EXPLORING THE INTERNATIONALIZATION PROCESS
MODEL OF AN INDONESIAN PRODUCT
CASE STUDY: FRUIT CHIPS SMES
DICKIE SULISTYA APRILYANTO
GRADUATE SCHOOL
BOGOR AGRICULTURAL UNIVERSITY BOGOR
DECLARATION OF THE THESIS, SOURCES OF INFORMATION
AND DELEGATION OF COPRIGHT*
I hereby declare that the Thesis entitled “Exploring The Internationalization Process Model of An Indonesian Product – Case Study: Fruit Chips SMEs” is my original work produced through the guidance of my academic advisors and have not been submitted to any tertiary institution. This thesis also presented for the award of a degree in The University of Adelaide as a double degree program between Bogor Agricultural University and The University of Adelaide. All of the incorporated materials originated from other published paper are stated clearly in the text as well as in the bibliography.
I hereby delegate the copyright of my paper to the Bogor Agricultural University.
Bogor, July 2015
Dickie Sulistya A.
SUMMARY
DICKIE SULISTYA APRILYANTO. Exploring the Internationalization Process Model of an Indonesian Product – Case Study: Fruit Chips SMEs. Supervised by HARTRISARI HARDJOMIDJOJO and TITI CHANDRA SUNARTI.
Globalization is an inevitable phenomenon will drive free trade flows, such as flow of goods; services; investments and others. Globalization will give opportunity for SMEs to compete and enter the international market.
However, SMEs in Indonesia are still facing some problems related to international business. Despite the huge numbers of SMEs, the contribution to total industry export was still below 20%. Based on previous research found that most of SMEs in Indonesia are still focused on domestic markets. Most of SMEs face constraints in technology, skilled workers, access to international market knowledge and lack of capital. Thus, studying the internationalization process from SMEs that have been successful in entering international markets is expected could give a better illustration to other SMEs to follow their paths.
A case study is chosen as the strategy in conducting this research. Using purposive sampling, the data collected through interviews with two banana fruit chips owner, Mekarsari and Burnosari SME. The Uppsala model was chosen as the basis of the development of interview questions due to its popularity and contemporary theory.
This research shows the importance of Government promotion assistance program for SMEs to access the international market knowledge. Assistance such as international exhibition participation will enable these SMEs to have international market knowledge that is needed and to discover opportunities within. In addition, this research also shows the importance of social capital, firm-specific advantage and the appropriate strategy as the key success in international business. The use of middleman service can also be used to link into international market.
RINGKASAN
DICKIE SULISTYA APRILYANTO. Eksplorasi Proses Model Internasionalisasi Produk Yang Berasal Dari Indonesia – Studi Kasus: IKM Keripik Buah. Dibimbing oleh HARTRISARI HARDJOMIDJOJO danTITI CHANDRA SUNARTI.
Tujuan jangka menengah dari industri nasional adalah industri harus mampu memperkuat daya saing di pasar dalam negeri dan meningkatkan nilai ekspornya. Terlebih Globalisasi sebagai fenomena yang tidak terelakkan akan mendorong arus perdagangan bebas. Ini adalah suatu kondisi dimana hambatan-hambatan perdagangan antar Negara, seperti arus barang; jasa; investasi dan lainnya menjadi berkurang. Didorong oleh dua factor tersebut, hal ini menjadi peluang yang harus dimanfaatkan bagi Industri Kecil dan Menengah (IKM) untuk memasuki pasar international.
Namun, IKM di Indonesia masih menghadapi berbagai kendala untuk terlibat dalam pasar internasional. Meskipun memiliki jumlah IKM yang besar, total kontribusi terhadap ekspor nasional tidak lebih 20%. Berdasarkan penelitian terdahulu menjelaskan bahwa IKM di Indonesia masih fokus terhadap pasar domestik. Sebagian besar IKM menghadapi kendala dalam hal penguasaan teknologi, tenaga kerja yang handal, akses terhadap pasar internasional dan kekurangan modal kerja. Thus, dengan mempelajari proses internasionalisasi yang telah dilakukan oleh IKM yang berhasil memasuki pasar internasional diharapkan mampu memberikan ilustrasi kepada IKM lainnya untuk mengikuti langkah-langkah yang harus diambil.
Studi kasus dipilih sebagai strategi dalam melakukan riset ini. Menggunakan purposive sampling, data dikumpulkan melalui interviu dengan dua pemilik IKM keripik pisang yaitu Mekarsari dan Burnosari. Model Uppsala dipilih sebagai basis dari penyusunan pertanyaan interviu dikarenakan kepopuleran dan kekinian teori proses internasionalisasi.
Riset ini menunjukkan pentingnya program asistensi promosi dari Pemerintah, terutama asistensi bagi IKM untuk mengikuti pameran di luar negeri agar dapat mengakses informasi tentang pasar dan menemukan peluang-peluang bisnis yang ada. Selanjutnya, riset ini juga menunjukkan pentingnya social capital, keunggulan spesifik perusahaan dan strategi bisnis sebagai kunci sukses dalam bisnis internasional. IKM juga dapat memanfaatkan jasa agen eksportir untuk sebagai jalan untuk memasarkan produknya ke luar negeri.
Copyright ©2015, by Bogor Agricultural University
All Right Reserved
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. No part or all of this thesis excerpted without inclusion or mentioning the sources a. Excerption only for research and education use, writing for scientific papers,reporting, critical writing or reviewing of a problem
b. Excerption does not inflict a financial loss in the proper interest of Bogor Agricultural University
Thesis
submitted to the graduate school in partial fulfillment of Master of Science Degree
in
Agroindustrial Technology
EXPLORING THE INTERNATIONALIZATION PROCESS
MODEL OF AN INDONESIAN PRODUCT - CASE STUDY:
FRUIT CHIPS SMES
GRADUATE SCHOOL
BOGOR AGRICULTURAL UNIVERSITY BOGOR
2015
ii
Thesis Title : Exploring the Internationalization Process Model of An Indonesian Product – Case Study: Fruit Chips SMEs Name : Dickie Sulistya Aprilyanto
NRP : F351137161
Study Program : Agroindustrial Technology
Approved by Advisory Committee
Dr. Ir. Hartrisari Hardjomidjojo, DEA Chairman
Dr. Ir. Titi C. Sunarti, MSi. Member
Acknowledged by
Head of Study Program of Agroindustrial Technology, IPB
Prof. Dr. Ir Machfud, MS
Dean of Graduate School of Magister Program, IPB
Dr Ir Dahrul Syah, MScAgr
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ACKNOWLEDGMENTS
Alhamdulillahirobil’alamin. All writers’ praise and gratitude to Allah Subhanahu wa Ta'ala for all its gifts so that this scientific work is successfully completed. The title of this thesis is Exploring the Internationalization Process Model of An Indonesian Product – Case Study: Fruit Chips SMEs.
