“Improving SME Entrepreneurship Competitiveness to Penetrate Regional and Global Markets”

Friday, 24 September 2021 

Facing competition from local and international companies, the development of Small and Medium Enterprises (SMEs) in Indonesia is currently increasing. The increase in SMEs in the business world shows that these businesses are able to maintain their business in business competition, for example during the 1998 economic crisis. This explains that the economic crisis in Indonesia in 1998 prompted the government to develop SMEs. The development of SMEs is encouraged by the Government of Indonesia because this sector has succeeded in creating jobs and increasing Gross Domestic Product (GDP) (Ministry of Finance of the Republic of Indonesia, 2015). The successful development of SMEs is useful to face the high competition in the current of globalization so that SMEs must be able to face global challenges. This needs to be done to increase the selling value of SMEs.

Micro, Small and Medium Enterprises (MSMEs) play a very large role in advancing the Indonesian economy (Susilo et al, 2008). Apart from being an alternative for new employment opportunities, MSMEs also play a role in encouraging the pace of economic growth after the 1997 monetary crisis, when large companies experienced difficulties in developing their businesses. Currently, MSMEs have contributed greatly to Indonesia’s regional and state revenues. MSMEs are a form of community small business whose establishment is based on a person’s initiative. Most people think that MSMEs only benefit certain parties. In fact, MSMEs play a very important role in reducing the unemployment rate in Indonesia.

MSMEs can absorb a lot of Indonesian workers who are still unemployed. In addition, MSMEs have contributed greatly to Indonesia’s regional and state revenues. MSMEs have an important role in economic development. Due to the relatively high level of labor absorption and small investment capital requirements, MSMEs can flexibly adapt and respond to changing market conditions (Sopanah, 2010). This makes MSMEs less vulnerable to various external changes. MSMEs are actually able to quickly capture various opportunities, for example to carry out production that is import substitution and increase the fulfillment of domestic needs. Therefore, the development of MSMEs can support economic diversification and accelerate structural changes, which are prerequisites for stable and sustainable long-term economic development. Suhendar (2010), said that the ability of MSMEs to compete in the era of free trade, both in the domestic market and in the export market, is largely determined by two main conditions that need to be met.

First, a conducive MSME internal environment, covering aspects of the quality of human resources, mastery of technology and information, organizational structure, management system, business culture/culture, capital strength, business networks with external parties, and the level of entrepreneurship. Second, the external environment must also be conducive, related to government policies, legal aspects, market competition conditions, socio-economic conditions, infrastructure conditions, public education levels, and changes in the global economy. In addition to these two conditions, the strategy of empowering MSMEs to be able to enter the global market is very important for ensuring the survival of MSMEs. However, in its development, MSMEs have limitations in various ways, including limited access to market information, limited market reach, limited working networks, and limited access to strategic business locations (Tambunan, 2012). For this reason, efforts are needed to increase MSME access to market information, business locations and business networks so that their productivity and competitiveness increase.