.4218% and balance funds 0.8451%.
With average return and standard deviation, it can be used to calculate Sharpe ratio. Although fixed income has
the least risk compare to others, its Sharpe ratio shows negative result. Not only fixed income but also balance funds
has negative Sharpe ratio. It means that both of them are not able to give more reward compare to its risk for
investors. On the other hand, equity mutual fund still able to give more reward to its investors although it has more
risk. With the performance analysis, it can be made an optimal portfolio as investors strategy to maximize their
return.
Table 3. Late expansion optimal portfolio
Equal Maximizing Sharpe
Equity 33.33% 100.000%
Fixed-income 33.33% 0.00%
Balance 33.33% 0.00%
Total Weight 100.00% 100.00%
Expected return 0.04242% 0.06630%
Standard Deviation 0.76917% 1.42179%
Sharpe -0.009853 0.011464
According to the performance analysis above, authors make a calculation to find out the best investment scenario
to maximize Sharpe ratio in late expansion phase. Based on calculation, it is better to have 100% portfolio at equity
mutual funds. With 100% funds in equity, the Sharpe ratio can be maximizing to the same amount of equity mutual
funds Sharpe. This proposed weight is better than the equal one. With equal weight investors only receive 0.04242%
expected daily return while proposed weight can give 0.0663%. Equal weight Sharpe ratio also shows negative
amount. It means with equal weight portfolio investors do not give more reward to its risk. In summarize, it will be
better to have 100% equity mutual funds.
2.2. Recession (Q4/2008 – Q4/2009, 5 Quarters)
When the late expansion over, the phase continue to recession. Recession phase run for 5 quarters from Q4/2008
until Q4/2009.
Table 4. Recession performance analysis
Fixed-
Equity Balance
income
Funds Funds
Funds
Daily Average
0.1553% 0.0583% 0.0970%
Return
Daily Variance 0.0574% 0.0018% 0.0173%
Daily Standard
2.3967% 0.4200% 1.3172%
Deviation
Daily Sharpe 0.04395 0.01977 0.03565
Fig. 3. Recession performance
At the beginning in recession phase, all mutual funds show a negative growth (see fig. 3). Equity mutual funds
has the highest negative about -49.53% while balance funds -24.25% and fixed income funds -7.01%. But, at the
end of the phase, equity mutual funds grow beyond fixed income funds and balance funds. Equity mutual funds
grows about 46.60% at this phase. Meanwhile, balance mutual funds still grow in between of equity and fixed
income funds about 29.08%. Lastly, fixed income funds shows the least growth 17.49% at recession phase.
More specifically, performance analysis shows a clear comparison between those funds. Equity mutual funds
daily average return shows the highest amount with 0.1553% while balance funds 0.097% and fixed income return
only 0.0583 average daily return. However, with the significance amount of average return, equity funds also has the
highest amount of variance. Compare to fixed-income and balance, equity funds has variance about 0.0574% while
fixed income 0.0018%, and balance 0.0173%. Indeed, fixed income funds has the least volatility compare to equity
and balance funds. Since equity funds have the highest variance, it also has the highest standard deviation. Equity
funds standard deviation is 2.68274% meanwhile fixed-income funds 0.55219% and balance funds is 1.40348%.
With a high amount of variance and standard deviation, it gives an implication that equity mutual funds is a risky
investment compare to fixed income and balance. However, based on Sharpe calculation, equity mutual funds has
the highest amount of Sharpe ratio (0.04395) compare to fixed income (0.01977) and balance funds (0.03565). It
means that whether equity mutual funds have high risk but its reward is greater than the risk. At a glance, equity
mutual funds still the best for recession phase. However, it is needed to construct optimal portfolio in order to
maximize investors benefit.
Table 5. Recession optimal portfolio

Equity 33.33% 66.12%
Balance 33.33% 0.00%
Total Weight 100.00% 100.00%
Sharpe 0.041553 0.044093
Based on calculation, the optimal portfolio is 66.12% proportion for equity mutual funds and 33.88% at fixed
income mutual funds. With proposed allocated in both equity funds and fixed income funds, investor can maximize
the Sharpe ratio that implicates better reward to its risk. With proposed weight, portfolio’s Sharpe is maximized and
beat individual Sharpe ratio from each funds and equal weight portfolio. Proposed weight give better expected
return than the equal weight but the standard deviation also gets increase. In summarize, for recession phase it is
recommended to have a portfolio with 66.12% at equity mutual funds and 33.88% at fixed income mutual funds.
Although it has higher standard deviation, it can give more reward to its risk compare to equal weight.
2.3. Early Expansion (Q1/2010 – Q4/2012, 12 Quarters)
The last but not least is the early expansion phase. Early expansion phase run for 12 quarters from Q1/2010 until
Q4/2012.
Table 6. Early expansion performance analysis
Equity Fixed-income Balance

Funds Funds Funds
Daily Average
0.05551% 0.04253% 0.04716%
Return
Daily
0.01610% 0.00028% 0.00646%
Variance
Daily
Standard 1.2689% 0.1685% 0.8038%
Deviation
Daily Sharpe 0.00434 -0.04430 -0.00354
Fig. 4. Early expansion performance
In general all the mutual funds performances have a positive performance along early expansion phase (see fig.
4). Equity funds, once again, shows the best performance based on figure above. It is followed by balance funds and
fixed income funds. At this phase, equity mutual funds grow about 40.96%, fixed income 31.39% and balance funds
34.80%. The equity funds still shows a great performance however, the growth is no longer as significance as the
recession phase.
The slowing growth of equity funds also can be seen from the performance measurement table. In that table daily
average return of equity funds is 0.05551%. It still shows a positive performance of daily return however, if
compare it to the recession phase, which is 0.1553%, the daily average return is decreasing. On the other hand fixed
income mutual funds marks a positive average return for early expansion phase with 0.04253%. However, the
amount also gets decrease compare to recession phase. Similar situation also occurred for balance funds which has
0.04716% average daily return while in recession phase get 0.097%. For the variance and standard deviation, fixed-
income funds show the best performance compares to equity and balance funds. However, its Sharpe ratio shows a
negative result. It means that there is no excess reward compare to its risk. This condition also exists in balance
funds which has -0.00354 Sharpe ratio. The only funds that has positive Sharpe ratio is equity funds with 0.00434.
Table 7. Early expansion optimal portfolio

Equity 33.333% 100.000%
Balance 33.333% 0.000%
Total Weight 100.000% 100.000%
Sharpe -0.002255 0.004341
Optimal portfolio for early expansion is similar with late expansion phase. In early expansion phase, it will be
better if we have our portfolio with proportion of 100% in equity funds. With this proposed weight, the Sharpe ratio
maximize similarly with equity funds. Compare to each funds and equal weight Sharpe ratio, proposed weight give
the highest Sharpe ratio among all. This analysis and portfolio construction also shows that in expansion phase, both
early expansion and late expansion, it will be better to have 100% portfolio at equity funds. It is because at
expansion phase economics at one country is growing grow and it align with stock market growth.
3. Strategy Simulation
After the optimal portfolio for each phase has been identified, it is necessary to test the effectiveness of the
strategy to maximizing the investor wealth. This section will run a simulation to test and compare the equal
weighted portfolio and proposed weighted portfolio. Beginning funds for each scenario will be the same Rp
10,000,000.00 and will be run in the same time frame of business cycle. The duration of the business cycle is 32
quarters or 8 years.
Simulation for the equal weighted portfolio divided the amount of funds into the same proportion of equity,
fixed-income and balance funds. The outcome from one phase will be fully reinvested in the next phase of cycle
with the same proportion as previous phase. From the simulation, Rp 10,000,00.00 at the beginning of the cycle will
become Rp 27,888,421.51 at the end of the cycle. Investor will get about 178.88% in 8 years if they do their
investment in mutual funds with the same amount of proportion
Another simulation is the proposed weighted portfolio. The investment scenario will follow the optimal portfolio
for each phase and reinvested the yield from one phase to forward phase. As the simulation start with Rp
10,000,000.00 at the beginning of the phase, it will end up with Rp 35,056,720.56. The proposed weight gives about
250.57% return for one cycle.
Compare the equal weight and proposed weight, it shows a significant difference between proposed weight
strategy and equal weight strategy. With the proposed weight strategy, investor can maximize their return higher
than equal weight portfolio. To ensure that the proposed strategy is really effective, it is need to run another test to
compare if an investor holds certain mutual funds (equity, fixed income, or balance) over the cycle.
Table 8. Comparison of investment scenario

Annualized
Annualized Annualized
Duration Strategy HPR Standard
Return Sharpe Ratio
Deviation
Reinvested
at new
Equal Weight phase with 178.8842% 13.678% 14.874% 0.0430
equal
weight
8 years Reinvested
(Q1/2005 at new
Proposed Weight – phase with 250.5672% 16.976% 19.489% 0.2020
Q4/2012) proposed
weight
Equity Buy & Hold 245.8111% 16.776% 25.184% 0.1484
Fixed-Income Buy & Hold 100.0420% 9.054% 3.591% -1.1098
Balance Buy & Hold 146.0040% 11.910% 14.829% -0.0761
LQ45 - 236.2984% 16.370% 28.189% 0.1182
The table above shows that compare to scenario that investor puts their money in a certain funds the proposed
weight scenario still has the highest return. If investor puts their money in equity mutual funds at the beginning of
the phase, it will give 245.81% return at the end of cycle. Meanwhile, if investor chooses to hold fixed-income over
the period, it will give only 100.042% at the end of period. The last but not least, balance mutual funds will give
146.004% at the end. Moreover, proposed weight strategy can beat LQ45 performance for one cycle performance.
Refer to several test, it is proved that the proposed weighted strategy is effective for maximizing investor wealth.
4. Conclusion
Business cycle has an influence through the mutual funds performance. On the late expansion phase, all mutual
funds shows positive growth at the beginning of the phase but slowly turn into negative at the end of the phase.
When the phase gets into recession, all mutual funds has negative growth at the beginning of the phase but it comes
positive at the end. The last phase of the cycle is early expansion phase. Each of mutual funds shows a positive
growth from beginning until the end of phase. However, the growth get slower compare to the last phase. equity
mutual funds outperform in every phase but it is not optimal to have 100% equity funds for every phases.
Since there is an influence of business cycle for mutual funds performance, it can be made an investment strategy
to maximize investors return. The strategy was based on optimal portfolio for each phase of cycle. It is founded that
it would be better to have 100% equity mutual funds on both early expansion and late expansion phase and
proportional weight of 66.12% at equity fund and 33.88% at fixed income funds for recession phase. The investment
strategy is also proved to maximize the investors return compare to several scenarios of investments.
References
Ambarita, A. P., & Soekarno, S. (2014). Sector Rotation Investment Strategy In Indonesia Stock Exchange. Handbook on the Economics,
Finance and Management Outlook, 371-376.
Bodie, Z., Kane, A., & Marcus, A. J. (2010). Essential Of Investments 8th Edition. Singapore: McGraw-Hill/Irwin.
Colander, D. C. (2013). Economics. In D. C. Colander, Economics (pp. 534-537). New York: McGraw-Hill/Irwin.
Harsanto, P. (2012, March 13). Ekonomi: Moneter: Artikel: Investasi Reksadana untuk Pemula. Retrieved March 10, 2014, from Kompasiana:
http://ekonomi.kompasiana.com/moneter/2012/03/13/investasi-reksadana-untuk-pemula-446454.html
Maulana, A. (2013). Pengaruh SBI, Jumlah Uang Beredar, Inflasi Terhadap Kinerja Reksa Dana Saham di Indonesia Periode 2004-2012. Journal
Ilmu Manajen Volume 1 no 3, 971-981.
Muthalib, A. (2005). Analisis pengaruh variabel makro ekonomi terhadap tingkat kinerja reksadana saham periode 1998-2004. Depok: Fakultas
Ekonomi Universitas Indonesia.
Rahmawati, S. A. (2009). Pengaruh Variabel Indeks Suku Bunga SBI, Kurs Nilai Tukar, Harga Minyak Dunia, dan Tingkat Inflasi Terhadap
Kinerja Reksa Dana Pendapatan Tetap. Malang: Fakultas Ekonomi Universitas Brawijaya.
Satriani, W. (2013, Febuary 25). News: Kinerja Reksadana Pendapatan Tetap Paling Gemilang. Retrieved March 7, 2014, from
investasi.kontan.co.id: http://investasi.kontan.co.id/news/pendapatan-tetap-paling-gemilang
12 – 14 August 2014
Application RF Module for Safety Helmet

Pola Rismaa, Yurni Oktarinab*, RD. Kusumantoc
abc
Politeknik Negeri Sriwijaya, Srijaya Negera Street-Bukit Besar, Palembang 3039, Indonesia
Abstract
Level safety of motorcyclist in roadway in this time very high risk, remember the amount of accident every day progressively
mount this matter earn us read various mass media, problem of this generate doubtfulness to motorcyclist. As known that during
the time motorcycle have been provided with lamp of light turn signal as alarm that the motorcyclist will turn direction, but
because lamp position of light turn signal located is not parallel or below/under line look into from consumer of other road street
when residing in its back more than anything else with rather approach distance far cause view to lamp of light turn signal the
become cant seen, more over if the motorcyclist bring things which quite a lot so that hinder view to lamp of light turn signal.
Therefore require to be designed a helmet with application sensor RF to activate lamp of light turn signal on helmet if the
motorcyclist activate light turn signal on motor as transmitter to lamp of light turn signal as receiver residing in helmet by
wireless. Radio frequency involves two sub units named, transmitter and receiver are both using Amplitude Shift Keying for
communication each other.
Keywords: amplitude shift keying; receiver; RF Module; safety helmet; transmitter
1. Introduction
Traffic accidents not only cause death and damage to motor vehicles but also lead to serious illness and
disability. Crisis lives due to traffic accidents is expected to continue and increase with an increase in the number of
motor vehicles. For example, the number of motorcycles increased significantly for the Southern Sumatera region
(as many as 2,864,717 units in 2011, in 2012 as many as 3,106,088 units).
Based on data from the Centre for Data and Information Secretary General of the Ministry of Transportation
(2012), the growth of rate of number of accidents in Road Transport increased 19.1%; number of casualties by
vehicle increased by 20.75%. The use of motorcycle accidents greater risk than the use of other modes of
transportation. In general, there are three factors that often lead to traffic accidents, human factor, vehicle factor and
road and environmental factors, however, more than 80% incidence caused by human factors, one of which is the
behaviour of traffic discipline.
E-mail address:yuo1610@yahoo.com
1877-0428 © 2014 The Authors. Published by Center for Innovation, Entrepreneurship, and Leadership (CIEL), School of Business and
138 Pola Risma / IICIES 2014 Proceeding
In terms of driving on the road, should pay attention to personal safety such as turning on the lights during the
day and wear a helmet, it is intended that both the rider or passenger safety is as sure up to the destination. For
example in a riding a motorcycle, it is important to turn on the turn signal when turning right or left.
As we know nowadays that helmets mostly used without using technology as a support for the safety of
motorcycle. Therefore in this project we applied using of technology of RF module on the helmet. RF modules are
often used in the communication system, the RF module can be used as a communication technology between the
motorcycle who wear helmets when driving on the highway. Communication used is one-way communication
occurs between a motorcycle and a helmet without cable an advantages of this helmet. This communication system
using the Transmitter as the sender of data that the brake lights, turn left signal and turn right signal placed on the
motor and Receiver placed on the helmet as a receiver of data.
Besides advantages of a safety helmet is easy to use, simple so that users feel comfortable motorcycle helmet
while using the helmet is given without the use of wires and provide a positive impact for both motorists and other
road users. This design project are quite simple and low budget expected to be mass produced so it can be a tool for
the safety of motorcycle on the road.
This motorcyclist equipped with a turn signal as an alarm that the motorcyclist would turn directions, but
because of the position of the turn signal is not equal or below the line of sight of other road users when they are
behind (because the motorcycle shorter than car) especially with visibility rather far led to the view of the turn signal
to be blocked (due to the size of a small light and hard to see), plus more if rider carrying enough cargo to block the
view to the turn signal. Based on the above, the authors take the title of “Application RF Module for Safety Helmet".
The topic of safety helmet has been discussed by some of the literature, but in this project we use the RF Module
sensor ICPT2272 and PT2262 as the main electronic components.
2. RF Module
The design of safety helmet consists of two parts, namely the transmitter place on motorcycle and the receiver
place on helmet are both working wirelessly.
Fig. 1. Block diagram of wireless communication through RF module

(www.allabaouelectronic.hpage.in)
RF module was applied as a communication tool between helmet and motorcycle. RF module using Amplitude
Shift Keying (ASK) which works if sensor the transmitter is activated-ON (in this case means the turn or brake
signal on motorcycle activated) then sensor on the receiver receives the signal to active the switch on driver’s turn
and brake signal helmet actively participate in helmet-ON.
Function of the transmitter encoder which is a collection of data in the form of binary numbers the data set is
called a package. This package will be converted by the encoder into the digital data decoder at the receiver while
changing the encoder package in the form of digital data into a sinusoidal signal.
RF module is the one of sensor that can be used for wireless communication, the advantage are the signals
Pola Risma / IICIES 2014 Proceeding 139
through RF can passed larger distance, suitable for long range application, and RF signals can through even when
there is an barrier between transmitter and receiver. RF module consist of 2 units are transmitter and receiver, both
are using Amplitude Shift Keying (ASK) for transmission the data, and frequency operates at 315 MHz which is
suitable for wireless control (remote control), it can work by wireless transfer data therefore mostly used for remote
control application, such as robots, control some machines from distance without touching. For transmit the data
from transmitter to receiver used an optional antenna.
The RF transmitter function is convert parallel data (encoding), then transmitted the data wirelessly to RF
receiver, and RF receiver function converted serial data (decoding) after the data came from transmitter. Fig 2 and
Table 1. explained ASK RF transmitter and receiver module, pin diagram and pin description of transmitter and
receiver.
a b
Fig. 2. (a). ASK RF transmitter-receiver module; (b) Pin diagram of transmitter and receiver.
Table. 1
RF Transmitter RF Receiver
Pin No. Name Function Pin No. Name Function
1 GND Ground (oV) 1 GND Ground (oV)
2 DATA Serial Data Input 2 DATA Serial Data Output
3 Vcc Supply Voltage (5V) 3 NC No Connection
4 ANT Antenna Output 4 Vcc Supply Voltage (sV)
5 Vcc Supply Voltage (sV)
6 GND Ground (oV)
7 GND Ground (oV)
8 ANT Antenna Input
2.1 Amplitude Shift Keying (ASK)
Modulation means to arrange parameter waving high frequency carrier with lower frequency information signal
equally variation by proportional to other wave which depend on given modulation. In modulation process requires
two signals that are sent information signal and carrier signal where the information signal joined with others. Two
modulation types are modulation of analogous signal and modulation of digital signal called Amplitude of Shift
Keying (ASK).
In digital modulation characteristics of the conversion process and nature of waving carrier occurs in such that
the result has the shape and characteristic of bit-bit/signal (0 and1). Changes in amplitude to the carrier signal 1 is
represented by the ON and signal 0 is represented by the OFF. Through this modulation process digital signal search
level can be sent to the recipient with either, for the delivery of media transmission using radio waves, therefore,
ASK is best used for short distance communication relationships. RF sensor working the short range, with a
frequency of 315MHz using Amplitude Shift Keying (ASK). On-Off Keying (OOK) is a special form of ASK,
where one of the amplitude is zero as shown as fig. 4. (http://www.ele.uri.edu).
Fig. 3. Amplitude shift keying waveform

(http://www.ele.uri.edu)
2.2 Encoder and Decoder
Encoder is a digital signal that produces a binary output code depending on which of its inputs are activated, and
decoder is a digital signal that coverts an input binary code into a single numeric output.
The HT12E Encoder ICs are series of CMOS LSIs for Remote Control system applications. They are capable of
Encoding 12 bit of information which consists of N address bits and 12-N data bits. Each address/data input is
externally binary programmable if bonded out. The HT12D Decoder ICs are series of CMOS LSIs for remote
control system applications. Those ICs are paired with each other. For proper operation a pair of encoder/decoder
with the same number of address and data format should be selected. The decoder receives the serial address and
data from its corresponding decoder, transmitted by a carrier using an RF transmission medium and gives output to
the output pins after processing the data. (http://maxembedded.com).
Fig. 4. Encoder and decoder pin diagram

A four channel encoder/decoder pairs has also been used in this system. The input signals, at the transmitter side,
are taken through four switches while the outputs are monitored on a set of four LEDs corresponding to each input
switch. (http://www.engineergarage.com).
3. Design of Project
Developed two separate systems wirelessly, are divided into two major components are the motorcycle system
and the helmet system are done electronically and mechanically.
3.1 Mechanical Design
Mechanical design includes:

Helmet + battery + electronic components
Components on motorcycle
The battery will supply voltage ( battery on helmet 3 V, on motorcycle 12 V)
Operating temperature -300 to + 800 C
3.2 Electronic Design
Electronic design includes:

Helmet indicator lights are activated by a signal from the helmet’s receiver with a sampling rate≤1 second.
The RF sensor’s transmitter on motorcycle (with a sampling rate ≤ 1 second) will send indicator signals to
the system’s receiver on helmet.
The RF sensor’s transmitter on motorcycle will transmit indicator signals to the helmet’s receiver
within1 second of signal activation
Fig. 6 shows a block diagram for the motorcycle and helmet components.
a b
+12V Motor Linear +3V
cycle Regulator
power
supply To helmet to motorcycle
IC IC Relay Right
Right Lamp PT2262 Lamp
PT2272
Left
Left lamp Lamp
From helmet From motorcycle
Brake
Brake lamp
Lamp
Battery
+3 V
Fig. 5. (a) Block diagram for the motorcycle components; (b) Block diagram for the helmet components
If we have multiple receivers in a room, they will all work at the same time with a single remote. Another is that
there is no error checking or bi-directional link - that means the remote does not know if the module received the
message or not. Third, there are a few different types of receivers and each one looks identical but they are act
differently.
The L4 latch type acts like a selector switch-when the A button is pressed the first time, the matching pin goes
high. When the B button is pressed it turns A's pin off and turns B's pin on. When C is pressed, it turns B off, etc.
Only one is on at a time. If you press the same button twice, it doesn't turn that pin off. In this receiver circuit have 4
switches, for active right lamp (switch 1), left lamp (switch 2), brake lamp (switch 3), and neutral switch (switch 4).
(http://www.adafruit.com).
While the switch 1 (right lamp) on the motor cycle is pressed , the transmitter IC PT2262 will send a signal logic
"1" and the signal will be received by receiver IC PT2272 then will activate the Latch switches relay. Initial
condition of the Latch switches relay is normally opened, for other switch will be OFF if one of them was selected,
as well as to activated the left light and brake light. In other hand, at “1” transmitter IC PT2262 and receiver IC
PT2272 active. When the switch 1 (right lamp) on the motor cycle was released no signal sent by the transmitter,
thus the transmitter was on standby condition ready for received other signal from transmitter every time.
Turn left lamp Turn right lamp
Brake lamp
Fig. 7. Turn and brake lamp on helmet

Signal from transmitter

received by receiver to Signal from
active turn and brake transmitter on
lamp on helmet motorcycle
Fig. 6. Side view of motorcycle and motor-cyclist wearing on improved safety helmet
3.3 Principles of Circuit
The circuit of RF (Radio Frequency) has a transmitter and a receiver using a transmitter IC PT2262 and PT2272
as receiver IC, PT2272 sensor circuit have 3 inputs and 3 outputs. However, the application of the RF sensor
PT2262 as a transmitter to activate the turn lamp and brake lamp on the helmet only using 3 inputs, which
consists of a brake lamp switch A, switch B as the turn right lamp and switch C as the turn left lamp.
If the transmitter circuit is activated or got input from one of the switches, the RF sensor PT2262 gave a signal to
the receiver in order to activate its output
If the transmitter sent a signal switch A (brake lamp on the motorcycle) then the receiver will receive the signal
corresponding to the transmitted data and display it as a brake lamp output at the helmet.
If the transmitter sends a signal switch B (turn right lamp on a motorcycle), the receiver will receive the signal
corresponding to the transmitted data and display it as a right turn signal output at the helmet.
If the transmitter sends a signal switch C (turn left lamp on a motorcycle), the receiver will receive the signal
corresponding to the transmitted data and display it as output left turn signal on helmet.
3.4 Analysis
While switch A as the brake is pressed on the motor then as input to the encoder reaches 8.80 volts while the
switch B is 0.20 volts and switch C is 0.10 volts means that the encoder inputs at logic 1 while switch A, switch B
and switch C logic are 0, the data was sent as a bit stream FFFFFFFF1000 as shown in figure 9 (when switch A is
activated), figure 10 (when switch B is activated), figure 11 (when switch C is activated).
Fig. 7. The result of a measurement when the switch A is activated

Fig. 8. The result of a measurement when the switch B is activated
Fig. 9. The result of a measurement when the switch C is activated
4. Conclusion
This design has been successfully performed for circuits in the motor and the helmet worked very well. Lights are
switched on the motor via an electronic circuit can also wirelessly activate lights on the helmet, thus making the
helmet extremely useful for motorcyclist use when carrying goods/cargo are quite a lot and when driving at night. In
other words, the ultimate goal of this project can be achieved that can facilitate other road users to know the
direction of the motorcyclist will turn over the indicator lights on the helmet and can reduce the number of accidents
caused by the indicator lights are not visible due to visibility and weather.
References
Directorate General of Land Transportation website. (2012). [Online]. Available: http://dephub.go.id/files/media/statistik/statistik2012.pdf.