The Author wants to thank you to advisory committee, Dr. Ir. Hartrisari Hardjomidjojo, DEA., Dr. Ir. Titi C. Sunarti, MSi., and Dr. Ronald Grill for all amazing support and encouragement in every stage of this study.
The Author also thank to Dr. Barry Elsey and Amina Omarova, who has given so much support during one-year study in The University of Adelaide and has so much self-directive learning through periodical workshops.
Many thanks to the Author’s colleagues in this double degree program for the time to share and discuss any knowledge, hand in hand for getting through good and bad times together.
Special gratitude to my father, mother, sister and brother hopefully this reputation may boast and useful for families in the future. To the Author's wife and daughter, thank you for all support and patience during the study period.
Bogor, July 2015
Table of Contents
LIST OF TABLE iii
LIST OF FIGURES iii
LIST OF APPENDICES iii
1 INTRODUCTION 1
Background 1
Problem Statement 2
Objectives of Study 2
Research Questions 2
2 LITERATURE REVIEW 3
Small and Medium Enterprises (SMEs) 3
SMEs Development 3
SMEs Characteristics and Export Limitations 5
Banana Industry 6
Internationalization 7
The Uppsala Internationalization Process Model 7
Knowledge and Opportunities 8
Psychic Distance 9
Liability of Foreignness 10
Liability of Outsidership 10
Relationship Commitment Decisions 11
Learning, Creating and Trust Building 11
Network Position 11
3 METHODS 14
Logical Framework 14
Settings 15
Participants 16
Research Procedure 16
Data Analysis Procedure 17
4 RESULTS AND FINDINGS 18
SMEs Profile 18
Problem identification 18
Financial 19
Packaging 20
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Technical Requirement 21
Raw material supply 21
Key Success Identification 22
Social capital 22
Raw Material Supply Continuity 23
Comparative advantage 23
Flexible Business Strategy 23
The role of Middlemen 24
Internationalization process 24
Network Position 24
Mekarsari Subsequent Internationalization Process 24
Knowledge and Opportunity 24
Relationship Commitment Decision 25
Learning, Creating and Trust Building 25
Burnosari Subsequent Internationalization Process 25
SMEs Internationalization Timeline 26
Limitation regarding the data collection 26
Implications 26
Strategic implication for SMEs 26
Policy making implication 26
Theoretical implication 27
5 CONCLUSION AND FURTHER RESEARCH 28
Conclusion 28
Recommendation for Further Research 28
REFERENCES 29
APPENDICES 31
LIST OF TABLE
Table 1 SME definition according to Law (UU) no 20/2008 3
Table 2 SME definition according to BPS 3
Table 3 the number of SMEs period 2011 – 2012 4
Table 4 Trend of number SMEs based on economic sector 4 Table 5 SMEs and LEs export contribution to national export value 5
Table 6 Fresh fruits production volume (Tons) 6
Table 7 Bananas export value 6
Table 8 Fresh fruits and processed fresh comparison 7
Table 9 Participants of the research 16
Table 10 Mekarsari SME and Burnosari SME profiles 19
Table 11 Internationalization problems identification 19 Table 12 SMEs internationalization key success factors 22
LIST OF FIGURES
Figure 1 The Uppsala model (1977) 8
Figure 2 The Revisited Uppsala model (2009) 8
Figure 3 the Network Model 12
Figure 4 Research Stages 15
Figure 5 Mekarsari SME Conventional Packaging 20
Figure 6 Internationalization Timeline 26
LIST OF APPENDICES
Appendix 1 SMEs Profiles Questionaire 31
Appendix 2 Interview Questions 32
Appendix 3 Mekarsari Interview’s Finding Theme 33
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INTRODUCTION
Background
The Indonesian government pays high attention to the role of small and medium enterprises (SMEs), as they have made a significant contribution to the Indonesian economy. Small and medium industries dominate the enterprises structure in Indonesia to more than 99% and have become main employment sources, giving livelihood to more than 97% nation’s workforce. SMEs are also quick to recover when a crisis comes.
One of the mid-term industry development determined that industry must strengthen the domestic market and to escalate export (Presidential Regulation no 28/2008). Moreover, globalization as an inevitable phenomenon will drive free trade flows. This is the condition where trade between countries, such as flow of goods; services; investments and others, become borderless. An example of this, Indonesia at the end of 2015 will be facing ASEAN Economic Community (AEC) that will lead to the opportunity for a market size of 600 million people. With the support from government and the existence of opportunities, therefore this is the time for SMEs to involve in international trade or to internationalize the businesses.
However, SMEs in Indonesia are still facing some problems related to international business. Despite the huge numbers of SMEs, the contribution to total industrial export values was still below 20%. Tambunan (2011) explains that most of SMEs in Indonesia are still focused on domestic markets. Most of SMEs face constraints in technology, skilled workers, access to international market knowledge and lack of capital. Thus, studying the internationalization process from SMEs that have been successful in entering international markets is expected could give a better illustration to other SMEs to follow their paths. In other words, learning from other firm’s internationalization behavior can be done by imitative learning (Haunschild and Miner, 1997 as cited in Petersen, Pedersen and Sharma (2003)). Imitating other firm’s internationalization decision will add firm’s experiental knowledge and make firm become more familiar with international market (Bonaccorsi (1992) as cited in Hadley and Wilson (2003)).
Despite the above problems, there are two fruit chips SMEs that have successfully entered international markets. Mekarsari and Burnosari SMEs are these two success examples. Burnosari’s banana fruit chips have been successfully exported to Singapore; meanwhile Mekarsari’s products have been exported to some countries in South East Asia, Taiwan, and Middle-East. By studying the success experience of these SMEs, it is expected that we could develop guidance for guiding, mapping and motivate other SMEs to follow on entering the international market.
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authors claimed that this model could be a guidance for other firms to internationalize their business.
Based on the background, this research aims to identify SMEs problems, key success factors and to explore fruit chips SME internationalization process examples based on the Uppsala model which is specific in Banana fruit chips SMEs.
