Jurnal Dinamika Manajemen, 14 (2) 2023, 165-177

http://jdm.unnes.ac.id
Nationally Accredited based on the Decree of the Minister of Research,
Technology and Higher Education, Number 85/M/KPT/2020

Business Performance of MSMES in Traditional Market: an Analysis

of Strategic Management Aspect
Rahmawati 1 Siti Arifah2, Bambang Pujiasmanto3, Francisca Sestri Goestjahjanti4,


Siti Nurlaela5, Nurul Badriyah6

Department of Accounting, Faculty of Economics and Business, Sebelas Maret University1, 2
Department of Agrotechnology, Faculty of Agriculture, Sebelas Maret University3
Department of Management, Faculty of Business, Universitas Insan Pembangunan Indonesia4
Universitas Islam Batik, Indonesia5
Universitas Islam Lamongan, Indonesia6

Info Article Abstract

History Article: This study aims to analyze the performance of MSME businesses in the Bahulak Market, Karungan
Submitted 22 February 2023
Plupuh, Sragen, from a strategic management perspective. This research uses quantitative methods.
Revised 2 April 2023
Accepted 5 June 2023 Primary data sources were obtained by distributing questionnaires to business actors and MSME
owners in Karungan Village, Plupuh, Sragen. The population that was the target of this study were
Keywords: SMEs registered in Karungan Village with a total of 74 businesses. The sampling technique used is
Bahulak market;
simple random sampling. Data analysis used the Structural Equation Modeling (SEM) approach.
business performance;
MSME; This study succeeded in concluding that the production strategy, HR strategy, and development
strategic management research strategy have a positive effect on business performance. In addition, business actors in the
Bahulak Plupuh Market in Sragen still need assistance from various related parties to further develop
the business they are running. This research is important to be carried out to encourage the Pasar
Bahulak Tourism Village, including that the products produced are absorbed by the market.

Kinerja Bisnis UMKM Pasar Tradisional: Suatu Analisis Aspek

Manajemen Strategis

Abstrak
Penelitian ini bertujuan untuk menganalisis kinerja usaha UMKM di Pasar Bahulak, Karungan
Plupuh, Sragen, dari perspektif manajemen strategis. Penelitian ini menggunakan metode kuantitatif.
Sumber data primer diperoleh dengan menyebarkan kuesioner kepada para pelaku usaha dan pemi-
lik UMKM di Desa Karungan, Plupuh, Sragen. Populasi yang menjadi sasaran penelitian ini ada-
lah UMKM yang terdaftar di Desa Karungan dengan total 74 usaha. Teknik pengambilan sampel
yang digunakan adalah simple random sampling. Analisis data menggunakan pendekatan Struc-
tural Equation Modeling (SEM). Studi ini berhasil menyimpulkan bahwa strategi produksi, strategi
SDM, dan strategi riset pengembangan berpengaruh positif terhadap kinerja bisnis. Selain itu, pelaku
usaha di Pasar Bahulak Plupuh Sragen masih membutuhkan pendampingan dari berbagai pihak
terkait untuk lebih mengembangkan usaha yang dijalankan. Penelitian ini penting dilakukan un-
tuk mendorong Desa Wisata Pasar Bahulak, termasuk produk yang dihasilkan terserap oleh pasar.
pasar. Hasil penelitian ini juga diharapkan dapat menjadi masukan bagi berbagai pihak terkait yang
akan membantu UMKM dalam memaksimalkan kinerja usahanya.
JEL Classification: L25, L26, M21, M31

How to Cite: Rahmawati, Arifah S., Pujiasmanto, B., Goestjahjanti, F. S., Nurlaela, S., Badriyah, N. (2023). Business Performance of MSMES
in Traditional Market: an Analysis of Strategic Management Aspect. Jurnal Dinamika Manajemen, 14(2), 165-177.

Correspondence Address ISSN
Institutional address : PDIE FEB Universitas Sebelas Maret, Jl. Ir Sutami No.36, Kentingan, 2086-0668 (print)
Kec. Jebres, Kota Surakarta, Jawa Tengah 57126 2337-5434 (online)
Email: [email protected]
 Jurnal Dinamika Manajemen, 14 (2) 2023, 165-177

