Competitiveness of Indonesian Small and Medium Food Processing Industry: Does the Location Matter?

Abstract

In this paper, we compare the competitiveness between clustered and dispersed Small Medium Enterprises (SMEs) in Indonesian food processing industry. This study was driven by the important role of SMEs in Indonesian food processing industry for helping low income people access the low price foods. Furthermore, as Indonesian Government implements policy that support clustered SMEs, it could be expected that SMEs in the cluster area could pursue and emphasize different performance than their non clustered counterparts. Primary data was collected in West Java, Indonesia. The sample includes only companies with fewer than 100 employees and those operate in the food processing industry. We put market orientation, innovation, and business performance as proxy of competitiveness. Mean comparison statistics was used to compare market orientation, innovation and business performance of clustered and dispersed SMEs. The main findings were found through data analysis notably there was significant difference between clustered and non clustered SMEs in market orientation, innovation and business performance.