Problem Statement
In order to improve SMEs access to international market, SMEs could study the success story of SMEs internationalization process. The success experience of banana fruit chips Burnosari in Lumajang and Mekarsari in Sidoarjo in exporting its products to international market has been taken as case study in this research. The internationalization process that has been taken by these two SMEs was explored through The Uppsala Model.
Objectives of Study
This research’s objectives are:
a. To identify problems for fruit chips SMEs on entering the international markets. b. To identify the key success factors for fruit chips SMEs on entering the international
markets.
c. To provide a better understanding on fruit chips SMEs internationalization process based on the Uppsala model.
Research Questions
RQ1. What are the problems for fruit chips SMEs on entering the international market? RQ2. What are the key success factors that enable fruit chips SMEs on entering the
international market?
RQ3. How does the internationalization process operate in Indonesian SMEs (study case in Banana Fruit chips SMEs)?
Significance of Research
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LITERATURE REVIEW
Small and Medium Enterprises (SMEs)
There are several SMEs definitions in Indonesia. Law (UU) no 20 year 2008 give definitions to micro, small and medium enterprises based on the total assets and annual turnover as follows:
Table 1 SME definition according to Law (UU) no 20/2008
No Description Criteria
Asset (Rp)* Annual Sales (Rp) 1 Micro Enterprises Max 50 million Max 300 million 2 Small Enterprises > 50 - 500 million > 300 million- 2.5 billion 3 Medium Enterprises > 500 million- 10 billion > 2.5 - 50 billion
*exclude land and building for business
Meanwhile the National Bureau of Statistics (BPS) classified SMEs based on the size of the workforce. Small businesses are businesses that have a workforce between 5 to 19 people, while the medium businesses are businesses that have number of workforce between 20 to 99 people. Table 2 illustrates this definition:
Table 2 SME definition according to BPS
No Description No of workforce
1 Small enterprises 10 - 19
2 Medium enterprises 20 - 99
aSource: National Bureau of Statistics
Given those definitions, this research will use the definitions of SMEs that given by BPS, considering the ease of definition and the access to data.
SMEs Development
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Enterprises 55,211,396 56,539,559 1,328,163
Total MSMEs 55,206,444 99.99 56,534,591 99.99 1,328,147 2.41 - Micro 54,559,969 98.82 55,856,176 98.79 1,296,207 2.38
- Small 602,195 1.09 629,418 1.11 27,223 4.52
- Medium 44,280 0.08 48,997 0.09 4,717 10.65
a
Source: Ministry of Cooperatives Small and Medium Enterprises
Having looked at economic sector, the largest SMEs units’ proportions in 2011 were in agriculture (48.85%). Table 4 views the next four sector consecutively were the Trade, Hotel and Restaurant (28.83%), Transport and Communication (6.88%), Manufacture (6.41%) and Services sector (4.52%). The dominance of SMEs in the sector based on agriculture, gives an indication that Indonesia has a great potential in natural resources and could be the prospective to be developed further.
Table 4 Trend of number SMEs based on economic sector
No Economic sector 2010 2011 Trend
Source: Ministry of Cooperatives Small and Medium Enterprises
Table 5 SMEs and LEs export contribution to national export value
2009 2010 2011 2012*
SMEs export (billion Rp) 162,254.5 175,894.9 187,441.8 166,626.5 LEs export (billion Rp) 790,835.3 936,825.0 953,009.3 1,018,764.5 National export (billion Rp) 953,089.8 1,112,719.9 1,140,451.1 1,185,391.0 SME's export contribution (%) 17.02 15.81 16.44 14.06 LE's export contribution (%) 82.98 84.19 83.56 85.94
aSource: Ministry of Cooperatives Small and Medium Enterprises
*temporary
SMEs Characteristics and Export Limitations
According to Tambunan (2008b) there are several SMEs characteristics that important to the Indonesian economy. Firstly, SMEs counted to more than 99% of all enterprises and big source of employment (>97% of workforce). Secondly, most of SMEs locations are at the rural place and thus agriculturally based activities. Therefore it might be important for rural economic development Thirdly, SMEs are labour intensive, thus provide livelihood to many people. Fourthly, source of capital is from personal savings. Fifthly, their production is less dependent on imported raw material and mainly targets domestic markets and low income consumers, and the last both the entrepreneur and workers are low educated.
Based on the characteristics above, there might be correlations with low SMEs export contributions. Rural based location might influence SMEs access to formal financial institution such as banks. As most SMEs finance their activities from personal saving and exports is considered as expensive, SMEs need other financial source to fund the export activity. Sometimes, this situation make SMEs turned to informal institution and must bear with high rate of return (Irjayanti & Azis 2012). Moreover, although government has provided such a scheme to funding SMEs activities, most of SMEs do not aware of this facility. Thus, export expensive costs and lack of capital become one of main constraints for SMEs in doing export activities ((Tambunan 2008a, 2008b, 2011)). Rural based area might also limit SMEs access to international market knowledge. This situation make difficult for export-oriented SMEs to seek opportunities in international market. Moreover Irjayanti and Azis (2012) emphasize the importance of market knowledge although SMEs has made good product but lack of market knowledge will inhibit SMEs in international market transactions. As a result of this, most of export-oriented SMEs decided to use intermediaries’ services such as traders, exporting companies to export their product, or through cooperation with large enterprises (Les), where SMEs produce the semi-final product and then finalized by LEs (Tambunan 2008a).
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Banana Industry
Indonesia has abundant production of bananas. The BPS data shows from period 2010 – 2013 the bananas production reached 24 million tons with 5 to 6 million tons of yearly production. This fact has put Indonesia as the second largest bananas producer in ASEAN and sixth largest in the world (UN Comtrade). Table 6 shows the fruits production (top 5) in Indonesia.
Table 6 Fresh fruits production volume (Tons)
Fruits /Year 2010 2011 2012 2013 Total Bananas 5,755,073 6,132,695 6,189,052 6,279,290 24,356,110 Mangoes 1,287,287 2,131,139 2,376,339 2,192,935 7,987,700 Oranges 2,028,904 1,818,949 1,611,784 1,654,745 7,114,382 Pineapples 1,406,445 1,540,626 1,781,899 1,882,806 6,611,776 Snake fruit 749,876 1,082,125 1,035,407 1,030,412 3,897,820 a
Source: National Bureau of Statistics
Banana production in Indonesia is not only for domestic market consumption but also exported to international market. According to UN Comtrade data (2013) the Indonesian bananas in international trade worth up to US$ 3 million with net weight more than 5,500 thousand tons in 2013. Table 7 shows the export figures of Indonesian bananas period 2010-2013.