INTRODUCTION Clearly, the Ministry of Investment stated that

this increase was continuous, having occurred
The COVID-19 pandemic has dragged since August 2020. The Ministry of Investment
the national and global economy into recession. also announced that there was a record for NIB
It is marked by negative national and global eco- submissions through Online Single Submissi-
nomic growth or recession according to the data on (OSS) throughout 2020; in October 2020,
from Ministry of Finance. The national economy reaching 377,540 applications received by Mi-
itself only experienced a contraction in the se- nistry of Investment. Of course, it is proof that
cond quarter of 2020, with economic growth of interest in micro businesses will continue to
-5.3%. This decrease was mainly due to a dec- dominate during a pandemic, considering that
rease in household consumption due to social 93.6% of the number of NIB applications came
restrictions to stem COVID-19, a decrease in from the micro business sector, or to be more
capital expenditures, including the construction precise, as many as 353,478 applications. The re-
and procurement of fixed assets, and a decrease cord recorded in October 2020 experienced an
in the implementation of state expenditures, increase of 91.3% more than the number of NIB
including state spending on goods. In addition, applications in the previous month, i.e., 197,322
there was a sharp decline in foreign trade. The requests through OSS.
lowest point in the decline in economic growth To build a people’s economy, the Presi-
passed in the second quarter, but COVID-19 dent of the Republic of Indonesia has issued gui-
would still restrain economic growth in the third delines for implementing top-class MSME de-
and fourth quarters. Therefore, the government velopment and cooperative modernization. The
attempted to improve the performance of the role of MSMEs greatly determines Indonesia’s
national economy in the third quarter and eco- economic growth, which accounts for 99% of
nomic growth in 2020, expected to range from all business units. The contribution of MSMEs
-0.4% to 1%. The economic crisis due to the to GDP also reaches 60.5% and 96.9% to job
COVID-19 pandemic has also had an impact on creation of the total national employment.
the sustainability of micro, small, and medium Previously, the health of domestic MSMEs
enterprises (MSMEs). The impact of overexer- declined during the first two years of the CO-
tion has then caused many workers to be laid VID-19 pandemic, in 2020-2021 to be precise.
off. Based on information from the Ministry of Based on a survey conducted by UNDP with
Cooperatives and SMEs in the Kompas newslet- the participation of 1,180 MSMEs surveyed, it
ter dated March 27, 2020, there were at least 949 was found that at that time, more than 48% of
reports from cooperatives and MSMEs affected MSMEs faced raw material problems, 77% had
by the COVID-19 virus pandemic. reduced income, 88% of MSMEs experienced a
On the other side, the pandemic has pus- decrease in product demand, and even 97% of
hed businesses in the micro sector to survive. MSMEs underwent a decrease in the value of
In line with the government’s efforts to issue its assets. According to data from the Joint Fin-
various policies in the context of recovering the tech Finance Association of Indonesia (AFPI),
national economy from the impact of the CO- in 2020, around 46.6 million out of 64 million
VID-19 pandemic, interest in micro businesses MSMEs in Indonesia did not have access to ca-
continues to dominate during the pandemic and pital from banks or non-bank financial institu-
grows positively. Even though the Indonesian tions. The financial difficulties faced by MSMEs
economy is experiencing ups and downs during are the basis for government support for other
this pandemic, the data collected at Ministry of financial mechanisms, including the Partner-
Investment revealed that there has been a sig- ship and Community Development Program
nificant increase in the submission of Business (PKBL), PNM Mekar, Micro Waqaf Banks, Ult-
Identification Numbers in the micro sector. ra Micro Financing (UMi), and People’s Corpo-

166
 Rahmawati et al. / Business Performance of MSMES in Traditional Market: an Analysis of ....

rate Credit (KUR). This government assistance In this case, Karungan Village is located
mechanism is through non-bank financial insti- in the north of Plupuh Sub-district, with a dis-
tutions, so the conditions given are much easier. tance of +- 5 Km and +- 15 Km from Sragen
This is intended to help MSME capital. The cri- Regency with an area of 305.4225 ha and has
teria that must be met to obtain a facility like a strategic geographical location as it is located
this are: registered, have an official business on the route between the Sub-district city and
license, have an e-KTP to prove Indonesian ci- Regency City. Since 2017, the Karungan Village
tizenship, and are not currently receiving other Government has established a Village-Owned
financial assistance facilities from the govern- Enterprise (BUMDes) with the name BUMDes
ment. However, assistance from this non-bank Sinar Karungan Mandiri. Specifically, the Ba-
scheme is very limited to a small amount of ru- hulak Market, which is located in the Karungan
piah, so it may not be able to help SMEs much Village area, Plupuh Sub-district, Sragen, has
in developing their business capital. The futu- some uniqueness that attracts visitors to witness
re challenges of MSMEs need to be addressed the activities and goods being sold. The tourism
jointly by all stakeholders, including innovati- market, which was just established in 2019, is
on and technology, digital literacy, producti- indeed very different from other markets. Star-
vity, legality or licensing, financial keys, brand ting from the goods sold by traders to the way
image and marketing, human resources, stan- of buying and selling is unique. No wonder this
dardization and certification, equitable deve- market attracts visitors, not only from the Sra-
lopment, training and facilitation, and a single gen area but also from many other areas outsi-
database. de Sragen. In fact, in its first year, Pasar Bahulak
Moreover, the emergence of various managed to record a turnover of IDR 1 billion.
MSMEs in various sectors has helped boost the In addition, this unique market is currently also
country’s economy. Where many creative peop- used as a location for weddings. Based on infor-
le try to sell their goods and services, so they will mation obtained from the Karungan Village Go-
be more able to move the economy when compa- vernment, the following are eight characteristics
red to those who are lonely without them trying of the Bahulak Market, which are rarely found
(Syahbudi & Ma, 2021; Syaifudin et al., 2022). in ordinary markets, so that visitors flock to the
However, it is not easy for MSME entrepreneurs Bahulak Market.
to run their businesses amidst unstable econo- Based on information obtained from the
mic conditions and problems that threaten the Government of Karungan Village, the following
stability of other companies. Some problems are eight characteristics of the Bahulak Market
often faced by MSME actors include minimal which are rarely found in ordinary markets, so
business capital, not having extensive business that visitors flock to the Bahulak Market, inclu-
knowledge, not using digital marketing, not ding sale and purchase transactions at the Ba-
knowing how to develop a business, not doing hulak Market in Sragen use coin shells that are
branding, ineffective business communication, provided by a curator where visitors must first
and lack of product innovation. This weakness exchange rupiah for coins provided by the ma-
will lead MSMEs to stagnate, unable to find so- nager of the exchange office, communication
lutions to the problems they face, or overcome must use the Javanese language, the snacks sold
problems due to the times. In this case what is are old school, there are about seven menus of
needed is strengthening the capacity of its hu- old school snacks sold by traders at the Bahu-
man resources, so that they can be more creati- lak Market in Sragen between including bread,
ve and innovative in dealing with the problems tiwul, cereal, galok, wedang gemblung, ketingan,
faced by MSMEs. Always improving the quality and Cekitet. There are lots of old selfie spots, so
of human resources is an absolute necessity (Bu- visitors can also take pictures and selfies with old
diarto et al., 2018). views. Visitors can also find traditional toys, in-

