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Kasetsart Journal of Social Sciences 41 (2020) 620–625

Kasetsart Journal of Social Sciences

journal homepage: http://kjss.kasetsart.org

Utilization of network resources by SMEs in the creative economy sector


in Banyumas Regency, Central Java, Indonesia
Slamet Rosyadia,*, Ayusia Sabhita Kusumab,†, Elpeni Fitrahb, Tuomo Rautakivic
a
Public Administration Department, Universitas Jenderal Soedirman, Jl HR Bunyamin, Purwokerto 53122, Indonesia
b
International Relation Department, Universitas Jenderal Soedirman, Jl HR Bunyamin, Purwokerto 53122, Indonesia
c
Visiting Researcher at the Administrative Science Master Program, Universitas Jenderal Soedirman, Jl HR Bunyamin, Purwokerto 53122, Indonesia

Article Info Abstract


Article history: This article provides some research findings investigating the efforts of two small and
Received 4 April 2018
Revised 22 January 2019
medium enterprises (SMEs) in the creative economy sector at the local level in
Accepted 22 January 2019 introducing their businesses to external parties. A qualitative approach with two cases
Available online 1 December 2020 of SMEs utilizing in-depth interviews with ten informants was employed in this study
to show that the primary objective of using network resources is to develop their
Keywords: capacity to promote their products for broader markets externally supported by various
creative economy, parties. The two SMEs selected in this research are Batik and Dablongan Clothing
local government, enterprises. Their products rely on ideas, knowledge, and creativity as the main
network resources,
small and medium enterprises
features of the creative economy. This article shows that network existence plays an
important role to promote SMEs in the creative economy sector regarding policy
failure. The results show the efforts of SMEs to utilize network resources to improve
their market access. Social community, academia, professional organization, diaspora,
and commercial banks play an essential role to promote SMEs to address the failure of
local government in the development of a creative economy. There are four key roles
that various types of network played in supporting development of SMEs, namely
(1) to overcome the production process, (2) to explore more potential domestic
customers, (3) to expand new markets overseas and to improve the quality of SMEs
products, and (4) to bridge internet literacy gaps. Thus, it is essential for the local
government to promote SMEs in the creative economy sector by utilizing the power of
network resources.
© 2020 Kasetsart University.

Introduction Economic Community (AEC) has provided spaces to develop


and improve the SMEs’ competitiveness mainly by applying
SMEs are the economic backbone of Southeast Asian the tariff and non-tariff barrier reduction.
countries. As stated by the board of ASEAN on the importance Despite the massive promotion and information about the
of SMEs, various efforts are needed to improve their implementation of SMEs, the local or regional governments
capabilities to reduce the economic gaps in ASEAN territories have not realized the existence of SMEs yet. In fact, the research
(Nandyatama, 2015). The economic integration of ASEAN conducted by ERIA SME Research Working Group (2014) explains
that SMEs contribute a quite significant role in the economy of
* Corresponding author. ASEAN countries. This is proven by 89 to 99 percent of the total
E-mail address: [email protected] (S. Rosyadi). industrial types being SMEs. These industries have absorbed at
† Co-first authors.
E-mail address: [email protected] (A. S. Kusuma). least 52 to 97 percent of workers, assisted GDP incomes by 23 to 58
percent and contributed to the total state export by 10 to 30 percent.
https://doi.org/10.34044/j.kjss.2020.41.3.26
2542-3151/© 2020 Kasetsart University.
S. Rosyadi et al. / Kasetsart Journal of Social Sciences 41 (2020) 620–625 621