Table 7 Bananas export value
Year 2010 2011 2012 2013
Value Trade (US$) 48,305 1,011,593 872,154 2,973,647 Net weight (Kg) 13,578 1,734,655 1,489,370 5,680,364 a
Source: UN Comtrade
Table 8 Fresh fruits and processed fresh comparison
Criteria Fresh fruits Processed fruits (chips)
Shelf lifetime 2 - 4 weeks 6 - 12 months and as a result will give higher selling price. At this time banana processing industry is still concentrated in the regions of East Java, Central Java, West Java, Lampung and South Kalimantan. The most common processed bananas are in fruit chips and “sale” banana, in which generally on medium scale industry.
Internationalization
Rundh (2006) as cited in Sari et.al (2008a) give definition of internationalization as the process of increasing the operational activities into international markets. In addition to this, Calof and Beamish (1995) as cited in Masum and Fernandez (2008) explains that internationalization involve firm’s operational adjustment, in strategy, structure and resources to an international market. Meanwhile Bandi and Bhatt (2008) explain internationalization as the firm’s process to enter foreign market and developing international operations. Moreover, Shirani (2009) explains internationalization as the action of firms to export their products and services and the process to have international business activities.
This research use the internationalization definition from Bandi and Bhatt (2008), as this research purpose is to gain better understanding on the fruit chips SMEs process to internationalize their products into international markets.
The Uppsala Internationalization Process Model
The original Uppsala model was developed in 1977 which the model was developed by observing four Swedish firms on how the firms internationalize the businesses. However due to the development on business network research or the Network view, the Uppsala model was revisited in 2009. Network view sees firms are embedded in the environment as part of networks.
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Fourthly, the firm tries to keep the risk-taking at a low (Hansson, Sundell & Öhman 2004). Fifthly, the model assumes that internationalization is pursued within networks.
The original model (1977) states that aspects consist of “market knowledge and market commitment”, meanwhile change aspects consist of “commitment decisions and current activities”. Figure 1 shows the original Uppsala model:
Figure 1 The Uppsala model (1977)
The revisited model in 2009 still consists of state and change aspects, but the component slightly changed. The state aspect consists of “Knowledge Opportunities and Network position”, meanwhile the change aspect consists of “Relationship commitment decision” and “Learning, creating and trust building” (Johanson & Vahlne 2009). The model explains the importance of market knowledge that will influence a firm’s commitment decisions and the activities that follow them. This commitment will lead to learning and creating new knowledge. An increase level of knowledge may be either positive, which manifested in form of increase level of commitment, or negative in impacts on commitment decisions. Hence the model is dynamic (Johanson & Vahlne 2009). The following figure shows the contemporary of Uppsala model:
Figure 2 The Revisited Uppsala model (2009)
Knowledge and Opportunities
Johanson and Vahlne (2009) argue that experiential knowledge can only acquire through firm’s operational activities or in other words experiential knowledge gathered by learning by doing. And it is become the basic mechanism in the internationalization process. This argument has been criticized that firms can get the experiential learning of different firms without experiencing the same encounters as these organizations. Firms could observe the other organization’s behavior, in particular the internationalization behavior, to learn as the same experiences that organization have (Haunschild and Miner, 1997 as cited in Petersen et al.). In addition, the network view explains that knowledge does not accrue just from firm’s current activities but rather additionally from activities of its networks (relationships). Therefore such relationships develop firm’s knowledge (Kogut (2000) as cited in (Johanson & Vahlne 2009)).
Eriksson et al. (1997) have put attention with market knowledge in the Uppsala model. They break market knowledge into two sub components, institutional market knowledge and market-specific business knowledge. Institutional market knowledge defined as the knowledge related to laws, local taxes, languages, local culture and norms. Johanson and Vahlne (2009) argue that this definition is similar with term of psychic distance and liability of foreignness that embedded in the Uppsala model. Meanwhile, market-specific knowledge defined as the knowledge of knowing how to organize and manage internationalization efforts which consider the new situations and upcoming problems that might arise. Once again Johanson and Vahlne (2009) emphasize that this knowledge is related to liability of outsidership of the Uppsala model. In addition to the term of psychic distance, liability of foreignness and liability of outsidership are considered as the factors that impede the internationalization process.
Moreover The Uppsala model added the term “opportunities recognition” as the subset of market knowledge and put it as the most important element of knowledge that drives the internationalization process. Opportunity recognition sees as the outcome of current business activities that add experience to the current knowledge. It implies that opportunity recognition is related to current business activities as opposed to with particular opportunity seeking activities. In addition, since relationship between firm’s and its networks can add new knowledge (accumulated knowledge) thus as a result of this, new opportunities are discovered or created. The process could be unilateral, bilateral or multilateral.
Psychic Distance
The Uppsala model suggests the internationalization begin in a market that are close to the domestic market which suggest the closer the market, the less psychic distance they have. Less psychic distance will benefit firms to establish new relationship with foreign partner eventually helping the process of trust building and learning knowledge. Psychic distance is defined as factors that make firms difficult to conceive foreign environment. These factors are language, culture, business practice, and political system which might inhibit and disrupt firms to obtain market knowledge needed (Arenius 2005; Masum & Fernandez 2008).
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and quality of the outer relationship owned by the firm and the individual within the firm. Components that are perceived as social capital are reputation, credibility and level of trust (Arenius 2005). In addition, Nahapiet and Ghoshal (1997) as cited in Sari, Alam and Beaumont (2008a) describes there are three dimensions of social capital. These dimensions are: structural dimension (connection with government officials, community and managers of others); relational dimension (similarity in language and culture); and cognitive dimension (trust).
Moreover, psychic distance relevance has been criticized by Madsen & Servais (1997) as cited in Johanson and Vahlne (2009). They states when internationalization starts, psychic distance is no longer a relevant factor. Nowadays, a firm could internationalize by acquisition, joint venture and develop strategic alliance which will help the process of getting market knowledge and building relationship faster.
Liability of Foreignness
Doing business in international markets, firms will face costs which is known as
liability of foreignness, which the local firms will not. These costs will affect firms in a competitive disadvantage. Costs that categorized as liability of foreignness could arise from four sources which are (Zaheer 1995):
1. Costs that related with spatial distance, in example travel, transportation and coordination between countries that firms need to make.