167
 Jurnal Dinamika Manajemen, 14 (2) 2023, 165-177

cluding seesaws seesaw, stilts, wooden bicycles, addition, the Karungan Village Government and
love rickshaws, etc. There is an Archaeological BUMDes work together to increase promotions
Dance Performance Center through performan- outside the area and organize interesting events
ces of ancient Indonesian dances from Aceh to when the market opens.
Papua. There is the Sragenan Karawitan Art by This study, therefore, aims to analyze the
Sarwo Gathuk and the performance invites visi- business performance of MSMEs in the Bahu-
tors to sing and dance together and last visitors lak Market, Karungan, Plupuh, Sragen, from the
aspect of strategic management. This research
is vital to do to encourage the Bahulak Market
Tourist Village, including the products produced,
to be absorbed by the market. The results of this
study are also expected to provide an evaluation
of strategic management practices carried out by
Figure 1. An overview of the atmosphere at the business actors who are members of BUMDES
Bahulak Market, Karungan, Plupuh, Sragen Sinar Karungan Mandiri and motivate them to
develop according to market demands.
can take part in practicing playing the gamelan. The importance of conducting this rese-
Nevertheless, since the COVID-19 pan- arch is as a form of effort to find solutions to the
demic hit the world at the end of 2019, the problems faced by the community, especially
Bahulak Market Tourism Village in Karungan MSME actors in the Bahulak Market, in terms of
Village, which is located in Plupuh Sub-district, the economic aspect. This research is also an im-
has also been affected. The decline in consump- portant consideration for maintaining and even
tion and people’s purchasing power greatly af- increasing the function of the Bahulak Market in
fected the demand for the Bahulak Market in the future. This research has an interesting no-
Karungan Village, Plupuh Sub-district, Sragen velty to study, namely assessing aspects of mana-
Regency. Meanwhile, many people in Karungan gement at an economic scale in remote environ-
Village depend on the Bahulak Market for their ments where they are not familiar with the term
livelihood. Then, through the BUMDes Sinar management strategy, so it needs more effort so
Karungan Mandiri, the Karungan Village Go- they can understand before filling out the ques-
vernment worked together to find solutions so tionnaire. Transfer of knowledge like this will be
that the business actors of the Bahulak Market very beneficial for respondents in developing
Tourism Village in Karungan Village could sur- business capacity in the future. So, in the future
vive and get through the conditions during this it is very possible to be followed up with other
pandemic well. academic programs such as community service.
Some of the things that were carried out by
the Karungan Village Government and the Sinar Hypothesis Development
Karungan Madiri BUMDes manager in order to Selig (2014) outlined several determi-
make the Bahulak Market remain a mainstay of nants of entrepreneurial success, including
the economy of its residents were: expanding the taking business work seriously, developing
market area with the policy of converting the fun- pragmatic business plans, developing flexible
ction of ‘bengkok village land’ into a social func- sales and marketing plans, understanding costs,
tion. BUMDes also organizes the market in such developing customer service, and developing
a way as to attract more people to visit, such as contingency plans. In addition, in business, the
wearing old clothes when selling, using a unique following things must be avoided, such as over-
medium of exchange for transactions, providing ly financial calculations, considering business
a play area for children, and providing life ‘tradi- trivial, being Penny-Wise and Pound-Foolish,
tional gendhing’ during the market’s opening. In and getting discouraged when the business feels

