Strategy Development of MSMEs in Order to Face of Industrial

Revolution 4.0

Egabetha Amirah Yudhaputri

and Dadan Umar Daihani

Faculty of Economics and Business, Trisakti University, Kyai Tapa, Jakarta Barat, Grogol, Indonesia

Faculty of Industrial Technology, Industrial Engineering Department, Trisakti University,

Kyai Tapa, Jakarta Barat, Grogol, Indonesia

Keywords: MSMEs (Micro, Small, and Medium Enterprise), Industrial Revolution 4.0, IoT (Internet of Things), AI

(Artificial Intelligence).

Abstract: Today we are facing the industrial revolution 4.0, the stage where the problems cannot be solve without

internet. The Internet of things (IoT) and Artificial Intelligence are coloring the way of conducting a

company. Therefore, entering this era, every company including Micro, Small and Medium Enterprises

(MSMEs) is required to have the ability to change and adapt to technological developments. Considering

this situation, some interesting question are, is the MSMEs in Indonesia are ready to adapt and take

advantage of this technological change? What is the appropriate strategy for enhancement the MSMEs in

order to survive and developed in this circumstance? The MSMEs have a significant role in the national

economy. This can be seen by the amount of business unit that reached more than 55.6 million units in

2011-2012, which involves more than 107 million workers. Meanwhile, the Big company has only 5

thousand business units and involves about 3 million workers. The MSMEs can penetrate to the wider

market, more flexible, can provide income sources for broaden communities, and has more resilience to the

economic crisis, as proven in year 1998. Considering these characteristics, the government must pay

attention to such issues. By fostering the MSMEs, Indonesia can create small, strong and advanced

entrepreneurs who have technological capabilities. This paper temps to analyze and discuss the various

strategies needed to build MSMEs in order to have adaptability in this era of industrial revolution.

1 INTRODUCTION

1.1 Backgrounds

One expert who first pointed out the concept of 4.0

industrial revolution was Prof. Schwab. According

him, in this era there has been a change in the way

humans work based on physical systems into cyber

systems dramatically (Schwab, 2016). The first

generation of industrial revolution took place in the

late 18th century. At that time the principle of

manual work was replaced by work based on

mechanical equipment. Human power began to be

replaced by steam and water-powered machines. At

this era, humans began to find mechanical weaving

machine (1784). With the discovery of mechanical

devices, the concepts of efficiency and productivity

were introduced.

The impact of changes in work characteristics is

felt by the entire business communities. Both for big

and small companies including MSME’s.

Automation starts running throughout all business

activities. Computers used as a driving force for

industrial activities, from the production process to

distribution is now increasingly inaccessible. Almost

every steps of industrial activities are all driven by

computers (Daihani, 2017). Even according to Issac

Assimov, we have now entered into a period where

all problems cannot be solved without computers.

Therefore, the most important thing is how we can

adapt to the development of computers continuously.

(Asimov).

The Computer, more and more, has a very

strategic role. Thanks to the development of an

increasingly sophisticated internets, many business

activities now have been carried out virtually.

Online stores grow everywhere like mushrooms in

the rain, hotel reservations, ticket orders and even

food order is done through the electronic equipment.

In the government sector, there are many

254

Yudhaputri, E. and Daihani, D.

Strategy Development of MSMEs In Order to Face of Industrial Revolution 4.0.

DOI: 10.5220/0008430002540262

In Proceedings of the 2nd International Conference on Inclusive Business in the Changing World (ICIB 2019), pages 254-262

ISBN: 978-989-758-408-4

administrative processes that have now been carried

out using electronic systems. We currently know

e_proqurement, e_gouverment, and others. It's no

exaggeration to say that the e_anything era has

coming.

Changes that occurred not only hit the big

companies. This change must also be adapted by

various MSMEs. Otherwise they may not be able to

compete. Moreover, competition that occurs not

only at the domestic, but also they must compete

globally.