Directorate General of Land Transportation South of Sumatera website. (2013). [Online]. Available: http://hubdat.dephub.go.id/.
Gillen, K., Mayle, A., McPherson, K., &Young, P. (2008). Motorcycle Safety System. The University of Akron.
Langton, C. (2002). Intuitive Guide to Principles of Communications. [Online]. Available: http://people.seas.harvard.edu/
~jones/cscie129/papers/modulation_1.pdf.
R. Gebelein., D. Varner., J. J. Synder., &J. Parson. (1998). Motorcycle Safety Helmet System. U.S. Patent 5704707.
Scott, W.W. (2002). Helmet Mounted Brake Light. U.S. Patent 6406168 B1.
Zainal, A. R., (2009). Development of New Third Light Brake Signal on Motorcycle Helmet. Universiti Teknikal Malaysia Melaka. Malaysia.
www.allaboutelectronic.hpage.in.
http://www.adafruit.com/products/1096.
http://www.ele.uri.edu/Courses/ele436/labs/ASKnFSK.pdf.
http://www.engineersgarage.com/electronic-circuits/wireless-rf-remote-control-circuit.
http://maxembedded.com/2011/09/06/rf-module-interfacing-without-microcontrollers/
12 – 14 August 2014
Innovative Model in Determining the Capital Structure Target

in State Owned Enterprises
Subiakto Soekarnoab*
a
School of Business and Management, Institut Teknologi Bandung, Jalan Ganesha 10, Bandung 40132, Indonesia
b
Padjadjaran University, Bandung, Indonesia
Abstract
This research is a descriptive and verificative study and aimed to determine the variables that influence capital structure either
statically or dynamically and how capital structure moves toward the target optimal. This research is using a secondary data from
annual reports, financial statements audited SOE (audited) to the period since the IPO until 2013. The data source of this study is
from the IDX Watch, Indonesia Stock Exchange, icamel, yahoo finance, and websites of each company in a unit of study, then
the data is analyzed using Eviews V8.0. The new variables which are rarely found in previous studies of capital structure are
dividends and initial leverage, those are specific to SOEs. Other variables that affect the SOEs capital structure significantly are
profitability, growth opportunities, the level of government ownership, and firm size. Behavior of SOEs is following the trade-off
theory. The variables that significantly influence the target capital structure are profitability, firm size, non-debt tax shield,
liquidity and past leverage.
Keywords: capital structure; innovative model; capital structure of state owned enterprise
1. Introduction
Referring to Damodaran (2001) there are three important decisions in the financial management of the company,
namely: investment decisions, financing decisions that affect the capital structure and dividend decisions. The
investment decision is a decision that must be made by the company to invest in assets that will provide a higher
yield than the specified minimum yield previously. The financing decision is a decision about how to finance the
previous investment decisions whether through debt or equity. The composition of debt and equity the company
selected will affect the company's capital structure. The proportion of debt and equity have been such that it makes
the cost of capital (cost of capital) of the company to a minimum so as to maximize the value of investments that
lead to maximizing the value of the company.
E-mail address: subiakto@sbm-itb.ac.id
146 Subiakto Soekarno / IICIES 2014 Proceeding
This research will increase understanding about the SOE’s capital structure and will enrich the capital structure
literature. Many studies in the literature on international capital structure does not separate the SOEs (State Owned
Enterprises) of the study sample because it assumes that they have the same characteristics as with private
companies.
There is an interesting phenomenon in the SOEs management in Indonesia, particularly in the dividend decision.
Usually in the private companies, dividend will be paid after all the investment opportunities has been taken and
funded. In case of SOEs, it seems like the opposite, dividend first and uses the remaining fund for investment. The
shareholder decision on the amount of dividend is driven by the need to fund the government budget deficit. This
dividend decision will lead to insufficient internal fund to finance the investment opportunities. Eventually it may
force SOEs to seek external fund for their investment funding need.
Based on the above background, this research will answer the following questions:
a) What factors are the determinants of SOE capital structure?. Is there any new determinant which is specific
to the SOE?
b) Does the SOE manager manage the company with a target capital structure or manage randomly so it does
not have a target capital structure?
c) If the SOE has a target capital structure, then the what are the factors that influence the adjustment towards
target capital structure?
d) When the SOE has a target capital structure, how quickly firms adjust their capital structure towards the
target capital structure ?
2. Literature Study
The objective of the company is to maximize shareholder wealth. The task of financial executives is how to
create economic value in the company through various financial policies include investing policy (capital
budgeting/investing), financing policy (financing), and dividend policy. Management must make decisions and
perform in such a way that they will have an impact on the long-term increase in the market value of the company.
The market value of the shares of the company are variables that can not be controlled but can be influenced by
management.
The development of the theory of capital structure literature initiated by Modigliani and Miller (1958) which
assumes perfect capital markets. Perfect capital market conditions that include no taxes, no transaction costs,
individuals and companies can obtain a loan with the same interest rate. With these assumptions, Modigliani &
Miller (1958) concluded that the value of the firm is independent of its capital structure so that the capital structure
is irrelevant. Furthermore, Modigliani and Miller (1963) in subsequent study, they stated that if one important
assumption is relaxed, which is tax condition, then the company starts enjoying the benefits of having more debt as
borrowing costs could reduce the tax payment obligations. They argue that the company can increase its value by
increasing the level of debt so that the capital structure is relevant. With this model, the optimal capital structure of
the company is having 100% debt.
After the seminal research of Modigliani & Miller (1958 and 1963), there are a lot of capital structure research
conducted to better understand the problems of optimal capital structure. MM proposition does not include the cost
of bankruptcy and financial distress. Modification of the MM proposition by including the cost of bankruptcy and
tax saving benefits / tax shield, which is known as static tradeoff theory.
Jensen and Meckling (1976) introduced the concept of agency costs which begins with identifying two kinds of
conflicts that may occur in every public company that is a conflict between shareholders and managers as well as
conflicts between lenders and shareholders. Myers (1984) introduced the pecking order hypothesis. He argues that
based on certain conditions, then issuing new equity may not be optimal for the company. Myers argues that internal
capital is preferred more than external capital when companies need additional capital. He gives an explanation for
why a company does not use debt as proposed by the trade-off theory. Titman and Wessels (1988) found that the
higher the profits the lower the leverage will be and this result is consistent with the pecking order model. Rajan and
Zingales (1995) with a sample of G7 countries also found similar facts.
Subiakto Soekarno / IICIES 2014 Proceeding 147
Fama and French (2002) analyze dividend policy and capital structure in the context of the trade-off theory and
the pecking order. They found that companies are profitable and companies with smaller investments paying higher
dividends. However, they found a variety of conflicting results in relation to the debt. They found that a profitable
company will use less debt, which in this case supports the pecking order theory. Furthermore, Frank and Goyal
(2003) reexamine the pecking order theory and find that internal funds are not sufficient to finance investments and
companies also use equity financing.
Market Timing Theory explains the behavior of companies trying to get additional equity when the stock price is
relatively high. At a time when companies need external funds and stock price is high then the company will most
likely sell shares rather than issuing debt. Market Timing Theory is introduced by Baker and Wurgler (2002).
Similar as the case with the pecking order model, they argue that the company does not have a certain leverage
target.
Alti (2006) tested the market timing model and stated that market timing is important in explaining changes in
short-term capital structure but has limitations in explaining long-term changes. He concluded that the policy of
long-term capital structure of a company appears to be more consistent with a model of trade-offs.
Capital structure research lately evolves from static model towards research into dynamic model. In the static
model, the capital structure of the company is always in the optimal point, while in the dynamic model allows the
company leverage to fluctuate until the extreme point which prompted the company to adjust the leverage back.
Dynamic capital structure research basically wants to test the theory of trade-offs. In general, the trade-offs literature
can be grouped into two models of the trade-offs which is static and dynamic trade-off models. Both models imply
that there is an optimal capital structure which is a combination of debt and equity at a certain level considered to
provide a minimum weighted average cost of capital. Thus the assumed corporate managers will attempt to adjust
the company's capital structure to the optimal level. With a static model, the company's managers considered
adjusting the capital structure towards the target immediately. However, the adjustment of capital structure
immediately to the optimal level would be unrealistic in reality. Therefore in alternative model, which is dynamic
trade-off model, companies adjust their capital structure toward the optimal level partially each year. The speed to
achieve this optimal level is called speed of adjustment.
Huang and Ritter (2009) stated that how firms adjust their capital structure towards optimal targets becomes an
important issue in the current capital structure research. Why companies do not adjust their capital structure towards
the target immediately is because of the adjustment costs. When adjustment costs are too high and exceeds the
benefit of operating in the optimal capital structure, the company will make adjustments relatively slowly implying
that the pecking order theory is in force as mentioned by Myers (1984). If adjustments to the target is conducted
relatively quickly then this indicates the force of the trade-off theory. This is the essence of dynamic capital
structure research, especially in relation to the speed of adjustment to the target capital structure.
Based on the literature review, it is known that the traditional determinants of capital structure is as follows:
profitability, growth opportunity, assets intensity, and the size of the firm. In this study, new determinants will be
investigated to see if they are specific related to the SOEs. The new determinants are dividend, government
ownership, and initial leverage.
Research hypothesis are developed to answer the research questions:
1. Dividend, profitability, growth opportunity, government ownership, asset intensity, firm size, initial
levverage influence significantly to capital structure partially and simultaneously.
2. Past dividend, past profitability, past growth opportunity, past tangibility, past firm size, past non debt tax
shield, past liquidity influence significantly to target capital structure partially simultaneously.
3. State Owned Enterprises have target leverage and adjust to their target partially so it will support trade off
theory.
3.1. Research Design
Taking into account the purpose of the study, the limited number of SOEs and unequal observation periods
(unbalanced observations), this research will use panel data regression technique.This research is a descriptive and
verificative study and aimed to determine the variables that influence capital structure either static or dynamic and
see how capital structure moves toward the capital structure target.
3.2. Data Collection
The research population, sample, unit of analysis and research period of this research are:
a. The population is all SOE companies which have listed their shares on the Indonesia Stock Exchange. The
research sample is taken throughout the SOE companies listed in Indonesia Stock Exchange to exclude financial
based firms.
b. There are 19 SOEs which have been listed in the exchange. However this research excludes 5 financial firm
companies which are not relevant to capital structure study. Therefore this research will use final sample of 14
companies.
c. Period of Study, this research covers the period from 1995 where the first SOE shares went public (PT Semen
Gresik) until 2013. There are 14 non-financial SOE companies have listed their shares in that period. SOEs
companies are privatized in a different time so that the data sample included here is the unbalanced data panel.
3.3. Research Model
There are two models in this research. The first is Static Model to test the influence of all research variables to
the capital structure. The second is dynamic model to test the influence of lag variables that may influence the
adjustment of capital structure to the target level.
Static Model:
(3.1)
where:
X i,j,t = independent variables for firm I, variable j and for time t.
J = dividend, profitability, growth opportunity, government ownership, tangibility, firm size, and initial
leverage.
e i,t = random error term for firm i and time t.
= the leverage of firm i at time t.
α = the intercept coefficient. Regression intercept (α i + α t ) can vary inter firm and inter temporal.
Dynamic Model:
To test whether SOEs have target leverage, this research will use partial adjustment model of Flannery & Rangan
(2006) as follows:
(3.2)
Coefficient of λ will show the speed of adjustment toward the optimal capital structure. The coefficient of λ is
expected between 0 and 1. Very small or zero λ tend to show that firms do not have target capital structure and vice
versa.
Where:
= leverage of firm i and time t.
= capital structure determinants at t-1 (lag) consisting of dividend, profitability, growth opportunity, asset
intensity, firm size, non-debt tax shield, liquidity and past leverage.
= speed of adjustment to target leverage.
= coefisient of determinants
e i,t = random error term for company i and time t.
The Dynamic model is derived from the hypothesis that target leverage of is impossible to oberve but can
be estimated. Target leverage is a function of lag variables of its determinants which can be written as follows:
(3.3)
The leverage evolves every time toward its target partially which can be written mathematically as follows:
(3.4)
After combining eq. 3.3 and 3.4, we can get the dynamic model which is used for this reach as follows:
(3.5)
3.4. Data Analysis
The data used in this study is a secondary data from annual reports, audited SOE financial statements of the
period since IPO until 2013. Secondary data needed is related to the components on the annual financial statements
of the issuer. The data source of this study is from the IDX Watch, Indonesia Stock Exchange, icamel, yahoo
finance, and websites of each company. Data processing used Eviews V8.0.
4. Results
4.1. Hypothesis Test Results of Static Model
To test the hypothesis dissertation research, we used the t test statistic and F statistic. Statistical t-test is used to
determine the effect of independent variables on the dependent variable partially, while the F-test statistic is used to
determine the effect of independent variables on the dependent variable simultaneously.
Based on the results of data processing on static capital structure model, then the value of the t test statistic can
be seen in the following table.
Table 1. The Value of the t-test Statistic
From the table above, it appears that for the variable dividend (DIV), profitability (PROF), growth opportunities
(GROW), the level of government ownership (GOV), firm size (SIZE) and initial leverage (INLEV) are all
significant at various α. The variable of asset intensity (TANG) is not significant.
To understand the effect of independent variables simultaneously on leverage, then the F test statistic can be seen
below.
Table 2. Results of F test statistic Static Model of Capital Structure
The estimation results from the static model of capital structure has a value of 17.49891. F test statistic is higher
than the F table value of 2.57 (17.49891> 2.57) at a significance level of 1%, so Ho is rejected. Variable dividend
pay out ratio, profitability, growth opportunities, the level of government ownership, asset intensity, firm size and
initial leverage simultaneously have significant effect on the capital structure at the confidence level of 99%.
The coefficient of determination shows how much variation of the dependent variable can be explained by the
independent variables. For the static model of capital structure, coefficient of determination shows how the capital
structure variables can be explained by dividend, profitability, growth opportunities, the level of government
ownership, asset intensity, firm size and initial leverage. The coefficient of determination (R2) for the static model is
a 0.791533.
Table 3. The coefficient of determination (R2) Static Model of Capital Structure
4.2. Results of Dynamic Capital Structure Hypothesis Testing
Based on the results of data processing in a model of dynamic capital structure, the value of the t test statistic can
be seen in the following table
Table 4. The results of t-test statistics Dynamic Capital Structure Model
From the table above, it appears that past profitability, past asset intensity, past firm size, past non debts tax
shields, past liquidity, and past leverage have significant influence to the capital structure adjustment toward its
target either partially.
To understand the effect of independent variables simultaneously on leverage, then the F statistic test is
conducted with the following results:
Table 5. Results of F test statistic Dynamic Capital Structure Model
The estimation results from the static model of capital structure has a value of 33.41772 F test statistic is higher
than the table F value of 2.57 (33.41772> 2.57) at a significance level of 1%, so Ho is rejected. Variable past
profitability, past growth opportunities, past size, past non debt tax shield, past liquidity and past leverage
simultaneously affect the capital structure at the confidence level of 99%.
The coefficient of determination shows how much variation of the dependent variable can be explained by the
independent variables. For the static model, determination coefficient shows how the capital structure variables can
be explained by the variable past profitability, past growth opportunities, past firm size, past non-debt tax shield,
past liquidity and past leverage. The coefficient of determination (R2) for the dynamic model model is 0.889138.
Table 6. The coefficient of determination (R2) Dynamic Capital Structure Model
5. Result Discussion
In this discussion section will analyze the influence of each independent variable on the dependent variable,
especially regarding the direction of influence is shown by the coefficients of the regression equation generated.
This is done to see and compare what the rules theory and the results of previous studies have been consistent with
the findings in this study or whether there are different results compare to previous study.
5.1. Capital Structure Static Model
There are three new determinants to capital structure that are found to be significant in addition to the traditional
determinants. Dividend, government ownership and initial leverage are new determinants that can be added to the
capital structure literature. The finding of these new determinants confirms that SOEs have different characteristics
compare to those of private firms.
In this study it was found that the dividend is an important determinant of capital structure for SOEs. This
variable gives significant effect even more significant than profitability which is considered as the main determinant
in the international literature. The higher profitability of the SOE, the higher the availability of internal funds
(retained earnings) so it is likely enough to finance investment activity. This finding is is in contrary to what Harris
and Raviv (1991) argue that the higher profitability of the companies have easier access to debt financing which will
increase leverage.
The traditional determinants of capital structure such as: profitability, growth opportunity, government
ownership, and size in this research give consistent result with previous literatures. The only different result is
regarding the effect of asset intensity (tangibility). It is found that the effect is not significant. It can be explained
that SOEs do not use their asset to secure higher debt because they have enough retained earnings and equity to
support their capital expenditures.
The result of firm size effect is in line with the findings of Rajan and Zingales (1995), namely the existence of a
positive relationship between firm size and the level of debt (leverage). Large firms tend to have large debt which
can be explained that the large firms enjoy a high capacity of loan borrowing.
From the regression equation it appears that the coefficient of initial leverage is 0.735564 which means that the
effect of initial leverage on capital structure is positive. The higher the initial leverage, the higher the target leverage
will be. Variable initial leverage is rarely found in the international capital structure literature and not so known to
be an important determinant of capital structure.
The results of this study indicate that the initial leverage is an important determinant of capital structure and
significant in SOEs. The only study found to be associated with the initial leverage is the study by Lemmon,
Roberts, and Zender (2006) which states that the initial variable leverage is an important variable in explaining
changes in the capital structure in the long run.
5.2. Dynamic Models of Capital Structure
The results showed the effect of firm size on the target capital structure is positive. Thus concluded that the effect
of firm size variable is positive and give significant impact to the target capital structure. The results are consistent
with the findings of Flannery and Rangan (2006), Fama and French (2002) and Rajan and Zingales (1995). The
coefficient of past non-debt tax shield is negative which shows that the higher the past non-debt tax shield then the
lower the leverage. This result is consistent with the findings of Flannery Rangan (2006) which states that
depreciation (non-debt tax shields) is a determinant that affects adjustment to the target capital structure.
Effect of past leverage to the following year target leverage is positive and significant. In accordance with the
theory of partial adjustment, the adjustment to the target capital structure is done in stages depending on the benefits
and costs of adjustment. Past leverage is an important variable because the estimated magnitude of the speed of
adjustment to the target capital structure is lay in this variable coefficient.
In general, the research variables that influence the adjustment to capital structure target is in accordance to the
results of past studies. Past profitability, past growth opportunities, past firm size, past non-debt tax shields, and past
leverage give effect in the same direction with the findings in previous research.
Liquidity influences adversely with the results of previous studies. It seems that SOEs use their liquidity to secure
higher debt instead of reducing their debt level. This is due to the fact that SOEs still have lower level of debt
generally or excessive equity position.
Dividend and tangibility does not affect the capital structure adjustment towards the target. Dividend shows a
significant effect to capital structure under static model. It means that the influence of dividend has a short term
effect so that after one year period it does not influence capital structure decision any longer. This support once
again that the high level of dividend payment in SOEs does not force the SOEs to get external financing for their
capital expenditures. In terms of tangibility, SOEs do not utilize their fixed asset to secure higher loan. Having SOE
status gives a perception that they are backed up by the government so the risk of giving loan to them is low.
6. Conclusion
The new variables that affects the capital structure significantly is dividend, government ownership and initial
leverage. These three variables are rarely found in previous studies of capital structure so that it can be concluded
that these are new determinants of capital structure that is specific to SOEs.
Other variables that affect the SOEs capital structure significantly are: profitability, growth opportunities, the
level of government ownership, and firm size. The influence of the profitability and the level of government
ownership on capital structure are negative which supports the pecking order theory. While the influence of the
growth opportunity variable and firm size is consistent with the trade off theory.
Based on the Dynamic Model of capital structure adjustment used in this research, it can be concluded also that
SOEs have a target capital structure. The managers adjust the capital structure toward its target partially each year.
Therefore the behavior of SOEs is following the tradeoff theory. SOE adjust the capital structure towards the target
at the speed of adjustment of 11.21%. The relatively slow speed of adjustment indicates that the cost of adjustment
is high for SOEs.
The adjustment towards target capital structure can be done by weighing the benefits companies operating in the
optimal capital structure and adjustment costs (cost of adjustment). The variables that significantly influence the
target capital structure are profitability, firm size, non-debt tax shield, liquidity and past leverage.
7. Recommendation
Practical advice addressed to SOEs management and the government to address the results of the research as
follows:
1. The government can make any decision at the Annual General Meeting of Shareholder as the top decision-
makers in companies concerning investment decisions and dividend decisions, so they must do it carefully. All
decisions should be based on the added value that can be generated by the company so as to support the
achievement of corporate value or wealth maximization of shareholders.
2. SOEs management are expected to make decisions that drive capital structure towards the target capital
structure faster. When the capital structure of SOEs to be around the optimal point, the cost of capital
(weighted average cost of capital) of SOE will be minimal so as to support the goal of maximizing the value of
the company or shareholder wealth.
3. The debt capacity of SOEs is still large. Therefore SOEs should actively seek new investment opportunities
that can be financed with external debt.
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12 – 14 August 2014
Competitiveness Strategy Analysis of Women Entrepreneurs:

A Case Study of SMEs in Indonesia
Sri Herlianaa*, Wawan Dhewantob, Grisna Anggadwitac
abc
Abstract
The development of women entrepreneurship in Indonesia has the potential to improve the economic communities. In the face
of market competition, especially in preparing AEC 2015 (ASEAN Economic Communities), the women entrepreneurs should
have a strategy to achieve competitive advantage. Women entrepreneurs in Indonesia are mostly involved in small and medium
enterprise sector, where the sector is able to survive amid the economic crisis hit Indonesia ever. The purpose of this paper is to
analyze and discuss the competitive strategies undertaken by women entrepreneurs in small and medium enterprise sector.
Analysis of competitive strategy using Porter's Five Forces Model approach. This study uses a case study approach to examine
and understand the phenomenon. Primary data were collected through semi-structured interviews with five women
entrepreneurs. The study found several competitive strategies of women entrepreneurs in Indonesia.
Keywords: competitive advantage, Porter’s five forces, women entrepreneurs
1. Introduction
In business, the process of creating, producing, selling, and providing a product or service is the basis of
competitive advantage. The process related to their operational way of doing business, an entrepreneur tends to
follow the operations of the companies that are already established, giving rise to fierce competition among them
because of the similarity of operational way they run. To generate competitive advantage, every company should
have a strategy to differentiate the business with others. Strategy is a process to understand and overcome the
problems.
The purpose of most of the business strategy is to achieve a sustainable competitive advantage. According to
Porter (1987), companies can gain a competitive advantage if it is able to create value for its customers. A company
can gain a cost advantage through economies of scale, technological advances, cheap raw materials, etc..
Differentiation strategy involves offering different products, different delivery systems, or using different
E-mail address: sri.herliana@sbm-itb.ac.id
156 Sri Herliana / IICIES 2014 Proceeding
marketing approaches. The "Five Forces" diagram captures the main idea of Porter's theory of competitive
advantage. Five forces determine the rules of competition within any industry. Five forces model highlighting the
aspects most important to long-term profitability.
Competition is not only experienced by large industry, but also experienced by small and medium
entrepreneurs. SMEs are more vulnerable in the face of competition because of capital and limited business scale.
The number of SMEs in Indonesia, 55.5 million units (BPS, 2013), but the data is not separated between men and
women entrepreneurs. The focus of this study are women entrepreneurs, where the population of women in
Indonesia currently account for 49.96% of Indonesia population (242 million) (BPS, 2013), so that the
empowerment of women are expected to economic contribution both to their life and the country.
The many challenges faced by women entrepreneurs raises a lot of questions of how their strategy of running
their business in the SME sector in Indonesia. Thus, this paper aims to analyze and discuss the competitive
strategies undertaken by women entrepreneurs in small and medium enterprise sector. This paper will also analyze
the relevant literature related to the competitive advantage.
The structure of the paper is as follows. First, the literature review highlights the context of women
entrepreneurs in SMEs in Indonesia. Conceptual insights from previous research that has focused on competitive
advantage are also discussed. Then, the results and discussion of the competitive strategies of women's
entrepreneurship in the context of SMEs in Indonesia. Finally, implications of the study for further research are
discussed, and the overall conclusions of the study.
2.1. Women Entrepreneurs in SMEs in Indonesia
Research on women entrepreneurs strongly related to micro and small enterprises (MSEs). Women
Entrepreneurs in the MSE sector is important for almost all countries in the world, especially for developing
countries. Storey (1994) defines SMEs as companies with relatively small market share which is managed by the
owners in a personalized way and not through a formal management structure, and act as a separate entity, which
means it is not part of a group or a large corporation. Small and medium enterprises (SMEs) have an important role
in the development of the country (Hunjra, 2011). In developing countries SMEs contribute significantly to the
national income and the realization of the concept of entrepreneurship.
Women entrepreneurs in the SME sector has an important role in economic growth, reduce poverty, increase
employment, and provides a variety of items of daily use at an affordable price. In recent years many developed
and developing countries have realized the importance of this sector. The study of women entrepreneurs in SMEs is
very important because SMEs have an important role in economic growth. Impact of SMEs to national GDP is
huge. Based on data from the Indonesia Statistic Agency (BPS, 2013) the number of SMEs in Indonesia reached
56.5 million units and a major contribution to the economy in Indonesia, which accounted for 57% of Gross
Domestic Product (GDP).
MSE sector can improve the social and economic systems in various countries, including the employment
opportunities with low capital costs, make a positive contribution to Gross Domestic Product (GDP), provides an
opportunity to broaden the base of entrepreneurship, and provide the flexibility needed to adapt to changes market.
So that every entrepreneur in the MSE sector needs to build its business in order to have a competitive advantage.
The competitiveness associated with competitors, and the factors that lead to a competitive, so the effect on
business performance for business continuity. Competitiveness in the context of MSEs requires a more proactive
approach, so it is necessary to consider the performance is more precise and more easily operationalized to survive
in a competitive market.
2.2. The Competitiveness Strategy
Currently, entrepreneurs must move quickly to follow the environmental changes that occur where they run the
business's operations. The process of analyzing the changes and determine how they adapt to the changing
environment known as a business strategy. According to Johnson et al. (2009), the strategy is a configuration of
Sri Herliana / IICIES 2014 Proceeding 157
resources and competencies in determining the direction and objectives of an organization in the long term to adapt
to environmental changes. Analysis of strategies are needed both for large companies and small and medium
enterprises. Strategy is closely associated with the decision-making process, so that in making a strategy should
consider all relevant aspects.
Porter's five forces model is a technical framework for analyzing the competitive strategy of a business. Porter's
Five Forces model was first developed by Michael Porter (1980). Porter's five forces helps in knowing the
advantages of today's competitive position and to be faced later. So the company can improve the strength,
anticipate the weakness and will avoid the company in making the wrong decision.
According to Kazeem (2004), the variables that affect the competitiveness of companies including market
structure, strategy and performance. Chaffey (2002) support the classical model of Porter's five forces, and he said
that it still provides a framework that can be trusted to review the threats that arise in the era of e-business. Porter
and Millar (1985) explains that the industrial structure is relatively stable, but may change over time as the industry
is growing, and the strength of the five competitive forces varies from industry to industry. In his book
"Competitive Strategy", Michael Porter (1980) introduced the five things that underlie a company has a
competitive advantage as follows : competitive rivalry; threat of new entrants; threat of substitutes; bargaining
power of suppliers; and, bargaining power of customers.
Fig. 1 Porter’s Five Forces