168
 Rahmawati et al. / Business Performance of MSMES in Traditional Market: an Analysis of ....

difficult to run. Penny-Wise and Pound-Foolish quite agree criteria. Besides, the effect of busi-
mean that they save coins but end up being ness capital on business development was 12%,
more wasteful, which may be due to a lack of while the simultaneous effect of business capital
entrepreneurs’ knowledge and experience. Furt- and marketing strategy variables on business de-
hermore, Selig (2014) mentioned some keys velopment variables was 38.4%.
to business success: customer focus, gambling
mentality, persistence, focus (limiting distrac- Financial Strategy
tions), entrepreneurial and intrapreneurial spi- Financial strategy is a core element of any
rit, organized, confident, enthusiastic, out of box venture and, ultimately, forms the backbone of
and innovative thinking, pragmatic and realistic, the business. Managing finances and securing
and become agents of change and innovators. income is critical to the success of any busi-
One important aspect of business suc- ness. Financial strategy is basically related to the
cess is local personality (Zhou et al, 2019). In collection and use of funds. The fundamental
other words, certain personality traits of ent- objective is to ensure an adequate and regular
repreneurs might exert their influence on ent- supply of funds for the current and future bu-
repreneurial success as a sort of reference effect, siness needs of the venture. Financial strategy is
where the local macro-psychological climate also related to financial resources, cost structure
represents preferences that shape the likeli- analysis, profit potential evaluation, accounting,
hood that specific entrepreneurial traits make and others. In short, a financial strategy is con-
entrepreneurial success more or less. Mersha cerned with the availability of sources and the
& Sriram (2019) conducted research based on use and management of funds. This strategy
gender and entrepreneurship in Ethiopia, exp- focuses on aligning financial management with
laining that women are more influenced by fa- the organization’s business and business objecti-
mily factors. Concerning personality traits, male ves to achieve strategic advantage.
entrepreneurs are generally more confident in Further, Qureshi et al. (2022) showed
their ability to succeed, whereas women display that in terms of sustainability in manufacturing
a higher fear of failure and an external locus of MSMEs, financial capability and employee in-
control. Women entrepreneurs also reported volvement play an essential role in implementing
lower business and entrepreneurial skills and re- lean in manufacturing MSMEs. Practicing ma-
lied more on government funding. Meanwhile, nagers may benefit from re-analyzing their lean
male entrepreneurs are outperforming women implementation plans and the respective aligned
in terms of sales, job growth, and profitability. strategies. They will also be in a position to iden-
Entrepreneurs with postgraduate educati- tify and focus on the scarce resources needed for
on had lower cost outputs; entrepreneurs with the next lean implementation. Lean manufactu-
business goals to complete an idea showed a lo- ring is a production practice that takes into ac-
wer cost output; companies with their human count all expenditures of existing resources to ob-
resource departments displayed minimal output tain economic value for customers without any
costs; companies with an annual training plan waste, and this waste is the target to reduce. Lean
exhibited a lower output cost. Offered four main manufacturing is also a management method and
propositions in entrepreneurship: purpose, ac- strategy to improve efficiency in manufacturing
countability, control, and business success. In or production. Lean always look at product value
their research, Sudrajat et al. (2022) found that from the customer’s point of view, where the va-
the venture capital variable had a mean score of lue of a product is defined as something that the
371.7 with the criteria for agreeing; the marke- customer is willing to pay for. The main goal of
ting strategy variable had a mean score of 306.85 lean is to eliminate waste and increase the value
with the criteria quite agree; the business deve- added to products (goods or services) to provide
lopment variable had a mean score of 311.1 with value to customers.

169
 Jurnal Dinamika Manajemen, 14 (2) 2023, 165-177

Simultaneously, entrepreneurial resilien- Several directions of innovation and ent-

ce was found to have a sizeable impact on sus- repreneurship policy guidelines are given by
tainable performance while mediating the effect Shkabatur et al. (2022), comprising, adoption
of financial literacy and competency on sustai- and adaptation, impact innovation, demand-
nable performance across Saudi MSMEs (Seraj oriented innovation, spatial innovation and
et al., 2022). It aligns with Saudi Vision 2030, government coordination. Therefore, to sup-
with a deep focus on entrepreneurship and de- port innovation, particularly in low-income
veloping a financially independent community countries, there is a need for a government
of entrepreneurs. For this reason, in addition to coordination platform that will set development
expanding knowledge, this research can support priorities, strengthen coordination and colla-
policymakers in formulating relevant strategies boration among ecosystem factors, and provi-
to encourage MSMEs that have been hit hardest de appropriate regulatory, infrastructure, and
by the COVID-19 pandemic to work sustainab- financial and legal services. Furthermore, the
ly. Venture capital and business donations also hypothesis developed is:
significantly affect the profit growth of techno- H2: Production Strategy (SP) has a positive ef-
logy-based MSMEs. Technology-based compa- fect on business performance in the Bahu-
nies can increase their access to finance through lak Market.
capacity building in entrepreneurial competen-
cies, such as acquiring the right skills and attitu- Marketing Strategy
des (Ibidunni et al., 2018). Furthermore, the Cardona et al. (2022) uncover the positi-
hypothesis developed is: ve influence exerted by e-commerce on financial
H1: Financial Strategy (FS) has a positive effect variables (revenue, administration costs, and sa-
on business performance in the Bahulak les), i.e., increased sales and reduced operating
Market. costs felt from implementing digital trading stra-
tegies, such as e-commerce. On the other hand,
Production Strategy traditional marketing wastes money, especially in
Raimo et al. (2021) revealed that Italian terms of promotion, advertising, and other costs,
MSMEs have an average level of digitization. compared to modern methods (Saleh, 2019).
Digitalization is an important opportunity for Nowadays, people prefer e-marketing because of
MSMEs or, in other words, a fundamental factor the ease and success of doing business from huge
to help them implement competitive strategies markets around the world, and at the same time,
aimed at innovation, cost reduction, and inter- it can reduce trade transaction costs. By using
nationalization. The empirical findings uncover e-marketing, MSME family businesses in Ma-
that company size, company profitability, and fi- laysia can be improved and require e-marketing
nancial leverage are the drivers that positively in- methods to improve their business, especially in
fluence the digitization of Italian MSMEs. In In- terms of profits and increasing sales revenue.
donesia, in the East Java region, MSMEs are the Home industries must also be able to
backbone of the economy since most people are develop marketing networks, improve product
involved in this sector (Hamdana et al., 2022). design and quality, promote and control costs,
Moreover, financial literacy, technology literacy, and product diversification, and it can only be
and supply chain practices make a positive and done with intensive training in managing busi-
significant contribution to MSME sustainability. ness and investment (Pangemanan & Walukow,
If MSME owners realize and understand the im- 2018). MSMEs that implement innovation, are
portance of financial literacy and are supported proactive, and dare to take risks can take advan-
by technology literacy, strengthened by supply tage of social media technology. In addition,
chain practices, the opportunities for them to run the rationality of business-to-business (B2B)
their businesses sustainably are even greater. marketing metrics has a tremendous impact on

