Australia Awards in Indonesia

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13 Feb 2016

Identifying Export Barriers and Export Development of Indonesian Manufacturing Small and Medium-sized Enterprises (SMEs)

Rita Rosita Pidani, September 2010
University of Newcastle

Abstract
This thesis investigates managerial and organisational factors affecting export development of manufacturing small and medium-sized enterprises (SMEs) in Indonesia. Export development of SMEs has been widely researched. However, little is known of how and why exports as part of internationalisation process take place in developing countries and this lack of evidence in the literature provides a strong rationale for this study. A review of the literature suggests that an investigation of export development should include the broad range of managerial and organisational factors as the key driving forces influencing the process. This line of reasoning highlights the role played by firm-specific resources and capabilities, management characteristics, attitude, and perceptions in shaping the export development process. 

To meet its research objectives, a quantitative method was employed. A personally administered survey was conducted, involving 197 owners and/or managers of manufacturing SMEs using a structured questionnaire. The data was analysed using the statistical package SPSS 17.  AMOS 17 was employed to test the  underlying model and address various hypothesis. The results are largely deductive and are presented in quantitative-themes.

The findings suggest the following: Firstly, export development of manufacturing SMEs in Indonesia is constrained by a lack of knowledge to identify foreign business opportunities, lack of resources to develop new products, difficulty in maintaining control over foreign middlemen, and verbal and non-verbal language differences. These are areas where export strategies could be addressed and improved. Secondly, the results indicate that interrelated factors influence export development of Indonesian manufacturing SMEs. Firm size, firm age, firm location, managerial age and language proficiency were particularly significant in determining the level of export development undertaken. Thirdly, the study also found that the key driver of export development of manufacturing SMEs in Indonesia is profit and opportunities in overseas markets. This study provides strong empirical evidence to suggest that to improve export performance there is the need to enhance economic and social development in Indonesia. This could be achieved through a more transparent government policy, promoting coherence among agencies supporting SMEs export development and adopting structured and relevant export development strategies in Indonesia.

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