(Source : Porter, 1987 )
3. Methodology
Women's entrepreneurship still be an interesting issue for further discussion, which with all its responsibility,
especially the women who are married they are able to carry out all activities. Case study approach is used to
understand the phenomenon of the competitive strategies of women entrepreneurs in Indonesia. A case study is
ideal for use in research aimed at answering the question 'how' and 'why' (Yin, 2003). Through these questions, the
basic substance contained in a study that examined can be explored in depth through observation and interview
stages. Five women entrepreneurs involved in the SME sector informants participated in this study. Semi-structured
questions have been used by researchers to ensure that the same information was obtained from each respondent.
This study aims to analyze more deeply about the competitive strategies of women entrepreneurs to survive amid
the fierce competition. Analysis of competitive strategy using a model porter's five forces approach.
Fig. 2 Competitiveness Strategy
4.1. Profile of Respondent
Table 1 is a mapping profile of the respondents in this study:
Table 1. Profile of Respondents

IN EL SM NS YL
Age 35 25 40 38 30
Educational Background Bachelor Degree Senior High School Senior High School Bachelor Degree Senior High School
Current Location Bandung Bandung Bekasi Bekasi Cirebon
Business Fashion Culinary Culinary Shipment Trade
Scale Micro Micro Micro Small Micro
Based on data in Table 1, all respondents are included in the category of productive age. Respondents who are
married and have children have a tendency to run her own business. Meanwhile, unmarried respondents doing
business due to the tendency for self-actualization. Educational background was also found affect the competence
and ways of thinking women entrepreneurs, and it affects the performance of their enterprises. But educational
background is not always the reason their business is not growing, because of the fact that many MSE sector in
Indonesia is growing rapidly even in the hands of entrepreneurs who do not have a high education. The business
scale of informants ranged in micro and small scale enterprises, and is engaged in the culinary business and trade.
4.2. Strategy Development
Women entrepreneurs in Indonesia already has a strategy for dealing with competition occurs. Five women
entrepreneurs participated in this study, this section will discuss more about the strategy analysis of women
entrepreneurs in Indonesia. Indonesia has a cultural diversity so every region in Indonesia has different
characteristics and potential, but the similarity of standard business sector to make the results of this study may
represent a general development strategy to enhance the competitiveness of women entrepreneurs in Indonesia.
4.2.1. Competitive Rivalry

Women entrepreneurs who run the business long enough trying to gain a larger market share by continuing to
improve the service and quality of products and services. Several strategies of women entrepreneurs in Indonesia
include:
Developing ideas and innovation. EL is a woman entrepreneur engaged in the culinary field, she tried to
innovate by expanding its target market is children's favorite. She made a variety of cake shapes children's toys
such as dolls, toy cars, etc.
Market expansion by using media technology. NS initially only use print media to promote her business in
the shipment areas, this time she is using the internet to expand its market to overseas shipments.
Increasing numbers of companies and new ideas that make the company more advanced, developed and
qualified so that consumers will be more interested because the company can give satisfaction to the consumer.
4.2.2. Threat of New Entrants

In line with government programs that increase the number of SMEs resulted in higher levels of competition
among entrepreneurs as many emerging new players in the market. Women entrepreneurs in Indonesia have been
aware of all these things. Some of the strategies they had prepared to face competition from new players such as:
Sri Herliana / IICIES 2014 Proceeding 159
Unique. Phenomena that occur in Indonesia, every product and service is unique will be sought by the
consumer. SM engaged in the culinary business, she sells only at night and always crowded with her
customers. Typical menu and design a place that only with candlelight add value the exotic places.
Customer priority. Quite difficult to establish customer loyalty, but IN making strategies to keep customers
loyal with provide benefits to loyal customers in the form of discounts and other shopping convenience. IN also
provide free delivery special for her loyal customers.
Sharing knowledge. EL try to provide more benefits to its customers by providing training and tips make a
cake. It attracted many customers and establish relationships and to improve personal branding her enterprise.
4.2.3. Threat of Substitutes

Substitute products and services is every product and service that has the same functionality and usefulness of
the products and services that already exist but at a relatively competitive price. Some of the strategies undertaken
by women entrepreneurs to overcome the threat of substitutes including:
Competitive prices. All women entrepreneurs in this study makes the strategy by implementing competitive
rates, even among those applying cheaper price than their competitors.
4.2.4. Bargaining Power of Suppliers

Suppliers have a major impact for the company because the company has many suppliers have control over such
suppliers in terms of price, quality and delivery schedule. Suppliers have an important role in which suppliers could
switch to another company if the deal with a supplier is not able to be met by the company. Some of the strategies
they had prepared to maintain good cooperation with suppliers such as:
Establish good cooperation. All women entrepreneurs build a good relationship with the supplier.
Establish partnerships and contract agreements. Contract agreement is very important in business, because
it has the force of law. NS made a contract with the supplier in accordance with the collective agreement and
not to harm.
Good negotiation process. Indonesia is famous for its hospitality, women entrepreneurs tend to be able to
negotiate well to their business processes, of course, in a professional manner.
4.2.5. Bargaining Power of Customers

Corporate profits depend on the number of customers who buy their products because of the increasing number
of customers who buy their products, the greater the profits. So the company must ensure that customers remain
loyal to the product and not switch to a competing product. Bargaining power possessed by the customer has a
large effect on the price offered by the company. Some of the strategies adopted by women entrepreneurs in
Indonesia to face the bargaining power of customers including:
Analysis of trend and lifestyle. Research and development is needed by every enterprises to know the needs of
today's customers. IN and EL conduct research to provide the products and services needed by the costumer. IN
doing business in the field of fashion so that the design and models that are sold must follow current trends.
The use of technology as a marketing medium. Nowadays marketing has been done through the medium of
the Internet to enable customers to obtain needed products and services via electronic devices (smartphone,
laptop, tablet, etc). Almost all women entrepreneurs in this study using the internet to market their products.
They do promotions via social media and personal websites.
Service Excellent. Providing the best service to customers is one of the strategies for dealing with new players,
as it generates customer loyalty. With hospitality will make customers be comfortable to shop. YL implement
these strategies in her business, all employees are given training in how to provide the best service to its
customers.
Sales promotion. Promotion process remains to be done in order to run their businesses. Promotion process can
be done through print, internet, and others. The women entrepreneurs in this study emphasizes the promotion
via word of mouth, they try to provide the best service to its customers so that customers promote to others. The
promotion is very effective to run by women entrepreneurs.
Establish good relationships with costumers. All women entrepreneurs trying to build and maintain good
relationships with customers. It aims to establish customer loyalty.
Friendly. One of the advantages of Indonesian society is famous for its hospitality. This kind of attitude is
needed by an entrepreneur. The women entrepreneurs use this attitude to get customers. Consumers will feel
comfortable when served with friendly.
4.3. Government Supports
The government is one of the strengths in a competitive advantage and supports all five forces in Porter's model.
Here is the role of government to support the process the competition according to the procedure.
Government regulation in managing market competition
Government policy in the formation of new SMEs
Government policy on the distribution process
The government participates to promote products and services of SMEs
The government provides training of management and entrepreneurship to assist SMEs in managing their
business, especially for women entrepreneurs
The government formed a center of creativity as a container to accommodate the creativity of SMEs.
Government helps facilitate SMEs to IPRs register to protect their products are not recognized by others
The government provides ease of SMEs to access loans to banking institutions
5. Conclusions
Women entrepreneurs in Indonesia have had a strategy to maintain and improve their business performance. The
strategy is made simple because of almost all respondents have the small business scale. This study indicate that
women entrepreneurs own readiness to face the global competition. To face global competition, the need for
increased competence and facilities that support women entrepreneurs to generate ideas and innovation.
6. Implication
The importance of this study is to explore the business strategies of women entrepreneurs in relation to the
competition, barriers, and business performance. The implications of this study to provide insights and
recommendations to the government in making policies related to how women entrepreneurs can improve the
performance and competitiveness of SMEs through Porter's five forces model approach, thus positively
contributing to economic development. This study also provides insight into the importance of the phenomenon of
women entrepreneurs in the development of strategies to improve their business competitiveness. Another
implication is the growing confidence of women in developing their ability to self-employment and the increased
role of women in the SME sector.
References
Chaffey, D. (2002). “E-Business and E-Commerce Management: Strategy, Implementation and Practice”. Prentice Hall.
Hunjra,.A. (2011). “Determinants of Business Success of Small and Medium Enterprises”. International Journal of Business and Social Science
Vol. No 20; November 2011.
Indonesia Statistics Central Agency (BPS). (2013). Official websites : www.bps.go.id
Johnson, G., Scoles, K., and Whittington, W. (2005). “Exploring Corporate Strategy: Text and Cases”. Prentice Hall-Financial Times, Essex.
Kazem, A. (2004). “Competitiveness of SMEs- The Influence of Owner’s Entrepreneurial Characteristics and Firm’s Strategies: Case
Study of Egypt”. The International Management Development Association, Thirteenth World Business Congress.
Porter, M. (1987). “From Competitive Advantage to Corporate Strategy”. Harvard Business Review May-June (3): 43–59
Porter, M. (1980). “Competitive Strategy”. New York: The Free Press.
Porter, M. and Millar, V.E. (1985). “How Information Gives You Competitive Advantage”. Harvard Business Review, July-August, 1985.
Storey, D.J. (1994) : “Understanding the Small Business Sector”, Routledge, London.
Yin, Robert K. (2003). “Case Study Research: Design and Methods”. Sage Publications: United States of America.
12 – 14 August 2014
Creativity and Innovation

“Asli Bali” New Destination
Gai Suhardja*
Interior Design Departement, Faculty of Art and Design, Maranatha Christian University, Jl.Prof.drg.Suria Sumantri No.65, Bandung 40164,
Indonesia
Abstract
Putting effort is a way for humans to improve the quality of life, particularly in the pursuit of profit in order to increase
purchasing power . Then entrepreneurship is the path to the chances of success, but it is necessary for creativity in the idea so that
business becomes attractive. Former sand mining area that has long been abandoned by residents because it has been exploited to
become damaged areas of scarred pit, an issue for the government in Klungkung regency of Bali. This paper shall discuss an idea
that has been taken positively by the Local Government and is in the process of preparing a conceptual design to plan the
realization of the master plan as an innovative idea that holds great promise for increasing local revenues, profits for investors,
citizens , and especially to create it to be integrated tourism area which is capable of reclaiming the area into a new tourism
destination genuine Balinese culture. The planning area will open up entrepreneurial opportunities for residents in accordance
with the program of Klungkung regency government which is empowering the potential of entrepreneurship for the welfare of its
people. Moreover if this area is already realized, it will be the pride of Bali in the native culture. Method of writing this research
using the scientific conception of the analysis of environmental natural resources and independent entrepreneurs.
Keywords: entrepreneurship; destination; culture; concep; genuine.
1. Introduction
Entrepreneurship in Indonesia is believed to be the best way to create community resilience despite the economic
crisis. Small and medium enterprises that have survived this long, now start to move forward, there are many
successful ones and also a few who have not been successful in the world of small entrepreneurs. So
entrepreneurship training programs began to grow like mushrooms in rainy season, because the opportunity
entrepreneurship is likely to achieve business success. This view comes from an effort to improve the quality of life
for many people, not part of an established and large employers who already have assets from upstream to
E-mail address: gai.suhardja@gmail.com
162 Gai Suhardja / IICIES 2014 Proceeding
downstream in achieving corporate profit maximization. But it should be realized that the role of entrepreneurs who
are already established in an effort to improve the economy of small people indeed necessary, for the sake of
regional equalization of economic progress. Because Indonesia is made up of the islands so the uneven development
is problematic. Because of that local governments should be able to open up good opportunities for cooperation with
emerging entrepreneurs, so that b government’s support open up the third-party employment and business
opportunities for small and medium businesses around it.
2. Entrepreneurial Development
Along with an increased effort in the verification process of a company, when there is an opportunity to reach the
next advancement, speculative calculation is necessary, so as not to be a boomerang amid the already stable
business. Courage in taking a decision to have a sharp mind in finding the best opportunity with the support from
authorities , of course would be an intensive attention which is not to be missed. There is a place that has already
been abandoned by its inhabitants because of the sand quarry which was originally very profitable for the dwellers,
when it ended because it had been exploited on a large scale. Then the area becomes damaged areas of the
environment, the former pit as deep as 10 to twenty feet filled with brackish water. Areas located in the not far from
the coast, and rivers flowed clear, therefore dug holes filled with sea water mixed with fresh water. No more big
trees. There remaining are wild plant, cows graze around artificial lakes. After a communication between
entrepreneurs and creative team, was born the idea of innovation from environmental problems that have been
damaged as it is to be used as a powerful business potential drag. And also an idea that not only will produce
unilateral advantage but benefits many parties, especially also provides opportunities for small and medium
entrepreneurs. Thus this idea will turn on the economy in the area and gives revenue to the local area. This idea
raises a spirit from the beginning to the synergistic cooperation with the parties that may be associated as a triple
helix, Government, Business, Academic professionals. So the best plan would require the synergy that comes from
expertise of various related fields.
3. Tourism Area
Bali is an international associating gate for anyone to relate to, the location of this area is located on the island of
Bali, and the south side is a stretch of beach while the northern part is hilly which drain the water from the natural
source that produces crystal clear river through the area and then ends at the mouth of south coast. This area is
geographically a very powerful attraction, despite being damaged by sand excavation. The idea is to be applied in
this area is an integrated tourism facility consisting of: Resort edge of the lake, floating restaurants, floating market,
water tours, water sports, culinary centers, play centers, educational facilities, health centers, point of sale products,
etc. The entire region has an area of about 400ha, and will contain a conception based on traditional Balinese
culture, it is considering the situation of development in Bali, famous in the world famous yet affected by
modernization that affect the traditional values that may be eroded by modern currents, then the regional
government and employers will be agreed by the experts conception designed to faithfully preserve traditional
cultural values. And the potential appeal of this tradition will actually bring in foreign tourists who want to know the
Balinese tradition closely. Clear architectural concept will continue to utilize traditional Balinese materials
consistently even with costly consequences of adequate maintenance. From a survey of foreign tourists visiting Bali,
expressed their desire especially to see directly how is the life of original Balinese culture. Then move from the
prospect of the tourist to visit which will be integrated tourism area it will be destination for entrepreneurs to get
profit. In line with there will be environmental benefits for the area that once took reclamation due to sand quarrying
before, now would be a new area that is a very attractive tourist destination. Balinese culture will live in this area
and be the main attraction. Opportunities for native communities and migrant entrepreneurs in this area are great to
succeed. Creativity of the people is expected to be a source of strength for the economic progress of local
communities.
Gai Suhardja / IICIES 2014 Proceeding 163
4. Planning
A good idea needs to be communicated to the parties concerned in order to make it happen, when the rest of the
network connection as required is reached, then the planning of work on paper is the next process. Condition and
conducive circumstances to support the idea and this area has become the first step, which has received approval
from the Regional Head for the realization of development in the area of Environment and socio-economic growth
of local culture. While the employers of the investment process is run in stages in accordance with the system of
venture capital investment. Investment is likely to be opened to foreign investment is the next, as a priority the
development this area according to the policy of the Regional Head prioritize on local entrepreneurs. The results of
the field survey the situation through the study and measurement of land area and the character of the soil conditions
in the physical construction feasibility plan. Due to the water resources in a way that a lot of excavation made lake,
there is a necessary safeguard to prevent situations of disaster. In the rainy season the state of groundwater discharge
will increase, this becomes a major issue that should not be an obstacle for the safety of the activity in this area.
Experts of waters and watershed managers and also support of construction of architectural planning would also
give priority to safe prevention, not merely designing sheer aesthetic architectural space, this condition of mutual
concern regarding the local government and national disaster mitigation, for spatial planning and regional
development plans and provincial governments areas concerned to cooperate in this area planning team.
5. Culture
Bali as the famous island in the world, its name is better known than the name of the Indonesian state, as foreign
tourists have long been captivated by the culture of Bali who live in the form of art everyday by residents of Bali,
the various cultures that have religious ceremonies, important celebrations such as the cremation process called
Ngaben especially in patrician families of the kingdom, they are still respected by the people. Even in areas such as
Ubud, the royal family of Puri Ubud is still charismatic in the community and was known to the ancients Abroad
since they were pioneered in bringing foreign tourists in first tourism era, the artists in the history of Western art and
culture of Balinese painting tradition led to the mixing of cultures and influences contemporary Balinese artists.
Puri Ubud family policies guide regional head for people to build physical buildings not taller than coconut tree
height, this makes the region a distinctive area in Bali without high buildings, except in big cities like Denpasar and
others. Based on the success of the policy, the idea of making an integrated region in this area will be one of the
regional planning guidelines architectural aesthetics.
For the sake of maintaining a green environment, building a culture of traditional Balinese tropical architecture
characterizes the planning area as a tourist area, the construction of the building was made in such a way not visible
directly or camouflage material of wood and bamboo, while the natural rock would be dominant too, because the
natural formation of green materials combination, wild grass, bamboo and wood is the traditional material of this
region. Site plans are prepared according to the zone of neighbourhood areas that guide the physical development,
plan of activities and grouping areas in order to provide comfort and convenience for activities in the region.
6. New Destination
With the establishment of the integrated Tourism area in Bali, tourists visiting the island of Bali will have a new
option, because the area of tourism in general is a beach, mountains and typical regional food served in the hotel
restaurant with a dance and cultural arts. Indeed there are other tourism business efforts, but this area is built from a
former mine that has been damaged, usually abandoned by everyone because it seems no longer attractive. But by
innovative idea this region could turn into a character of its own location, and also become the work of creative
social, economic and cultural masterpiece nurturing presence of the arts and Balinese cultural value. Hopefully what
became the blueprint in this plan materialize soon for the sake of the realization for economic progress and the
dignity of the Indonesian people in the eyes of the world.
164 Gai Suhardja / IICIES 2014 Proceeding
7. Conclusion
In planning a place of business that produce profits for the company, of course what shall be calculated ae
considering the results providing the welfare of not only the owner of the company, but for the welfare of the
workers of the company. It is not complete if the business plan do not provides an opportunity for the benefit of the
business environment where business activity needs to be built and provide the best opportunities for network-
related relationships that led to the economic progress of poor people who are often excluded by the big business.
The local government has a program of poverty alleviation and economic improvements in small and medium
businesses, people who have been successful entrepreneurs in advanced economies need to pay attention to the little
people who are often oppressed in helplessness. Because it's integrated tourism business innovation will provide
opportunities for small entrepreneurs as a foster child of the entrepreneurs who have established in order to increase
economic opportunity for advanced family of entrepreneurs SMEs, so that they can feed their children and their
children of high school to higher education. The concept of the region as a basic example of an effort to implement a
democratic economic system that would fix a weak economic conditions that always need to gain access and
opportunities for empowerment and self-improvement of entrepreneurial success. Hopefully all these plans would
materialize soon for the sake of our future.
References
Shalini Singh, Dallen J. Timothy, Ross Kingston Dowling. (2003). Tourism in Destination Communities, Publisher CABI Dayton Duncan Ken
Burns. (2009). National Park: America’s Best Idea, Publisher Alfred A.Knopf
Rosalie A. Schnick.(1982). Mitigation and enchancement techniques for the upper Missisippi River system and other large river systems,
Publisher University of California
Made Wijaya .(2013). Architecture of Bali: A Source Book of Traditional and Modern Forms, Publisher University of Hawai John Howkins,
(2013). The Creative Economy how people make money from ideas,Publisher Penguin
Primadi Tabrani, (2006). Kreativitas dan Humanitas: Sebuah Studitentang Peranan Kreativitas dalam Perikehidupan Manusia, Penerbit Jalasutra
Pengelolaan Daerah Aliran Sungai,Penerbit Perpustakaan Kementrian Pekerjaan Umum.
Peraturan tentang Reklamasi Tambang, Seminar Nasional Rehabilitasi Lahan Tambang, 11 Februari 2006, UGM Bulaksumur Yogyakarta.
12 – 14 August 2014
Ecosystem for Indonesian Creative Industry:

Case in Design Subsector
Achmad Ghazalia*, Nadinastitib, R. Bayuningrat Hardjakaprabonc, Mandra Lazuardi K.d
abcd
Abstract
The initiation of Indonesia Creative Industry has started in 2007 by the launching of The Mapping of Indonesian Creative
Industry. However after 7 years of the program, the understanding of creative industry itself is different between each
stakeholder. Therefore it’s important to have the same understanding of creative industry definition, its scope and the ecosystem
of this industry. This paper is focus on creative industry in subsector design. Using secondary data, in-depth-interview and focus
group discussion as basis data in designing the ecosystem and the scope of creative industry, this paper aim to add the knowledge
about design subsector as one of Indonesia creative industry and helps the stakeholder understand about it. The result shows
design definition in Indonesia creative industry, the scope of design subsector, and the ecosystem that supported design industry.
Those results will help government and player in design industry in developing design subsector in the next five years of
planning.
Keywords: creative industry; design; ecosystem; scope of industry
1. Introduction
Currently, the interpretation of the word "design" can be different for each branch of the science and profession
because coverage is fairly broad sense. For example, the design can be defined as the process of designing a product,
both symbolic as well as software as a building material, as well as the process of thinking to solve a problem.
However, in the development of the creative economy, "design" has a distinct meaning that is quite unique. The
design became one of the sub-sectors of creative industries and regarded as a driver of other industries. In addition,
the design becomes one of the roots for the whole creative industry, marked by numerous parts of the design which
now has grown into its own industry because of developments in technology, science, and social culture. An
understanding of the meaning is certainly very important to help understand the design sub-sector in its development
E-mail address: achmadghazali@sbm-itb.ac.id
166 Achmad Ghazali / IICIES 2014 Proceeding
plan. Therefore, it’s important to clarify the definition and scope of design as one of the sub-sector of the creative
economy in Indonesia.
1.1. Defining Design
Discussion regarding design starts from thought of the Greek philosophers who introduces the method of rational
thinking, trace, transparent, logical, and methodical. The method begins by thinking of the Greek philosophers such
as Socrates, Plato, Aristotle, and Archimedes. Socrates introduces the meiotic method who questioned the nature of
the goods. Plato idea contributes in the form of dialectics, i.e. acuity analysis in finding the relationship between the
various terms. The method is called "idea decomposition" or diairesis the basis of analysis to draw up complex
problems into easy to understand. On the other hand, Aristotle contributes a scientific method that is based on the
logic of deductive or inductive thinking. Other philosophers thought that also famous as the complement forethought
is heuristic methods of Archimedes. Heuristic method of thinking is done by analogy and the hypothesis. Those four
methods of the philosophers then creating a new method which is design thinking methods (Widagdo, 2011).
Problem Formulation
Exploration Decision Making
Analysis
Conclusion
Product
Deductive/
Meiotic Diairesis Heuristic
Inductive Design Plan
Socrates Plato Archimedes
Aristoteles
Group of Thoughts Group of Decision Making
Fig. 1. The relation between classic philosophy and design process.
Figure 1 shows that the four methods that have been discovered by the Greek philosophers developed into an
outline design method or methods of design. The design process is divided into two major groups, namely the group
of thoughts and group of decision-making design. The study group consisted of several stages, as follows.
1. Formulation of the problem, i.e. determining the nature of the problem, the scope of the problem, the purpose
of the problem, and so on. At this stage, gathering as much information then used as the basis for the
formulation of the problem. This stage is the stage meautik found by Socrates.
2. Exploration and analysis, which is taken from Plato diairesis method, is a stage to parse and detailing the
problem. After that, the development of the concept solution according to the selected design strategy.
3. Conclusions drawn by using method of deductive or inductive by Aristotle to determine further direction for
the development of the design.
Achmad Ghazali / IICIES 2014 Proceeding 167
Furthermore, the design decision-making group is the final stage of the design process. At this stage, combination
of elements of the objective with the subjective elements such as aesthetics, market trends, and factor for the user
has to be conducted. Because it uses a heuristic method that relies on Archimedes' analysis and hypothesis, then the
decision is based on the design aesthetic sensibility, creativity, and creativity of designers. In other words, the
heuristic method is crucial in the design process. Design thinking methods are then developed in accordance with
the time, period, and applied to many fields of science and professionalism so that changing the design paradigm
itself. The design was applied to the fields of science such as art, computer science, architecture, engineering, and
design itself. Here is a conceptual mapping relationship design adopted from Tether (2005).
Fig. 2 Conceptual Mapping of Art, Science, Design and R&D (adopted from Tether, 2005)
In Figure 2, the horizontal axis states the mode of production of goods, which were divided subjectively
emotional to rational objective perspective based manufacturers. The vertical axis express the type of output,
ranging from symbolic goods to material goods. Both axes divide the diagram into four quadrants, namely the
Abstract Function, Function Material, Material Expression and Abstract Expression. Based on research Tether,
which includes design is located in the Abstract Expression and Function of Material consisting of visual
communication design, fashion, interior design, product design, architecture, design materials, engineering, and
design components. Explanation of Figure 2 shows that the design or the design itself has a very broad sense as
covering many disciplines and professions. Some examples of the use of design science is fashion design, building,
machinery, components, and so on.
The design has a broad scope, but the meaning is sometimes directly collapsible by known it as art, because
people thought design very close with aesthetics. But in fact both of these come from different things. Making
artwork artist departs from the need to express themselves, while the design work is always initiated from the user's
needs and problems. In addition, the design of which is absorbed from the word "DISEGNO" (Italian language) has
the meaning of drawings, sketches, plans, illustrations, or scheme. The meaning of the word is clear that the design
has a meaning more than the art itself because it involves the ability to create images and the ability to create
designs.
1.2. Design in Indonesia Creative Economy
Based on the original meaning of the word, its development, study of literature, according to the definition of the
design world organizations such as Icograda (International Council of Graphic Design Association), ICSID
(International Council of Societies of Industrial Design) and IFI (International Federation of Interior Architects /
Designers), and the results of focus group discussions, the design blueprint is defined as follows:
"The objective problem solving process for human and its environment based on collaboration knowledge and
creativity by adding the values including the value of cultural identity and added value (added value) both
economical, functional, social, and aesthetic so it can provide a subjective solution"
Source: Focus Group Discussion Subsector Design, Ministry of Tourism and Creative Economy Indonesia (May-
June 2014)
The following is an explanation based on the key words in the above definition.
1. Objective problem solving process. Efforts in identify, explore, analyze, and draw conclusions from a problem
with a view to taking a decision. The problem to be solved is a technical nature such as the function of an item;
2. Humans and the environment. The basis of the design process is a problem that occurs in the fulfillment of
human needs and the environment to improve the quality of life. Problems or needs that depend on the scope of
each field of design;
3. Collaboration of science and creativity. Process design requires a variety of related disciplines, among them
psychology, informatics, architecture, and engineering. In addition, the design with a deep understanding of the
issues and ability to create new design solutions appropriate;
4. Value of cultural identity is local wisdom that can be a source of inspiration for the design, for example
through the motif, processing methods, and materials. Each region in Indonesia has the local knowledge which
is the result of the dynamics of the local culture. Value of cultural identity can change and differ according to
location and time. Serves as a medium of design preservation by making the value of cultural identity as the
inspiration which is then adjusted to the present;
5. Added value. The results of the design process must add value to the economic, functional, social, and
aesthetic of a product and not just as an expression of a designer. For example, ordinary wood has a value that
is much different when compared to wood that has been processed into a radio Magno;
6. Subjective solution is the solution that comes from the taste, aesthetics, experience, and knowledge of each
designer.
Today, design development in the world and in Indonesia is supported by the development of software
technologies that facilitate the design process and allow for more collaboration. With the collaboration, product
design will have more values for commodities that can be further developed and utilized in industry by society to
provide a better quality of life in accordance with their respective functions.
2. Methodology
The study of defining design sub sector as one of industry inside Indonesia creative economy were using
literature review, in depth interview, and focus group discussion (FGD). The literature review that we use in this
study were coming from the previous document that published by Indonesia government, published material about
creative economy in the world, and specific books or paper about design. In depth interview were conducted in three
months between April-June 2014, with the expert that we choose for interview coming from practitioner, educator,
and design community. Focus group discussion was held between June and July 2014, we invited earlier expert from
in depth interview and additional member that known as stakeholder in design industry. The number of expert that
coming to attend the focus group discussion is 10 experts. The FGD were conducted three times, the first FGD to
explore our understanding about design as one of the sub sector in Indonesia creative industry and its scope. Second
FGD is to mapping the design industry ecosystem and problem identification inside the ecosystem. And the last
FGD is to confirm the results from the first and second FGD.
3. Scope of Design
The concept of design thinking is a concept that prioritizes the needs and desires of consumers (such as the
workings of the designer) in the development of a product, service, process, up to the strategy. Parties applying this
concept to understand the needs of consumers by communication with a regular basis to produce the best product
that suits the needs. This concept is similar to the method of trial and error to produce a product that is expected by
consumers (Brown, 2008).
Currently, both the tools used and products generated by the industry is still not meeting the needs of the people
of Indonesia. For example, many Indonesian raw materials sold abroad, processed, and resold and consumed by the
people of Indonesia. Sales of raw materials that would be detrimental to Indonesia because of its potential to be lost
and used by others. This is because the current manufacturers are more concerned with customer needs rather than
the needs of consumers who are the end users of a product. Hence the need for the application of the concept of
design thinking that prioritizes the needs of consumers as a whole and promote efficiency but still produce added
value.
Danish Design Centre (2003) expressed design as a hierarchical. There are four levels in the hierarchy of the
organization's commitment to design:
1. Non-Design. Design becomes a dominant part in the development of products and done by people who are not
professionals in the field of design. Design solutions obtained from the functional and aesthetic perception. The
end user of the product is not involved in the design process.
2. Design is Styling (Design for aesthetics). Become part of the aesthetic design of a product. Professional
designers might do this, but other professions may also be involved.
3. Design as Process (Design as a work process). Design has become the method of work adopted since the
beginning of the product development. Solution design focuses on the end user and requires a multidisciplinary
approach, for example, from the marketing, material experts, and expert process.
4. Design as Innovation. Designers collaborate with owners and managers in adopting an innovative approach to
doing business. The design process combined with the organization's vision.
The study of the Danish Design Centre shows that the scope of the design concept not only as matters of aesthetics
and art, but further into the design of capital in terms of innovation.
Other research conducted by Tether in 2005 that has been discussed in Figure 2, In the diagram that has been
drawn up, covering the design of visual communication design, fashion, interior design, product design, architecture,
design materials (design of capital goods), engineering, up to design components. However, according to the
definition of design that has been written in section 1.2 which states that the design is "the process of solving
objective problems with subjective solutions", then the scope of the design according to the context of the
development of the creative industries are located on the subjective emotional scope. Therefore, the design that
included in the context of the creative industries based research Tether include four areas, namely visual
communication design, fashion, interior design, and product design.
Of the four areas, the current fashion industry is a mature industry from downstream to upstream that
characterized by periodically changing trends. The fashion show is always done on a regular basis, and a large
number of industry revenue. Seen conjunction with the fourth field, fashion is a wedge between product design and
interior design. Due to the maturity, the fashion (mode) is not included in the scope of the design itself. Thus limits
the field of design in the creative economy in Indonesia are visual communication design, interior design, and
product design.
The third field of the relevant design is also reflected in the agreement stated by the international design
associations. The main actors in the design industry has developed a special code of ethics developed into
professional organizations respectively called the Model Code of Professional Conduct For Beginners published by
Icograda, ICSID, IFI and in 2012 the code in the document, the word "designer" defined as individuals who either
freelance design practice or work, or a group of designers who have partnered and scope as follows: (i) visual
communication and graphic designers, (ii) designers products and goods, and (iii) the interior designer / interior
architect.
4. Design Ecosystem
Consume
Creative Chain
Public Access
Public Access
Develop Archiving Market
Public Access
Nurturance Environment
Appreciate
Fig. 3. Ecosystem for Creative Industry
Modeling ecosystem (Figure 3) of the design as sub-sector industry is the ideal state that describes the activities
at each stage of the creative. In each of these stages, there are actors involved and the linkages between components
as an ecosystem. Modeling is done to map ecosystem consists of four components, namely as follows.
1. Creative Value Chain. Chain creative components (creative chain) is the main process that occurs in each sub-
sector of creative industries, in the creative process of this happening is the beginning of the creation of the
output in the creative industries to the output displayed or absorbed by the market. In the design sub-sector, a
common process chain is creation - production - distribution and presentation of adjusted back to their
respective areas of design;
2. Market - Audience (Market-Audiences). Products or works of industrial design is then displayed and absorbed
by the market. The market component describes the character of the market, audience, and consumers in each
sub-sector of creative industries. In the design sub-sector, generally the market is paying client services to the
designer to create a masterpiece, the target community or consumer of a work, to design experts who have the
competence to criticize a design;
3. Development Environment (Environment Nurturance). On the other hand, to support the creative process of
the chain, necessary nurturance environment or development environment that consists of two main activities,
namely the appreciation and education.
a. Appreciation activities aims to give recognition to the creative industry and also gives an understanding of
the industry sub-sectors. Appreciation activities can be initiated through the literacy process which aims to
provide knowledge and understanding of the creative industries to the community so hopefully after getting
a good understanding, then the appreciation will be much easier to do. Activities can be undertaken
appreciation awards, incentives, and public appreciation of the IPR (Intellectual Property Rights) of
creative people. With the appreciation of good activity, the creative people will be encouraged to continue
to be creative;
b. Education is one of the main tools in creating a creative person. Education is considered very important as a
place to hone the ability of people to be able to become qualified and creative people capable of running the
creative process with a good chain. This educational activity can be done through formal, non-formal, and
informal. In the design sub-sector, dominated curriculum education about aesthetics and design;
4. Archiving. The purpose of this archiving process is as a medium that can be accessed by the public to obtain
information and data related to the creative industries sub-sectors. Archiving can be used as a source of
inspiration and as a medium of instruction in educational institutions. For example, many sites now have a
portfolio of service providers for the designer. Archiving process is generally carried out through the collection
phase - restoration - Storage - preservation. The process of restoration is only done if the documents or things
that need to be archived are already experiencing damage or mismatch repair process that needs to be done
without changing the original meaning or value prior to storage and preservation process.
5. Conclusion
Developing design industry in Indonesia is on-going-process. The common understanding about this industry
should be communicate to the stakeholders and the communities. This study shows different perspective in defining
the design and its scope. The ecosystem shows there are four area that we should consider in understanding design
industry, which are: creative chain, market, nurturance environment, and archiving. Those four has their own
problems but they are very important in developing design industry. Therefore, this study will help Indonesia
government to focus, make priority, and help government and player in design industry in developing design
subsector in the next five years of planning.
Acknowledgements
Ministry of Tourism and Creative Industry, Indonesia, Ahmad Rifqi Anshorulloh, Agus Windarto, Andar Bagus
Sriwarno, Andi Abdulqodir, Bima Shaw, Cokorda Dewi, Dika Despanhi Sulaeman, Dona Saphiranti, Eko
Priharseno, Francis Surjaseputra, Hanny Kardinata, Hastjarjo Boedi Wibowo, Hilton Kurniawan, Intan Rizky
Mutiaz, Irvan Noe'man, Iwan Sastrawiguna, Mizan Allan de Neve, Reindy Allendra, Widagdo, Widihardjo, Yudi
Amboro
References
Brown, T. (2008), Design thinking. Harvard business review, 86(6), 84.

Center, D. D. (2003), The Economic Effects of Design. National Agency.
Tether, B. (2005), The role of design in business performance. ESRC Centre for Research on Innovation and Competition, University of
Manchester.
Widagdo (2011), Desain dan Kebudayaan (4th ed.), ITB Publisher
12 – 14 August 2014
Designing Photography Industry

as Subsector in Indonesia Creative Economy
Achmad Ghazalia*, Wijayanto B. Santosob, Nur Arief R. Putrantoc
abc
Abstract
At the beginning of Creative Industry in Indonesia, Photography is representing in one sub-sector, which is Film, Video, and
Photography. However to look at in Photography itself is also interesting, since the stakeholder in this area yet the same
understanding about this industry. Therefore it is important to make the same understanding about the photography as industry,
the scope of the industry, and the ecosystem of photography, so the growth of this industry will contribute the development of
Indonesia creative economy. Literature review, in-depth-interview, and focus group discussion were using in designing this
industry. And the results shows a new understanding of this industry in Indonesia context and some initiatives that may be the
answer in developing photography in Indonesia.
Keywords: creative industry; photography; ecosystem; scope of industry
1. Introduction
Photography evolved not only as an image or an image capture technology. Photography is also growing due to
the increasing benefits of photography in human life (Sharples, 2000). Both processes are equally important in the
view of the development of photography, because basically both are interrelated and affect each other. The definition
of photography is inseparable from the technical side of photography technology development itself. It can be seen
from the development of technology from analog to digital photography. This development led to changes in the
elements of photography that makes the definition of photography requires adjustment. In the era of analog
photography for example, a film has dual role as the recording medium and as information storage media. Both of
these roles can then be replaced by different devices in present digital age. Therefore, advances in technology of
photography can change the definition of photography itself.
E-mail address:achmadghazali@sbm-itb.ac.id
In addition, advances in technology may affect the scope of photography which is now more widespread and also
had an influence on the development of photography in terms of economic, social, and cultural. Understanding of the
definition and scope of photography is necessary to be able to determine the focus of the development of
photography in the contextual development of the creative economy in Indonesia.
1.1. Defining Photography
The term "photography" was widely introduced by Sir John Herschel in 1839 to refer to some of the experiments
were done in a moving image of an object into a two-dimensional medium. However it turns out, the word
"photographie" has been raised in 1834 by Brazilian inventor named Antoine Hercule Romuald Florence in a note.
Note from Hercule Florence successfully inspected by Boris Kossoy in 1976. When viewed from word origin,
photography is derived from the Greek word composed of two words, photos meaning light, and graphé which
means drawing. So when the two words are combined, photography can be interpreted literally as painting with light
(Monteiro, 2007).
According to The Hutchinson Dictionary of the Arts (1994), photography is defined as follows:
“Process of reproducing images on sensitized materials by various forms of radiant energy, i.e. visible light,
ultraviolet, infra-red, x-rays, atomic radiations, and electronic beams.”
Definition of Hutchinson is able to answer the substance of photography in the development of technology. The role
of light-sensitive films and surfaces in the analog era has been replaced by a light sensor that is not only able to
capture visible light, but also be able to capture wave energy in another form. Therefore, these definitions can be
used as a definition of photography today.
When photography was associated with the creative industries in Indonesia, the definition needs to be adjusted,
"An industry that encourages the use of individual creativity in producing the image of an object by using a
photographic device, which includes a recording medium light, file storage media, and the media that displays
information to create prosperity and employment opportunities."
(Source: Focus Group Discussion photography sub-sectors, the Ministry of Tourism and Creative Economy, May-
June 2014).
Based on the above definition, it can be concluded that in photography there are five elements that always exist,
namely:
1. Creativity, in this case is the ability to process ideas to produce creative work, including the skills and talent.
Creativity in photography including the ability to capture an expression or the message of the object to be
photographed. Creativity is certainly owned by creative people. Creative people in photography can be derived
from:
a. Photographer or the photographer, subject or person conducting photography. In the digital age, when
the camera can be remotely operated with the remote assistance, the photographer is the person who set
up or setting the camera to take pictures.
b. Creative director, the person responsible for the creative concept of a creative work.
c. Digital imaging artist (DIA) or the photo editor, the people who have expertise in creating and
manipulating digital images.
2. Object of photos. An object or situation that wants to be reproduced in the form of a picture or image with the
aid of a recording medium or light, or camera.
3. Light recording media. This media is sensitive to light so as to duplicate the image or the image of the object
that emits light. In the days of analog photography, recording medium light can be light sensitive paper; plates
supplied with chemicals to be sensitive to light, and also the movie. In the digital era, the light sensor on a
digital camera serves as the recording medium light.
4. Media file storage (information). It is a medium or tool that saves the file (in this case the image information).
In the days of analog photography, the function of a storage media is represented by a film with a recording
medium light. Such medium are light-sensitive paper, light-sensitive plates, and films. While in the era of
digital photography, file storage media (information) is a form of digital data stored in memory and can be
transferred to other digital file storage media such as CD / DVD, flash disks, memory cards and hard drives.
Media that displays an image or images. It is a medium that shows the end result of the photographic object. In
the days of analog photography, the one that displays the image is printed photo. In the era of digital photography,
image viewer function can be done by a computer screen, camera display or smart phone display.
2. Scope of Photography
Based on the results of the study of literature, photography can be grouped by genre or genres of photography and
the purpose of its use. Genre in photography can be shared by several approaches such as (1) the development of
camera technology and media recorder; (2) the object image; (3) The technique of photographing; (4) the location or
the shooting; (5) the event or events. While photography is based on the purpose of the subject of photography can
be divided into: (1) photography education; (2) amateur photography; and (3) professional photography.
In terms of the development of camera technology and recording media, photography can be classified into
analog and digital photography. Digital photography is growing rapidly since the 1990s, and this then does not
diminish the presence of the old technology, analog photography in this case. With that maintains a unique,
identifying characteristic, and the value of history, analog photography still get a spot on the side of photography
enthusiasts. Both genres can survive, even with all the advantages of digital photography finally able to be the
industry standard at the time of photography this subsector (Datta, Joshi, and Wang, 2006).
Several types of analog photography include: Lomography, an analog-style photography using film that has high
contrast and saturation and color profiles that are characteristic of the picture as printed by cross processing.
Photography pinhole is in the making of photo using a pinhole camera. Pinhole camera is an object that has a light-
tight space, which is then given a very small hole in one side. Pinhole camera can be made of any material. Polaroid,
a type of photography that uses special films that can be printed direct the film results in an instant.
Based on the object, then the genre of photography can be classified into several examples as follows: Astro-
photography, it’s a special photography that photographing celestial objects like the moon, stars, and planets. Portrait
photography (portraiture) is a special photography photographing people. Nature photography is special photography
that photographing the beauty of nature as scenery, flora, and fauna. Selfie is the latest genre in photography, the
special photographic self-portrait or a group of friends. The genre is growing with the increasing use of smart phones
(Kiprin, 2013). Photography food (food-photography) is a special photography in photographing food and drinks.
Based on the techniques of shooting, then photography can be classified into several examples as follows:
Strobist photography is a technique in photography that using the flash or artificial lights separate from the camera.
Long-exposure / slow shutter photography is a technique in photography with a slow shutter speed. The purpose of
this technique is usually to create a subtle effect on the image waterfalls, clouds in the sky, or eliminate the passing
crowd somewhere. Light painting photography is a similar technique with long-exposure techniques, but the
expected effect is the presence of traces of light that can be either an image or text that comes from a light source
that driven by humans or objects. Levitation photography is the technique of photographing someone who is
skipping with a very fast shutter speed, so that the resulting effect of the object in flight or stopped in the air. Macro-
photography is photography technique that produces images of objects enlargement small photo. HDR (High
Dynamic Range) is techniques to combine multiple images that have different high levels of illumination (exposure).
The purpose of HDR photography is to brighten the dark image and darken the bright parts of the image, so that all
ranges of light in the image is normalized so there is no part that too bright (over-exposed) or too dark (under-
exposed) (Inanici, 2006).
The following are some examples of a genre based on the location or the shooting: (i) Aerial photography,
photography obtained by shooting in the air. Usually shooting aided by remote control, or the shooting is done with
the help of a helicopter and (ii) Underwater photography, photography is done in the water. Shooting is usually done
in the pool, lake, river, or ocean.
The following are some examples of a genre based on the event or events: (i) Wedding Photography (wedding
photography), photography that aims to document a wedding party, (ii) Photography pregnancy (maternity
photography), photography documenting a woman during pregnancy. Usually the shooting is done when the
prospective mother's belly already looks bigger, and (iii) Photography birth (newborn photography), baby
photography in documenting the early moments of his birth.
In addition to classification by genre, generally photography is also classified based on the purpose of the
activities of the agents of photography. The following is a classification:
1. Photography as a science education is taught in the formal and non-formal education.
2. Amateur photography is photography that cultivated by photographers who pursue achievement and self-
actualization in the field of photography, and photography hobbyists who do photography for personal
consumption.
3. Professional photography is photography that the photographer sold his expertise in the field of photography
and make photography as his livelihood. Professional photography itself can be divided into four categories,
namely:
a. Journalistic photography is photography that is closely related to the area of production and consumption of
print and electronic media. The main goal of the photojournalist is to take pictures of events and events that
are going to be reported back through the mass media. A photograph obtained is expected to strengthen the
content of articles that are presented in the mass media. The actors in the field of journalistic photography
among photojournalists, photo editor, photo editor, and photo bureau manager.
b. Commercial photography is photography that is closely related to the practitioners of professional
photography. Photography is usually associated with advertising agencies and corporations. The images
created can be based on the wishes of the client (which is made from the initial concept), or the client can
purchase photographs that have been created by the photographer for the benefit of clients. Other form of
commercial photography is photography retailer, which has been providing photographic services ranging
from concept to print photo shoot. All processes in the retail photography have been standardized in the
standard operating procedures of the company. Clients greatly facilitated the use of these photographic
services. In general, this photography photographing people, either individually or together, in the studio.
Wedding photography and photographic coverage of the event are also included in the retail photography.
Actors in the field of commercial photography are a professional photographer, photography studio owner,
entrepreneur photography, school owner and a photography course, and photography bureau managers.
c. Art photography was coming from the encouragement of personal expression. This type of photography is
sometimes difficult to understand by ordinary people because the concept that needs to be understood and the
power of imagination is similar like painting. However, the photographic works of art also has a high value,
although not as high as the relative value of art paintings. Actors in the field of art photography among other
artists who use the medium of photography, art historian, art critic, curator, gallery manager (galleries), art
dealer, collector, and art conservators
d. Special photography is photography that used for specific industry or field of science and technology.
But in the creative industries, not all areas of photography above belong to the scope of photography in the
creative industries. Special photography more widely used in the fields of research and development, making it less
precise when incorporated into the scope of photography as the creative industries. Amateur photography does not
directly provide economic influence to the creative industries, but amateur photography has a role in building the
ecosystem of industry sub-sectors of photography, especially as part of the development environment. It can be
concluded that the scope of Indonesia's creative industries subsector includes photography is professional
photography, namely: Photography journalism, commercial photography and photographic art, which covers all
genres in photography.
3. Methodology
The study of defining photography sub sector as one of industry within Indonesia creative economy were using
literature review, in depth interview, and focus group discussion (FGD). The literature review that we use in this
study were coming from the previous document that published by Indonesia government, published material about
creative economy in the world, and specific books or paper about photography. In depth interview were conducted in
three months between April-June 2014, with the expert that we choose for interview coming from practitioner,
educator, and community. Focus group discussion was held between June and July 2014, we invited earlier expert
from in depth interview and additional member that known as stakeholder in photography industry. The number of
expert that coming to attend the focus group discussion is 10 experts. The FGD were conducted three times, the first
FGD to explore our understanding about photography as one of the sub sector in Indonesia creative industry and its
scope. Second FGD is to mapping the photography industry ecosystem and problem identification inside the
ecosystem. And the last FGD is to confirm the results from the first and second FGD.
4. Ecosystem in Photography Industry
To provide a comprehensive and in-depth understanding of the creative industries, especially in this sub-sector of
photography, it is necessary to map the ideal condition, a condition that is expected to occur and the best practices
from countries that have already developed the creative industry and its competitiveness, and the actual conditions in
Indonesia to understand the dynamics of creative industries in photography subsector.
Consume
Creative Chain
Public Access
Public Access
Develop Archiving Market
Public Access
Nurturance Environment
Appreciate
Fig. 1. Ecosystem for Creative Industry
Understanding between the ideal conditions to actual conditions can provide a big picture of the needs of national
creative industries so that the government can develop this industry properly, taking into account the potential
(strengths and opportunities) and problems (challenges, weaknesses, threats, and barriers) faced in developing the
creative industry in Indonesia. Ecosystem creative industries is a system that describes a relationship of mutual
dependence between each role in the creative process of value creation and the roles of the surrounding environment
that supports the creation of creative value.
To illustrate this interdependency relationship (figure 1), an ecosystem is consists of four major components,
namely:
1. Creative Value Chain as a series creation process. In every process, there is a major activity, support activities,
and a major role associated with each process occurs. In photography industry, creative value chain that happens
is the creation, production, and distribution.
2. Nurturance Environment is an environment that can stimulate and improve the quality of creative value creation
process, including:
a. Educational activities include: (1) formal education, (2) non-formal education, and (3) informal
education.
b. Appreciation, a response to the work of creative people and creative process. Appreciation can be
viewed from two perspectives, namely the appreciation by the market (consumers) and appreciation of
the people, the work, and the creative process.
3. Market (Consumer), the person or party who use photographic work or photography services.
4. Archiving, the preservation of creative works and documentation of the creative work that can be accessed and
utilized by all stakeholders (creative people, governments, educational institutions, businesses, communities,
and intellectual) in the creative industries as media ecosystem learning and literacy.
These four components have different roles and interact with each other so as to form a cycle in a creative
industry that can certainly be applied to the photographic industry subsector. Through this ecosystem expected value
creation process, activities and outputs of each process, and the role that involved can be mapped properly, so the
development plan will be made more systematic and focus.
4.1. Creative Value Chain
In the modeling of subsector photographic ecosystem, the approach taken in the creative value chain approach is
a commercial photography. This is due to the creative value chain of commercial photography are very complex, so
that each stage of value chain in this industry can be described as a whole. The model maps in the ecosystem also
could be used in explaining the creative process that happens in journalistic photography and art photography.
4.1.1. Creation process

