ISSN 0798 1015

Vol. 41 (Issue 10) Year 2020. Page 23

Development Model of Competitiveness of Chicken Farm SMEs in Sidrap Regency, South Sulawesi, Indonesia.

Modelo de Desenvolvimento de Competitividade para PandersonMEs de Granja em Sidrap Regency, South Sulawesi, Indonesia.

ALAM, Syamsu 1; MUNIZU, Musran 2; MUNIR, Abdul R. 3; PONO, Maat 4; KADIR, Abdul R.O 5

Received: 09/12/2019 • Approved:10/03/2020 • Published 26/03/2020

Contents

1. Introduction

2. Methodology

3. Results

4. Conclusions

Bibliographic references

1. Introduction

Small Medium Enterprise (SMEs) is a stimulus or driver for the economy in Indonesia. Its existence is not only a real contribution to GDP but can also absorb labor, equitable distribution of the results of development and poverty reduction. It must also be admitted that this SMEs has given its role as security for the national economy during the crisis. This can be seen when there is a monetary crisis in Indonesia when big entrepreneurs experience huge losses, but SMEs can stand without any shaking. SMEs are driving forces in the development of the nation and State economy (Hamid & Susilo, 2011).

The prospect of a chicken farm business in Indonesia is considered to be very valuable in terms of the domestic and foreign markets, when viewed from the supply and demand sides. On the supply side, the production capacity of purebred chicken in Indonesia has not yet reached the actual production capacity (Sudaryani & Santosa, 2005). This can be seen from the large number of breeding companies, animal feeds, and medicines that are still producing below the installed capacity. It means that the prospect of its development is still open. On the demand side, currently the eggs production of purebred chicken is only sufficient to meet the needs of the domestic market by 65%. The rest is filled with free-range chicken eggs, ducks and quails. The global trade climate has begun to be felt now, increasingly allows purebred chicken egg products from Indonesia to foreign markets, given that purebred chicken products are elastic to changes in per capita income per year from a country. Although the potential for purebred chicken farm is very interesting, a number of challenges can be obstacles to businesses that can change profits into losses (Zhang, 2001; Tambunan, 2010; Syarif et al., 2015).

Challenges and obstacles in the business of laying purebred chicken farms include weak maintenance management, fluctuations in product and production facilities prices, selling-time uncertainty, low operating margins, production facilities that are highly dependent on imports and tight competition globally. However, the challenge should not make investors who want to invest in the sector of laying purebred chicken farm discourage, but should be the basis for finding solutions to problems through a competitive agribusiness system (Demirbag et al., 2006; Munizu et al., 2017). Firm competitiveness can be enhanced through cost, quality, flexibility, speed of product delivery, and product innovation (Barney, 1991; Muller et al., 2009; Suryana, 2013; Munizu et al., 2019).

One solution to the problem that can be done is the implementation of the agribusiness system, which can make laying purebred chicken farm become potential and grow. Large-scale husbandry despite having a large business capital as an internal strength but still has some weaknesses, one of which is the price of eggs which is higher than the price of eggs from East Java for the market in East Kalimantan. Whereas, for external factors includes the threat of bird flu, the high cost of animal feed, and high-competition for markets outside South Sulawesi, namely East Kalimantan, while for the markets of Southeast Sulawesi, Central Sulawesi and West Sulawesi tend to be stable but if there is no marketing strategy in the future, it felt concerned about the market share in the area was also captured by competitors (Ismaya & Parawansa, 2011; Yupi, 2012; Saptana, 2014). According to Porter (1998) a country will gain a competitive advantage, if companies in a region or country have high competitiveness.

There are many farms operates in Indonesia on an industrial scale but still many are also found subsistence farms. Although the poultry industry continues to grow, the industry in Indonesia is still unable to compete with the poultry industry in other countries in ASEAN. However, the development of SMEs in the field of chicken farming is increasingly encouraged by the government to meet the domestic market (Tangendjaja, 2016).

