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How did the crisis affect small and medium-sized enterprises? -- from a field study of the metal-working industry in Java

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  • Sato, Yuri

Abstract

This paper focuses on the impact of Indonesia's economic crisis on small and medium-sized enterprises (SMEs). It shows how the performance of SMEs during the crisis varied widely even in the same industrial subsector, and found that the factors most affecting performance have been market orientation and the linkages that the SMEs have formed with the buyers of their products. Well-performing SMEs were found to have utilized putting-out linkages with wholesalers which enabled them to switch to products having better markets. On the other hand, the SMEs which had subcontracting linkages with assemblers or contracting linkages with user-factories (with the exception of SMEs having export-oriented linkages) suffered badly in the crisis because of specificity of products with little room for switching. The paper also found that exposure to debt due to borrowing for investment has been another factor affecting performance, but that enterprise size has had no linear correlation with performance.

Suggested Citation

  • Sato, Yuri, 2000. "How did the crisis affect small and medium-sized enterprises? -- from a field study of the metal-working industry in Java," The Developing Economies, Institute of Developing Economies, Japan External Trade Organization(JETRO), vol. 38(4), pages 572-595, December.
    • Handle: RePEc:jet:deveco:v:38:y:2000:i:4:p:572-595
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    Citations

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    Cited by:

    1. Adalgiso Amendola & Anna Maria Ferragina & Rosanna Pittiglio & Filippo Reganati, 2012. "Are exporters and multinational firms more resilient over a crisis? First evidence for manufacturing enterprises in Italy," Economics Bulletin, AccessEcon, vol. 32(3), pages 1914-1926.
    2. Hayashi, Mitsuhiro, 2002. "The role of subcontracting in SME development in Indonesia:: Micro-level evidence from the metalworking and machinery industry," Journal of Asian Economics, Elsevier, vol. 13(1), pages 1-26.
    3. FERRAGINA, Anna Maria, 2013. "The Impact of FDI on Firm Survival and Employment: A Comparative Analysis for Turkey and Italy," CELPE Discussion Papers 127, CELPE - CEnter for Labor and Political Economics, University of Salerno, Italy.
    4. Budy P. Resosudarmo & Catur Sugiyanto & Ari Kuncoro, 2012. "Livelihood Recovery after Natural Disasters and the Role of Aid: The Case of the 2006 Yogyakarta Earthquake," Asian Economic Journal, East Asian Economic Association, vol. 26(3), pages 233-259, September.
    5. Tulus T. H. Tambunan, 2019. "The impact of the economic crisis on micro, small, and medium enterprises and their crisis mitigation measures in Southeast Asia with reference to Indonesia," Asia and the Pacific Policy Studies, Wiley Blackwell, vol. 6(1), pages 19-39, January.
    6. ŠEmsa ÖZAR & Gökhan ÖZERTAN & Zeynep Burcu İRFANOĞLU, 2008. "Micro And Small Enterprise Growth In Turkey: Under The Shadow Of Financial Crisis," The Developing Economies, Institute of Developing Economies, vol. 46(4), pages 331-362, December.
    7. Mitsuhiro Hayashi, 2003. "Development of SMEs in the Indonesian Economy," Departmental Working Papers 2003-01, The Australian National University, Arndt-Corden Department of Economics.
    8. Celeste Varum & Vera Rocha, 2013. "Employment and SMEs during crises," Small Business Economics, Springer, vol. 40(1), pages 9-25, January.

    More about this item

    Keywords

    Indonesia; Small and medium-scale enterprises; Metal industry; Economic crisis; インドネシア; 中小企業; 金属工業; 経済危機;
    All these keywords.

    JEL classification:

    • L61 - Industrial Organization - - Industry Studies: Manufacturing - - - Metals and Metal Products; Cement; Glass; Ceramics

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