Since the world economy has shifted from goods Literature Review
production to service, information and knowledge have
become the main keys for the economic driving force. Network Resource Concept
Howkins (2013) mentions that when the economy is
experiencing a crisis of resources and finances, creative The utilization of network resource is highly essential for
solutions are necessary. Some researches stated that industries business sustainability, especially to the SMEs and this fact,
based on knowledge, information, and creativity have has received much attention (Carter & Jones-Evans, 2012;
significantly provided contributions to the economy, favorable Sharafizad & Coetzer, 2016). To further understand the
business climate, environmentally friendly resource utilization, concept of network resources, Huggins (2010) has classified
and positive impacts to the society (Simatupang, Rustiadi, & them into two types: social capital and network capital. These
Situmorang, 2012). concepts are used to describe and comprehend the resources
The contribution of SMEs in the creative economy sector and capital resulting from inter-company network. Also, there
in Indonesia has also been acknowledged by the government, is the main difference between network capital and social
as to have had a positive impact on national economic growth capital. The main difference between both concepts is
between 2010 and 2013. Its contribution has reached 7.1 generally that “social capital consists of social relations and
percent to the Product Domestic Bruto and absorbed networks made by individuals”, while “network capital
approximately 10.7 percent or 12 million workers of the total consists of the strategic and calculative relations in which the
workforce (CNN Indonesia, 2016). The promotion of SMEs’ companies make the network.”
creative economy should not be performed by the government Regarding practical use, Munshi (2014) mentions that
only, but also by the other stakeholders or networks. Moreover, community or social network provides several solutions to the
the government’s lack of knowledge and experience in incomplete markets. First, the community network may support
managing this sector becomes the main problem to be solved their business activities. They may dominate the trading
(Atherton & Smallbone, 2010). activities as they have a strong relationship among them to
There are some underlying reasons due to the importance control their business activity. Secondly, the community
of social network role in assisting the government in promoting network plays a vital role in providing and securing jobs for
the SMEs in the creative economy sector. Cordell and their members. Thirdly, the community network may provide
Ramanow (2006) show that community or social networks social insurance particularly for their members in critical times.
may create social capital in the forms of public pride feeling, In the perspective of resource dependence theory, the
community cohesion, sustainability, etc. Fitriati (2015) finds external relations, such as organizational partnership and the
that the collective actions made by the role of the social network, may contribute success and profitability to the parties
network have stimulated the monitoring and enforcement involved in building the connections (Street & Cameron,
mechanism to improve the SMEs’ competitiveness. The other 2007). Due to the increasing social media usage, SMEs should
study conducted by Kantorová, Bachmann, and Hrdinková also develop their business and network by utilizing the digital
(2015) shows that social network in the internet era has the social media (Cole, DeNardin, & Clow, 2017; Scuotto,
function of bridging communication between SMEs and Giudice, & Omeihe, 2017), such as Blog, Facebook, Instagram,
customers. and Twitter. Some studies find that social media plays an
Banyumas Regency has provided a unique case on the role essential role in improving the SMEs’ competitive advantages
of social network in promoting the SMEs in the creative (Cole et al., 2017; He & Lu, 2016).
economy sector to expand their markets. In Banyumas
Regency, creative economy-based SMEs have provided Creative Economy and SMEs
positive contributions to the local economy, such as absorption
of workers and more incomes for the local people. Data show Howkins (2013) has introduced the term of a creative
that in 2017, the number of SMEs in Banyumas Regency economy. He mentions that a creative economy is an economic
reached 214,329 businesses (98.97%), while the number of activity whose inputs and outputs are in the forms of ideas.
large and medium enterprises only reached 2,231 businesses The intended ideas are those original ideas which intellectual
(1.03%) (Satelitpost, 2017). However, local policy through property rights protect.
the SMEs’ Product Center has failed to promote the SMEs’ The Indonesian government defines creative economy as
creative economic products (Radar Banyumas, 2016). The the new economy based on ideas born from the creativity of
SMEs are more interested in utilizing network resources to human resources (people’s original ideas) and based on the use
gain more access to markets, instead. By using the Banyumas of science, including cultural and technological heritage
SMEs’ cases, this study aims at exploring a significant (Ghazali & Nadinastiti, 2015). Hence, the creative economy is
contribution of network resources to the development of a concept placing creativity and knowledge as the main assets
SMEs in the creative economy sector. More specifically the in running the economic activities (Pangestu, 2015). In
goals of this study are to identify various types of network particular, creative economy sectors include architecture;
resources utilized by SMEs and to analyze the roles of interior design; visual and communication design; product
network resources in supporting the development of SMEs in design; film, animation, video, and photography; craft;
the creative economy sector. culinary; music; fashion; application and game developer;
publishing; advertising; television and radio; performing art;
and art.
622 S. Rosyadi et al. / Kasetsart Journal of Social Sciences 41 (2020) 620–625