Sidrap regency aside from being a center for rice production in South Sulawesi, it is also a center for chicken farm SMEs. The Central Bureau of Statistics shows the development of chicken population in Sidrap district spread in 12 sub-districts in Sidrap regency with a total number of breeders of 3.193 households which can be clearly seen in Table 1 below.

Table 1
Data of chicken livestock population development 2009 - 2015 in Sidrap Regency

Source: The Central Bureau of Statistic, 2017

Competitiveness development method of chicken farms is a priority in SMEs (Pono et al., 2018), this is important because the business sector is part of the government program of Sidrap regency to improve the welfare of chicken farmers, but more than that, this business is able to make a significant contribution in accelerating structural changes, namely increasing national economy. In addition, the chicken farming contributes in several aspects of life, not only in the economic aspect, but also can have a positive impact on the provision of employment as well as increasing the regional original income especially in Sidrap regency.

As described above, this study aimed to identify the influence of entrepreneurship aspect, and environmental aspect toward internal resources and firm competitiveness of chicken farming SMEs in Sidrap Regency, South Sulawesi Province, Indonesia.

This study was conducted in Sidrap regency with the consideration that the district is a center for the development of chicken farms. The total population of 584 chicken farm SMEs covering 12 sub-districts in Sidrap regency. Determination of the number of samples using SLOVIN formula at α = 10%, so that obtain a minimum sample size of 100 units of chicken farm SMEs. After the primary data collection was done, 115 complete respondent data were used to be processed and analyzed. The variables of study consist of entrepreneurship aspect, environmental aspect, internal resources aspect, and firm competitiveness aspect. Measurement of indicators and variables uses a Likert scale with a score of 1 to 5. Furthermore, the data were analyzed using by descriptive statistical analysis, and Structural Equation Modeling (Hair et al., 2006; Sekaran & Bougie, 2009; Sugiyono, 2012). Then, data is processed by using SPSS and AMOS program.

The first analysis uses in this study was statistic descriptive. The purpose of this analysis is to reveal description of respondents based on variables of gender, age, level of education, and length of business. The results of the descriptive statistical analysis can be seen in the table 2.

The table below shows that total of respondents of this study was 115 persons that consisted of men (80%) and women (20%). Based on their age, most respondents had ages between 31-40 years (42.61%), the rest had ages 41-50 years (30.43%), over 50 years (18.26%), and 20-30 years (8.7%) of the total respondents. By education level, most respondents were high school / vocational school graduates (50.43%). In addition, the data in the table also shows that the most respondents have run their businesses between 11-20 years.

Table 2
Frequency Distribution
of Research Respondents

Source: Data processed (2019)

The secondary analysis is Confirmatory Factor Analysis (CFA), it can be seen that a variable of entrepreneurship aspect has 3 indicators: self-confidence, leadership ability, and courage to take risks. The results of factor analysis on the variable of entrepreneurship aspect (X1) can be seen in the following table.

Table 3
Confirmatory Factor Analysis -
Entrepreneurship Aspect (X1)

Source: Data processed (2019)

As data above shows that indicators X1.1, X1.2, and X1.3 are valid indicators in forming the variable of entrepreneurial aspect (X1). This conclusion is supported by the results of processed data that show the probability value of each indicator is smaller than standard α value (prob. < 0.05). In addition, the value of critical ratio (CR) of each indicator is greater than t-table value (CR > 1.980). The data in the table also explains that the indicator of leadership ability (X1.2) is a very important indicator in forming the variable of entrepreneurship aspect with a factor loading value of 0.807 which is greater than other indicators in the construct of entrepreneurial aspects. Therefore, it can be said that leadership ability is a very important factor that influences the variable of entrepreneurship aspect.

The results of the confirmatory factor analysis also showed that the variable of environmental aspects had 3 indicators, namely: socioeconomic dimension, information technology progress, and government support. The results of the confirmatory factor analysis on the variable of environmental aspects (X2) can be seen in the following table 3.

