Proceedings of the 1st International Conference on Business, Law And Pedagogy, ICBLP 2019, 13-15 February 2019, Sidoarjo, Indonesia

Research Article

Micro Enterprise (MEs) Upgrading in Indonesia: Why MEs are not Growing?

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  • @INPROCEEDINGS{10.4108/eai.13-2-2019.2286205,
        author={Atika Rukminastiti Masrifah and Setiawan Bin Lahuri and Muhammad Ridho Zarkasyi and syamsul Hadi Untung},
        title={Micro Enterprise (MEs) Upgrading in Indonesia: Why MEs are not Growing?},
        proceedings={Proceedings of the 1st International Conference on Business, Law And Pedagogy, ICBLP 2019, 13-15 February 2019, Sidoarjo, Indonesia},
        publisher={EAI},
        proceedings_a={ICBLP},
        year={2019},
        month={10},
        keywords={enterprises upgrading micro enterprises operation management and policy},
        doi={10.4108/eai.13-2-2019.2286205}
    }
    
  • Atika Rukminastiti Masrifah
    Setiawan Bin Lahuri
    Muhammad Ridho Zarkasyi
    syamsul Hadi Untung
    Year: 2019
    Micro Enterprise (MEs) Upgrading in Indonesia: Why MEs are not Growing?
    ICBLP
    EAI
    DOI: 10.4108/eai.13-2-2019.2286205
Atika Rukminastiti Masrifah1,*, Setiawan Bin Lahuri1, Muhammad Ridho Zarkasyi1, syamsul Hadi Untung1
  • 1: University of Darussalam Gontor
*Contact email: atikamasrifah@unida.gontor.ac.id

Abstract

Indonesia had a vast number of micro, and small enterprises and only a few larger enterprises, more than 90 per cent of firms were micro-sized enterprises (MEs). Empirical evidence suggested that most of them stagnated and never graduated into the segment of the medium even small-size enterprises, only a small minority of them graduated to the next size category. This research referred to this group as upgrades. It raised the question as to which factors determined the upgrading of MEs into higher scale. The target population of this study was MEs which graduated to small enterprise, operating in different lines of business. The sample size of this study was 209 enterprises. Responses of the subjects were collected through questionnaires. Structural Equation Model (SEM) was used for analysis. As a result, the main factors determined the upgrading of MEs was shaped by internal (i.e. financial literacy, operational training, accessibility to a financial institution) as well as external (i.e. policy, social environment, challenge) factors. SEM results showed that financial literacy and operational training were the most critical determinant to upgrade the scale level of MEs.