Empowerment Through Cluster Approach For Improving Competitiveness and Performance Of Small And Medium Industries In Central Java-Indonesia

Abstract

This study aims to (1) identify the strengths, weaknesses, opportunities and threats (SWOT) which faced by small and medium industries (SMI), (2)measure the SMI competitiveness and performance, and (3)describe the empowerment approach to improve the SMI competitiveness and performance. The samples are 394 small and medium entrepreneurs in Central Java - Indonesia which selected by random survey. The SMI competitiveness is measured by the index which is established on Porter's diamond model. This model includes four dimensions. They are the dimension of factor condition, the dimension of demand condition, the dimension of firm strategy structure and rivalry, and the dimension of the supporting industries and related industries. Based on the results of SWOT analysis, SMI has higher opportunity score than threat score and the strength score has lower than weakness score. From the measurement of competitiveness, it is found that SMI has the high competitiveness. The index score is 264.18. The measurement of SMI performance is used by ROI, ROE, and sales growth rates. The results showed the average ROI (20.96%)), ROE (25.89%), and sales growth (7.51%). Based on correlation analysis, it is found the SMI competitiveness has positive correlation with the SMI performance significantly. The empowerment approach to improve the SMI competitiveness and performance uses the pattern cluster approach that involves three main actors. They are government, entrepreneurs, and owner of show room and broker.