The number of MSMES in Indonesia is very

large and has a strategic role in Indonesian economic

development. According data from the Ministry of

Cooperatives, MSMEs in Indonesia in years 2017

reached 62,922,617. Consisting of micro businesses

as many as 62,106,900, small businesses amounting

to 757,090 and medium categories amounting to

58,627. This amount is very large compared to big

companies with only 5,460. As mentioned in the

paragraph above, MSMEs have a strategic role for

Indonesian economic. In 1998 when there was an

economic crisis, MSMEs saved the Indonesian

nation. At that time almost all large companies

collapsed and caused a lot of unemployment. But

MSMEs with a workforce of 65 million can survive.

Now in the industrial revolution era 4.0, with the

inclusion of various technologies, what strategies

should be implemented by MSMEs? So, they can

still exist and are able to compete with various

companies based on Information Technology. This

interesting issue will be the main subject of this

paper.

1.2 Approach

Figure 1: The 5 steps of study.

This paper is based on a literature review of various

studies. The method used is the qualitative approach

consisting of five steps as in figure 5 (Arbnor, 1997).

The first step is to describe the phenomenon that

occurs. At this stage the data sources are taken from

various documents and literature. The second step is

to analyze the causes of the phenomenon. At this

stage, various possible causes of the phenomenon

will be seen. The next step is to try to look ahead,

what will happen and what must be done by the

object of study to be able to answer the challenges of

the future. Next step 4 and 5 is the preparation of

strategic recommendations that must be formulated

so that the UMKN could continue to develop.

2 LITERATURE REVIEW

Three things will be described in this section, first

about understanding and development of the

industrial revolution 4.0. Second is the description of

various forms of business in the cyber era and its

impact on the business community, especially the

MSMEs. The third part will describe the

characteristics and development of MSMEs in

Indonesia.

2.1 Notion of Revolution Industry 4.0

Currently production management in various

manufacturing sectors has gradually used computers.

This development is strongly supported by the

creation of various innovations, especially in the

field of information technology. As stated by Morrar

Rabeh (Morrar, 2017) that the internet is already a

part of daily life for both individual and business

activities. That's what is called as IoT or Internet of

Thing.

Berger even added, that to increase efficiency

and work productivity, we cannot leave the

computer. The internet and computers become a

whole unit to support the current work system

(Berger, 2014). The information and communication

technology revolution has helped the development

of the industry and encourage high economic

growth. Thus it can be said that the use of

technology in the industry has a positive impact on

improving human welfare. Information technology

has also fostered better production of goods and

services sectors.

The first Industrial Revolution started at the end

of the 18

century. At that time the principle of work

based on mechanical equipment was introduced.

Steam and water power begin to replace human and

animal power. In this era humans began to find

Strategy Development of MSMEs In Order to Face of Industrial Revolution 4.0

255

mechanical weaving machine (in 1784). With the

discovery of mechanical tools, the concepts of

efficiency and productivity were introduced.

Based on the concepts of efficiency,

effectiveness and productivity, experts began to

develop various work methods. At the beginning of

the 20

month, a pattern of mass production work

was found. This method is based on a system of

division of labor and specialization. One application

of this concept was carried out on the slaughterhouse

production line on the Cincinati in 1870. (Daihani,

2017)

In this era, the discovery of various work

methods developed very rapidly. The principles of

scientific management introduced by Taylor color

the era of the 2nd industrial revolution. In 1909,

Taylor published "The Principles of Scientific

Management". In his opinion, by improving the

system and work procedures towards a simpler and

more optimum way, it will increase productivity.

With a simpler system all work can be done easily.

Likewise, by optimizing all resources used, very

high efficiency will be realized. One famous

experiment is designing a spade that allows workers

to optimize the way it works. Likewise other

experiments were carried out on masons who finally

found optimal working patterns for masons in laying

piles of stone. Taylor argues that by calculating the

time of movement (elements of work) needed for

various activities, it can be found "best" to complete

the task. The timing principles of this movement

came to be known as "Taylorism".