2. Firms-specific costs based on a particular company’s unfamiliarity in a new environment.
3. Costs that occur from host country environment, such as economic nationalism or local pride.
4. Costs that occur from home country environment, such as restriction on technology transfer.
This concept still correlated with psychic distance where the greater psychic distance the greater firm’s liability of foreignness (Arenius 2005). Costs from liability of foreignness eventually will impact on foreign firm’s profitability. Thus, several things need to be done to trade-off these costs. Things that can be done to overcome the liability of foreignness are (Zaheer 1995):
1. Cost saving economies of scale
2. Exploiting location based cost advantage
3. Resources such as a brand name or a differentiated product
4. Ability to learn or transfer organizational practice and managerial skill
Thus, firm specific advantages are needed in order to overcome the liability of foreignness.
Liability of Outsidership
In addition to the above, companies also will face the “liability of outsidership”. This concept states internationalization should begin within international relationship. A firm that does not have international relationship called the "outsider".
Secondly, potential market from an international market request a service, thus an “insider” opportunity is open.
Relationship Commitment Decisions
After firms confirm the opportunities within and acquire the knowledge needed, firm could whether to abandon or continue by making commitments. But, before the commitment decisions there is an important factor which becomes the lubricant so that commitment could run well, and that is trust. It can be said after firms has sufficient
knowledge of foreign market, firms will establish a relationship with a company / local partner, which requires mutual trust prior to business commitments being made. Trust building comes first before establishing a commitment. When trust and commitment exist it would guarantee efficient, productive and effective outcomes.
“Trust can also substitute for knowledge, for instance when a firm lacks the necessary market knowledge and so lets a trusted middleman run its foreign business (Johanson & Vahlne 2009)”.
Hence, the definition of commitment here is the decision of firms to commit the business to relationships. A local firm decides whether to increase or decrease the level of commitment to one or several relationships in its network. Moreover, commitments usually visible through changes in entry modes, the size of investments, organizational changes, and definitely in the level of dependence (Johanson & Vahlne 2009).
Learning, Creating and Trust Building
Firms interactions within its relationship (partner), will allow both parties to learn about and from each other. There is a knowledge sharing between them. As a result, this interaction may also create new knowledge and create new opportunities as well. In addition, if the partner also is committed to other relationship, the firm will also have indirect relationship to a wider network which may also make has the probability to benefit the knowledge that possessed among them. Thus, the firm will benefit from its indirect relationship as well.
But, on the other hand new knowledge will also have negative effect, when one of the parties perceive the current performance and in the future are not sufficiently promising (Johanson & Vahlne 2009). As a result, these aspects will influence the level of trust and commitments as well. The level of trust and commitment can either goes up or down. The Uppsala model underlines that the speed, intensity and efficiency of these processes depend on the existing body of knowledge, trust and commitment.
Network Position
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international market, wants the focal firm to follow. It happens when firm’s partner need services or products from focal firm.
In order to have better illustration of the network position, Network model by Johanson and Matson (1988) as cited in Hosseini et.al (2012) is presented. The model explains there are four positions regarding to the two principal elements; Degree of internationalization of the firm, and degree of internationalization of the network (Hosseini et.al 2012). These positions are (1) early starter, (2) Lonely international, (3) The late starter and (4) International among others which illustrated as follow:
Figure 3 the Network Model
Source: Johanson & Mattson (1988) as cited in Hosseini, Mojtaba and Dadfar, Hosseini (2012)
“Early starter” (ES) is the position where both firms and its network have little involvement in international market. An early starter firm has lack of current activities in foreign market, and lack of foreign networks. Thus, firm has little opportunity to acquire international market knowledge since the information feedback from market is low. As a result, an early starter firm must face high uncertainty and risks. It is suggested that an early starter firm to use agents to acquire market knowledge needed and as a result to reduce uncertainty (Chetty & Holm 2000).
“Lonely international” (LI) is the position where firms already establish a position in international market, nevertheless its networks still in domestic focus. An LI firm has greater of commitment of international activities and greater level of experiential knowledge than an ES firm. It is claimed that LI have advantages compared to competitors due to its experiential knowledge possess.
knowledge. Nevertheless, firm could benefit from indirect relationship with foreign business networks through its supplier, customers, and even from competitors.
“International among others” (IAO) is the position where both firm and its networks highly internationalized. An IAO firm has established position and its resources in international market. As a result this firm has high level of experiential knowledge.
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METHODS
Logical Framework
This study explored SMEs problems and success factors that enable SMEs to enter international market. In addition this research provides better understanding of the SMEs internationalization process with case study in Fruit Chips SMEs.
The following research questions in this research are:
RQ1. What are the problems for SMEs to enter international markets?
RQ2. What are the key success factors that enable SMEs to enter international markets? RQ3. How does the internationalization process operate in Indonesian SMEs (study case in Banana Fruit chips SMEs)?
This research is a qualitative research with an exploratory case study approach. Malhotra (1996) as cited in Bandi and Bhatt (2008), defined qualitative research as a research that unstructured, using exploratory research methodology and small samples in small number which eventually provide insights of the problems. This explanation relates to the small sample that being used in this research which is 2 samples of banana fruit chips SMEs. In addition, Parasuraman (1991) as cited in Bandi and Bhatt (2008) explains that qualitative research involves collecting, analysing and interpreting data that cannot be genuinely measured.
This research uses qualitative research method based on the features described by Yin (2010) as follow:
1. This research attempts to get data from participant’s views through semi-structured interviews. Therefore with minimum intrusion the interview participants is expected to give straightforward data. Eventually participant’s views will help to develop the research outcome
2. Getting participant’s view is the major purpose of this research.
3. Qualitative research is expected can explain the contemporary events through an existing concept. In this research the Uppsala model is proposed as the concept to explain the fruit chips SMEs internationalization process.
Exploratory is chosen as the purpose of this research because this research is intended to understand or to know how SMEs internationalize their business. Saunders et. al (2011) explains that an exploratory study is a significant method for figuring out 'what is going on; to look new insights; to make inquiries and to evaluate phenomena in a better way. Moreover, they explain the advantages of exploratory are flexible and adaptable to changes as new data appear and new insights are coming. Thus, give space to change the research’s direction.
multiple case study is the need to see whether the discoveries in the first case happen in the second case.
