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Development of small and medium enterprises in a developing country

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  • Tulus Tahi Hamonangan Tambunan

Abstract

Purpose - The Indonesian Government has taken many measures to support the development of small and medium enterprises (SMEs), which are expected to play a crucial role in employment creation, gross domestic product growth, and non‐oil and gas export development. The purpose of this paper is to examine recent developments of SMEs in Indonesia. More specifically, it aims to address the following research questions: How important are SMEs in Indonesia? What are their main constraints? What is the impact of women entrepreneurs on SME development? and Can Indonesian SMEs be sources of innovation? Design/methodology/approach - The paper analyzes data from Indonesia's National Agency of Statistics and reviews key literature and secondary data on Indonesian SMEs. Findings - First, SMEs have been the main player in domestic economic activities as they account for more than 99.9 percent of all firms and employ 96.2 percent of the workforce. Second, key SME constraints include lack of finance and marketing difficulties. Third, representation of women entrepreneurs is still relatively low and can be attributed to low level of education and cultural/religious constraints. Finally, SME innovation capability is low for several key reasons. Originality/value - The paper considers the involvement of women in SMEs in a Muslim‐majority country and contributes to the literature on the innovation capability of SMEs.

Suggested Citation

  • Tulus Tahi Hamonangan Tambunan, 2011. "Development of small and medium enterprises in a developing country," Journal of Enterprising Communities: People and Places in the Global Economy, Emerald Group Publishing Limited, vol. 5(1), pages 68-82, March.
    • Handle: RePEc:eme:jecpps:v:5:y:2011:i:1:p:68-82
    DOI: 10.1108/17506201111119626
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    References listed on IDEAS

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    1. Manning,Chris, 1998. "Indonesian Labour in Transition," Cambridge Books, Cambridge University Press, number 9780521594127, October.
    2. Jajri, Idris & Ismail, Rahmah, 2007. "Source of output growth in small and medium scale enterprises in Malaysia," MPRA Paper 2779, University Library of Munich, Germany.
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    Cited by:

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    5. Meyske A. Rahantoknam & Meyske A. Rahantoknam & Wellem A. Teniwut & Anna M. Ngabalin, 2017. "Loyalty or Inertia? Customer Perspective on Traditional Micro-retailing of Fisheries Commodities in Small Islands Coastal Area," International Review of Management and Marketing, Econjournals, vol. 7(1), pages 137-144.
    6. Andres Jauregui & Kirk C. Heriot & David T. Mitchell, 2021. "Corruption and formal-sector entrepreneurship in a middle-income country: spatial analysis of firm births in the Mexican states," Small Business Economics, Springer, vol. 57(4), pages 1957-1972, December.
    7. Shoaib Ali & Farooq Azam & Hafiz Muhammad Naveed & Waqar Abid, 2020. "Impact of Prestigious Indicators on Sustainable Growth of Small and Medium-Sized Enterprises in Pakistan," Asian Journal of Economics and Empirical Research, Asian Online Journal Publishing Group, vol. 7(2), pages 251-257.
    8. Muhammad Haseeb & Hafezali Iqbal Hussain & Sebastian Kot & Armenia Androniceanu & Kittisak Jermsittiparsert, 2019. "Role of Social and Technological Challenges in Achieving a Sustainable Competitive Advantage and Sustainable Business Performance," Sustainability, MDPI, vol. 11(14), pages 1-23, July.
    9. Indrayati, 2021. "Accounting Information System Implementation and Compatibility with MSMEs Accounting Standards for Preparing Financial Statements at Micro, Small and Medium Enterprises (MSMEs) in Malang, East Java, I," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 10(4), pages 167-175, October.
    10. Andri Soemitra & Kusmilawaty & Tri Inda Fadhila Rahma, 2022. "The Role of Micro Waqf Bank in Women’s Micro-Business Empowerment through Islamic Social Finance: Mixed-Method Evidence from Mawaridussalam Indonesia," Economies, MDPI, vol. 10(7), pages 1-19, July.

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