170
 Rahmawati et al. / Business Performance of MSMES in Traditional Market: an Analysis of ....

business success (Rakshit et al., 2022). Further, key research and innovation indicators of firms,
knowledge about customers through text mi- such as R&D and patent intensity. Furthermore,
ning and knowledge from customers with the the hypothesis developed is:
Kano model reveal critical requirements that H4: The Research Development Strategy (SPP)
will be used for the development of a social me- has a positive effect on business perfor-
dia marketing strategy framework, referred to mance in the Bahulak Market.
as knowledge for customers. The strategic fra-
mework consists of five general components for Human Resources Strategy
MSMEs to carry out social media marketing: A relationship exists between taking ac-
context, channel, content, communication, and tions related to sustainable business in compa-
sustainability (Chen et al., 2022). Furthermore, nies and managers’ beliefs (awareness) regarding
the hypothesis developed is: the concept of sustainable business development
H3: Marketing Strategy (SPM) has a positive and managers’ influence on employees and the
effect on business performance in the Ba- stimulation of their behavior, including their de-
hulak Market. velopment, appropriate treatment, communica-
tion with managers, and reward and promotion
Research and Development Strategy systems, where managers take several actions
Research and development activities are aimed at developing their employees. Qualified
influenced by human resource factors, finan- human resources are also an integral part of the
cial resources, and cooperation (Nikolova et al., company’s strategy. Human resource develop-
2022). In addition, achieving a positive effect on ment is, therefore, an important step toward bu-
the management of eco-innovation influences siness success in the marketplace. Thus, managers
the innovation activities of industrial companies, must motivate employees in different ways that
their ability to carry out research and develop- result in human resource management related to
ment activities, and their ability to effectively achieving company goals. Hence, the issue of in-
manage their technical and technological resour- dividual motivational programs created for indi-
ces. Innovation activities aimed at carrying out vidual employees tailored to the needs of emplo-
scientific research and development activities, yees should be discussed (Lorincová et al., 2018).
products and processes obtained as a result of In another study, Tam & Gray (2016) lin-
eco-innovation activities, and adequate informa- ked organizational learning practices in MSMEs
tion management directly impact the efficiency to the organizational life cycle, contextualizing
of business processes and financial results. the differential aspects of the integrated rela-
Among the most important recommenda- tionship between them. There are three stages
tions to increase the competitiveness of MSMEs of the life cycle, the initial phase, high growth
in the agricultural industry are utilizing all ap- and maturity. Furthermore, Tam & Gray (2016)
propriate agricultural subsidies, utilizing accre- found that three out of four learning levels
dited agricultural advisers, ensuring that legal (individual, group, organizational, and inter-
requirements of government bodies are met, inc- organizational) practiced in MSMEs varied in
reasing income for arable agriculture, establishing importance between life cycle stages. There is
cooperatives/sales associations to balance power significant potential to be realized through the
competing buyers, rejuvenating the workforce, strategic management of HR practices to achie-
strengthening the ownership structure in busi- ve a sustainable competitive advantage (Ahmad
nesses, diversifying entrepreneurship, and imp- & Khan, 2022). Here, supervisory and manage-
roving the quality of livestock (Chladkova & For- ment education and appropriate workforce skill
mankova. 2016). Engagement in collaborative levels along with continuous industry-leading
R&D vis-á-vis non-collaborative research strate- training appear to be the most successful busi-
gies is also associated with higher return rates for ness strategies followed by MSMEs. For greater

171
 Jurnal Dinamika Manajemen, 14 (2) 2023, 165-177

efficiency, MSMEs need to have dedicated HR population that became this study’s target were
management and financial and audit services. MSMEs registered in Karungan Village with a
Meanwhile, public sector entities and represen- total of 74 businesses. The sampling technique
tative business entities need to provide training applied was simple random sampling. The num-
and practical technical and financial assistance ber of samples was calculated using the Roscoe
targeted at strengthening MSMEs and increa- reference, stating that a good sample size can
sing the reach of their outputs. Furthermore, the range between larger than 30 and smaller than
hypothesis developed is: 500 samples (Sekaran & Bougie, 2016).
H5: The Human Resources Strategy (HRS) has In this study, the independent variables
a positive effect on business performance consisted of management strategy, comprising
in the Bahulak Market. financial strategy, production strategy, marketing
strategy, research and development strategy, and
From the explanation above, the research human resource strategy. Meanwhile, the depen-
framework can be described as follows: dent variable used was business performance.
The research questionnaire was developed refer-
ring to previous research. Data analysis utilized a
structural equation modeling (SEM) approach.
In the SEM approach, the outer model and inner
model were tested, and the hypothesis test was
carried out using the bootstrap function.
Questionnaires prepared to answer this
research were delivered to respondents, namely
business people in the Bahulak Market, Karun-
gan Plupuh, Sragen. This questionnaire was de-
veloped from previous research and adapted to
the conditions of the respondents in the In ge-
neral, the questionnaire developed in this study
contains: Financial Strategy (SK) includes four
statements, Production Strategy (SP) includes
Figure 2. Research Framework five statements, Marketing Strategy (SPM) in-
cludes seven statements, Research Development
Figure 2 shows that strategic management Strategy (SPP) includes three statements, Sour-
in this study is translated into 5 variables con- cing Strategy Human Resources (HR) includes
sisting of: Financial Strategy, Production Strate- six statements, and Business Performance (KB)
gy, Marketing Strategy, Research Development includes four statements. The Likert scale was
Strategy, and Human Resources Strategy. Each used in this study to measure the attitudes and
variable is then assessed for its effect on Busi- opinions of respondents by indicating their le-
ness Performance. vel of agreement with a series of questions in the
questionnaire given.
METHOD
RESULTS AND DISCUSSION
This study used a quantitative method.
The data source was primary data obtained by Questionnaire data were obtained from
distributing questionnaires to business people 59 respondents who were MSME actors in the
and MSME owners in Karungan Village, Plu- Bahulak Market, Karungan Village, Plupuh Sub-
puh, Sragen. In addition, secondary data was district, Sragen Regency. Table 1 below descri-
also employed through a literature study. The bes the demographics of the study respondents.