Before the process of creation, research and studies can be done in advance as a supporting activity. Research
conducted may include identification of the client or target market identification. This activity can support the
creation process step due to the research data obtained will be more and more, so it is expected to produce more and
more new ideas. The model creation process is implemented using the design approach. Because of the design,
especially visual communication design, very strong influence in commercial photography that the message was
well received by consumers.
The process of creation can be done in 3 stages: ideation, design, and planning. Ideation is a creative process in
creating, developing, and communicating new ideas. This stage can be done by various methods such as
brainstorming, mind-mapping, forced association, and Synectics. After determining the photo concept, the next step
is the design phase. In the design phase including the following: (i) Statement of Intent, which is an affirmation of
what will be done. Here the photographer confirms what the early visual idea. For example, a photographer stated,
"I want to produce a portrait of a character who was chatting with street children in Bandung." Or for example give
a statement, "I want to make images that reflect the state that occurs when the floods hit Jakarta's population, and
how residents helping each other with each other." (ii) Sketch, which is the stage where the photographer drew this
sketch with descriptions and notes on what and how the photo will look. Sketches can be done by hand or using a
computer graffiti. In different role, a statement of intent is to give a verbal description and the sketch will give an
overview of the raw visually (iii) Determine the elements and principles of design. In this stage photographer, record
a list of the elements and principles of design that will be used in the shooting (iv) Symbolism, photographers can
also use objects or elements that can strengthen and help communicate the message to be conveyed.
Last stage is planning, that include planning for: time or scheduling, lighting, the location, equipment and
supplies (equipment list), allocation of funds (budgeting), a model, and particular item. The output can be obtained
from this creative process is a design draft concept of the photo shoot that produced the design stage and document
the shooting plan resulting from the planning stage.
The process of creation in commercial photography done by creative people, who in this case than can be done
by the photographer, can also, be carried out by a creative director or a creative team of an advertising agency. In
commercial photography, the creative process is conducting in advance discussions about draft of the shooting.
Discussion conducted by two parties, namely, service users and photographer. The concept of shooting can be
submitted by either of the two sides. And then if there was an agreement, then the concept of production must be
agreed upon. This is slightly different to the commercial photography business that is retail such as a photo studio.
In the retail products such as photography family photo shoot in the studio, or wedding photography, the creative
process has been carried out by business owners with creative people in the company. Thus, the customer or client
can directly select the concepts that have been provided by the photo studio without having to think about the
concept from the beginning again. Business owners usually have to standardize the concepts of shooting in a
standard operating procedure (SOP). Photographer who became employees in the retail photography business
shooting usually only follows the procedures that have been defined in the work.
Careful planning basically is much needed in photographic journalism, although the preparation is not as
complex as commercial photography. In this photography, planning is required by the photographer to anticipate the
events that may occur at the site of the shooting. Therefore, the conditions at the location shooting cannot be
controlled as well as in the studio. In the art of photography, the photographer is the main actor in the process of this
creation. The idea and concept is owned by an artist photo and it is the most important thing of photographic art.
4.1.2. Production
In the production phase, plans have been made to mature in the creation phase will be executed one by one.
Production stage can be divided into 3 parts, namely, pre-production stage, production stage itself, and the
postproduction stage.
Preproduction phase is the preparation phase before production. At this stage, various permits such as location
permits, a model release and property release had to be resolved; photographic equipment needed already borrowed
or rented; makeup artist, hair stylist has been contacted and the contract has been agreed upon; and costumes have
been prepared. After all the preparation is complete, the next stage is production. In this phase, sometimes the
execution is carried out is not as smooth as planned. External factors can affect the sustainability of production. The
weather changed suddenly incompatible forecasts, accidental damage to equipment and other non-technical things
that can cause delays stages of production. For that there are times when photographers do experiments and
modifications to the concept in the middle of shooting. And when do the changes in the concept of the photo shoot,
of course, it must be communicated to the client.
Basically in digital photography, after completion of the production phase is the photos already can be obtained
in the form of digital data. Digital photos can then be directly distributed to digital media such as online news
portals and social media. The same thing happened to Polaroid photography that the picture can directly be
instantaneous because of the type of film that can be printed instantly. In general, postproduction stage is necessary
in stage of the production process of photography. Postproduction stage may include: a review of all the images and
the selection, provision of detailed records shooting, providing technical notes, refinements, editing, and provision
of annotations.
4.1.3. Distribution
Distribution stage is the stage of submission of the work of the photographer to the client, or the opening stage
public access to the photographs. In this stage photographers can submit their work in 2 forms. The first is in the
form of digital data. Photos in the form of digital data can be stored into the storage media such as CD / DVD, hard
disk, flash disk, or can also be sent via email or file-sharing media on the internet. The second is in the form of
prints such as photographs, photo albums, posters, flyers, or photos that have been framed.
Basically the photo works of various genres of photography can be presented at a media presentation (display) of
any kind, but there is a tendency that certain photographic stream only displayed on certain media presentation
anyway. With the development of information technology today, photographers can sell their work through the
personal website or websites that provide space for the photographer to be promote their work. For the amateur
photographer or a beginner, presentation work can be done through social media such as Facebook, Flickr,
Instagram, and 500px.com. This is to attract the people closest to them, or even people who are not previously
known to be able to see and enjoy the results of their photos. In today's Internet era, through social media these
talented amateur photographers can start developing his photography business to the professional stage.
4.2. Market (Consumer)
Consumers in subsectors of photography can be divided into two major groups, namely companies or
organizations, and individuals. Consumer companies usually come from the media industry, advertising industry,
commercial industry, and other industries that require photography services. Individual consumers are divided into
general and special consumer. Special consumer is a consumer expert, galleries, photo collector, and museum. A
gallery even is willing to pay high enough for buying a high-value photograph. Currently works photo that has the
highest price is the work of Andreas Gursky belong titled "Rhein II," which was made in 1999. His work sold for
$4,338,500 in 2011 by Christie's auction house in New York.
4.3. Nurturance Environment
4.3.1. Appreciation
Appreciation can be done in 2 ways, namely, through photography literacy and through the recognition and
appreciation for the work of the photographers. If the function of literacy is to develop photography from the
consumer side, the recognition and appreciation of photography is to develop the creative side. Literacy in
photography is the ability to understand, analyze, create, and use of, or taking a photo. Literacy photography for the
community to have a function as a system controller photographic content (especially for children), improving the
quality of public photography in public space, and can appreciate a photo as the work of a photographer.
In addition to increase public literacy on photography, appreciation also serves as a form of recognition and
appreciation to the photographer on creative work. This is done so that the spirit and the desire to work from the
creative people in the field of photography this can be maintained, thus increasing the quantity and quality. Awards
and recognition for photographers can be done in several ways: competition or photography contest, giving the
award, provision of photography degree, exhibition of photography, book of photography, and copyright.
4.3.2. Education
Education is one important element in the value chain, through the education of photography as competent
photographers born. And to support the competence of the professional in subsector photography, educational
materials is required so that a comprehensive photography education provision can be applied in the real world. In
higher education, schools of photography in developed countries like the United States, there are three aspects of
education taught in photography education. These three aspects are (1) knowledge of discourse in photography
whether it is related to art, design, technology and history, (2) technical knowledge about photography, and (3)
professionalism.
In addition to formal educational institutions such as vocational schools and colleges, there are also non formal
schools of photography in Indonesia, i.e. Indonesian School Nikon, Canon School of Photography, LaSalle College
International, Indonesia School of Photography, and Darwis Triadi School of Photography. Nowadays there is a
trend that the photographers who have been successful in the field of photography began venturing into the business
of photography education by offering short classes photography, workshops, and seminars. This could be an
alternative container for aspiring photographers to learn photography without going through formal education.
In addition to formal and non-formal education, photography can also be studied with informal learning. This can
be done by self-taught through apprenticeship in a company or business photography services, read from the media
and the internet, to follow the activities in communities photography. The role of the internet is very helpful in the
process of photography education. With the wide variety of photography tutorials are packaged in various forms
(text, images, audio, and video) on the internet. Novice photographer or someone who wants to learn about
photography can choose the method and form of tutorials which according to their interest.
4.4. Archiving (Archiving)
In today's digital era archiving can be done in various forms and ways. The works of photos can be stored either
in the form of data or in printed form. Archiving in the form of data can be done by storing it in the CD / DVD, flash
drive, hard disk, or memory cards. Besides stored in physical form, the photographer can also store it in photo
sharing services on the Internet such as Flickr.com, 500px.com, Picasa, Instagram, Facebook, and others. In the
United States, the one that responsible is US National Archives and Records Administration. Archiving is also done
by the academics through a library owned, or by the private sector.
One of the national institutions that perform functions of archiving images, especially in photojournalism, is the
Gallery of Photography between Journalism (GFJA). GFJA is non-governmental organization which is owned by
Antara news agency. In terms of photo restoration, GFJA has been helped by Japan and the Ford Foundation to
restore old photographs owned by GFJA. Not only archiving, GFJA also organizes trainings photojournalism. In
Indonesia, government agency that does archiving photos is the National Archives of the Republic of Indonesia. In
addition, we can find historic photographs in museums in Indonesia, such as in the National Museum of Indonesia in
Jakarta, National Monument in Jakarta, Asian-African Museum in Bandung, Fort Rotterdam Museum in Makassar,
and others. Because of the archiving location were scattered, it make us realized the need for archiving institutions
for photography in Indonesia. The institution can also serve as knowledge management center to facilitate
stakeholders to work together in promoting photography in Indonesia.
5. Conclusion
Developing photography industry in Indonesia is still continuing. The common understanding about this industry
should be socialized to the stakeholders and the communities. This study shows different perspective in defining the
photography and its scope. The ecosystem shows there are four areas that we should consider in understanding
photography industry, which are: creative chain, market, nurturance environment, and archiving. Those four has
their own problems but they are very important in developing photography industry. Therefore, this study will help
Indonesia government to focus, make priority, and help government and player in photography industry in
developing photography subsector.
Acknowledgements
Ministry of Tourism and Creative Industry, Indonesia.
References
Datta, R., Joshi, D., Li, J., & Wang, J. Z. (2006). Studying aesthetics in photographic images using a computational approach. In Computer
Vision–ECCV 2006 (pp. 288-301). Springer Berlin Heidelberg.
Inanici, M. N. (2006). Evaluation of high dynamic range photography as a luminance data acquisition system. Lighting Research and Technology,
38(2), 123-134.
Kiprin, B. (2013). Go Selfie Yourself!.
Monteiro, R. H. (2007). Art and science playing on the margins. On the discovery of photography in the 19th century Brazil.
Sharples, M. (2000). The design of personal mobile technologies for lifelong learning. Computers & Education, 34(3), 177-193.
12 – 14 August 2014
A New Dynamic of Innovation System

Based on Local Competitiveness in Emerging Region in Indonesia:
The Case of Cimahi City
Lutfah Arianaa*
a
Center for Science and Technology Development Studies, Indonesian Institute of Sciences,Building A PDII 4th floor,
Jl. Gatot Soebroto Kav 10. Jakarta, 12720, Indonesia
Abstract
To be competitive, every region needs to be creative. Since the government launched a promising agenda towards Creative
Economy in 2008, there are many emerging regions transform into a new outlook of innovation system. One of the current
policies, Regional Innovation System, has been launched to generate local competitiveness of every region in Indonesia.
However, every region has its own understanding and choice in determining what kind the best practices of innovation system.
This paper will focus on the innovation process and creativity based on industrial cluster development of region-city in Cimahi,
West Java. As an approach of new policy in regional development, cluster has been widely introduced in emerging economies,
especially related to readiness of a region in accelerating its local competitiveness in globalization era. This paper will also
identify the "local factor" as indigenous factor for the region in building innovation system and propose a new recommendation
for the local government in initiating local competitiveness based on cluster approach. By having in depth interview with several
key factors including government, industries, and societies, this paper will focus on regional dynamic capabilities including
leadership capability, network capability, and visionary capability. These capabilities Various problems differ in term of
government understanding in building a new framework for the implementation of such policy. Some impediments are also
analyzed since there is still arising problems in developing a new paradigm in this field.
Keywords: regional innovation system; cluster; innovation; region; competitiveness
1. Introduction
In current globalization and knowledge-based society, every region must be prepared to face highly competitive
environment by encouraging creative economy from its potential resources and intellectual assets. In this emerging
E-mail address: juffrow@yahoo.com
184 Lutfah Ariana / IICIES 2014 Proceeding
economy, Indonesia has shifted towards decentralization system that provides a new way for local government to
initiate its local development. One of the policies related to propose local economic development in Indonesia is
innovation system.
In recent, issues on innovation systems indicates that the region plays an important role at which innovative
capacity is created and economic activities coordinated and governed (Carlsson et al., 2002). Even though the
concept of national innovation system (NIS) and Regional Innovation System (RIS) were developed in 1980s-1990s,
the discussion over the years has been limited on theoretical and concepts of innovation policies (Chung, 2002). In
fact, the first national innovation system policy in Indonesia has been initiated in the early 2000s, it reflected that the
government is still in the process of finding the appropriate building of NIS based on the context of Indonesia.
There has been a shift of paradigm on innovation, from perspective of linear sequential into dynamic and
interactive-recursive model, that is the driver for long term growth by emphasizing the interaction of many actors
and social learning, and also balance development policy between national and regional level (Taufik, 2007).
Therefore, NIS couldn‟t be implemented without the contribution of regional actors as the counterpart. According to
the strategic aspect of regional development in supporting the success of innovation policy, this paper will focus on
Regional Innovation System (RIS) that has been initiated in an emerging regions as a response of NIS policy. RIS is
defined as interacting knowledge generation subsystems, consist of public and private research laboratories,
universities, technology transfer agencies, vocational training organizations and exploitation subsystems that
understood as the regional production structure (Cooke, 2004a, p.3).
In this context, this paper aims to map out the current of innovation system at the level of city, and also
understand the support of national policy on the regional innovation system. One of the implementation of RIS is the
growing of industrial clusters in several regions as centers of innovation and knowledge-transfer. As Porter stated in
his seminal works that the establishments of diamonds clusters will provide competitive advantages for the region. In
further, Asheim et al (2010) also commented that the specialization of firms in a phase of production are regarded as
Marshall‟s localization economies. In this case, the introduction of decentralization system in Indonesia has provided
regions to create its local policies and development goals. However, several studies concluded that the new stream of
development still creates disparities in social and economic among regions (Resosudarmo and Vidyattama, 2006;
Akira and Alisyahbaha, 2002).
Most recently, factor of “locality” is considered to be very important in developing competitive advantage in
many regions. Therefore, regional economic development or local economic development should be based on the
best of local potential resources and it needs a strategic focus that will be a collective agenda for synergizing its
multi-stakeholders. Another condition in viewing the importance of local competitiveness in RIS is related to lack of
readiness and capacity of the local economy in benefiting economic values for the societies. Regional government is
a key actor in initiating the implementation of RIS and responsible in engaging of local development through making
policy decision of innovation system. In the case of autonomy, the regional governments have authority to create and
develop their own regional innovation system that appropriate with their specific condition. In fact, there is some
regional governments follow-up the policy of innovation system, and a few of them could be succeeded in
developing ecosystem of innovation in their local development. Most regional governments initiated the acquiring
condition in building regional innovation system by building industrial cluster development that emphasizing the
local resources.
Policy on regional innovation has been introduced in RPJPN Year 2005-2025 in order to support the local
competitiveness of regions based on knowledge economy. Therefore, this paper will analyze the creating process of
innovation and local creativity of regional government in responding the RIS policy in term of their capability in
innovation. As a lesson learned, this paper will focus on the implementation of RIS policy of city level. By having an
analytical study, this paper is attempted to identify determining factors of innovation system in regional competitive
development based on its dynamic innovative capabilities.
Following the arising problem, this paper is organized as follows: the first section revisits policy context on RIS,
cluster industries, and case studies from advance countries. In the following section the paper explores these
concepts implementation in Indonesia perspectives by providing two case studies and how it progress over time. The
final section addresses research summaries and possible actions to accelerate Indonesia's regional innovation
systems.
Lutfah Ariana / IICIES 2014 Proceeding 185
2.1. Policy Context of RIS in Indonesia
Policy and regulation are the most dynamic factors influencing innovation system. They are the main gate for
political interest to intervene innovation system, could be either positively or negatively. Ratchford and Blanpied
(2008) argued that in many ways competence in science and engineering is the „controllable‟ driving factor. Policy
framework, stable governance, and military power are boundary conditions. They are necessary but not sufficient for
sustained economic growth. But these boundary conditions can help assure a flourishing economy driven by science
and technology (S&T), if correctly structured (Lakitan, 2013).
There are several stakeholders in making decision of S&T policy in Indonesia. Initially, S & T law requires the
National Research Council (NRC) to advice the government in formulating S & T development strategic policies. It
also requires the regions established regional research council/RRCs to advice and to assist regional government in S
& T and innovation system. However, as Taufik (2007) argues, despite the advancement and readiness of legal
documents and research publications, Indonesia‟s innovation has not been a consensus systematic and policy
framework. The documents has not provide clear innovation policy framework that integrate stakeholders (sector-
wise and region wise). As such, a tangible and coherent national-regional and cross-sectoral dimension of innovation
system has not present in Indonesia‟s effort (Aritenang, 2012).
According to the governance of innovation activities, there are 19 RRCs at the provincial level and 5 local
agencies that act as RRCs (Aritenang, 2012). These centers are guided and advocated by several central science and
technology of government institution such Agency for Assessment and Application of Technology and Indonesian
Institute of Sciences. The aims of this centres is providing regional establishment including visions, local expert
recruitment, and network with local government. However, field surveys reveals that these local research councils
has not act as its purpose, advisory and guide for technology and innovation activities, because of the limited
expertise and skill of the members and the unclear relation with the innovation actors (Aritenang, 2006).
2.2. Regional Dynamic Capability
As mentioned in the background, the building understanding of RIS in Indonesia‟s context is started from the
innovation process of local region and creativity of the players in optimizing the local resources. The dynamic
capability of this region is shaped or determined by some factors, includes (i) history which is path dependency as a
key factor influencing future trajectories; and (ii) regional assets and resource configurations.
In further, these factors will be categorized into five dynamic capabilities that are identified as being important in
developing regional dynamic capability: (i) innovative capability; (ii) learning capability; (iii) networking capability;
(iv) leadership capability and (v) visionary capability. First, regional innovative capability means the joint
innovation capability of the enterprises and other supporting organisations in the region. The key link here is
learning, where the ability to learn is decisive for the economic success of individuals, firms, regions and nations.
Secondly, regional learning capability can be defined as an RIS‟s ability to create and manage knowledge in a
collective, interactive and cumulative learning process leading to new settings of resources, competencies and skills.
It relies on network capability as a strategic tool to distribute knowledge and continuous learning of network‟s
actors. Next, regional networking capability emphasizes RIS‟s ability to build interactive networks including field-
specific creative social capital leading to effective utilisation of the resource configurations in the networks.
However, path dependencies can create damaging effects, called as „lock-ins‟ that can prevent the desired
development processes. According to Grabher (1993, in Mc Call, 2013), there are three recognised kinds of „lock-
ins‟ in a regional context: functional; cognitive and political. In this case, the role of leadership is decisive when
preventing „lock-ins‟, because it could influence actions steering the processes and resources of the system in the
desired direction and avoiding harmful „lock-ins‟. „Lock-ins‟ are a real challenge because the knowledge economy
challenge regions – so heavily dependent on their past – to have to continuously make new decisions whilst insecure.
This insecurity can be reduced by using resource-based futures research and visionary capability. Visionary
capability refers to an RIS‟s ability to outline the possible potential development trajectories based on the paths
travelled and utilizing the opportunities emerging through the changing techno-economic paradigm.
In this paper, the stressing point of the competitive advantage of a region is limited to its visionary, networking
and leadership processes, shaped by its specific asset position and the paths available to it. The following variables
are used to describe the three dynamic capabilities need in the regional development:
Table 1. Elements of Regional dynamic capabilities

Visionary Capability Leadership Capability Networking Capability
Initiative activity Combining different opinions Choosing external partners
Visionary thinking Hierarchical methods Building trust relationship
Innovativeness Centralized management Increasing interaction
Customer orientation Sticking to decisions achieved together Creating a suppotive atmosphere
Decisions achieved together Internationalization
Specialization
Cooperation
Community
Honest activity
Sources: Pihkala et al., 2007
The processes should lead to building regional capabilities, competences and core competences based on regional
resources, in order to enhance a sustainable competitive advantage.
2.3. Case Studies of RIS in Other Countries
Generally, various studies on innovation systems are dominated from developed countries. In Germany, GRDP
per capita is 34% higher than European Union average of 100 because of the generation of regional economy
system. Most leading companies included automotive, electronic, and mechanical engineering have driven a
collaborative system among core industry, suppliers, universities, research institutes and technology transfer centers
(Cooke, 1996 in Aritenang 2012). As results, it could reveal the emerging institutional industries such as promotion
and finance to support innovation performances.
Another case study from the UK shows that innovations in the country are led by business activities. Different
cases of emerging innovation arise in the case for Yorkshire and Humberside, and there is diversity of innovation
networks and structures. Another region, Strathclyde, likely creates their innovation by promoting internalization of
innovation process in company level. According to Thomas (2000), the common approaches of these regions are the
local government's commitment to culture of innovation and entrepreneurship, the upgrade of ICT infrastructure, and
identify regional universities as the main sources. In brief, there are several points of innovation driver of RIS in
UK; collaborative networks, common awareness in enhancing the role of university and spin out companies, the
application of R&D results for SMEs through knowledge transfer and innovation cultures, and also business
activities that emphasize manufactures, suppliers, customers and supporting agencies.
3. Methodology
Innovation system can be explained by describing the actors and the interaction process among them. It requires
specific information about the key players which is not only exist in the system but also arises from other system. In
order to analyses the working process of innovation system in regional level, this study will perform a qualitative
study based on case study. Case study conducted in the Cimahi City region in West Java is used as an empirical data.
We choose this region suggested by Agency for the Assessment and Application of Technology (Badan Penerapan
dan Pengkajian Teknologi – BPPT) in which this region has been considered to be committed implementing the RIS
policy and directly guided in the process of development by central government (BPPT). In depth interviews with
regional and local governments provided first-hand material concerning RIS policy in city level. Answer reliability
may vary according to the type of question asked. In some cases, problems arise when the informants did not
correspond to the profile requires by the topic researched. In fact, general misunderstanding between interview
participants around the goals of the research resulted in a serious bias. In order to reduce such bias, we conducted
extensive interviews with key informants and collected data from secondary sources. In the following sections we
show the sample characteristics and some preliminary results of the analysis.
In addition, we also investigate the behaviour of regional government in responding RIS policy towards strategic
planning of innovation system and industrial cluster development, and how they develop partnerships in enforcing
the regulation. These interviews represented a further step in order to deepen our knowledge of these processes. We
also visited the actors of innovation that is Cimahi Creative Association (CCA) that consists of local firms in ICT
sectors especially telematics and animation.
Research instrument has been structured based on different key informants (local government, firm, association).
The main point is included in the following sections: the background initiated RIS policy, legal framework,
development planning map in S&T and innovation program, operational policy, and RIS profile (actors and
network). For local firms, the questions emphasized innovation activities includes dynamic innovation capabilities,
firm production activity, the evolution of the innovative behaviour and cooperative relationship for a specific
innovation, and also their linkages with government, customers, suppliers and other organisations (universities,
research centers, etc).
Arising regional innovation system in some regions in Indonesia is initiated by some national policies such as the
National Medium Term Development Plan (RPJMN 2010-2014), the National Spatial Plan (RTRWN) from 2010 to
2030, and the Master Plan for the Acceleration and Expansion of Indonesian Economic Development (MP3EI)
2011-2025. The main aim of these policies is to encourage the economic development in every region for promoting
high local competitiveness. With various complexities of multi-sector and multi-facet perspectives, regional
competitiveness development rests on the potential need and other aspects that support the growth of local industries.
In addition, the introduction of linkage between industries in the district will be the key success factors of
competitive regional development. The role of industries will also be very important especially in enabling an
increase in value added of existing resources in the region.
Joint Decree between Ministry of Research and Technology No. 3 of 2012 and the Ministry of Home Affairs No.
36 of 2012 on Development of Regional Innovation System "instruct" every local official to design the economic
development of the region based on regional innovation system. There is a strong message that the development of
innovation is an appropriate strategy for the region in general. The region is chosen to be the focus of the executor of
policy implementation at the micro level, as well as direct contact with the public and users of science and
technology as well as community that spread across the region. As been explained by Sulaiman (2007) that "local" is
now growing and played a key role in development. This is certainly an important change for the development of
science and technology in the future.
To analyse the dynamics of local competitiveness on regional development, this section identify a case study of
Cimahi city-region using qualitative data of RIS practices.
4.1. The City of Cimahi
Cimahi City is one of the emerging local economies in West Java. Iniatiated in 2002, by amount of population
597,317 people placed at 4,036.45 hectares with less natural resources, this city emphasized the potential human
resources especially in developing creativity for the future. By the limited resource of land, a range of local
government in Cimahi City into sub-districts are relatively short, the average is 1-2 km. Cimahi is at a strategic
location and is located at the intersection of the path of regional economic activity and the core city of Bandung
Raya. This region-city is adjacent to the capital of the province where the distance to the provincial capital of only
10 km. This condition also encouraged the local government of Cimahi City to realize a city based on creative
industries.
As part of her mission, Cimahi City generates economic development based on the local wisdom and cultural of
the societies. In promoting the purpose of local economic development (LED), the local government build up the
economic capacity of the local area to improve its economic future and the quality of life for all (World Bank, 2013).
LED in Cimahi City is encouraged by integrating the sectoral approach and location approach. This approach is well
known as industrial cluster (Porter, 1999). The development of economic activities based on location is necessary for
different regions in Cimahi City because each of them has different characteristics. For example, Sub district of
South Cimahi is dominated by manufacturing sectors (Table 1), while sub-district of Central Cimahi is mainly
dominated by trade and service sectors. Another region, sub-district of North Cimahi, the economic sector that has
been emerged is agricultural sector.
Table 1. Contribution of local sectors in Cimahi City base on constant price, 2007 – 2011
2007 2008 2009 2010 2011
No Sector Billion Billion Billion Billion Billion
% % % % %
Rp Rp Rp Rp Rp
1. Agricultures 8.87 0.16 9.24 0.16 9.64 0.16 10.10 0.16 10.07 0.15
2. Mining - - - - - - - - - -
3. Manufacturing 3,462.99 61.41 3,597.31 60.89 3,729.34 60.33 3,832.25 58.87 4,019.59 58.50
4. Electricity, gas, and clean 210.00 3.72 213.90 3.62 225.42 3.65 240.01 3.69 251.64 3.66
water
5. Construction 348.60 6.18 365.17 6.18 385.89 6.24 406.54 6.25 423.94 6.17
6. Trade, hotel. And 1,083.34 19.21 1,164.51 19.71 1,243.90 20.12 1,397.54 21.47 1,502.10 21.86
restaurant
7. Shipment and 86.60 1.54 91.08 1.54 95.78 1.55 107.98 1.66 120.54 1.75
communication
8. Finance, rent and company 108.35 1.92 119.42 2.02 128.69 2.08 141.66 2.18 149.97 2.18
services
9. Other services 330.16 5.86 347.44 5.88 362.74 5.87 373.24 5.73 386.55 5.63
Gross regional income 5,638.91 100 5,908.07 100 6,181.40 100 6,509.31 100 6,871.22 100
Source: BPS Kota Cimahi-PDRB year 2010 - 2012
According to World Bank study in 2011, there is four potential industrial cluster in Cimahi City that should be
developed, includes:
1. Industrial cluster in textile and textile products (fashion)
2. Industrial cluster in food and beverages
3. Industrial cluster in handcrafts
4. Industrial cluster in telematics (telematics and animation industries)
These clusters are parts of sub-sector of creative industries that has been defined by Ministry of Trade and
Industry guided in the Road Map of National Creative Industry in 2008. Therefore, in order to develop creative
industry in Cimahi City, the selected approach is driven by industrial cluster. The initiative of local leader of Cimahi
City to build creative economy is supported by the mission of central government towards Knowledge Base
Economy since 2008. Synergizing all the actors in these clusters is needed to improved the value chain of the
economic sectors (Lesego Herr, 2007) started from downstream until upstream sectors.
Instead of identifying the potential clusters, Cimahi City also cooperated with BPPT to create RIS document in
2011. Eventhough the generation of RIS policy has been committed in the document, government of Cimahi City
has not assigned for the formal regulation on RIS because they consider some supporting institutions should be
firstly completed. As the consequence, this document is realized as the draft of Regional Innovation Strategy. This
statement is completely different from RIS policy in other regions, in which most of them stated as Regional
Innovation System.
According to this document, Regional Innovation System is defined as a set of collective actors, institutions,
interactions, and productive process that drive the direction of development and innovative acceleration, and also
learning process in Cimahi City. This document is expected to be a basis for other referred documents and it could
be used for the direction of enforcement and development of innovation in improving local competitiveness of
Cimahi City. In its implementation, RIS will need a high participation of all stakeholders including universities,
government, industries, and societies in Cimahi City to achieve the goal of RIS. In particular, the existing document
of RIS mentioned to support the policy for local government in promoting industrial cluster development especially
animation and film cluster, e-government development, and e-society and also the transformation of innovation
culture in sub-district of Cirendeu.
In recent years, Cimahi City has 400 creative industries driven by various sectors. Out of this number, 67
industries are focus on telematics. Unfortunately, the document arranged in 2011 is still projected for development
of one industrial cluster which is telematics including animation and film in Cimahi City, whereas other clusters are
still in continually designed. The existing document covers sectoral level and has not included development strategy
for other industrial clusters such as food and beverages (cullinary) cluster, textile and textile product cluster, and
craft cluster (World Bank Jakarta, 2011).
One supporting condition created by the local government to foster the telematics cluster is the establishment of
Baros Creative Cyber City Building which projected as a locus of expertise community in ICT sector as well as a
catalisator for the growth of creative industries in ICT sector. Instead of universities, another establishment in human
resources of ICT sector is also emphasized for vocational graduates such as broadcasting. A recent agenda held by
Cimahi city goverment to attract business sectors, governments, students, academician and societies is called Baros
International Animation Festival 2013 (BIAF). This event received widely respons from many countries to join and
to share various knowledge and experiences related to the state of the art in animation and film.
4.2. Dynamic Capabilities and Local Development of Cimahi City
Cluster is defined as a concentration of a business cooperation and business unit, other supporting and related
industries in a certain region. The driver of regional development is based on cluster in industrial sectors. The
successful of cluster in a region is identified from its specialization. In this case, Cimahi city is constructed for
specific clusters based on World Bank study in 2011.
Another condition to be the indicator of successful region in building industrial cluster is the existence of local
networks especially production system networks, and learning networks. Instead of these requirements, human
resources with high skill and knowledge will generate more innovative ideas. A good access to financial institution,
an open cooperation between local firms and other institutions have been also initiated by local government of
Cimahi City by building a new facility that comprehend the objetives of innovation system. Since 2011, after two
years in progress, the Baros Information and Technology Center (BITC) has been supported by several ministries
such as Ministry of Research and Technology, Ministry of Industry, Ministry of Education and other institutions
especially for the infrastructures and information access.
Regional development of BITC is expected to become a brand image for the local identity of the city.
Development strategy of telematics and animation cluster is oriented to generate a new business (start-up firms)
which will attract investment in Cimahi. In case of telematics and animation cluster, the government has already
initiated to give training for start-up firms through business incubators and giving priority in administrative
licensing. This cluster has been managed by special community so called Cimahi Creative Association (CCA)
comprising the local ICT industry, students and societies.
The model of innovation capability developed in this paper is shown in Fig. 2. The model assumes that the
organisation is focused on innovation and innovation outputs as their primary competitive strategy. These framework
conditions substantially affect innovative activities of companies. The relationship between RIS and cluster is
concerned based on the theoretical framework which emphasizes the interactive system which includes four clusters
that can be regarded as a realization of RIS. In other words, RIS makes industrial cluster to be competitive by
offering socio-cultural and institutional environment.
There has been a close relationship among major actors in the governance. For example, the meetings of the
committee were active, regular sessions were held several times and focus group discussions were held two times in
2011. It could be interpreted that network among major actors in RIS has successfully established. Moreover, there
was an intermediary actor from the central government, BPPT. It seems that not only the local government who
initiated, but also is encouraged by the central government. They become aware of the necessity of the horizontal
network because the importance of RIS in generating local competitiveness of the region.
Global and national