SMEs in Indonesia reflect the dominant part of all firms jobs for most of the females in Papringan village, who
working inside the Indonesian economy. The general concept formerly worked overseas as Indonesian Female Workers.
of SME is a firm which has fewer than 30 workers, 10 billion Previously, most batik makers worked for batik business
rupiahs in assets, and 50 billion rupiahs in turnover. Most of owners in the other sub-districts because they did not have
the firms in Indonesia are classified as SMEs. The Bank of adequate capital and facilities to develop their batik businesses.
Indonesia revealed that in 2018 the number of creative SMEs Moreover, their incomes as batik workers are considered very
reached 8.2 million and has the potential export value of USD low. Unfortunately, the batik motifs created by the batik
19.9 million (Kompas, 2018). Ironically, SMEs face many makers do not have any intellectual property right protection,
obstacles in their development. Fashion subsector like Batik, so their creations have no potential to earn any royalties.
for example, still experiences the main obstacle such as how to There are limited facilities and capabilities owned by the
obtain raw materials and to protect property rights. In fact, Batik enterprises, and the coloring waste management sites are
Batik enterprises are amongst the top two highest contributors still inadequately managed. The batik managers realize that
for Indonesia’s GDP from the fashion sub-sector. This situation they cannot discard waste in unspecified locations since it may
shows that although Batik products are seen as the essential pollute the environment. Fortunately, due to developed
creative economy sector, they do not obtain any significant networks, the Pringmas Batik Enterprise has received training
support from the Indonesian government to compete in the on program facilities from competent external parties to
global market (Sulistianingsih & Pujiono, 2018). manage batik waste. The following is an excerpt of experiences
told by an informant related to the assistance provided by an
Methodology external party in managing batik waste.
“Due to the assistance of our partners, we are introduced
Banyumas Regency of Central Java Province has been to a competent institution known as the Main Center for
selected as the research location since this region shows a Handicrafts and Batik of Yogyakarta. Through that institution,
dynamic development of SMEs in the creative economy we are becoming more familiar with the management of clean
sector, particularly in fashion subsector. The data were products concerning how to handle batik production waste
collected from April to September 2017. For analytical management. By improving our knowledge on batik production
purposes, this study employed a qualitative approach with a waste handling, we understand better on how to manage the
case study method. Two case studies represent the SMEs in the production’s waste. (IS, personal interview, June 14, 2017)
creative economy sector that has extended their markets to the
regional level. They are Pringmas Banyumas Batik and After obtaining the government assistance program (the
Dablongan Clothing enterprises. From all 16 subsectors of the Community Empowerment National Program) for three years,
creative economy in Banyumas, three subsectors have local precisely in 2013, the Pringmas Batik Enterprise has no longer
potential, namely fashion, craft, and culinary. The focus of this received supporting funds. Fortunately, the Bank of Indonesia
paper is on the fashion subsector. There are two kinds of style holds various empowerment programs, one of which is located
in Banyumas in the process of developing and having great in Papringan village. They provide some facilities, such as the
potential, Batik Banyumas in Papringan and Dablongan establishment of a gallery building to display Pringmas batik
clothing. Fashion is one of the subsectors in the creative economy creative products, holding some production management
which is full of innovative works by way of design and creativity. training, conducting comparative studies to batik businesses made
It is a form of art and has become an identity of a person. in the other regions, opening market accesses, and optimizing
In-depth interviews were also conducted by purposively the promotion of Pringmas batik through exhibition activities.
selected ten informants who represent SMEs’ actors, local However, there are some occurring challenges in the
government officers, local activists, and village development development processes of Pringmas batik businesses. Those
activists. These interviews focus on the network resource types challenges include batik prices, product qualities, capacity to
they have utilized, network resource benefits, and the roles of meet the demanded orders in a large quantity, business
a network resource. This study also combines in-depth interview competitions with the printed batik, batik model innovations,
method with observatory research to fully present the data. marketing network expansion and development, and online
The data are analyzed using an interactive model proposed marketing.
by Miles, Huberman, and Saldaña (2013), consisting of data To overcome those challenges, the Pringmas Batik
collection, data condensation, data display, and conclusion. Enterprise has made various efforts to make some cooperation
This study employs a source triangulation technique in which with multiple parties, such as hotel industries, academicians,
the data collected from various data sources are compared to Indonesian workforce networks, and the local agency of
obtain a mutually strengthening confirmation and to maintain education, youth, and sports as well as blogger groups. In
its data validity. response to the cooperation, hotel industries have provided
batik display rooms for the Pringmas Batik Enterprise, such as
Results in the Santika dan Aston hotels. Through those display
facilities, many people will acknowledge the existence of
Case A. Pringmas Batik Enterprise Pringmas batik products. Meanwhile, many academicians,
especially the Center for Research and Community Services
Batik-making traditions of Pringmas Batik Enterprise of Jenderal Soedirman University, provided management
have long been developed and have become the source of side training and market access development in the Aston Hotel for
S. Rosyadi et al. / Kasetsart Journal of Social Sciences 41 (2020) 620–625 623