172
 Rahmawati et al. / Business Performance of MSMES in Traditional Market: an Analysis of ....

Table 1. Respondent Demographics local regional government and various related

parties to play a role in increasing the capacity of
Category Number Percentage business actors in the Bahulak Market. Coupled
Age with the conditions showing that the majority
<21 0 0% of them have never had a business before and
the majority of duration of the running business
21-30 28 48%
was still in the range of fewer than five years, the
31-40 6 10% business they were developing at the Bahulak
>40 25 42% Market is a start-up in nature. The condition of
Status the respondents as presented in Table 1 above
Married 59 100% illustrates that business actors in the Bahulak
Last education Market, Plupuh Sragen, still need assistance
Senior high school 43 73% from various related parties so that the running
Junior high school 16 27% business will grow in the future. It is hoped that
the results of this research can be used as input
Having previous for various related parties who will assist the res-
business experience pondents, especially related to business strate-
No 40 68% gies with the potential to increase their capacity,
Yes 19 32% the ultimate goal of which is for them to maxi-
Length of business mize the performance of their business results.
(Year) Based on the questionnaire results filled
<5 38 64% out by business people at the Bahulak Market,
5-10 12 20% Karungan Plupuh, Sragen, the following results
11-15 0 0% of the SEM analysis in this study are depicted.
>15 9 16%
The number of
employees (Number)
0 13 22%
1-5 36 61%
>5 10 17%
Source: Data processed by the author, 2023

Table 1 reveals that the age of business ac-

tors in the Bahulak Market was the highest in the
age range of 21-30 years. It was because many
residents in Karungan Village married young, so
they had to earn a living to meet family needs. It
could be seen from the status of all respondents
who were married. To meet the needs of their
households and families, these respondents run Figure 3. SEM Analysis Results
and developed businesses in the Bahulak Mar-
ket. Then, the last education of business actors Figure 3 above is the SEM test results,
was dominated by senior high school graduates, showing the final result, where all statements in
with the majority being relatively young, which the research questionnaire were entirely used
means that their knowledge of business strategy for further hypothesis testing. This study then
was likely to be lacking. It is a challenge for the employed a bootstrapping model simulation

173
 Jurnal Dinamika Manajemen, 14 (2) 2023, 165-177

to the sample to examine each relationship of role of managers is very important for strategy
endogenous latent variables. Based on Figure implementation due to a lack of internal resour-
2, it can be seen that the contribution of plan- ces and external funding constraints.
ning and strategy development has the greatest In a study, Maury (2022) focused on the
path coefficient or the greatest contribution to relationship between CSR, business strategy,
business performance. The next biggest contri- and future business performance and how stra-
bution to financial strategy. While other variab- tegies such as growth, exploration, and defense
les show smaller path coefficient numbers, even strategies influence the performance-CSR rela-
in negative positions. The contribution of pro- tionship. As a result, lead generation strategies
duction strategy to business performance shows were associated with high R&D and advertising
the largest number, this shows that the existence costs but had low capital intensity, whereas ove-
of this market is highly dependent on the real rall growth strategies were measured by revenue
goods faced by buyers. the more there are and growth. In addition, an increase in CSR was
the more there are, the more it will greatly affect found to be positively related to the profitability
the performance of BUSINESS in the shoulder and future growth of the company. Growth and
market. This is similar to research by Lestari et management strategies also improved the per-
al. (2020) where product innovation variables formance of CSR activities.
support company performance. Table 5 below In this study, hypothesis 2 states that the
displays the hypothesis testing results based on production strategy influences the business
the path coefficient and p-value. performance of MSMEs in Karungan Village,

Table 2. Regression Test Results

Original Sample Standard T statistics

Variable P-values
Sample (O) Mean (M) Deviation (STDEV) (O/STDEVl)
SK→ KB .303 .219 .193 1.571 .117
SP → KB .203 .185 .103 1.972 .049
SPM → KB .546 .259 .404 1.351 .177
SPP → KB .408 .482 .225 1.812 .071
SSDM → KB -.980 -.744 .446 2.198 .028
Source: Data processed by the author, 2023
Business actors in the Bahulak Market in- Plupuh, Sragen. Hypothesis 2 was supported,
dependently and simply planned, implemented, indicated by the p-value of 0.049. Furthermo-
and maintained their business. Therefore, the re, hypothesis 5 proposes that HR strategy in-
characteristics and capacity of a business actor fluences the business performance of MSMEs
here are determining factors in the success of in Karungan Village, Plupuh, Sragen. Hypothe-
their business strategy. If the management ca- sis 5 was supported, shown by the HR strategy
pacity of business actors is good, it is easy for variable with a p-value of 0.028. Then, hypot-
them to apply the right strategy for their busi- hesis 4 puts forward that the R&D strategy in-
ness, which significantly affects business results. fluences the business performance of MSMEs
Business actors are also more motivated to work in Karungan Village, Plupuh, Sragen. From
harder if they can get high results. Hence, busi- the results of testing this hypothesis, the R&D
ness people will try to apply the right business strategy variable obtained a p-value of 0.071,
strategy. It is consistent with research by Park significant at an alpha of 10%. Therefore, it can
& Byun (2022), asserting that in MSMEs, the be concluded that hypothesis 4 was supported.