resources
Networking
capabilities
Innovation
capacities
Resources Leadership Competitive
capabilities advantage
Distinctive
knowledge
Visionary pool
capabilities
Local resources
Fig. 2. The Capability Model for City-Regions

(Source: Sotarauta, 2007)
5. Conclusion
From the case study above, Indonesian national and innovation system can be seen as follows, first, limited
understandings of policymakers and stakeholders, which renders their capacities in designing strategic policies in
innovation. Second, disintegrated innovation system polices and efforts that leads to gaps between innovation phases
among regions and unclear national innovation strategies. Third, poor innovation system database and indicators to
monitor, assess, and evaluate as feedback from policies.
By industrial cluster approach in the framework of Local Economic Development, it could be expected to create
diagonal inter-connection among different industrial clusters and vertical and horizontal cooperation among creative
sectors (ICT and animation) for every industrial cluster (intra-industry cooperation). Related to the development of
industrial cluster of textile and textile products, development process of telematics and animation cluster could
become the driver for the emergence of other potential industrial clusters in Cimahi City.
Acknowledgements
The present study was carried out with the financial support of the Center for Science and Technology
Development Studies, Indonesian Institute of Sciences. A special acknowledgement for the team of DIPA
PAPPIPTEK 2014 with research project entitled "Policy Analysis on Regional Innovation System" in 2013 for the
support in giving permission for further analysis.
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Abstracts of Publication in
ELSEVIER
Procedia – Social and Behavioral Sciences
ISSN 1877-0428, Vol. 169, Pages 1-410
12 – 14 August 2014
A Framework of Affiliation Partnership between Univesity, SMEs,

and Business Sector: A Case Study of PKBL Telkom, Indonesia
Kristina Sisiliaa *, Yahya Peranginanginb, Retno Setyorinic, Nadya Moelionod
1
abc
Business Administration Program, Telkom University (Tel-U), Bandung, Indonesia
d
Content Business & Data Analysis Research Group, Telkom University (Tel-U), Bandung, Indonesia
Abstract
Increasingly, university continues to seek collaboration opportunities with external parties, industry or business and
Small Medium Enterprise (SME) community, to understand and implement research and knowledge were taught in
college and how it can solve real problems in economic and social environment. The collaboration makes both
parties stronger and university can play a greater role outside campus traditional activities. Partnership between
Adbis Telkom University (Tel-U) and CDC Telkom is to help PKBL Telkom addressed problems, identified and
proposed solutions. PKBL Telkom has a function to deliver Telkom‟s CSR funds to finance thousands of their
assisted-SMEs in Indonesia. Adbis Tel-U will propose a partnership affiliation framework that assist PKBL Telkom
can do feasibility analysis and application assessment more accurate, effective and efficient. The study will used
information from executives of CDC Telkom‟s interviews that oversee all activities at PKBL Telkom units. The
analysis will present a usage of crowdsourcing method and Understanding by Design (UbD) curriculum framework.
The results of this research can be beneficial for university (Adbis Tel-U) and PKBL Telkom in helping them
enhance their loan approval processes for new candidates‟ applications and loan payment collections from their
existing SMEs tenants.
© 2014 The Authors. Published by Elsevier Ltd.

Peer-review under responsibility of Center for Innovation, Entrepreneurship, and Leadership (CIEL), School of Business and
Keywords: partnership; curriculum; crowdsourcing method; affiliation; framework
E-mail address: kristina@telkomuniversity.ac.id
195
12 – 14 August 2014
Moderation Effects of Entrepreneurial Self-Efficacy in Relation

between Environmental Dimensions and Entrepreneurial Alertness
and the Effect on Entrepreneurial Commitment
Nur Khusniyah Indrawatia *, Ubud Salimb, Djumahirc, A. Helmi Djawahird
2
abcd
Faculty of Economic and Business, Brawijaya University, Malang, Indonesia
Abstract
The research aims to examine the effects of environmental dimensions on entrepreneurial alertness, as moderated by
entrepreneurial self-efficacy and its impact on entrepreneurial commitment. Study population was SMEs in Malang at start-up
phase. Sample was chosen by purposive method with amount 26 SMEs. Data was collected by a questionnaire research
instruments. The General Structured Component Analysis (GSCA) was used to analyze the data to overcome disadvantages of
small samples. The research results showed that only environmental complexity and entrepreneurial self-efficacy affect on
entrepreneurial alertness. Effect of environmental complexity was greater than entrepreneurial self-efficacy. The study also found
that entrepreneurial self-efficacy not as moderator, but become a predictor the relationship between environmental complexity and
entrepreneurial alertness. Entrepreneurial alertness affect on entrepreneurial commitment, but in opposite direction. It means
higher entrepreneurial alertness will lower an entrepreneur identifies with and was engaged in new venture creation.

Keywords: environmental dynamism, environment complexity, environmental munificence, entrepreneurial self-efficacy, entrepreneurial
alertness, entrepreneurial commitment.
* Correspondence author.
Email address: nurkhusniyahindrawati@yahoo.com
196
12 – 14 August 2014
Barriers in Implementing the Lean Startup Methodology

in Indonesia – Case Study of B2B Startup
Michael Dwianto Nirwana *, Wawan Dhewantob
3
ab
Abstract
Entrepreneurship has been everywhere in the world. From developed countries till developing ones, new businesses have
emerged in a huge number and likely to grow exponentially within time. However, we also notice that there‟s also a lot more
businesses that couldn‟t survive or even come off the ground.
In that case, a new study has been emerging about how to succeed in developing a business idea. It‟s called the lean startup
methodology (LSM). LSM is a methodology that focuses on agile testing and learning cycle to validate hypotheses in the business
idea. With LSM, a lot of companies in United States has succeeded and be well known all over the world. It‟s also been adopted
all over the world as it has slightly acknowledged as the solution to the fear of business failure.
Nevertheless, the methodology may seem obvious and well implemented in developed countries such as the United States, but
how about in developing countries where it‟s only getting in heat for its entrepreneurship to raise like Indonesia. This paper‟s
purpose is to explain and explore the lean startup methodology and its barriers of implementation in Indonesia so in the end could
give recommendations to entrepreneurs for a better chance of success. The research methodology would be by identifying the key
barriers of each lean startup principle and exploring it in a case study analysis.

Keywords: barriers; lean startup methodology; B2B; startup
E-mail address: michael.dwianto@sbm-itb.ac.id
197
12 – 14 August 2014
The Analysis of Communication between Friends on Social Media

towards Purchase Intension (A Study Case of Companies in
Entrepreneurship Project of President University, Bekasi, Indonesia)
Bion Aldo Syarief Sa, Genovevab * 4
ab
Management Study Program, President University, Jl.Ki Hajar Dewantara, Jababeka, Cikarang, Bekasi 17750, Indonesia
Abstract
Communication via social media to be one of the trend in recent years, especially among college students (Brown, 2007). This
study wants to analyze the role of social media, particularly Twitter in communication among friends of the intention to buy the
products offered by students companies who are working on projects Entrepreneurship at the President University. The
communication have two ways ; directly through communication with peers moderated by need for uniqueness and indirectly by
reinforcing product involvement. This research is quantitative descriptive, with total 140 respondents researchers did some test,
questionnaire analysis and data analysis. Researchers found out several results. Pretest on validity and reliability analysis has been
done using SPSS 18 software. The results indicates supported by the data. Descriptive analysis also has been done by calculating
the results from obtained questionnaires, using Likert method in interpreting the scale of value. After that, researchers did
Structural Equation Modeling (SEM) and Confirmatory Factor Analysis. SEM used when in research model there are numbers of
variable with numbers of relationship, and CFA use to find whether the research model valid and reliable.
The Conclusion of the study, from 8 hypotheses being tested, there are 2 hypotesis negative ties and 6 hypothesis positive
relationship.

Keywords: peer communication, twitter, need for uniqueness, product attitude, purchase intention
E-mail address: genoveva.claudia@gmail.com
198
12 – 14 August 2014
Determinant Factors for Small Business to Achieve Innovation,

High Performance and Competitiveness:
Organizational Learning and Leadership Style
María Isabel Rivera Vargas* 5
University of Guadalajara, Department of Social and Legal Sciences, Periférico Norte No. 799 Modulo M 2° piso, Zapopan, Jalisco
Abstract
Within the globalization context characterized by unstable settings involving strong competition, and taking the dynamic
capacities, as central concept of the resource-based view, this paper argues that organizational learning with an appropriate
leadership style is a determining strategy for small and medium size firms to achieve innovation high performance and
competitiveness.
By using analytical-synthetic methodology, in the first part, after the introduction, this paper provides and analyses empirical
evidence which sustain that organizational learning is an influential factor that enable organizations to respond in an expeditious
way to market opportunities. Following this, in the second section, the paper provides and analyses the arguments and empirical
evidence in favor of competing leadership styles: transformational/transactional or a blend of the two types of leadership and their
impact on organizational learning to achieve innovation, high performance and competitiveness. As an outcome, the following
section discuss the proposition of a blended leadership style as an strategic leadership characterized for being „ambidextrous‟ and
able to simultaneously implement diverse courses of action in order to facilitate organizational learning, as proposed by several
authors, among them (Quinn,1988; Bass & Avolio, 1993; Denison, Hoooijberg, & Quinn,1995; Tush-man & O‟Reilly, 1996;
Avolio, Bass, & Jung, 1999), and conclude proposing the leadership style that according to the analysis of the theoretical and
empirical literature appears as the most dominantly apt to promote an organizational learning process to achieve innovation,
high performance and competitiveness.

Keywords: organizational learning; transformational leadership; transactional leadership; innovation; competitiveness; small and medium size
firms
E-mail address: isariv2011@cucea.udg.mx
199
12 – 14 August 2014
Commercialization of Emerging Technology:

The Role of Academic Entrepreneur
Noorlizawati Abd Rahima *, Zainai B. Mohamedb, Astuty Amrinc
6
abc
Razak School of Engineering & Advanced Technology, University Teknologi Malaysia, Kuala Lumpur,54100, Malaysia
Abstract
This paper explores the role of academic entrepreneur in the commercialization of emerging techno-creative innovations. The
discussion is focused on nanotechnology. Universities commonly known as the source of technological innovation play an
important role in transferring university-invented technology and expertise to the market. With sufficient and supportive
infrastructure for technology transfer in place, academic entrepreneurs may form start-up companies and make profits based on
intellectual property generated from these innovations. It is believed that for successful new technology venture, entrepreneurs
should possess a combination of different skill sets to face challenges in various stages of commercialization process. Therefore,
this paper reviews to what extent academic researchers are the right translators of novel science-based technology in bringing
innovations from lab to market, hence the role of academic entrepreneur. Analysis is performed based on case studies and
publications pertaining to learning experiences of successful technology start-ups in developed countries. Subsequent analysis
suggests that entrepreneurship competencies that include risk taking and brave, knowledge, values and self-confidence are vital
for successful entrepreneurs. In addition, a review on the influence of other complementary infrastructures that include
university‟s support to academic entrepreneurs in realizing technology entrepreneurship programme is also performed in this
study. Indeed, we observed that the right entrepreneurial environment and enterprise infrastructure are important contributors in
empowering academic researchers to produce innovations that are both technologically feasible and commercially viable.

Keywords: academic entrepreneur; technology transfer; nanotechnology; technology infrastructure; commercialization.
* Correspondence author.
Email address: arnoorlizawati2@live.utm.my; lizabdrahim@gmail.com
200
12 – 14 August 2014
Strategy for Achieving the Millennium Development Goals 7-10

through Knowledge-Based Sustainable Design Approach
Bambang Syairudina *, Lantip Trisunarnob, I Ketut Gunartac
7
abc
Industrial Engineering Department-Institut Teknologi Sepuluh Nopember Surabaya
Abstract
The International agreements of MDGs (Millennium Development Goals) have been responded positively by the Indonesian
government as outlined in the Strategic Plan of the Ministry of Health 2010-2014 that contains eight priority focus of development
and road map STBM (Community Based Total Sanitation) acceleration program 2013-2015. One of the most prominent priority
focus is environmental sanitation program and a target for increasing the percentage of people who stop BABS (Open Defecation)
of 71 percent in 2010 to 100 percent in 2014, that number is above the achievement of MDGs 7-10 is to decrease halve the
proportion of people who do not have access to drinking water and basic sanitation that is viable continuously in 2015. The
Concept of strategic formulation applied by the government to achieve these targets, including through changes in behavior, the
creation of sanitation needs and improve the supply market to meet the sanitation needs by involving the communities, the
government and sanitation entrepreneurs facilitated and advocated by the Non-Government Organization (WSP-Water and
Sanitation Program, and APPSANI-Asosiasi Pengelola dan Pemberdayaan Sanitasi Indonesia). This research studied the role of
knowledge sharing between actors who perform collaborative functions and contribute to the triple helix (demand, supply, and
enabling) in relation to the achievement of the MDGs 7-10. This study resulted the proposed model of sustainable design which is
useful as a strategic framework for achieving MDG targets 7-10.

Managements (SBM), Institut Teknologi Bandung (ITB).
Keywords: the MDGs 7-10; strategic framework; triple helix; knowledge-based austainable design approach
E-mail address: bambangsy@yahoo.com
201
12 – 14 August 2014
Permissive, Aggressive or Apathetic?

Indonesian Telemarketing Customer
Amalia E. Maulanaa *, Khairunnisa Nurulfirdausib
8
a
ETNOMARK Consulting, Jakarta 15229, Indonesia
b
Binus Business School Bina Nusantara University, Jakarta 10270, Indonesia
Abstract
The resistance of telemarketing in Indonesia is currently mounting but the brand owner using this marketing channel seems not to
worry about their brand image. This research study was aimed to fill in the research gap to provide better understanding on the
dynamic of telemarketing in Indonesia and provide solutions for the brand owner. The method that used in this research
included netnography, mystery shopping and in-depth interview and followed-up with questionnaire survey to 122 respondents.
This study found that there are three types of customer-response toward telemarketing: Permissive, Apathetic and Aggressive.
Permissive type is not dominant and the brand owner has to realize that. The understanding of various customers groups
behavior and their attitude toward telemarketing in Indonesia has great significance for industry, brand owner, and also for
government as a regulator in better and more correctly handling and facing the problem of resistance on telemarketing.

Keywords: telemarketing; indonesia; customer segmentation
E-mail address: amalia@etnomark.com
202
12 – 14 August 2014
Organizational Entrepreneurship and Its Impact on the Performance

of Governmental Organizations in the City of Mashhad
Javad Yazdi Moghaddama *, Alireza Khorakianb, Yaghoob Maharatic
9
a
Faculty of Economics and Administrative Sciences International campus of Ferdowsi University of Mashhad, Iran.
bc
Faculty of Economics and Administrative Sciences Ferdowsi University of Mashhad, Iran.
Abstract
A new wave of change in societies, new technology and innovation has resulted in corporate responsibility, survival, value and
performance to comply with the new requirements. To fulfil their missions and goals, organizations need to be innovative,
proactive and in other words practice organizational entrepreneurship. Also it can be said that increasing new competitors, a sense
of distrust in traditional management practices in organizations, leaving experts and qualified people pursuing their career as
individual entrepreneurs can stimulate organization entrepreneurship. Entrepreneurship can occur in products and services, or
processes. Hence organizations in order to take appropriate action to overcome environmental challenges need entrepreneurs and
entrepreneurship. Since the units in the government sector are bureaucratic and conservative they cannot be considered as
entrepreneurial. Although the governmental sector has no disagreement with the entrepreneurial type structures, in practice, the
dominant culture, bureaucracy and traditional activities prevent organizational entrepreneurship. The present study is an attempt to
present the conceptual model of entrepreneurship and its role in enhancing the performance of governmental Organizations in the
city of Mashhad. The correlation between two variables of entrepreneurial behavior and entrepreneurial management and its
impact on the performance of government organizations in Mashhad was also studied with the emphasis on the importance of
organizational entrepreneurship in these organizations. The study was conducted on 70 government organizations in Mashhad. For
analysis and the statistical tests for the study of relationships between variables, the SPSS and Smart PLS software were used. The
main results of this study indicate that there is not entrepreneurial orientation and entrepreneurial Management in government
organizations in Mashhad; hence, in these organizations, there is no organizational entrepreneurship.

Keywords: organizational entrepreneurship; entrepreneurial behavior; entrepreneurial management; organizational performance; entrepreneurial
organization
E-mail address: javad.ym@gmail.com
203
12 – 14 August 2014
The Opportunities and Threats of Small and Medium Enterprises

in Pekanbaru: Comparison between SMEs in Food and Restaurant
Industries
Diana Eraviaa *, Tri Handayanib, Julinac
10
ac
UIN Suska Riau, Jl. H.R. Soebrantas, Pekanbaru 28293, Indonesia
b
Politeknik Negeri Bengkalis, Jl. Bathin Alam, Bengkalis 28715, Indonesia
Abstract
The development of Small and medium enterprises (SMEs) showed growing trend in Indonesia and also in Pekanbaru. Although
small-scale enterprises, but it has very meaningful role to contribute to prop up the national economy and create many new jobs.
The purpose of this study is to identify the effect of entrepreneurial competencies on business performance, and its opportunities
and threats in the two types of small and medium enterprises that is, food and restaurants industries. Data was collected using a
questionnaire. As many as 52 respondents from SMEs in food industries and 58 respondents SMEs in restaurants industries are
participating in this study. Data is processed descriptively and quantitatively. The result of the study showed that both types of
SMEs have high entrepreneurial competencies in their business. Based on quantitative analysis using regression, it was found that
both entrepreneurial competencies have positive and significant effect on performance. Opportunities held by SMEs in Pekanbaru,
among others, are economic growth above the national average, high level of public consumption, the conducive atmosphere to
investment, geographically located close to the neighboring countries and so on. Nevertheless we can not deny the empowerment
of the SME sector is still faced with the challenges, such as limited access to capital, raw material, information technology,
qualified human resources, marketing the product or services, lacked of guidance from government, exchange rate, high interest
rate, and so on. Therefore, increasing competitiveness of SMEs is urgently required especially in dealing with the ASEAN
Economic Community in 2015.

Keywords: opportunities, threats, SMEs, entrepreneurial competence, performance.
E-mail address: diana_eravia@yahoo.com
204
12 – 14 August 2014
Change in Energy Consciousness and Spread of Photovoltaic Cells

after the Great East Japan Earthquake
Kazuhiro Fukuyo * 11
Yamaguchi University, Tokiwadai 2-16-1, Ube, Yamaguchi 7558611, Japan
Abstract
The awareness about the energy security and acceptability of renewable energy ha s increased in Japan since the Great East Japan
Earthquake of March 11, 2011 and the subsequent accident at Fukushima Daiichi nuclear power station. Against this background,
the Japanese government launched a feed-in-tariff (FIT) in 2012. These situations give business opportunities not only to large
enterprises but also to SMEs and start-ups related to the renewable energy. However, if a renewable energy enterprise wants to
establish a solid business foundation, it has to know its internal and external business environment. In this paper, the author
focused on the spread of residential photovoltaic (PV) systems and analyzed its social demand as the external business
environment. The author used internet questionnaires to discover what households think of the conventional and renewable
energy and what they do for energy saving. It was found that that more than half of the Japanese people, especially the people
accepting the PV systems have raised their awareness of electricity and energy conservation and became more interested in the
renewable energy after the 2011 disaster. The level of RET demand is thought to be increasing in Japan. However, at the same
time, the survey shows signs of a decline in the RET demand in the future.