Table 4
Confirmatory Factor Analysis
Environmental Aspect (X2)

Source: Data processed (2019)

As data above shows that indicators X2.1, X2.2, and X2.3 are valid indicators in forming the variable of environment aspect (X2). This conclusion is supported by the results of processed data that show the probability value of each indicator is smaller than the standard α value (prob. <0.05). In addition, the value of the critical ratio (CR) of each indicator is greater than the t-table value (CR> 1.980). The data in the table above also explains that the socioeconomic indicator (X2.1) is a very important indicator in forming the variable of environment aspect with a factor loading value of 0.825 which is greater than the other indicators in the construct of environment aspect. Therefore, it can be said that the socioeconomic aspect is a very important factor influencing the variable of environment aspect.

Furthermore, the results of the Confirmatory Factor Analysis test also indicate that the variable of internal resource aspect has 4 indicators: marketing, raw materials, labor, and production technology. The results of factor analysis on the variable of internal resources aspect (Y1) can be seen in the following table.

Table 5
Confirmatory Factor Analysis
Internal Resources Aspect (Y1)

Source: Data processed (2019)

As data above shows that indicators Y1.1, Y1.2, Y1.3, and Y1.4 are valid indicators in forming the variable of internal resources aspect (Y1). This conclusion is supported by the results of processed data that show the probability value of each indicator is smaller than the standard α value (prob. <0.05). In addition, the value of the critical ratio (CR) of each indicator is greater than the t-table value (CR> 1.980). The data in the table above also explains that the marketing indicator (Y1.1) is a very important indicator in forming the variable of internal resource aspect with a factor loading value of 0.701 which is greater than the other indicators in the construct aspect of internal resources. Therefore, it can be said that the marketing aspect is a very important factor influencing the variable of internal resource aspect.

The result of Confirmatory Factor Analysis shows that the variable of competitiveness has 4 indicators: cost, quality, speed of product delivery, and flexibility. The results of the factor analysis on the competitiveness variable (Y2) can be seen in the following table 5.

Table 6
Confirmatory Factor Analysis
Firm Competitiveness (Y2)

Source: Data processed (2019)

As data above shows that indicators Y2.1, Y2.2, Y2.3, and Y2.4 are valid indicators in forming the variable of firm competitiveness (Y2). This conclusion is supported by the results of processed data that show the probability value of each indicator is smaller than the standard α value (prob. < 0.05). In addition, the value of the critical ratio (CR) of each indicator is greater than the t-table value (CR> 1,980). The data in the table above also explains that the indicator of product delivery speed (Y2.3) is a very important indicator in forming the variable of firm competitiveness with a factor loading value of 0.923 which is greater than the other indicators in the SMEs competitiveness construct. Therefore, it can be said that the speed of product delivery is a very important factor that influences the variable of firm competitiveness.

Testing of the research hypothesis was carried out by using structural model equation analysis (SEM). There are six criteria used as a basis for evaluating a model namely: Chi-Square (expected small), CMIN / DF (≤ 2.00), GFI (≥ 0.90), RMSEA (≤ 0.08), CFI (≥ 0.95), and TLI (≥ 0.95). The analysis showed that all the criteria have been met so that the result of structural equation model can be used for further analysis. Then, the results of structural model about the effect of entrepreneurship aspect, environmental aspect toward internal resources and firm competitiveness of Chicken Farming SMEs can be presented in the following table.

Table 7
Hypothesis Testing Results

Source: Data processed (2019)
Notes:  *) significant at:  α ≤ 0.05; Level of confidence at 95%

The data in the table above shows that variable of entrepreneurship aspect has a significant influence on internal resources. This can be seen from the value of the critical ratio (C.R.) that greater than t-table value (5.172 > 1.980). The estimated value 0.422 indicates that 42.2% of variation increase internal resources variable is influenced by entrepreneurship aspects in the term of aspects of self-confidence, leadership ability, and ability to take risks. The result of this study is consistent with Suryana (2013), Anderson & Eshima (2013), and Maulida (2018) that either capacity or capability manager or leaders are very important elements in both developing and improving SMEs business.