The era of the 2

industrial revolution went on

long enough until finally found various electronic

equipment. Starting with the use of electronics

equipment and information technology in the

production system. The automatitation are build in

this era. The debut of the third generation industrial

revolution was marked by the emergence of the first

programmed logic controller (PLC), the modem

084-969. This computer-based automation system

makes industrial machines no longer controlled by

humans, but has been controlled by computers. In

this era, namely in the 1970s, it was known as

"Digital Manufacturing", but later developed the

concept of Computer Integrated Manufacturing

(CIM). This system has integrated the physical

system (production line) with its management

system. Therefore, the whole process is controlled

by system, various computers, from product activity,

production planning, production process to cost

calculation. Data communication is combined with a

new managerial philosophy that increases

organizational and personnel efficiency.

After the CIM concept and computer became an

industrial tool, now the era of industrial revolution

4.0 is approaching which is marked by the cyber-

physical system. Today the industry is beginning to

touch the virtual world, in the form of human,

machine and data connectivity, everything is

everywhere. The use of computers as a driving force

for industrial activities, from the production process

to distribution is now increasingly in accessible,

almost every step of industrial activity is all driven

by computers.

From the various descriptions above, the 4th

industrial revolution can be said as an accumulation

of integration of technological innovation from the

discovery of mechanical, electronic, robotic devices

to the development of internet-based information

technology. (Morral et al, 2017) (Yonsin, et al

2018).

According to Schimitt (Schimitt, 2015) there are

5 reasons why the 4.0 industrial revolution is

something that can encourage increased productivity

and open a broad market and can also improve the

quality of human life.

1. First, this technology allows companies to work

more flexibly. Thus various consumer needs can

be met easily. In addition, with the availability of

internet facilities, it will create a wider network,

so that supply chains can be made better.

2. Second, with robotic technology, product

diversification can be easily done. Various

innovations will be created, this will encourage

increased productivity. Besides that the value

chain and partnerships can be made easy.

3. Third, with the availability of communication

facilities through the internet, the relationship

between producers and consumers will be well

established, even consumers in this case can be

considered an inseparable part of the producer.

4. Fourth, workers can be easily coordinated, and

have the opportunity to facilitate it well in this

business process. Of the four benefits as stated

above.

5. Finally all of these will provide benefits for the

realization of the welfare and quality of human

life.

2.2 Business Models of Industry 4.0

The development of information and communication

technology has influenced in behaviours and

business patterns. The entrepreneurs who initially

used conventional methods are now migrating to

systems based on information technology, such as

e_procurement, e_marketing, etc. Even the

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256

government uses the same method, for example by

creating e_gouverment and e_identity to serve the

community. So it's not excessive, if it is said that

todays we had entered to the e_anything era. Internet

allows humans to interact with many parties more

faster.

Nowadays people can work from anywhere and

are not physically bound. Houses can be used as an

office, work space can be used by anyone as long as

this is connected to the internet. It is the internet that

is a medium of work and not physical space

anymore. This workspace is then called the cyber

office or cyber workspace. By using cyber work

space, work is more productive and efficient because

it does not depend on place and time anymore.

Today we have entered an era of very tight and

complex competition. One alternative to be able to

compete is to build a network as wide as possible.

The bigger our network, the stronger our position

will be. In the partnerships model, companies are not

required to have large assets, because the strength of

the company will lie in the accumulation of the

strength of the entire network.

The form of organization based on work

networks is called the Virtual Corporation (Kurtz et

al, 2010) (Kluber R et al, 1999). This form can be

realized and work well due to internet technology.

Virtual Corporation in principle is like the form of a

cooperative. An example, one form of Virtual

Corporation that is now developing is a travel agent.

