Firm and Group Dynamics in the Small and Medium Enterprise Sector in Indonesia

• Published in: Small business economics Vol. 18; no. 1/3; pp. 141 - 161
• Main Authors: Berry, Albert, Rodriguez, Edgard, Sandee, Henry
• Format: Journal Article
• Language: English
• Published: Dordrecht Kluwer Academic Publishers 01.02.2002; Springer Nature B.V
• Subjects: Agglomeration; Business economics; Business structures; Business studies; Clothes; Cluster analysis; Corporations; Developing countries; East Asia; Economic growth; Employment; Enterprises; Foreign investment; Furniture; Furniture industry; GDP; Gross Domestic Product; Group dynamics; Indonesia; Industrial concentration; Industrial development; International trade; Labor market; Labor productivity; LDCs; Location of industry; Manufacturing; Productivity; Public policy; Rural areas; Rural industries; Small & medium sized enterprises-SME; Small and medium sized enterprises; Small business; Small scale industry; Studies; Subcontracting; Subcontractors; Tiles; World Bank; Indonesia
• ISSN: 0921-898X; 1573-0913
• DOI: 10.1023/A:1015186023309

This paper discusses the role of clusters and subcontracting as factors in the evolution of small and medium firms in Indonesia during the last quarter century. It is argued that a number of such firms have become successful exporters of rattan furniture, wood furniture and garments on the strength of subcontracting relationships with foreign investors and buyers as well as agglomeration economies achieved by clustering in selected locations. Examples are provided to show that clustered enterprises are more likely to be in the exports business and to adopt product and process innovations as compared to more dispersed firms. Public policy support for fostering subcontracting links and cluster formation is also discussed.