However, a case study also has some limitations that most probably occurred in this research. As Yin (2009) explains case study mostly cannot avoid biases, where these biases may have been more frequently encountered and less frequently overcome in case study research. Moreover, case study provides little support in scientific generalization. Nevertheless case study is generalizable to the theoretical concepts and not to population. In addition, the fundamental objective of a case study is to generalize theory instead of statistical generalization.
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Figure 4 Research Stages
Settings
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Participants
The participants were selected using purposive sampling. Saunders et. al (2011) explains the use of purposive sampling should meet the criteria that chosen by researcher, which will enable researcher to answer research questions and research objectives. In extent, purposive sampling is often used in case study analysis where the research involves a very small sample.
The criteria of the participants in this research were:
1. Banana fruit chips SMEs that has already internationalized the business (export) 2. Hold different process of internationalization, i.e. one case by direct export and another case using agents.
The different internationalization process by these two SMEs presented different views of problems, key success factors and definitely the process of going international. This was conducted to reduce biases from researcher prejudgments that might appear in this research.
The participants for this study were two owners of Banana fruit chips SMEs as shows in Table 9.
Table 9 Participants of the research
Name Background Established Marketing Area
This research was conducted with following procedures: 1. Identification of Internationalization problems and success factors
a. Profiles of SMEs
Data of SMEs profiles were collected from questionaire which was sent to respondent through email and phone interview. The questionaire list is provided in Appendix 1. Profiles of SMEs covers data of factory location, marketing area, way of exporting, number of workforce, types of machinary, production capacity, net assets, and turnovers.
b. Internationalization Problem Identification
These results are provided in Appendix 3 (Mekarsari SME) and Appendix 4 (Burnosari SME).
c. Internationalization Success Factors Identification
The success factors data were also collected through semi-structured interview, as the list of interview questions are provided in Appendix 2. The succes factors were also interpreted from the interview result and use the uppsala model as the conceptual basis. These SMEs internationalization success factors are social capital, raw material supply continuity, comparative advantage, flexible business strategy, and role of middleman. The result of analysis are provided in Appendix 3 (Mekarsari SME) and Appendix 4 (Burnosari SME).
2. SMEs internationalization empirical evidence
SMEs internationalization process were described based on the Uppsala model. The description consist of 4 elements in the model, which are network position, knowledge and opportunities, relationship commitment building and learning and creating knowledge and trust building. The data were collected from semi-structured interview.
Data Analysis Procedure
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4
RESULTS AND FINDINGS
SMEs Profile
Burnosari SME established in 1997. The business started when Mrs Kasri Andayani (Ani), the owner, saw the opportunity of the abundance of banana production in Lumajang. Burnosari processed banana into a product called banana sale and banana chips.
Recently, Burnosari marketing area covers several cities in East Java Province, Indonesia. After positive response from domestic market, in 2004 an Exportir agent from Mojokerto interested to be a buyer and market Burnosari banana chips to international market. The cooperation term between these two parties, Burnosari SME produce and sell banana chips without packing and brand as much as 1 ton weekly, henceforward the product being repackaged and given brand by the agent to be sold into Singapore.
Burnosari SME also get several bids to export its product into international market from foreign buyer, namely to Dubai, UAE and Seoul, South Korea. But, because of limited production capacity Mrs. Ani had to reject the bids.
Meanwhile, Mekarsari SME established by Mrs. Ida Widyastuti in 2002 and it was started in Trenggalek. Mrs. Ida also saw the potential from the abundance of banana production. Therefore Mrs. Ida had an idea to develop partnership with the farmer where from this partnership farmers sell the harvest to Mekarsari and Mekarsari also empowering the local people to process the banana into banana chips.
Recently Mekarsari marketing area covers almost all big cities in Java Island. The Mekarsari success in domestic market has put government attention and eventually facilitates them to attend international exhibition. Currently Mekarsari SME has two factories, one is located in Trenggalek where the production is specialized for domestic market and another is located in Sidoarjo where the production is specialized for international market. Details of SMEs profile is shown in the Table 10.
Problem identification
Table 10 Mekarsari SME and Burnosari SME profiles
No Profile Mekarsari Burnosari
1 Owner Ida Widyastuti Kasri Andayani
2 Establish 2002 1997
3 Factory Location Trenggalek and Sidoarjo Lumajang
4 Marketing
5 Export Directly Indirectly - using middleman
6 Workforce 99 33
7 Machinary Combination, manual and automated machinery
Combination, manual and automated
machinary. 8 Production Capacity 2 tons daily 150- 400 kilograms daily
9 Net Asset (Rp) N/A 20 million
Packaging Supply in continuity Raw Material Financial Relationship
(commitment building)
Technical Requirement
Financial
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because most of Government promotion assistance program only covers the booth rental cost, excluding the other costs that might occur such as accommodation costs. Moreover, the researcher make an evaluation and interpretation of Burnosari’s SME financial capability from its profile. Comparing the production capacity of Mekarsari and Burnosari SME, it can be seen that Mekarsari SME has 5-7 times bigger capacity as Burnosari SME. From this evaluation, the researcher evaluated that Burnosari’s financial capability is not as good as Mekarsari SME. Therefore the researcher concluded that Burnosari SME will also face financial problem if they would like to participate in international exhibition.
As Tambunan (2008b) mentioned that most of SMEs activities are financed from personal savings, thus the financial capability among SMEs is different. Therefore some SMEs might lack of capital to do export activities. Not to mention the inhibitor fro SMEs to borrow capital from Banks, which is mostly because SMEs are unable to meet certain requirements set by banks. This financial cost problem is related to the factor of liability of foreignness.
Thus some actions could be taken by SMEs if they would like to finance their business to enter international market. One of these actions is SMEs could have used the facilities from Government such as KUR (Credit for Businesses Programme). From this program SMEs will get easiness to borrow some money to banks where SMEs do not have to provide any collateral from financing, where this collateral is usually required by the Bank and can not be fulfilled by SMEs.
Packaging
In the earlier time when Mekarsari SME participate in international exhibition, the product’s packaging were still conventional and less attractive. Although the consumer perceived the product has good taste, due to its packaging the consumer were not interested and affect Mekarsari SME to get prospective business partners as buyers.