Pringmas Batik organizers. Additionally, the local agency of seems to be challenging. The problem is well described by two
education, youth, and sports also has provided overseas prominent figures of creative economy as follows:
marketing access to the countries where Indonesian workers
are working, such as in Hongkong and Taiwan. Similarly, the “Banyumas is gifted with social power in the forms of
utilization of social media such as Twitter, Instagram, and creative economic communities in cooperation with the
Whatsapp also will facilitate the communication of SMEs’ Village Development Movement Forum consisting of bloggers,
actors with the other stakeholders. arts and cultural activists, village activities which then meet
The bloggers and village development activists also their interests to develop the village and its economy. However,
promote the Pringmas batik products through their blogs and the existence of those communities has not been well
even bring them as souvenirs when the bloggers are traveling acknowledged by the Regency government of Banyumas.
overseas. The television industries similarly promote the Similarly, funding supports provided by the Regency
Pringmas batik to be well acknowledged by society, government of Banyumas are still at the minimum limit to
particularly in Central Java. Thus, the assistance provided by facilitate the development of a creative economy”. (PP, BD,
various partners has a positive influence on the Pringmas batik personal interviews, May 14, 2017)
products, both at local and national level.
The communities and their networks may attract external
Case B. Dablongan Clothing Enterprise sources’ attention in the forms of funding, knowledge, and
the other capitals not depending on the government budget.
This is similar to Batik, Dablongan Clothing businesses The creative economic promotions including batik still
require creativity, especially in dealing with the image and text depended on network power. For example, Pringmas’ batik
designing. Driven by some young entrepreneurs, this business has been taken to the city of London and performed on stage at
is considered a unique company due to utilizing images and the Aston Hotel by involving some national designers without
texts adjusted to contemporary socio-cultural dynamics. The the participation of the regional government. The following
idea in developing this business is not a new thing since in are excerpts of interviews from several informants.
other regions, such as Yogyakarta and Bali, they have long
expanded this kind of clothing business. This business has also “Blogger communities have important roles in marketing
become a signature souvenir for many tourists visiting those the products of SMEs’ creative economy. There are various
regions. benefits obtained by the bloggers when promoting those
Dablongan T-shirt marketing ranges not only to various unique products since they have many followers. During this
areas in Banyumas but also to Taiwan and other ASEAN time, their roles are not maximally utilized institutionally by
territorial areas. By utilizing social media, such as Instagram the Regency Government of Banyumas”. (ES, personal interviews,
and Whatsapp, the overseas customers are becoming familiar May 31, 2017)
with Dablongan T-shirt products, especially the Indonesian
workers from Banyumas who are joining the communities “The marketing strategies are traditionally made and
under the local agency of education, youth, and sports. supported with the utilization of information technology in the
Diaspora communities or those working in other areas are forms of social media as well as the cooperation with wider
exceedingly proud to promote Dablongan T-shirt products to blogger communities. The products are also well marketed to
their friends. They are not only pleased with products showing all Banyumas people working out-of-town and overseas through
the character of Banyumas culture, but they also think that domestic and overseas workforce”. (SM, IS, personal interviews,
wearing a Dablongan T-shirt may lessen their longing for their June 12, 2017)
hometown. This regional sentimental feeling is raised by the
Dablongan Clothing Enterprise to ensure the cooperation of “Marketing strategies apply traditional ways and
those who are working out-of-town, to become Dablongan’s information technology in the forms of social media and
broader market segments. cooperation with bloggers. The bloggers support the product
The promotion strategies of Dablongan clothing businesses marketing at the star hotels in Purwokerto area”. (MA, personal
also utilize the network power of blogger communities. In interviews, June 17, 2017)
some bloggers’ activities, Dablongan clothing provides an
endorsement by providing T-shirts for the participants of their Discussion
events. With this strategy, the Dablongan products are
promoted by the bloggers in their web blogs. This research shows that SMEs have been able to utilize
the network resources either from community groups, local
The Roles of Network Resources agency, banking, or professional institutions. The availability
of network resources provides positive impacts on the product
This research finds that various communities have been market expansion and product quality development. This study
widely developed in Banyumas and play an essential role in finds that there is excellent attention from various parties
promoting SMEs’ creative economic products. However, the regarding the development of creative economy sectors. Such
Regency Government of Banyumas has not utilized those an atmosphere is then utilized by SMEs’ actors to improve
opportunities yet. The Banyumas bureaucrats’ mindsets are their social networks in supporting their business.
still dependent on the project and budget approach. If not well The collaboration between communities and SMEs’
allocated and well programmed, the cooperation opportunity
624 S. Rosyadi et al. / Kasetsart Journal of Social Sciences 41 (2020) 620–625

