An Empirical Analysis of Medan Indonesia MSMES Persistence based on Capital Structure Behavior, Business Strategy, and Business Operational: A Descriptive Study

Muhammad Andi Abdillah Triono, Syahrizal Chalil Harahap, Humisar Sihombing

2018

Abstract

The purpose of this study is to explore Medan City-Indonesia Micro, Small, and Medium Enterprises (MSMEs) persistence based on their capital structure behavior, business strategy, and business operational. Most literature in SMEs envisage lack of capital is the most severe constraint for SMEs survival and growth. Furthermore, trade-off and packing theory are commonly used to explore SMEs behavior toward how they seek new capitals. This study conducted from 1st of August 2018 until 15th of October 2018 which used primary data through in-depth interview which used questionnaire to capture the characteristics of Medan Indonesia MSMEs capital structure behavior, business strategy, and business operational that describe their persistence. The research population was targeted all MSMEs that operate in 33 districts of Medan, Indonesia and cluster sampling (area sampling) is used as the study sampling method which come out to 21 districts are selected as the sampling area that lead to 530 MSMEs as the research respondents and covers a period of 2017 to 2018. Descriptive analysis is used with SPSS 18 as the study tool of analysis. The result showed that 72.8 percent in 2018 Medan MSMEs did not apply for new capital such as debts and equities. Moreover, data from finance retainment indicates that the proportion of retain in finance was at 62.6 percent which indicate most of Medan MSMEs used their own retain on earning for operating their business. Furthermore, debts retained were at 61.1 percent which was higher than retain on equities at 56.4 percent. Therefore, this empirical evidence of persistence through analysis of descriptive statistics shows that Medan MSMEs capital structure behavior were highly consistent with packing order theory. Moreover, it showed that financial measures, focus on cost, focus on product quality, and focus on innovation are the main characteristics of Medan MSMEs business strategy. Furthermore, it showed that Medan MSMEs operational were mostly characterized by the used of small number of employees that account from using 1-5 employees and operate less than 5 years.

Paper Citation

in Harvard Style

Triono M., Harahap S. and Sihombing H. (2018). An Empirical Analysis of Medan Indonesia MSMES Persistence based on Capital Structure Behavior, Business Strategy, and Business Operational: A Descriptive Study.In Proceedings of the 1st Unimed International Conference on Economics Education and Social Science - Volume 1: UNICEES, ISBN 978-989-758-432-9, pages 736-743. DOI: 10.5220/0009503107360743

in Bibtex Style

@conference{unicees18,
author={Muhammad Andi Abdillah Triono and Syahrizal Chalil Harahap and Humisar Sihombing},
title={An Empirical Analysis of Medan Indonesia MSMES Persistence based on Capital Structure Behavior, Business Strategy, and Business Operational: A Descriptive Study},
booktitle={Proceedings of the 1st Unimed International Conference on Economics Education and Social Science - Volume 1: UNICEES,},
year={2018},
pages={736-743},
publisher={SciTePress},
organization={INSTICC},
doi={10.5220/0009503107360743},
isbn={978-989-758-432-9},
}

in EndNote Style

TY - CONF

JO - Proceedings of the 1st Unimed International Conference on Economics Education and Social Science - Volume 1: UNICEES,
TI - An Empirical Analysis of Medan Indonesia MSMES Persistence based on Capital Structure Behavior, Business Strategy, and Business Operational: A Descriptive Study
SN - 978-989-758-432-9
AU - Triono M.
AU - Harahap S.
AU - Sihombing H.
PY - 2018
SP - 736
EP - 743
DO - 10.5220/0009503107360743