Figure 5 below presents the conventional packaging where banana chips are packaged in plastic packaging. This packaging design are acceptable in domestic market instead of in international market. This problem confirms psychic distance problem, where local business practice in domestic market is difference with international market
Figure 5 Mekarsari SME Conventional Packaging Source: www.mekarsarisnack.com
Eventhough the use of plastic as packaging have some advantages like lightweight, transparent, strong and thermoplastic, but plastic also have some disadvantages due to its probability of monomer substances migration from the plastic material into food. Food packed in plastic packaging, may not be prevented 100% from this migration (especially if the plastic used is not compatible with the type of food). Migration monomer occurs caused by the temperature of the food or the storage and processing process. The higher the temperature, the more monomers can migrate into the food. The longer the contact between the food with plastic packaging, the amount of monomer that can migrate. Moreover, plastics additives, plasticizer, stabilizer and antioxidant can be a source of contamination and can cause poisoning.
In conclusion, limited market knowledge will inhibit SMEs to understand what the international market’s products quality and standards required.
Relationship (Commitment) Building
In process of establishing relationship with foreign partner, Mekarsari emphasizes the process is timely. Not in every international exhibition participation will lead to a business contract. Mekarsari needs to follow up the contacts She’s got, in order to keep communicate with any potential buyers that visit Mekarsari’s exhibition booth. In fact, the process could take 2 years’ time to establish a commitment for both parties.
In addition, the potential buyer also compared one of the Mekarsari’s product, which is packed in composite can, with potato chips “Pringles” that use similar packaging. This make Mekarsari difficult to develop a commitment.
The factor that may become the inhibitor to establish a commitment for both parties is “trust”. This confirmed what explained by Johanson and Vahlne (2009) that prior a commitment, trust must be developed first. These findings might be an indication that the potential buyers hesitate in Mekarsari’s products future prospects to compete in their home market. Thus, relationship building is considered as timely, costly and uncertain process.
Technical Requirement
In a particular market, there are some specific requirements for Mekarsari to fulfill. For instance in Japan market, Mekarsari was asked to present on farm activities certificate, i.e. certificate of type of plant, fertilizer and pesticides. This situation made Mekarsari difficult to comply with its requirements.
This problem relates to term of psychic distance where there is Government regulations (laws) need to comply with, such as Plant Protection Law and Food sanitation law (Jonker & Ito 2005). Therefore it is important for The Government to provide some market knowledge preview to the SMEs, to give opportunity assessment.
Raw material supply
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production has affected banana’s price in fresh market. When the production of bananas from farmers down, then the price of raw materials could rise up to 2 times (2x). This fact has led Burnosari SMEs in difficult situation to ensure the availability of raw materials
According to Tarigan (2007) there are two main actors in the upstream of banana chips agro-industry in Lumajang. First, the farmers as producers of raw materials. The farmers sell banana directly to banana chips processing industry or through traders. The second main actors are traders, who will distribute or sell bananas to banana processing industry. This provides evidence that Burnosari might also have to compete to obtain opportunity of exporting to several countries.
Key Success Identification
The key success identification is also explained based on each SME specific key success factors. Since Burnosari SME products are exported through middleman service, therefore it is identified as the only Burnosari SME specific key success factor. The details of both SMEs key success factors are shown in the Table 12.
Table 12 SMEs internationalization key success factors
Key Success necessary networks to access international markets. Reputation that Mekarsari and Burnosari might possess may include the brand's reputation, quality of products or achievements of the SME owner. Zaheer (1995) describes these reputations as firm’s social capital.
Raw Material Supply Continuity
Big and sustainable production capacity has enabled Mekarsari to fulfil the business contracts and has proven its credibility in international market. This is due to its raw material continuity. In order to ensure its raw material availability, Mekarsari has developed mutual partnership with farmers in term of “inti-plasma” partnership. Through this partnership, Mekarsari act as a mentor to the farmers in Trenggalek on farm activities and buy the plantation production. Mekarsari also empowered the local people to work on the factory to produce banana chips.
This success might be taken as an indication that Mrs. Ida has good interpersonal skill to conduct a persuasive approach to the farmers and all related stakeholders, i.e. local Government to support and establish this partnership.
Comparative advantage
Mekarsari has its advantage in using banana “Agung” as raw material. According to Mekarsari, Banana agung give comparative advantage with its bigger diameter size compared to competitors. As it is quoted from Mrs Ida (Mekarsari’s owner):
“In some exhibition that I have attended, I noticed that banana chips from other countries do not have type of banana “Agung” which have big diameter size.”
Mekarsari has taken this as a relative positive advantage. Johanson and Vahlne (2009) explain the importance of decision maker role in opportunity identification, developing and exploitation. In addition to the positive response from people who taste Mekarsari banana chips at the exhibition, has increased Mrs. Ida confidence to compete and to be successful in international market.
Flexible Business Strategy
Mekarsari has always considered the local consumer preferences in exporting to international markets. Mekarsari conduct product customization to a particular market. In the way Mekarsari provides some samples with different ingredients to the buyer, which subsequently gives feedbacks to Mekarsari before it goes to production stage. Mekarsari also made some improvements to increase the product’s quality. As it is quoted from Mrs. Ida as follow:
“The basic concept is we provide at least three samples with different recipes A, B, C. Later on, we ask feedback from buyer to adjust with local customer preferences.”
Mekarsari emphasize the importance of product customization due to difference preferences between domestic and international markets. Through this strategy Mekarsari has been able to overcome the psychic distance related on local business practice.
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By combining its raw material availability, comparative advantage and flexible business strategy has enabled Mekarsari to achieve its success.
The role of Middlemen
Burnosari successfully market their products to Singapore by using the service of middleman. This middleman repackages the Burnosari’s products using their own design and packaging. Through this cooperation, Burnosari’s products are marketed to Singapore. Burnosari also made some improvement related to this commitment, for instance raw material sorting which is used 100% banana “Rajapeni”, using spinner to reduce the oil moisture in the banana chips. This improvement is carried out to keep partner’s trust in Burnosari’s products.
Internationalization process
Network Position
Both Mekarsari and Burnosari SME started their business in domestic market. Their domestic market activities have enabled Mekarsari and Burnosari SME acquire knowledge and experience in banana chips industry. In extent they both also develop domestic business networks. This finding is supported by research from Masum and Fernandez (2008) which found the importance of domestic market position prior internationalization. They explain domestic market position will affect market commitment and significantly affects position in international market.
As the knowledge and experience from Mekarsari and Burnosari is growing, at the same time their social capital is developing, such as reputation (achievements), networks and trust. In example of Mekarsari reputations (achievements) are “Inspirative Woman of the Year” in 2011 by Nova Tabloid, “1st Winner of entrepreneurial Woman” in 2012 by Femina magazine and “1st of Ernest and Young Entrepreneurs Winning Women” in 2012.