This company can offer all the needs of travellers,

from airplane tickets, hotels, restaurants and various

other facilities. All of these facilities do not belong

to this travel agent. All of these facilities are

actually connected by the internet network. From

point of view customers, the company can be

considered as one company. But in reality VC

consists of hundreds or even thousands of companies

connected via the internet. This is where the strength

of the competitiveness of the company, by having

many working partners, the various facilities as if

owned by the company. So basically the Virtual

Corporation for consumers feels like a real

company, even though the company is physically

not real. Each member of the Virtual Corporation

can join and separate depending on the context and

type of work involved

In general it can be said that there are four basic

characters from a virtual corporation namely:

Differentiation, Configuration, Integration and

Technology (Bauer R et al, 2003), (Bultje R and et

al, 1998).

1. The First Character is Differentiation.

This character emphasizes the principle of

heterogeneity and modularity. To deal with

increasingly complex competitive situations,

companies are required to have various functions

(modular) that have specific expertise and specific

competencies (Balint S, et all,1998)

2. The Second Character is Configuration.

This character is related to the form of a temporary

network, this can mean that the relationship between

network members is not too rigid (loosely coupled).

As stated above, that from the viewpoint of

consumers, a VC company is seen as a single

company, but actually consists of many companies.

They join only related to one particular project. The

overall structure of VC is determined by network

configuration and changes that are tailored to

customer demand. Byrne, Brandt et al. for example,

argues, that VC is "a group of collaborators who

quickly unite to take advantage of certain

opportunities. Once there is an opportunity, a

network can be formed which can be dissolved when

it is finished if it is not needed. (Ulrich J et al, 1999)

3. The Third Character is Integration.

This character is related to a coordination

mechanism that is based more on the mechanism of

trust than contractual relations. Heterogeneity and

dynamic reconfiguration of various core

competencies combine to become a mission to fulfil

customer needs. Every member of the organization

who joins must have the desire and commitment to

work in an integrated manner on the basis of

responsibility and trust. This is important because

the achievement of the required value of the

consumer can be achieved so that all the components

work equally well and with one another. A single

juncture failure can cause failure of all jobs. Because

this level of trust is a prerequisite for the formation

of a VC. (IshayaT et al, 1999)

4. The Other Factor is Technology.

This character consist of Information and

Communication Technology. One other character of

VC is the existence of Technology, especially

Information and Communication Technology.

Networking between independent VC-forming

corporations is possible because it is woven by

Computer Technology. Without intelligent

technology from computers this form of network

would not be possible to materialize well. Therefore

technology is an important element in the formation

of VC. (Amant K et al, 2005)

2.3 Notion of MSME

Referring to Law No. 20 of 2008, MSME

Strategy Development of MSMEs In Order to Face of Industrial Revolution 4.0

257

Companies can be defined as follows:

Micro businesses are individual productive

businesses whose assets are no more than 50 million

rupiah and turnover is around 300 million rupiah.

Whereas those included in the category of small

businesses are around 50 to 500 million individual

businesses and their turnover can reach 300 million

to 2.5 billion. Meanwhile, what is meant by medium

business is an individual company that is not a

branch of another company with assets of around

500 million to 10 billion. While the amount of

turnover from medium-sized companies ranges from

2.5 billion to 50 billion rupiah

The Indonesian government is very interested in

continuing to empower MSMEs, because MSMEs

are the national economic backbone. It is revealed

that during the economic and financial crisis,

MSMEs were the ones who saved the national

economy. Therefore, the government continues to

launch MSME development programs including:

1. The Government continuously organizes

programs to improve entrepreneurship and

cooperation spirit between them.

2. The government continues to simplify licensing

and protection procedures and mechanisms for

MSMEs.

3. Open access for MSMEs to enter the broadest

market and create easy access for capital.

4. Fostering an independent and competitive

organization.

From the perspective of the guidance and

characteristics of MSMEs, MSMEs can be

categorized into four forms, as follows:

1. Livelihood Activities. This type of MSMEs is

MSMEs which are used as job opportunities to

earn a living everyday. This MSME is known as

the informal sector. An example is food street

vendors.

2. The Micro Enterprise consists of craftsmen but

does not yet have a clear institutional form.