174
 Rahmawati et al. / Business Performance of MSMES in Traditional Market: an Analysis of ....

Meanwhile, hypotheses 1 and 3 in this study The results of this study are expected to
were not supported. It denotes that the finan- provide an evaluation of the strategic manage-
cial and marketing strategies carried out by ment practices that have been carried out and
business actors in the Bahulak Market did not motivate them to develop according to market
affect business performance. It was because the demands. The results of this study are also ex-
scope of their business was still on a local sca- pected to be input for various related parties
le so the financial and marketing aspects have that will help MSMEs in maximizing their busi-
not affected performance. Going forward, it is ness performance.
necessary to develop these two aspects so that
the business performance of business actors in Conclusion and Recommendation
the Bahulak Market can be further optimized. This study assessed the factors in strategic
The following is a summary of the hypot- management and how they influenced business
hesis testing results. performance. This study successfully conclu-

Table 3. Hypothesis Testing Results

Hypothesis P-Values Conclusion

Financial Strategy → Business Performance .117 Not significant
Production Strategy → Business Performance .049 Significant
Marketing Strategy → Business Performance .177 Not significant
Development Research Strategy → Business Performance .071 Significant at 10% alpha
HR Strategy → Business Performance .028 Significant
Source: Data processed by the author, 2023

This study reinforces the studies of Raimo ded that the production and HR strategies had
et al. (2021) and Shkabatur et al. (2022), where a positive effect on business performance at an
the product is the main element in business per- alpha of 5%, while the development research
formance. The development of good product strategy influenced business performance at an
innovation will further improve the business re- alpha of 10%. In general, the description of the
sults of MSMEs. respondents’ demographic condition revealed
In running a business and making decisi- that business actors in the Bahulak Market, Plu-
ons, MSME owners in Karungan Village also in- puh Sragen, still need assistance from various
volved other members in the business as part of related parties to further develop their running
developing resources. They also tended to prio- business. This research’s results are expected to
ritize welfare, in addition to prioritizing the pro- be used as input for various related parties who
ductivity of their resources. The development of will assist the respondents to maximize their bu-
these resources continued to be performed to siness performance.
further improve business results. The practical implication of the results
Further, this study corroborates with Lo- of this research is the need to improve strate-
rincová et al. (2018) and (2015), stating that gic management aspects in the management of
development research in businesses affected the SMEs in the Bahulak Market. By paying attenti-
success of their businesses. So far, business actors on to which aspects have a significant influence,
in the Bahulak Market, Karungan Plupuh, Sragen, in the future business development in the Ba-
have tried to conduct trials in their product deve- hulak Market will be carried out optimally. The
lopment as a form of R&D, but with modest capa- theoretical implication of this research is that for
city, and each one needs to be improved further. markets in remote areas, certain management