Keywords: renewable energy; photovoltaic; small and medium enterprises
E-mail address: fukuyo@yamaguchi-u.ac.jp
205
12 – 14 August 2014
Assessment and Planning of Knowledge Management at

PT Dirgantara Indonesia (Persero)
Albert Yosuaa *, Jann Hidajat Tjakraatmadjab
12
ab
Center of Knowledge for Business Competitivenes (CK4BC), School of Business and Management, Jl. Ganesha No 10, Bandung, 40132,
Indonesia
Abstract
PT Dirgantara Indonesia (Persero) (PTDI) has corporate strategy in 2012 upwards to develop new N-219 aircraft. This strategy
requires employees to have knowledge to work in accordance with their competences in developing aircraft especially in
Direktorat Teknologi dan Pengembangan (Dittekbang) of PTDI, the unit analysis of this study. Currently, no systematic process to
maintain employees‟ knowledge and there will be knowledge loss from going to retire senior employees who have the valuable
knowledge because of their experiences. PTDI management need to create Knowledge Management (KM) plan that could be
brought effectively into Dittekbang. Questionnaire from Asian Productivity Organization (APO) KM Framework is adopted for
this quantitative study. This is to assess current condition of KM and to develop KM plan to improve condition based on the
assessment result. The findings, employees don‟t feel to be valued if they share their knowledge, management does not give
rewards and incentives for knowledge sharing, and critical knowledge from leaving employees is not retained. Based on this, KM
plan should prioritize to get top management commitment to support KM initiatives, to develop trust in knowledge sharing, and to
capture knowledge of leaving employees to avoid loss of company‟s intellectual capital. Three knowledge sharing techniques
emerged: mentoring, subject matter expert interview, and communities of practice. These tactics are assumed to have effective
effect in knowledge transfer based on knowledge types, employees‟ expertise level, and the expected condition to achieve. These
options are proposed to be implemented in combination with each other.

Keywords: knowledge management; knowledge transfer; knowledge management assessment; knowledge management planning; aerospace
industry
E-mail address: albert.yosua@sbm-itb.ac.id
206
12 – 14 August 2014
Risk Mapping on Dynamics Creative Industry:

Case Study at Bandung City, Indonesia
Sudarso Kaderi Wiryonoa, Harry Susatyob *, Suryo Utomoc, Barli Suryantad, Oktofa
13
Yudha Sudrajade, Mandra Lazuardi K.f, and Yuanita Hg

abcdefg
Abstract
Creative industry is a new global phenomena that arise at this information age. It is said that creativity will be the driver for social
and economic change in order to become a new source of competitive advantage. Nowadays, business, government, academician
focus their attention to creative economy. It is about how the content creates creativity and further adds the GDP and job creation.
The purpose of this research are to find the major or relevant risks that have strong relationship to creative industry and creating
policy that support creative industry based on relevant risks in Bandung, Indonesia.
Data collection gathered through structured questionnaire and in-depth interview to digging information from respondents. The
questionnaire contains list of variables which reflected on questions of financial sector, marketing sector, human resource sector,
operation sector, and industry sector where each sector contain detail activities. Assessment of the questionnaire using likelihood
and impact with the scale of 1 (rare and little impact) to 4 (almost happen and catastrophic). Respondents were chosen by
purposive-random sampling method in Bandung and this research using 60 respondents that represent 14 sub-sectors of creative
industry. This research uses factor analysis to summarize the variable of risks and then multiple regression to rank those risks
based on priority level.
The result of this research shows that there are to two sections for risk categorization i.e. the most affecting variable and less
affecting variable, where each variable contains with sum of predictors that have shown by method used in this research.

Keywords: creative industry; risks; policy; GDP
E-mail address: harry.susatyo@sbm-itb.ac.id
207
12 – 14 August 2014
An Effectuation Measure of Entrepreneurial Intent

Dave Valliere * 14
Ted Rogers School of Management, Ryerson University, Toronto, Canada M5B 2K3
Abstract
This article proposes a novel measure of entrepreneurial intent, the “Entrepreneuring Intent Scale”, to address shortcomings of
existing measures. Previous scales have confounded intent with beliefs, attitudes, and expectations, contrary to the assumptions of
the Theory of Planned Behaviour that underpins research in this area. Such confounding of measures can lead to significant errors
in the interpretation of empirical insights into entrepreneurial intent. Secondly, they have treated entrepreneurship as an “all-or-
nothing” decision, ignoring evidence that many prospective entrepreneurs employ effectual logics and formation of intent. This
misspecification of the construct can lead to systematic bias in measurement of entrepreneurial intentions.

Keywords: entrepreneurial intent; effectuation; theory of planned behaviour; methodology; entrepreneuring
E-mail address: valliere@ryerson.ca
208
12 – 14 August 2014
Management Experience and The Performance of Accelerators

Dave Vallierea *, Sean Wiseb
15
a,b
Ted Rogers School of Management, Ryerson University, Toronto, Canada M5B 2K3
Abstract
We investigate the effects that the experience level of accelerator management teams has on the performance of the accelerators
they manage. In particular we examine how the collective business experience of the accelerator managers influences the survival
and growth of tenant firms within the accelerator. The experience of accelerator managers is assessed from two perspectives: their
own direct knowledge from operating entrepreneurial startups, and their ability to access the knowledge of others from their
professional networks. The survival and growth of tenant firms is assessed as the hazard rates for successful exits (acquisitions)
and unsuccessful exits (firm failures). We find evidence to suggest that increased knowledge of accelerator managers reduces the
risk of firm failures and that this reduction is more due to differences in the amount of direct experience the accelerator
management team has as founders in startups, than to differences in connectedness to the ecosystem.

Keywords: accelerator; incubator; hazard rate; performance
E-mail address: valliere@ryerson.ca
209
12 – 14 August 2014
Planning Community Development Program of Limbangan

Traditional Market Revitalization with Social Mapping
R. Dimas Dwinovanto Putraa *and Dr. Bambang Ruditob
16
ab
School of Business and Management, Institut Teknologi Bandung, Jl. Ganesha 10 Bandung 40132, Indonesia
Abstract
Activities which continue to evolve drive human behavior to create trading instruments, some of which are the markets and the
traditional ones, and for narrower geographical scope are traditional markets in Indonesia. It is believed that traditional market is
one of the comprehensive factors of nation‟s economic wheel. The longevity of traditional market is feared for its dying tendency
in the near future. In accordance to that and to preclude elimination, Indonesia‟s government has persistently implied the concept
of traditional market‟s revitalization. Revitalization of Limbangan Traditional Market Project, hosted by the Local Government of
Garut District, engages to establish sustainability development of Limbangan people.

Keywords: relationship revitalization; traditional market; social capital; community development; sustainable development; social mapping;
empowerment
E-mail address: dwinovanto.putra@gmail.com
210
12 – 14 August 2014
Regional Innovation Cluster for Small and Medium Enterprises

(SME): A Triple Helix Concept
Sri Herliana * 17
Abstract
The presence of SMEs make an important contribution to the national economy. In order to enhance the
competitiveness of SMEs, until now, various attempts have been carried out by the Government. One way to increase
the growth of SMEs through cluster approach. Cluster development and growth of small and medium enterprises
(SMEs) support programs Regional Innovation Cluster. Regional Innovation Systems is an integral part of the
National Innovation System. In realizing National Innovation Systems effective and productive, and significantly
contribute to national economic growth necessary to strengthen Regional Innovation Systems. The innovation could
not go partially, he must be collaboration between the academy, the industry/the business and the government.

Keywords: regional; innovation; cluster; SME; triple helix
E-mail address: sri.herliana@sbm-itb.ac.id
211
12 – 14 August 2014
Developing New Ideas & Capability-Based Framework

for Innovation Process: Firm Analysis for Indonesia
Arif Hartonoa,b * 18
a
Management Department, Faculty of Economics, Universitas Islam Indonesia, Yogyakarta 55283, Indonesia
b
PhD Student, Warwick Business School, The University of Warwick, Coventry CV4 7AL, UK
Abstract
This paper aims to propose a new holistic measure of innovation that encompasses the various narrow definition of innovation
along three steps of the innovation process, namely new ideas and capability-based framework. The framework consists of three
sequential steps such as news ideas generation, conversion and exploitation. Compared to the previous studies, this framework
will be the pioneer that provides the following contribution such as the integration of new ideas and relevant a firm‟s capability, a
wider range of internal and external new ideas sources and types of innovation as the output of innovation activities. The
developed framework will be tested to measure innovation activities of the Indonesian firms from a wide range of size and types
of industry background

Keywords: new ideas; firm capability; innovation process; firm level; Indonesia
E-mail address: phd13ah@mail.wbs.ac.uk
212
12 – 14 August 2014
Is There Any Possibility for Famous Local Bakery in Indonesia

to make Brand Alliance with AirAsia
Andrea Stevena *, Mustika Sufiati Purwanegarab
19
ab
School of Business and Management, Institut Teknologi Bandung, Jl. Ganesha 10 Bandung 40132, Indonesia
Abstract
This paper examines the projected brand alliance for Kartika Sari and AirAsia brands. The result reveals market
awareness, customer satisfaction, and relationship between satisfaction and brand alliance. Findings show there is no
significant difference for customer satisfaction of each ally brands, satisfaction relate to the successfulness of brand
alliance that could make this projected alliance promising.

Keywords: brand; alliance; awareness; satisfaction; relationship
E-mail address: andrea.steven@sbm-itb.ac.id
213
12 – 14 August 2014
The Portrait of Entrepreneurial Competence

on Student Entrepreneurs
Verni Y. Ismaila *, Efendy Zainb, Zuliharc
20
abc
Faculty of Economics, YARSI University, Jakarta, Indonesia
Abstract
In the framework of foster new entrepreneurs from universities, there should be an investigation of the entrepreneurial
competencies on the students. Based on psychological and business aspects, entrepreneurial competencies are used to find out the
characteristics and skills of the students so that they can become a successful entrepreneur. This study was designed as a quasi-
experimental research, which is non randomized group pre test – post test. The treatment has been given in the form of
entrepreneurship education with the number of respondent were 30 students. The data were analyzed using the Comparative
Analysis of "t" Test Methods. The results showed that both before and after undergoing entrepreneurship education, research
respondents basically had the pretty good entrepreneurial competencies scores. The results of the study by using a pre-test and
post-test analysis, showed that the characteristics of the respondents with the highest scores both before and after participating in
entrepreneurship education were need of achievement and endurance. While the characteristics that have the weakest scores were
need of autonomy and risk-taking propensity. Overall entrepreneurship education has been followed by respondents indicated a
difference in their entrepreneurial competencies cores (significant at α 0.01). Differences entrepreneurial competence component
scores were significantly occurred on endurance and market awareness components (α 0.01) as well as the need of autonomy and
need of power (α 0.05).

Keywords: entrepreneurship education; entrepreneurial competence; entrepreneurial characteristics; entrepreneurial skills
E-mail address: verni.yuliaty@yarsi.ac.id
214
12 – 14 August 2014
An Evaluation of P3DK (An Acceleration of Development Village

Program): A Reviewing on Failure toward Revolving Loan Fund
System in Kepulauan Riau Province, Indonesia
Raja Abumanshur Matridia *, Dedi Zuraidib, Rendra Setyadiharjac, Endri Sanopakad,
21
Desrian Effendie, Diah Siti Utarif

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Sekolah Tinggi Ilmu Sosial dan Ilmu Politik (STISIPOL) Raja Haji Tanjungpinang, Jl. Raja Haji Fisabilillah No. 48 and 29100,
Tanjungpinang-Kepulauan Riau-Indonesia
Abstract
P3DK (An Acceleration of Development Village Program) is a system or design as an effort of people empowerment to develop
infrastructure and the economic development at village level with the purpose to attract more people participate in development
and to strengthen people in the future. P3DK has been conducted by Kepulauan Riau Province. Totally, there were 169 target
villages and this program was conducted in 2006 to 2011, where each village was allocated fund as of IDR 500.000.000. Every
year, the target village to get the fund has been variety. This program was run by giving fully authority to the head of village and
it‟s people to design an applicable concept of village development through P3DK to start small- medium enterprise in the village.
The main aim is to measure and study the success of the implemented concept by the local government to develop Economic of
the people. The research funding shows that concept has failed in reaching the target which has been set early to develop the
economy of people in village through P3DK. This happened because the tack of intention of the people to return the loan. Another
factor is the punishment was not being taken to those who didn‟t returned the loan. The recommendation of this paper is the
reconstruction of new loan system by focussing on the procedure and mechanism of the program in crucial to be done. Rewards
and Punishments is indeed to be implemented seriously for the shake of program.

Keywords: P3DK; failure; loan funding System; village economic development
* Corresponding authors.
E-mail address: matridi_aeksalo@yahoo.com
215
12 – 14 August 2014
Factors Analysis on Knowledge Sharing at Telkom Economic

and Business School (TEBS) Telkom University Bandung
Vina Shabrinaa, Anita Silvianitab * 22
ab
Business Administration, Telkom University (Tel-U),Bandung, Indonesia
Abstract
Knowledge is a core value that can be differentiates someone with another person. Sharing knowledge is one from many efforts
that can be used in every organization to improve their goals. In academic institution, sharing knowledge become an important
process that must be done to maintain the sustainability and achieving a competitive advantage in its role as a center of science so
was in Telkom Economic and Business School (TEBS) Telkom University Bandung. The aim of this research is to define factors
that create knowledge-sharing activities between lecturers in TEBS and to define how much these factors dominate knowledge
sharing activities. This research adopts six variables as a knowledge sharing factors and using 75 lecturers who work as a
respondent. Through factor analysis can be reduce six factors such as working culture, employee attitudes, motivation to share,
opportunity to share, communication and technology become two dominant factors that inspire the creation of knowledge-sharing
behavior in TEBS Telkom University Bandung. The new factors are opportunity to share knowledge and organizational culture.
Opportunity to share knowledge it represented by opportunity to share, communication and technology. These factor able to
explain 54,8% from all knowledge sharing factors. While 17,4% is explain from organizational culture and it represented by
working culture, employee attitudes and motivation to share. From this result, we can conclude that academic institution have to
improve the communication between lecturer to increase the opportunity to share. The qualities of technology such as Internet
also become important to support knowledge sharing behavior.

Keywords: knowledge sharing; TEBS Telkom University; Factor Analysis
E-mail address: anitasilvianita@telkomuniversity.ac.id
216
12 – 14 August 2014
Value Orchestration Platform: Promoting Tourism in Batik

Industrial Cluster Solo
Santi Novania *, Utomo Sarjono Putrob, Pri Hermawanc
23
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Abstract
Batik industry constitute of one of 14 classified creative industries in Indonesia. As part of creative industry, batik design and the
batik product is possible continuously develop. In this research, we focus on Batik Industrial Cluster in central Java, Solo. This
research aim is to model value co-creation process and value orchestration platform as a hierarchical service by using service
science perspective. We argue value orchestration management strategies to promote Solo as batik industrial clusters to world
favourite tourist destination. To achieve it, we first examine and express the situation from batik industrial cluster in Solo by using
qualitative approach. Then, we analyze a process model of value co-creation consisting of four phases, i.e., co-experience, co-
definition, co-elevation and co-development. The model describes interactive relationship among stakeholders in Batik industrial
cluster by involving value co-creation process to supporting such collaboration. Finally, we apply three management strategies of
value orchestration platform for orchestrating value co-creation process, i.e., involvement, curation and empowerment strategies.

Keywords: value co-creation; co-experience; co-definition; co-elevation; co-developmen; value orchestration platform
E-mail address: snovani@sbm-itb.ac.id
217
12 – 14 August 2014
Marketing Strategy and the Development of Batik Trusmi

in the Regency of Cirebon which Used Natural Coloring Matters
Tita Borshalina * 24
Widyatama University, Bandung, Indonesia
Abstract
The trends that customers tend to turn back to nature has so far enhanced Micro, Small and Medium Enterprises (SMEs) of Batik
Trusmi to develop innovation in new products that use natural coloring matters. Borshalina‟s research (2012) proved that there
was an influence of market orientation on the innovation and there was an influence of innovation on the performance of SMEs of
Batik Trusmi and some indirect influence of market orientation on the performance through the innovation of SMEs of Batik
Trusmi. The result of Borshalina‟s research (2012) indicated that the performance of SMEs of Batik Trusmi was influenced by
the innovation of its actors in fulfilled the market orientation or its consumers requirements.
To fulfilled the trends of the consumers and in minimizing the problems of waste material resulting from the synthetic coloring
material, SMEs of Batik Trusmi have innovated using natural coloring materials such as, mango leaves, tree bark, bark of
mahoni, tobacco, indigo bark, bark of jengkol tree. In spite of all those, it was admitted that the price of Batiks colored with
natural coloring materials were more expensive than Batiks colored with synthetic coloring ones. This was the challenges
encountered by SMEs of Batik Trusmi, how to produce batik which were environmentally friendly in line with the concept of
sustainable development.
The research result showed that the selling price becomes higher as it uses environmentally friendly of natural coloring materials
managed or anticipated in inclining quality that it could be accepted by the consumers; the supporting factor of developing the
market of Batik Trusmi with natural coloring materials were many consumers interested in Batik Trusmi which proved to be
environmentally friendly and became the solution over the obstacle of increasing number of labors who were reluctant to work on
batik colored with natural coloring materials that, in this case, SMEs of Batik Trusmi tried to provide inputs for the workers that
Batik with natural coloring materials were quickly sold on the market.

Keywords: batik; coloring materials; innovation; environmentally friendly; sustainable development; marketing strategy
E-mail address: tita.borshalina@widyatama.ac.id
218
12 – 14 August 2014
Assessing the Effects of e-servicescape on Customer Intention:

A Study on the Hospital Websites in South Jakarta
Lukmanul Hakima, Leli Deswindib * 25
ab
ESQ Business School (STIMIK ESQ), Jl. TB. Simatupang Kav. 1, Cilandak, South Jakarta
Abstract
The impact of the internet is very influential in the development of today‟s business world. It is crucial for service
providers to use their official website to seize potential customers‟ attention by creating a website that impresses
them. The role of corporate website in service industry is really important because it can present the intangibility
elements (physical surroundings) of the service itself. The purpose of this study is try to examine which element of
the e-servicescape on hospital websites that significantly influences customers‟ perceived quality to encourage
potential customers to use the services of the hospital. Quantitative method is conducted using a Spearman Rank
correlation for nonparametric data to obtain a significant relationship value of the variables observed.

Keywords: e-servicescape; perceived quality; customer intention; nonparametric test
E-mail address: ldeswindi@esqbs.ac.id
219
12 – 14 August 2014
Lesson Learned from Indonesian Biggest Fashion Retailer Company

to Encourage the Development of Small Fashion Business
Ivana Liliani Sugiha *, Subiakto Soekarnob
26
ab
School of Business and Management,Institut Teknologi Bandung, Jl.Ganesha 10, Bandung 40132, Indonesia
Abstract
Indonesian retail industries for fashion sector continue growing vigorously due to raise of income per capita and rise of middle-up
class people. PT Mitra Adiperkasa Tbk (MAP) is the leader of fashion retailer in Indonesia. The company‟s stock had ever
categorized as a blue chip stock in Febuary 2013 - January 2014 indicates its satisfactory performances. The company
successfully brought many top fashion brands from other countries such as Zara and takes the Indonesian market well. In 2014,
the stock is no longer pinned as a blue chip even some securities dwindled 24% of the stock price and the profit growth reach the
negative area. The issues above trigger a curiosity about the company performance and value. How is the actual financial
performance of MAP compare with other local and global companies? What innovative idea does each brand of MAP have to
captivate Indonesian market? How small fashion businesses in Indonesia should develop themselves to be the fashion leader brand
in the home country? To assess the financial performance, ratio analysis is going to be used. PT Mitra Adiperkasa financial
performance will be compared with PT Matahari Department Store, PT Ramayana Lestari Sentosa, FJ Benjamin Sdn Bhd
(Malaysia), Royal Sporting House Ltd (Singapore), and Giordano International Ltd (Hong Kong). The valuation will use 2
methods; DCF and market approach. The valuation using DCF method confirms that MAP‟s shares will grow 46% in 2029.This
financial analysis is an encouragement either for the entrepreneurs to start fashion business or small businesses to continue
developing since in the future fashion business is always tempting for investors and customers. Small fashion business should
implement effective and efficient supply chain to create fast retailing and become the fashion business leader in the home country.

Keywords: mitra adiperkasa financial position; mitra adiperkasa valuation; fashion industry; ratio analysis; dupont analysis; small fashion business
indonesia; fashion market segment
E-mail address: ivana.liliani@sbm-itb.ac.id
220
12 – 14 August 2014
Trade-off Study of Equity Mutual Fund

for Small and Medium Enterprise
Eric Marshall Ting Toyoa *, Sylviana Maya Damayantib
27
ab
Abstract
The purpose of this research is focused on equity mutual fund in Indonesia at 2007-2013. From equity mutual fund that active at
2007-2013 this research examined whether selected factors influence the performance of equity mutual fund. Then this research
also investigated which equity mutual fund‟s performance exceeded performance of Indonesia stock index (IHSG). 5 equity
mutual funds that exceed Indonesia stock index (IHSG) is panin dana maksima, schroder dana istimewa, pratama saham, batavia
dana saham, dan BNP Paribas pesona. This research can provide recommendation for small and medium enterprise to allocate
their fund in mutual fund. SMEs usually have a volatile revenue and income stream. In order to reduce the operational risk, SMEs
allocates high cash position as a buffer during difficult situation. This paper aims to increase earning from this cash position
through investment strategy.

Keywords: mutual fund, SMEs; performance mutual fund; variables mutual fund; sharpe ratio
E-mail address: eric.marshall@sbm-itb.ac.id
221
12 – 14 August 2014
Value Co-Creation Process in Small and Medium Enterprise

by Utilization of Viral Marketing as a Branding Tool:
A System Dynamic Approach
Aulia Fadil * 28
School of Business and Management,Institut Teknologi Bandung, Jl.Ganesha no 10, Bandung 40132, Indonesia
Abstract
People like to talk about their involvement with products and services for a variety of reasons. These include the prestige and
status that may arise through ownership or a need to share their purchase experiences in order to help others. These conversations
are then passed to family, friends and other people in social networks. This reference process is known as Word of Mouth (WoM)
communication and is regarded as a powerful and influential form of communication, if only because of the perceived objectivity
and credibility associated with the parties involved. Viral marketing has emerged as the electronic form of WoM and involves the
principle of passing on or referring news, information or entertainment to another person. Viral marketing is a highly effective
internet marketing communications tool, and will succeed if companies understand their online customer and providing a better
value than those competitors. Unfortunately some studies have shown that SMEs may lack competence and show low level of
awareness and organizational readiness for adopting innovative approaches for interaction with customers. Meanwhile, Internet
technology continuously provides new research tools that enable companies to interact and participate in brand value co-creation
together with customers.

Keywords: viral marketing; system dynamic; brand awareness
E-mail address: aulia.fadil@sbm-itb.ac.id
222
12 – 14 August 2014
User Requirements Analysis for Restaurant POS

and Accounting Application Using Quality Function Deployment
Lana Sularto *, Wardoyo, Tristyanti Yunitasari
29
Faculty of Economics, Gunadarma University, Indonesia
Abstract
The purpose of this study is to identify the consumer requirements and technical requirements that are part of the Quality Function
Deployment (QFD) analysis, as applied to restaurant SMEs in Jakarta, Bogor, Depok, Tangerang and Bekasi (Jabodetabek). The
design of integrated Point of Sales (POS) and accounting applications prepared based on "Restoku" POS and Accounting
applications that has been built and implemented at the restaurants. The draft then used as the basis for preparing a questionnaire
that has been distributed for 200 restaurants.
The research methodology begins with the collection of user requirements and analyse it using QFD. Application design is funded
by the government through a program of Featured Universities Research by the Directorate General of Higher Education (DIKTI).
Conclusions from this research are identified which include the Consumer Requirements of integrated POS and accounting
application. The elements of the consumers requirements consists of 11 elements and 49 elements of Engineering Characteristics
restaurant requirements. Therefore the design of POS and accounting applications that will be built, is designed according to the
findings by eliminating features that are not needed by restaurant based on QFD House of Quality.

Keywords: systems analysis, applications design, point of sales (POS), quality function deployment
E-mail address: lana@staff.gunadarma.ac.id
223
12 – 14 August 2014
Batik Solo Industrial Cluster Analysis as Entrepreneurial System:

A Viable Co-Creation Model Perspective
Lidia Mayangsaria *, Santi Novanib, Pri Hermawanc
30
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Abstract
This study diagnoses the issues of viability existed in the depth of Batik Solo industrial cluster. Viable System Model (VSM) in
practice would assist the viability investigation process, prescribe, and facilitate the agreed improvements from operation division
to policy management as the highest level of the system. Rather than focusing only on the internal factors, as an entrepreneurial
system, batik Solo industrial cluster has to gain deeper insight from the external aspects like consumer and market. This study also
employs the concept of value co-creation from service science perspective to compliment the powerful internal assessment of the
system by VSM with the external one by using a positive collaborative innovation with customers as a third dimension. The
concept encourages entrepreneurial system to weight more on the role of customers as the crucial element determining business
future performance. The finding is a mapping model of the industry, the roles, and the improvement from viable value co-creation
point of view which consist of five functional and complete working organs: (1) operation, (2) coordination, (3) integration, (4)
intelligent, and (5) brain. The operation represents the executive systems: firms (Kauman batik cluster, Laweyan batik cluster,
Solo traditional market, and travel agencies), research and financial institution (Canting Kakung Community and Bank of Central
Java), and university (Universitas Negeri Sebelas Maret and Batik University). The coordination is a mutual assistance of the
convergent understanding among operation systems: Batik Surakarta Entrepreneur Union (PPBS), Laweyan Batik Village
Development Forum (FPKBL), and Kauman Batik Tourism Village Association (PKWBK). The rest organs are focused on the
government from Culture and Tourism Office of Surakarta as the integration, Local Government of Surakarta as the intelligence,
and Ministry of Tourism and Creative Economy as the brain. The integration of the system also employed Cooperation and Small
and Micro Enterprise Office of Surakarta and Industry and Trade Office of Surakarta. The dominant and overlapping function of
government from different layers caused a bottle-necking in the connecting structure of batik Solo industrial cluster as an
entrepreneurial system.