3. Another form is Micro Enterprise, but already

has a good entrepreneurial attitude. MSMEs in

this category can already become subcontracts

from other companies even though they have

produced products for export.

4. The fourth form is MSMEs that are more

dynamic and fast developing. MSMEs in this

category generally have high entrepreneurial

characteristics and are ready to transform into

large companies.

3 ANALYSIS AND DISCUSSION

As mentioned earlier, MSME has a very important

and strategic role for the national economy. In 1998,

at the time of the monetary crisis, MSMEs were still

able to mobilize Indonesia's economic wheels. At

that time almost all large companies were collapse

due to the increase of the dollar exchange rate (six

times), from which the exchange rate of 2000 rupiah

per dollar then increased dramatically to 15 thousand

rupiahs, even touching the figure of 20,000 rupiah.

In that condition, of course, many big companies are

bankrupt, because they are exposed to huge foreign

debt burden and also the burden of importing raw

materials to be paid in dollars. In addition, many

large companies with foreign debts have entered due

date, requiring huge dollars. Another problem faced

by large companies is the debt repayment period. At

that time many large companies used short-term debt

but were used for investment. As a result, interest

charges and short repayment periods are very

burdensome.

Whereas MSMEs, whose scale of business is not

too large and does not depend on foreign debt, are

able to survive. MSEMs are capable of replacing the

domestic market which was once the market of big

companies. MSMEs are very flexible, and have the

ability to diversify products quickly. They can

switch from one product to another. Flexibility,

adaptability and speed of reacting to change are

unique characteristics of MSMEs. That is the basic

capital of UMKM to remain survive in the economic

crisis situation.

The existence of cooperatives and MSMEs that

are dominant as national economic players are also

strategic subjects in community empowerment. In

the business profile book published by BNI in 2015,

it was stated that in the post-1997-1998 economic

crisis the number of MSMEs is relatively stable.

Until 2012 MSMEs increased steadily and able to

absorb 85 million to 107 million workers. In that

period, the number of business players continues to

increase until it reaches more or less 56,539,560

units, consist of 56,534,592 units of Micro, Small

and Medium Enterprises (MSMEs) or 99.99%. Only,

around 0.01% or 4,968 units is a big business. This

figures proves that MSMEs are a very potential

market for the banking industry, especially financial

institution to channel financing. Because around 60 -

70% of MSMEs do not have access to bank

financing. (LPPI, BI, 2015)

Realizing this, the government through

Cooperative Empowerment and Micro, Small and

Medium Enterprises (KUMKM) continues to

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258

provide guidance. MSMEs should be seen as an

integral part of national economic development.

This program in line which the mission on National

Government to create a just and prosperous society,

in accordance with the mandate of the 1945

Constitution of the Republic of Indonesia. In the

1945 Constitution (article 33 paragraph 1), explicitly

emphasizes the implementation of the principle of

family in the implementation of a national economy

based on economic democracy (Article 33 paragraph

4).

Refer to the role and function of MSMEs, the

government enforces an affirmative policy towards

Cooperatives and MSMEs. In this case the

empowerment of Cooperatives and MSMEs is

directly related to life and improving welfare for

most of the Indonesian people (pro poor). in

particular in the context of expanding business

opportunities for new entrepreneurs and employment

and reducing the unemployment rate (pro jobs). The

development approach aimed at economic actors,

especially in cooperatives and MSMEs, is very

important. This step is at the same time to reinforce

the structuring of the structure of national economic

actors. which had been in a dualistic and lame

condition. Development aimed at Cooperatives and

MSMEs is expected to deliver a more unified and

balanced structuring of the structure of national

economic actors, both in the business scale, strata

and sector, so that the structure of national economic

actors is solid and independent. By paying attention

to the role and potential of the national economy, the

existence of cooperatives and MSMEs has proven to

be independent, strong and flexible business actors

even in normal and crisis conditions. It cannot even

be denied by anyone that Cooperatives and MSMEs

are the leaders of the Indonesian economy. It

became the heart of the people's economy, and the

pioneer of the growth of popular economy.