175
 Jurnal Dinamika Manajemen, 14 (2) 2023, 165-177

strategies sometimes do not have a significant Hamdana, H., Murwani, F., Sudarmiatin, S., & Her-
effect because the business scope is still very mawan, A. (2022). The Effects of Financial
limited. So that scientifically it must be further and Technology Literacy on the Sustain-
developed which aspects of strategic manage- ability of Indonesian SMEs: Mediating Role
ment have a more significant effect. of Supply Chain Practice. Uncertain Supply
Chain Management, 10(4), 1449-1456.
The limitation in this study is that the
Ibidunni, A. S., Kehinde, O. J., Ibidunni, O. M.,
sample used was only from traders at the Ba- Olokundun, M. A., Olubusayo, F. H., Salau,
hulak Market and the Sinar Karungan Mandiri O. P., Borishade, T.T., & Fred, P. (2018). Data
BUMDes managers, and did not involve com- on the Relationships between Financing
munity leaders and the Karungan Village Go- Strategies, Entrepreneurial Competencies
vernment. By involving them, the discussion in and Business Growth of Technology-Based
this research should be richer in discussion and SMEs in Nigeria. Data in brief, 18, 988-991.
more representative of the interests of society in Lestari, S. D., Leon, F. M., Widyastuti, S., Brabo, N.
general. Suggestions for further research are de- A., & Putra, A. H. P. K. (2020). Antecedents
veloping a questionnaire instrument to be able and Consequences of Innovation and Business
to further explore internal potential, as well as Strategy on Performance and Competitive Ad-
vantage of SMEs. The Journal of Asian Finance,
developing samples as research objects so that
Economics and Business, 7(6), 365-378.
the data obtained becomes more complete and Lorincová, S., Hitka, M., Štarchoň, P., & Stachová, K.
detailed. (2018). Strategic Instrument for Sustainabil-
ity of Human Resource Management in Small
REFERENCES and Medium-Sized Enterprises using Manage-
ment Data. Sustainability, 10(10), 3687.
Ahmad, Y., & Khan, M. R. (2022). How Business Maury, B. (2022). Strategic CSR and Firm Perfor-
Strategy Drives Human Resource Practices mance: the Role of Prospector and Growth
in Small and Medium Enterprises? Evidence Strategies. Journal of Economics and Busi-
from Pakistani Autoparts Industry. Interna- ness, 118, 106031.
tional Journal of Organizational Analysis. Mersha, T., & Sriram, V. (2019). Gender, Entre-
Budiarto, R., Putero, S. H., Suyatna, H., Astuti, P., preneurial Characteristics, and Success:
Saptoadi, H., Ridwan, M. M., & Susilo, B. Evidence from Ethiopia. Thunderbird Interna-
(2018). Pengembangan UMKM antara Kon- tional Business Review, 61(2), 157-167.
septual dan Pengalaman Praktis. UGM Press. Nikolova-Alexieva, V., Alexieva, I., Valeva, K., &
Cardona Arenas, C. D., Quintero Renaud, S., Mora Petrova, M. (2022). Model of the Factors Af-
Quintero, M. C., & Castro Cardona, J. (2022). fecting the Eco-Innovation Activity of Bulgar-
E-Commerce Influence on the Financial Per- ian Industrial Enterprises. Risks, 10(9), 178.
formance of SMEs in the City of Manizales, Pangemanan, S. A., & Walukow, I. M. (2018). Mar-
Colombia. Innovar, 32(84), 75-96. keting Strategy Analysis for Small and Me-
Chen, Y., Harncharnchai, A., & Saeheaw, T. (2022). dium Scale Business Enterprise (SMEs) for
Social Media Marketing Strategy Frame- Home Industry Furniture in Leilem, the Re-
work of SMEs Using Customer Knowledge gency of Minahasa. In Journal of Physics: Con-
Management. Proceeding. Joint International ference Series, 953(1).
Conference on Digital Arts, Media and Tech- Park, W., & Byun, C. G. (2022). Effect of Managerial
nology with ECTI Northern Section Confer- Compensation and Ability on the Relation-
ence on Electrical, Electronics, Computer ship between Business Strategy and Firm Val-
and Telecommunications Engineering, ECTI ue: for Small and Medium-Sized Enterprises
DAMT & NCON 2022, January. IEEE. (SMEs). Sustainability, 14(8), 4689.
Chladkova, H., & Formankova, S. (2016). Strategy Qureshi, K. M., Mewada, B. G., Alghamdi, S. Y.,
for SMEs in the Area of Primary Agricultural Almakayeel, N., Qureshi, M. R. N., & Man-
Production. Agricultural Economics, 62(9), sour, M. (2022). Accomplishing Sustain-
395-406. ability in Manufacturing System for Small

176
 Rahmawati et al. / Business Performance of MSMES in Traditional Market: an Analysis of ....

and Medium-Sized Enterprises (SMEs) Entrepreneurial Resilience among Saudi En-

through Lean Implementation. Sustainabil- trepreneurs. Sustainability, 14(17), 10689.
ity, 14(15), 9732. Shkabatur, J., Bar-El, R., & Schwartz, D. (2022). In-
Raimo, N., De Turi, I., Rubino, M., & Vitolla, F. novation and Entrepreneurship for Sustain-
(2021). Which Italian SMEs Fall in Love with able Development: Lessons from Ethiopia.
Digitalization? an Exploration into the Deter- Progress in Planning, 160, 100599.
minants. Meditari Accountancy Research. Sudrajat, A., Megawati, L., & Munasto, D. (2022).
Rakshit, S., Islam, N., Mondal, S., & Paul, T. (2022). The Influence of Business Capital and Mar-
An Integrated Social Network Marketing keting Strategy on The Development of
Metric for Business-to-Business SMEs. Jour- MSMEs. Quality-Access to Success, 23(190).
nal of Business Research, 150, 73-88. Syahbudi, M., & Ma, S. E. I. (2021). Ekonomi Kre-
Saleh, H. (2019). Enhance Small Medium Enter- atif Indonesia: Strategi Daya Saing UMKM
prise (SMEs) Family Business in Malaysia Industri Kreatif Menuju Go Global (Sebuah
Through E-Marketing Strategies. Internation- Riset Dengan Model Pentahelix). Merdeka
al Journal of Scientific & Technology Research, Kreasi Group.
9(2), 3374-3377. Syaifudin, R., Shodiqin, A., & Nase, N. (2022). Per-
Sekaran, U., & Bougie, R. (2016). Research Meth- an Usaha Kecil dan Menengah (UKM) dalam
ods for Business: a Skill Building Approach. Meningkatkan Kesejahteraan Masyarakat.
John Wiley & Sons. Tamkin: Jurnal Pengembangan Masyarakat Is-
Selig, G. (2014). Critical Success Factors for Win- lam, 7(3).
ning Entrepreneurs and the Role of an In- Tam, S., & Gray, D. E. (2016). Organisational Learn-
cubator in Accelerating the Growth of Start- ing and the Organizational Life Cycle: the
Ups and Early-Stage Companies. Proceedings. Differential Aspects of an Integrated Rela-
Zone 1 Conference of the American Society tionship in SMEs. European Journal of Train-
for Engineering Education, ASEE Zone 1 ing and Development, 40(1), 2-20.
2014, April. IEEE. Zhou, M., Zhou, Y., Zhang, J., Obschonka, M., & Sil-
Seraj, A. H. A., Fazal, S. A., & Alshebami, A. S. bereisen, R. K. (2019). Person–City Person-
(2022). Entrepreneurial Competency, Fi- ality Fit and Entrepreneurial Success: an Ex-
nancial Literacy, and Sustainable Perfor- plorative Study in China. International journal
mance—Examining the Mediating Role of of psychology, 54(2), 155-163.

177