At this point both Mekarsari and Burnosari SME still at the “early starter” network position as described by the network model. This is indicated from both SMEs that do not have international activities as well as international business networks. As a result of this, both SMEs have low level of international market knowledge.
Mekarsari Subsequent Internationalization Process Knowledge and Opportunity
Afterward, both SMEs have different subsequent internationalization process. Mekarsari’s achievements from various media have attracted the Government attention and invited Mekarsari to attend international exhibition in Malaysia. This was first time Mekarsari involvement in international activity.
As a result, Mekarsari begin to acquire both the institutional and market-specific business knowledge in Malaysia. Mekarsari has used its social capital to acquire, and interpret international market knowledge. This finding confirmed what has been explained by Arenius (2005) that the use of social capital can gain firms to the access of information.
cost of coordination which is confirmed the term of liability of foreignness in the Uppsala model.
Relationship Commitment Decision
Before committed to establish cooperation between the two parties, both Mekarsari and potential buyers explore the mutual business prospects in the future (probing). This assessment will have two side effects. First, trust was built among them and lead to relationship commitment. Second, on the contrary they decided not to commit each other, in this case Mekarsari face the failure of relationship building.
For example of this relationship building failure was when Mekarsari probe the Japan market in which the potential buyer offered lower price than Mekarsari expectation. In addition to the complexity of technical requirements, Mekarsari decided not to probe Japan market. This finding confirmed that building relationship is time consuming, costly and uncertain process (Johanson & Vahlne 2006). On the other hand, if both parties perceived they will have good business prospects in the future, the trust was built and they will establish a relationship commitment together.
Mekarsari’s commitment to enter international market was visible in several things. First, Mekarsari build new factory in Sidoarjo, with bigger capacity and automated machine, to produce Banana chips that to be exported. Second, Mekarsari make an improvement in production process to increase product’s quality. Third, Mekarsari in sending their products to a particular international market based on an order made by the buyer. Thus, this cooperation establishment will also increase the Mekarsari’s level of dependence to buyer.
Learning, Creating and Trust Building
In order to determine the packaging designs, flavour of banana chips to meet local preferences, certification to be included as the technical requirement both Mekarsari and buyer establish intensively communication. Through this communication, also allow them to discover new opportunities.
For instance the relationship with buyer from Philippines discovers the potential opportunity in Indonesian rambak crackers. Having known this, the buyer requested Mekarsari to produce Rambak crackers and to be exported to Qatar. In addition, this relationship also leads Mekarsari to expand their exporting are to Middle-east through “LULU” supermarket chain. The cooperation is established in private label strategy.
As the Uppsala internationalization process model is dynamic and the aspect is affecting one another, those above processes will lead Mekarsari to a new “Network Position”. As an example, Mekarsari started their internationalization process from “early starter” and as Mekarsari has established the relationship with a foreign partner, Mekarsari might possess an “International among other” position.
Burnosari Subsequent Internationalization Process
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SMEs Internationalization Timeline
Burnosari SME and Mekarsari SMEs were established at different time. Burnosari establish in 1997, a year prior monetary crisis in Indonesia and its products enter international market in Singapore through a middleman services in 2004. Later on in 2002 Mekarsari SME was established. Afterwards since its participation in 2011 on International exhibition Mekarsari SME’s products has been able to enter international market. Figure 6 below shows both SMEs internationalization timeline.
Figure 6 Internationalization Timeline
Limitation regarding the data collection
By interviewing only two fruit chips SMEs, we should be very aware on generalizing the findings of internationalization process to all fruit chips SMEs, or other industries. In addition, there are so many factors that affect internationalization such as economic factors, non-tariff barriers, and infrastructure and so on which are not addressed in this research. However, considering all of these limitations, we believe that this research could give some insights of SMEs success in entering international market. Therefore it is expected other SMEs could learn from it. Moreover, this research could be basis for further extensive research on this relevant topic.
Implications market knowledge. Thus, SMEs opportunity to participate in the international exhibition should be expanded. However, there are several things need to be concerned by the Government. First, the Government needs to provide sufficient information for SMEs of particular market knowledge prior the attendance. This will help SMEs to mapping the existing potential. Second, the Government need to consider giving funding to finance
SMEs accommodation and travel costs. As this international exhibition participation will make SMEs face financial risks.
Moreover, Governments can also assist SMEs in finding solutions to provide continuous supply of raw material. The Government could facilitate the partnership between SMEs and farmers or SMEs and State owned enterprises.
Theoretical implication
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CONCLUSION AND FURTHER RESEARCH
Conclusion
This research shows the importance of Government promotion assistance program for SMEs to access the international market knowledge. Assistance such as international exhibition participation will enable these SMEs to have international market knowledge that is needed and to discover opportunities within. Nevertheless, market knowledge prior the international exhibition attendance is considered important as well. This knowledge will help SMEs to analyse whether the market is potentially developed or not. This will help SMEs to avoid the unnecessary costs and lead to costs effectiveness.
In addition, this research also shows the importance of social capital, firm-specific advantage and the appropriate strategy as the key success in international business. The use of middleman service can also be used to link into international market.
The internationalization processes of both SMEs are considered to follow The Uppsala model. The existing relationship and its networks has become the basis point to enter international market. This research shows different path for both SMEs internationalization process. Mekarsari SME might have better network position since its first internationalization. On contrast, the dependence Burnosari SME to middleman service might have prevented them to obtain international market knowledge as a result the network position possessed might remain stand still.
Recommendation for Further Research
This research is limited to only two successful fruit chips SMEs in internationalization. Suggestions that can be used for further research are:
1. Sample size. It is interesting to conduct this research using bigger sample. With bigger sample size of SMEs that have successful entered international market, it is expected to obtain a better understanding of SMEs internationalization process. 2. Different case. It is interesting if the further research involve SMEs that fail to enter
international market. As a result it is expected to gain better understanding in SMEs internationalization problem and can be as comparison with the successful SMEs. 3. Participants. This research in only limited from business participant. It is better to
conduct this research in the future to involve Government and Academics to have different perspectives and be part of triangulation.
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APPENDICES
Appendix 1 SMEs Profiles Questionaire
No Profile Remark Note
1 Owner Name
2 Establish Year
3 Factory location
4 Marketing Domestic and International
market area
5 Export Directly/indirectly
6 Workforce Number
7 Machinary Manual/Automated/Combination
8 Production capacity
9 Net asset Rupiah (Rp)