Regarding with the issues of Industrial

Revolution 4.0, some strategic questions are: Can

MSME’s Indonesia:

 Adapt to this situation?

 Transform into an IT-based business?

 Compete with start-ups?

 Etc.

When referring to the experience of the economic

crisis in 1998 and also in mid-2009, it was seen that

MSMEs was able to survive and continue to grow.

Thus it can be said that MSME's has very good

elasticity. They have proactive abilities. In this case

proactive is defined as the capacity, ability and

sensitivity of a business organization to follow,

anticipate and simultaneously adopt changes that

occur in their environment. In proactive terms, there

is an understanding of the dimensions of time.

Another ability possessed by MSME is

adaptability. This key concept can be interpreted as

the ability to adapt a business organization to the

development of its environment. If the proactive

concept contains an understanding of the dimensions

of time, then the concept of adaptability emphasizes

the dimensions of space. Besides being Proactive

and able to adapt, MSME also has other internal

capabilities, namely Flexibility. This capability is

the capacity of the business organization in terms of

changing itself in accordance with the demands of

the environment, both related to management

structures, business patterns and even the types of

products.

Referring to the change management method

proposed by Kurt Lewin (see Figure 1), these

MSMEs have the ability to unfreezing, changing

process and very fast refreezing (Murthy, 2007).

Unfreezing is an initial process of change. This step

is an important step to change the perceptions of all

members of the organization to be open minded to

new perspective. Basically all members of the

organization want to get better conditions compared

to current conditions, but they are usually reluctant

to change. Therefore it takes a hard effort to

convince all members of the organization to make

changes. We must open their horizons to jointly look

far ahead and achieve a better future. After forming

the same view and awareness to change from the

members of the organization, the process of new

changes can begin to be implemented. The process

of change usually takes a long time, even need to go

through a transition period. Not all stages can be

done easily, it requires patience and awareness from

all parties

. After the members of the organization

can leave the old ways and begin to be able to accept

new ways, then the process of stability of the

working mechanism must be re-established, that is

what is called the refreezing.

From the description above, it can be said that

MSME has proven to be able to change rapidly.

Because the scale of the company is very small and

consists of only a few people, various hurricanes that

forge themselves can be immediately overcome.

Technological developments can also be regarded as

a factor that disturbs stability and as an initial trigger

of change. With a very thin organizational structure

and short hierarchy, the unfreezing process is

usually easy to do. In contrast to big companies

whose structures and numbers of people are very

large, then if there are changes that come from the

Strategy Development of MSMEs In Order to Face of Industrial Revolution 4.0

259

environment, then the company will be difficult to

change.From the perspective of company

characteristics based on organizational virtual

principles, MSME basically can quickly change and

adjust to the conditions of the industrial revolution

4.0

Figure 2: Kurt Lewin Change Model.

From the perspective of company characteristics

based on organizational virtual principles, MSME

basically can quickly change and adjust to the

conditions of the industrial revolution 4.0. This is in

accordance with the concept proposed by Bauer

Roland, namely Differentiation, Configuration,

Integration and Technology.

First the concept of differentiation, In general,

micro, small and medium businesses have specific

expertise, but they have the ability to join other

fields so that they can produce new products that

have high competitiveness. By combining these

skills, a new business entity is formed. In the era of

industrial revolution 4.0, where part of the work was

automated, the modular nature was very important.

For example, now it has developed and is present in

our midst, one of the three-dimensional printing

technology. For large companies this can be a threat,

but for this small industry it can be an opportunity.

Another important character is configuration. In

the era 4.0 it was characterized in the form of a very

loose working partnership. For micro, small and

medium enterprises, the work pattern and network

building are very flexible. The network formed by

MSME is very loose, each member can join or

separate depending on the work he is doing. So the

network bond is not in the form of a very rigid

network. One of the advantages is that each member

can work in their respective rhythms. So that the

working relationship does not prevent him from

developing and building networks with other

partners. This pattern of work is usually very

difficult to do for large companies.