The variable of environmental aspect has a significant influence on internal resources. This can be seen from the value of the critical ratio (C.R.) that greater than t-table value (3.144 > 1.980). The estimated value 0.269 indicates that 26.9% of variation increase internal resources variable is influenced by environmental aspects in the term of aspect of social economy, aspect of technology information, and government policy aspect, such as pro-business government policy. The result of this study is support Muller et al., (2009), Hamid & Susilo (2011), and Munizu et al. (2017) that the socioeconomic dimension is an important element of environment factor that affect business competitiveness in the SMEs context.

Furthermore, the results of this study also showed that variable of entrepreneurship aspect have a significant influence on competitiveness. This can be seen from the value of critical ratio which is greater than t-table (4.450> 1.980). Then, the contribution of the effect entrepreneurship aspect toward competitiveness was 31.5% which includes aspects of self-confidence, leadership ability, and the ability to take risks. Variable of environmental aspect has a significant influence on competitiveness. This can be seen from the value of the critical ratio which is greater than t-table (2.737> 1.980). Then, the contribution of the effect environmental aspect toward competitiveness was 20.8%. Additionally, variable of internal resources has a significant influence on competitiveness. This can be seen from the value of the critical ratio which is greater than t-table (5.846 > 1.980). Then, the contribution of the effect internal resources toward competitiveness was 48.6% in term of marketing dimension, material dimension, labor dimension, and production technology.

The results of this study are consistent with Barney (1991), Zhang (2001), Lee & Tsai (2005), Tajeddini et al. (2006), Yupi (2012) and Damang et al. (2019) that the marketing aspect and internal organization capability as the key elements for existing in the global competition. The results of this study also support the findings of Munizu et al. (2019) that speed of product introduction in the market is an important element in conducting business in the context of global market competition. Moreover, these study findings are in line with Barney (1991), Porter (1998), Demirbag et al. (2006), and Syarif et al. (2015) that emphasized on speed of delivery as one of key elements in surviving and winning the competition in the global market. A very dynamic global environment and rapid changes in customer tastes must be anticipated by companies by providing products that are in accordance with market needs and supported by product delivery in real time to customers.

The result of this study found that variable of entrepreneurship aspect is formed by self-confidence, leadership abilities, and ability in taking risks. The leadership ability element is the dominant factor affecting variable of entrepreneurship aspect. Then, the variable of environmental aspect is formed by socioeconomic, information technology, and government policy support. Socioeconomic element is the dominant factors affecting the variable of environmental aspect. Furthermore, the variable of internal resources aspect is formed by aspect of marketing, raw materials, labor and production technology. Marketing element is the dominant factor that affecting the variable of internal resources. In addition, it also showed that the variable of firm competitiveness is formed by cost, quality, speed of delivery, and flexibility. The speed of delivery is the dominant factor that affecting the variable of firm competitiveness.

Then, entrepreneurship aspect and environmental aspect have a positive effect and significant on internal resources as well as firm competitiveness. Internal resources have a positive effect and significant on firm competitiveness. The results of this study provide some guidance for management and business owners of chicken farm SMEs in enhancing the competitiveness of their businesses by considering the factors of entrepreneurial, environmental, and internal organizational resources. In addition, result of this study can be used as additional references for future research that focuses on developing the competitiveness of SMEs in the agribusiness sector.

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1. Department of Management, Faculty of Economics and Business, Hasanuddin University, Indonesia. Contact e-mail: syamsu.alam60@yahoo.com

2. Department of Management, Faculty of Economics and Business, Hasanuddin University, Indonesia. Contact  e-mail: m3.feunhas@gmail.com

3. Corresponding Author, Department of Management, Faculty of Economics and Business, Hasanuddin University, Indonesia. Contact  e-mail: arazak.munir@gmail.com

4. Department of Management, Faculty of Economics and Business, Hasanuddin University, Indonesia. Contact  e-mail: maatpono@yahoo.com

5. Department of Management, Faculty of Economics and Business, Hasanuddin University, Indonesia. Contact  e-mail: rahmankadir90@yahoo.com