creative economy may show social capital at the local level. creative economy. Social community, academia, professional
The SMEs’ actors greatly trust the role of the social network to organization, diaspora, and banks may assist the local
support the development of a creative economy positively. government with their respective resources to improve the
The strategic partners provide the information, knowledge, regional market access as well as skills for SMEs’ actors.
and social support resources in cooperation with the SMEs. This research studied the role of various network resources
Those resources greatly impact the development of creative in the development of SMEs in the creative economy sector.
economic business at the international level as shown by the However, this research only included two cases of SMEs
distribution of diaspora communities, who are acting as both representing fashion subsector of a creative economy. Future
overseas customer and reseller for the creative economic research should consider more SMEs from various subsectors
products. The local creative economy actors’ competence to of creative economy that utilize network resources for their
obtain more overseas partners surely provides business business development.
transaction acceleration with the overseas costumers (Jones,
Coviello, & Tang, 2011). Afsar (2014) also finds that the Conflict of Interest
diaspora power as the overseas partner may be utilized to open
opportunities and new ways to export the SMEs’ products. There is no conflict of interest.
The utilization of network resources becomes greater as
obtained through the power of social media, such as Twitter, Acknowledgments
Instagram, Whatsapp, and blogs considered as popular social
media utilized by the SMEs’ actors. A study conducted by The researchers gracefully thank the Indonesian Higher
Durkin, McGowan, and Murray (2014) found that social Education Directorate General of the Ministry of Research,
media may provide the added values to improve the Technology and Higher Education who have provided funding
relationship and communication between SMEs and the for this research in the scheme of Applied Research Grant 2017.
banking party. In our case study, we also find that the presence
of social media provides greater access for SMEs’ actors to References
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