The third concept is Integration which is built

through trust mechanism. This concept is in line

with the previous concept, namely the concept of

modular and differentiation. Because the partnership

network is very loose, the way to maintain the

commitment of its members is trust. Thus each

member has the opportunity to be able to join and

can also separate at any time. However, the

mechanism of relations between members of the

network must be bound by a strong commitment,

namely mutual trust. In fact, often in the work

relationship between network members there is no

need to do a very rigid employment contract.For

small entrepreneurs, this trust mechanism has been

established for a long time. Therefore they can easily

cooperate without having to go through negotiations

and contract-based work agreements. But of course

for large companies this is often impossible. They

must work based on clear and very detailed

contracts.

Another important factor is Integration.

Relationships between work partners can now be

easily woven thanks to the development of

information technology. Especially now that internet

technology is available that can connect anyone

anywhere. Therefore the era is now referred to as

IoT (Internet of Thing). Internet of things common

definition is defining as: Internet of things (IOT) is a

network of physical objects. Internet of Thing in

general can be defined as the formation of various

networks through the internet. The network formed

not only consists of companies or institutions but

also individuals. IoT is not just a network of

computers, but all equipment including smart

phones, medical devices, household appliances,

office equipment and others can be connected to one

network. Thus various activities can be carried out

and organized in one network. That is one of the

technological advancements that encourage changes

in work patterns and even thinking patterns. (Patel

Keyur at all, 2016). A terms of the use of

technology, it is not only monopolized by small

companies, but even large companies have used it.

Even before internet technology was discovered as it

is today, it is big companies that have used this

information technology.

However, technology is developing rapidly and

requires a lot of money, this is where the handicap is

owned by MSMEs. Costs are needed not only to buy

technology but also to develop human resources.

Good cooperation is needed between the

government, universities and researchers. From the

description above it is clear that the MSME group

has enormous potential to be able to utilize or have

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260

readiness to enter the era of industrial revolution 4.0.

They have the ability to easily adapt and to be able

to form a large network. They have the flexibility to

diversify their products by joining others, they can

combine core competens to form a strong production

network and supply chain relationship.

That is the strategy that must be built by

Indonesia so that small business actors can

participate and become the foundation of the

national economic development based on freedom

and justice.

4 CONCLUSIONS

Based on the description and analysis above, there

are some interesting notes to be put forward at this

conclusion including:

At present we are entering the industrial era 4.0,

where all processes are carried out based on

Information Technology, especially the internet and

Artificial Intelligence. In this condition there is no

other way but we must adapt to the development of

technology. Technological development cannot be

ignored, so there are two choices, to drive

technology or we are driven by technology.

MSME’s in Indonesia has a very large number

and has a very important role for the national

economy. During the economic crisis in 1998, they

saved the Indonesian economy. Besides its

contribution to GDP, MSME’s is also able to

accommodate a very large number of workers and

even more than the workforce that can be

accommodated by big companies. But they often get

obstacles in terms of capital. Therefore the

government should continues to carry out

affirmative policies to foster them including

providing capital facilities.

It is clear that the MSME’s has enormous

potential to be able to utilize or have readiness to

enter the era of industrial revolution 4.0. They have

the ability to easily adapt and to be able to form a

large network. They have the flexibility to diversify

their products by joining others, they can combine

core competency to form a strong production

network and supply chain relationship.

To improve MSME's competitiveness and

capabilities in the industrial revolution 4.0 era, the

strategies that need to be built are : 1) Encouraging

the development of networks between different

expertise, 2) Helping to build human resource

capabilities, 3) Opening the path of global trade, 4)

Formulating simple regulations and encouraging the

growth of IT-based MSME’s, 5) Translating the

results of research institutions for practical purposes,

6) Building information technology infrastructure

for the public interest, 7) Creating various capital

schemes for MSME’s.

Based on those conclusions, this strategy can be

applied by practitioners or professionals in the field

of MSME’s in order to follow the development of

today's business world.

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