Keywords: viable system model; value co-creation; batik Solo industrial cluster
E-mail address: lidia.mayangsari@sbm-itb.ac.id
224
12 – 14 August 2014
Physical Evidence of Small Theme Restaurant in Indonesia:

A Case Study of Ramen House
Oktavina Diah Puspita * 31
Abstract
In order to remain exist in the tight competition in culinary industry, business people have to make a clear differentiation for their
venture. Bandung, the capital city of West Java, is famous for the creative people and it is one of good places to start a culinary
business in Indonesia. This paper observes the elements of physical evidence and the types and roles of servicescape of Ramen
House, a small Japanese restaurant in North Dago, in order to create uniqueness compare to other restaurants in Bandung. Ramen
House has distinctive exterior and interior facilities as well as other tangible things in order to serve the customers. The
servicescape usage of Ramen House is interpersonal service; meanwhile the design of servicescape has three roles, which are
package, facilitator, and differentiator. The important thing for the theme restaurant is the consistency in conveying the concept
through every part of the restaurant‟s physical evidence.

Keywords: physical evidence; servicescape; service marketing; theme restaurant; culinary industry
E-mail address: diah.puspita@sbm-itb.ac.id
225
12 – 14 August 2014
ICT Adoption, Skill and Use Differences among Small and Medium
Enterprises Managers Based on Demographic Factors
Nurhidayati Kusumaningtyasa and Dyna Herlina Suwartob * 32
a
Balai Diklat Industri Regional IV Yogyakarta, Yogyakarta, Indonesia
b
Universitas Negeri Yogyakarta, Yogyakarta, Indonesia
Abstract
The Small and Medium Enterprises in economics are able to develop by Information Communication Technology (ICT) adoption.
The adoption is determined by many factors, one of them is demographic. This research purpose is to examine the demographic
factor differences (age, gender and education level) in ICT (computer and internet) adoption, skill and use among small and
medium enterprises (SMEs) managers at Province Daerah Istimewa Yogyakarta. The research sample is the SMEs that guidance
by Tenaga Penyuluh Lapangan (TPL) Badan Diklat Industri Region IV Yogyakarta as 196 SMEs managers. The analysis is using
Manova Test to find out the age and education level meanwhile the gender variable is investigated by Independent Sample T-Test.
The research evidence found that there is difference of ICT adoption, skill and use based on age and education level. Meantime
there is no difference according to the respondent gender.

Keywords: ICT Skill; ICT use; ICT adoption; age; education level; gender
E-mail address: dyna.herlina@gmail.com
226
12 – 14 August 2014
Servant Leadership and Human Capital Management:

Case Study in Citibank Indonesia
Andrea *, Donald Crestofel Lantub
33
ab
Abstract
Servant leadership is one of type leaderships that popular nowadays. Moreover, servant leadership is concept leadership that
suggest leader to serve the employees to improve performance of employee. Human capital Management is systems that support
employees to make sure that employees will increase the performance. Nowadays both of concepts usually implemented in the
company. However, we still do not know that if both of those concepts can be put together in one company or no.
This paper is aimed to explore and examine the implementation of servant leadership and human capital management in business.
The methodology used is qualitative research with case study approach. The data will be collected through two main ways: (1)
biography and other documents analysis of several company in the Indonesia and foreign country such as Unilever, Indonesia Port
Company, Telkom, Bank DBS, IDEO, Netflix, and Blackrock Company. (2) Interviewing and observing one big bank in the
world which is Citibank. Researcher interviews Citibank which located in Indonesia and interviews several important people such
as manager of Citibank, trainer of Citibank, Human Resource of Citibank, and others. From the secondary data which is biography
and other document analysis, research will create a idea concept of human capital and servant leadership. Then, research will
compare the ideal model of servant leadership and human capital management in the Citibank Company. Citibank Company is
multinational company which research thinks that the company has a good system in both leadership and human capital
management.
The results of this research are expected to provide richer knowledge and insights that are related to the implementation of servant
leadership and human capital management in the business, both in the Indonesian and foreign country context. This research may
encourage more qualitative studies on the operationalization of servant leadership model in the workplaces so that could be useful
for practitioners who want to embrace the idea as a meaningful and effective way of leading knowledge workers. Besides, we will
know about the ideal concept of human capital management and servant leadership which may be will be useful for some
company to implant those concept.

Keywords: servant leadership; business; human capital management; ideal
E-mail address: andre.sbm@sbm-itb.ac.id
227
12 – 14 August 2014
Understanding Consumer Decision-Making in Tourism Sector:

Conjoint Analysis
Shimaditya Nuraenia *, Arlavianyssa Pradiva Arrub, Santi Novanic
34
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School of Business and Management, Institut Teknologi Bandung, Jl. Ganesha.10, Bandung 40132, Indonesia
Abstract
Tourism has been key global economic activities and youth is said to be the mind share attainer in which they are the opinion
starter for many movements and trends. This study try to acknowledge the decision making of the youth, how they choose their
tourism destination site using conjoint analysis to evaluate their preference attribute. The result showed that the most youth choose
tourism destination with attributes such as international trip, friendly local people and has local specificity, and the expense in this
trip is focused to enjoy sightseeing

Keywords: decision-making; conjoint analysis; tourism
E-mail address: shimaditya@sbm-itb.ac.id
228
12 – 14 August 2014
Factors that Influence Student‟s Decision

in Starting-Up Service Franchise Business in Bandung
Shintya Janice Kristandya *, Leo Aldiantob
35
Abstract
Starting a whole new business often seems to be too risky. There are too many uncertainties pertaining to the amount of capital
required, the sales revenue potentially generated and the right management style required to achieve success. Franchise business,
with an already well-established systems and operating procedures, provides a way for new entrepreneurs to invest in a more
forecastable and profitable future. At the macro level, franchise business is like a vehicle driving the lifestyle and income of a
population in the right direction for long term economics growth. Indonesia, being the one of the largest economies in Asia, offers
excellent market potential for franchising. Having an adequate and proven systems already in place, franchise business is
perceived as an appropriate stepping stone for building sustainable business environment in Indonesia. The allure of starting a
franchise business in mitigating the uncertainties faced by an independent start-up to a large extent, therefore, is worth its weight
in gold.
This research aims to develop the know-how of starting-up effective franchise business to penetrate Indonesian market. The study
hopes to establish a comprehensive guide for the increasing number of aspiring entrepreneurs to boost their confidence in starting
up service franchise business in Bandung. This research uses both qualitative and quantitative research method. Through
quantitative research, the author collected data through several surveys and questionnaires which were distributed among 100
business management students from several universities in Bandung such as Institute Technology Bandung, Parahyangan Catholic
University, Padjajaran University, and Maranatha Christian University. Subsequently, qualitative research was also conducted to
clarify ambiguous situations or discover ideas that may generate potentially-profitable business opportunities. Common data
collection methods used in this qualitative research includes in-depth interview with related franchisor in the service industry.
Researcher performed pre-test analysis to the data collected to ensure the constructs‟ validity and reliability. Data were then
analyzed, computed and presented in various simplified forms (writing, graphics, tables, and numbers) for easy comprehension
and interpretation.
Our conclusion is that with adequate systems of franchise business already in place, it provides a suitable platform for the students
to embark on their entrepreneurial journey. Purchasing a franchise business license is one common option. However, a substantial
amount of attention has to be given to the franchise mechanism model i.e. factors such as: costs, controls, and
termination/renewals of contracts. In the process of selecting the right franchise business, substantiate knowledge and careful
review of the franchise agreement is of critical importance to prevent mislead and confusion. This paper will highlight and discuss
these issues in further details.

Keywords: franchise business; entrepreneur; business model
E-mail address: s.janice@sbm-itb.ac.id
229
12 – 14 August 2014
Glass Ceiling, the Prime Driver of Women Entrepreneurship in

Malaysia: A Phenomenological Study of Women Lawyers
Mohmad Yazan Sharif * 36
Universiti Utara Malaysia, School of Business Management, 06010 Sintok, Kedah, Malaysia
Abstract
The aim of this paper to present some findings on the construct of glass ceiling in organizations and its role in driving women
professionals in Malaysia to venture into business as entrepreneurs. The researcher used the qualitative method known as
„phenomenology” to explore the phenomenon of glass ceiling. The concept was said to be created by Western academics in the
1970s to describe a situation where women professionals found barriers in progressing in the organizational hierarchy in generally
all types of organizations whether firms or governmental organizations. For many women professionals especially in the West, the
lack of promotional opportunities in the corporate world had driven them to involve in businesses. This paper wanted to determine
whether this situation had driven women professionals in Malaysia to venture into business. The samples were women
professionals in the legal firms. Interviews were conducted with 20 women professionals. It was found that 6 professionals had set
up their own legal firms while 14 had set up their business firms not connected to the legal business. In terms of performance,
their firms were observed to be doing well exceeding the three-year gestation period. Generally bankers believe that if a start-up
firm can survive the first three years of its establishment, then it is on its way to become successful in whatever business it is in.
The average length of the businesses that the Malaysian women professionals were involved in was five years. This is an
indication that the said women professionals had successfully transformed themselves into entrepreneurs. It can be said that the
glass ceiling phenomenon has a positive effect in this regard as it had spurred the creation of women entrepreneurs among the
legal professionals.

Keywords: entrepreneurship; gender inequality index; glass ceiling; Malaysia; women entreprenur, women lawyers
E-mail address: lukpikad@yahoo.com
230
12 – 14 August 2014
Searching for Emotional Intelligence Measurement

in Indonesia Context with Innovative Approach
Yuni Ros Banguna, Ken Ratri Iswarib * 37
ab
Abstract
Emotional Intelligence is widely accepted as one of the dominant factors contributing to superior educational and professional
performance. Previous research has determined the contribution of Emotional Intelligence and some factors that influence
Emotional Intelligence. Researchers have introduced measurement tools for Emotional Intelligence. Those that have been
accepted internationally; Multifactor Emotional Intelligence Scale (MSCEIT) of Mayer, Caruso, and Salovey (2000); Emotional
Quotient Inventory (EQ-i) of Bar-On (2002); and Emotional and Social Competence Inventory (ESCI-360) of Goleman, Boyatzis
and HayGroup (1999). These models are generally accepted but constructed for Western empirical setting and written in the
English language.
Moon (2011) suggest that EI cannot be fully or meaningfully understood without consideration of people‟s cultural values and
beliefs due to the existence of cross-cultural differences in EI. Instead of adopting a standard for Emotional Intelligence according
to a western approach, it is important to develop an innovative Emotional Intelligence measurement tool according to the context
of Indonesia because Indonesia is a multi-cultural country in South East Asia with too strong different characteristic when
compared with Western nations. Wang (2009) argues that Eastern and Western cultures have numerous differences because
Eastern and Western people live in different environment and are educated in distinctively different way. As a result, the
characteristics of each culture are shown in its people behaviour, their attitude toward life and love, and their personalities (Wang,
2009).
This research is done by innovatively analyse the current research on Emotional Intelligence in Indonesia and further research
recommendation on innovative Emotional Intelligence measurement for Indonesia context. The purpose of this paper is to learn
about and to compile some research on Emotional Intelligence specific to Indonesia‟s context and its impact on determining
success. The various research components such as literature review, exploratory research and descriptive research have been
implemented. Self Assessment Questionnaires were designed for Indonesian Business School graduates (undergraduates and
master program), leaders of multi-sectors companies, and government employees. At the end, structured equation modelling was
utilized to create a path model.
The findings indicate that in Indonesia, Emotional Intelligence and Competencies have an important role in determining success
and influencing performance. At last, the findings will be a powerful insight to develop innovative Emotional Intelligence
measurement tools in Indonesian version.

Keywords: emotional intelligence; competency; conflict management style; innovative approach
E-mail address: ken.ratri@sbm-itb.ac.id
231
12 – 14 August 2014
Mapping on Entrepreneurship Policy in Indonesia

Isti Raafaldini Mirzantia *, Togar M. Simatupangb, and Dwi Larsoc
38
abc
Abstract
Entrepreneurship policy has an influence in creating a conducive environment to support and develop entrepreneurship. A
challenge in developing entrepreneurship policy is that one policy applied in certain areas cannot be applied in other areas
automatically. The number of entrepreneurship policy literature, mostly originates from developed country or few from
developing country. As well as in Indonesia, entrepreneurship policy has not been explored yet. The first attempt of this research
is to define the mapping of entrepreneurship policy in Indonesia. The current research addresses research questions, namely the
objectives of entrepreneurship policy; categories of entrepreneurship policy in different units of analysis; and entrepreneurship
policy programs. Research method is using a qualitative descriptive research. The process includes policy stages, from agenda
setting, formulation, and implementation stage of entrepreneurship policy; while the analysis is conducted based on the principles
of categorization of entrepreneurship policy content. This study contributes to reveal the implementation of entrepreneurship
policy in Indonesia; enrich entrepreneurship policy literature; and suggest recommendation on a more customized and structural
entrepreneurship policy for promoting entrepreneurship.

Keywords: entrepreneurship; entrepreneurship policy; Indonesia; policy mapping; government policy
E-mail address: isti@sbm-itb.ac.id
232
12 – 14 August 2014
Analysis of Cross Cultural Management Course Pedagogy Methods

in Developing Students‟ Cultural Intelligence
Nur Arief Rahmatsyah Putrantoa *, Aurik Gustomob, Achmad Ghazalic
39
abc
Abstract
Preparing students to able to face the globalization when they enter business world is one of business school responsibility. One
way to do that is by increasing their cultural intelligence (CQ) so they can adapt and perform effectively in multi cultural
environment. This experimental research tried to find how a business school course can improve students‟ CQ. This research was
done by measuring CQ of students who attend cross-cultural management course at the beginning and at the end of the course. In
this course, the students got four treatments to improve their CQ (lecturing, reading literature, sharing session, and field trip).
From those four treatments, field trip is the most effective method to learn and understanding about different culture based on
students‟ perception where lecturing is the least effective. Despite that, the combination of these four method in teaching cross-
culture result in the improvement of students‟ CQ and all of its components.

Keywords: cultural Intelligence; CQ; students; cross-cultural
E-mail address: nur.arief@sbm-itb.ac.id
233
12 – 14 August 2014
Proposal to Improve Employee Engagement in PT Maju Sentosa

by AON Hewitt Model and Mercer Model
Stephaniea *, Aurik Gustomob
40
ab
Abstract
Preparing the organization‟s overall performance to compete and reach its future goal in turbulence business environment is one
of the management‟s responsibility. The prior key to do is by improving the employee engagement within the organization, as we
know that employee is the most crucial capital that can props the sustainability of an organization. This research tried to improve
the employee engagement in PT Maju Sentosa. This research was done by assessing current condition about employee
engagement level in PT Maju Sentosa, analyzing factors that affecting employee engagement in PT Maju Sentosa, and also
providing conclusion and gradual recommendation in order to improve future employee engagement that leads to better
performance of PT Maju Sentosa. From the research, it is known that the current employee engagement level of PT Maju Sentosa
is in acceptable and need to be improved level, with average score 3.36 out of 5, and the three significant factors that affecting
employee engagement in PT Maju Sentosa are welfare, career and social support, and work motivation.

Keywords: employee engagement; AON hewitt model; mercer model; factor analysis; multiple linear regression
E-mail address: stephanie@sbm-itb.ac.id
234
12 – 14 August 2014
Civil Servants‟ Competence in Indonesia:

Suggestions for Future Research in the Context of Business
Andika Putra Pratamaa *, Achmad Ghazalib, Nur Arief R. Putrantoc, Ken Ratri Iswarid,
41
Anggara Wisesae, Hary Febriansyahf

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Abstract
Driven by the necessity for improving the quality of Indonesia‟s human resources and bureaucratic reform as laid out in the
Master plan for Acceleration and Expansion of Indonesia Economic Development (known as MP3EI), this article aims to
highlight the importance understanding Indonesian civil servants‟ competence, argued as a forgotten enabler for the success of
business. As our selective literature review has shown, research on competence of the civil servants, published in major journals,
has been scant. Our main expected contribution is to make readers aware of the essence of being engaged in the issue of civil
servants‟ competence and offer several potential research directions that researchers may want to pursue.

Keywords: competence; competency; Indonesia; economic development; literature review, research suggestions; public administration;
organizational development
E-mail address: andika.putra@sbm-itb.ac.id
235
12 – 14 August 2014
Creating Better Education System, Building Stronger Human

Capital: A Creative Industries Perspective
Sonny Rustiadia,b * 42
a
Institute for Creative & Cultural Entrepreneurship, Goldsmiths University of London. UK.
b
Abstract
Education is seen all over the world as the key to enable individuals and nations to meet rapid economic and social changes. This
paper will discuss the findings from the research field work conducted regarding the development of creative industries in the city
of Bandung, particularly regarding issues in education system. Using a mix of research tools, which mainly consist of desk study
and interviews, the research selected sixteen industry practitioners to conduct the interview. The research then explore three
important school of thoughts regarding education system as a way to explore how the same issue found is addressed in different
context. We look at other contexts to learn their experiences and apply whenever appropriate within the Bandung context. On a
practical level the research is also expected to contribute ideas and recommendations to various stakeholders, in particular the
local government to develop strategies in improving and developing the education system.

Keywords: education, human capital, creative industries
E-mail address: sonny_r@sbm-itb.ac.id
236
12 – 14 August 2014
The Development of Entrepreneurship in Creative Industries

with Reference to Bandung as a Creative City
Salfitrie Roos Maryunania, Isti Raafaldini Mirzantib * 43
ab
Abstract
Creative industries have been growing and developing in many parts of the world, especially in developed countries. The
development of creative industries in certain countries more or is less connected to their own cities. The term creative industries
had just been known in Indonesia in the year 2007, when the Ministry of Trade of Indonesia published the Creative Industries
Study of Indonesia. Since then, the area of the creative industries has started to be looked at by not only the government, but also
by academics and practitioners.
As the capital of West Java Province, Bandung is said to be a creative city, and becoming a pilot project that later will become a
model for creative industries in Indonesia. Many theories suggested that Bandung had all the potentials. Previous research
indicated that most of the creative industry businesses in Bandung were categorized as small and medium enterprises, also some
of them were less developed, so the industrial growth in Bandung on the medium and even large scale was not significantly seen.
Considering that, as a country, in order to boost the economic condition, Indonesia needs to increase the number of entrepreneurs
at medium-scale at the very least. Referring to the challenge stated above, we wished to focus this paper on two general questions,
namely on how to develop entrepreneurship in the creative industries in Bandung and how local characters (e.g. quality of life and
the education system) of Bandung will impact the development?

Keywords: creative industry; Bandung; entrepreneurship development
E-mail address: isti@sbm-itb.ac.id
237
12 – 14 August 2014
Stakeholders‟ Collaboration on Innovation in Food Industry

Mustafa Bombaywalaa, Andra Rianditab * 44
a
Faculty of Engineering, Lund University, P.O. Box 118, SE-221 00 Lund, Sweden
b
Abstract
In the dynamic economic environment where knowledge is vastly distributed companies can no longer rely on their own research
and are pushed to utilize outside sources to sustain growth. At the same time food industry involves large number of horizontal
and vertical relationships, the very dynamic nature of these relationships play role in innovation. The primary purpose of the
research is to study interactions and relations between stakeholders in food industry, particularly in Sweden, to gain an
understanding of the driving forces for development in food processing and packaging technologies. Also gain insight into the
innovation process at major Packaging solution provider (PSP) and Process equipment manufacturers (PEM), their interaction,
collaboration and information sharing with food manufacturing companies (FMC). Study shows the views of industry experts
strongly reflect that the role of suppliers of processing and packaging in food industry is “contractual” in nature, whereas
ingredient suppliers tend to be more mature partners in the innovation process. The innovation process at major food machinery
and packaging companies corresponds well to the „food-machinery framework‟ of open innovation (Bigliardi et al., 2010). It is
apparent that food industry is taking steps to integrate external knowledge sources in the innovation process, still suppliers
continues to play limited strategic role in innovation. This study shows that some barriers to collaboration were identified and they
can be grouped into two types: technical and perspective. Technical factors constitute lack of technical expertise amongst food
manufacturer, requirement for legal framework and difficulty in predicting future needs.

Keywords: stakeholders interaction; collaboration; innovation; food industry
E-mail address: andra@sbm-itb.ac.id
238
12 – 14 August 2014
Applying Interactive Planning on Public Service Leadership in The

Directorate General of Immigration Indonesia
M. Iman Santoso * 45
Faculty of Law, University of Krisnadwipayana, Jl. Raya Jatiwaringin, Pondok Gede, Jakarta 13077 Indonesia
Abstract
Nowadays, the public sector is being under pressure to improve the service and be able to work with other sectors more
effectively and efficiently. This is due to the high expectations of the people to obtain services from public sector organizations.
As the result, the leaders of public sector organizations are required to carry out bigger duties and responsibilities. It includes the
implementation of Indonesian immigration functions being performed by The Directorate General of Immigration, Ministry of
Justice and Human Rights of the Republic of Indonesia. Immigration in Indonesia itself has a unique character, because in terms
of its geographical condition, Indonesia is a the largest archipelagic state in the world for its large width of seas and numbers of
islands, which affects the expansion of the immigration service. The main question is what kind of leadership that is needed to
control the high dynamics of immigration in Indonesia? This study aims to describe the interactive planning (Ackoff, 2001, Asmui
and Fitriati 2013), which includes the explanations of what things that are needed to be applied in the case of The Directorate
General of Immigration. The results showed that the leadership in the General Directorate of Immigration Republic of Indonesia is
not tied to a position that has formal authority, but rather to the collaboration between management and staff of the organization
(Morse & Buss, 2008). The leadership characteristic needed is the leadership that has mission, create a vision, trust employees,
keep their heads in a crisis, encourage risk taking, has the expertise, know what is essential, become listener, teachers and
mentors. The leadership characteristics determine how the planning is able to answer challenges and overcome various problems
of immigration system in The Directorate General of Immigration. To support the success of interactive planning in imigration
services in Directorate General of Immigration, participative principle, continuity principle, and holistic principle are required.
The recommendations for Directorate General of Immigration are that government needs to conduct further research in order to do
mapping and planning scenario related to the role and position in Directorate General of Immigration, Ministry of Justice and
Human Rights Republic of Indonesia in facing globalization as well as ASEAN Economic Community 2015.

Managements (SBM), InstitutTeknologi Bandung (ITB).
Keywords: public service leadership; servant leadership; interactive planning; Directorate General of Immigration
E-mail address: m.iman.santoso@gmail.com
239
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A New Dynamic of Innovation System Based on Local Competitiveness in

Conference Paper · August 2014

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Accelerating Techno-Creative Innovation and

Accelerating Techno-Creative Innovation and

Penerbit: CIEL SBM ITB

Desain Sampul: Dini Aprilia Murdeani

Hak cipta dilindungi oleh undang-undang.

Undang-undang Republik Indonesia No. 19 Tahun 2002 Tentang Hak Cipta

Chair, Dwi Larso, Ph.D.

Prof. Wawan Gunawan A. Kadir Russell Toth, Ph.D.

Dwi Larso, Ph.D

Donald C. Lantu, Ph.D

Chair, Andra Riandita, Co-Chair, Mandra Lazuardi Kitri

General Secretary, Olva Patriani, Riyadhusolihah

Public Relation, Raden Roro Mirna Astari Magetsari

Treasurer, Suryo Utomo

IT, Web & Design, Epri Triyono Saputra

Program, Marina Natalia Tampubolon

Paper and Submission, Amilia Wulansari

Publication & Documentation, R. Bayuningrat Hardjakaprabon

Logistic, Bob Situmorang, Fathurrohman

Akbar A. Utama, Ph.D Mia T.D. Indriani, MSc

Constant innovation is the key to economic stability and development of entrepreneurship

Dwi Larso, Ph.D

Scientific Committee iii

The Application of Value Systems Prevailing in the Community on the Development 1

Pattern of Appropriate Technology Development of Processing of Pineapple Fruit in 5

A Course on Idea-to-launch Process with Emphasis on Experiential Learning 13

Empowerment Strategy Small Medium Entreprises (SMEs) Creative Industry to 31

Determining Customer Satisfaction by Analyzing Price in The Case of Small 41

Applications of Psychology in Business Context: An Innovative Approach of 51

Small ICT Enterprises Development Based on Community Entrepreneurship 57

Management Understanding in Small and Medium Enterprises 63

Developing Competitiveness of Small and Medium Scale Industries in Magelang and 79

Implementation Policy of Acquisition Intangible Assets in Government Financial 89

Identification for Biological Resource Based Creative Industry Cluster 95

A Course on Idea-to-launch Process with Emphasis on Experiential Learning 107

Innovation for Mutual Funds Investment Strategy in Indonesia 129

Application RF Module for Safety Helmet 137

Competitiveness Strategy Analysis of Women Entrepreneurs: A Case Study of SMEs 155

Creativity and Innovation: “Asli Bali” New Destination 161

Ecosystem for Indonesian Creative Industry: Case in Design Subsector 165

A New Dynamic of Innovation System Based on Local Competitiveness in Emerging 183

Abstracts of Publication in ELSEVIER Procedia – Social and Behavioral Sciences 193

The Application of Value Systems Prevailing in the Community

Keywords: value system; entrepreneurship; college

2. Result and Discussion

2.1. Entrepreneurship Management Cooperation Model in College

Fig. 1. Symbiosis students entrepreneurship activities in college

2.2. Value system Approach

2.3. Steps of Entrepreneurship in College

There are some models of steps of entrepreneurship as following (Indarti, 2008):

Pattern of Appropriate Technology Development of Processing of

Keywords: alam sari; appropriate technology development; pineapple processing.

3. Result and Discussion

3.1. Profile of KUB Alam Sari Business

3.2. Raw Material Procurement

3.3. Activity Description

3.4. Production Process Technology

Cut into four part

Throw away its liver