Empowerment of Small Medium Enterprises (SMEs) through
Participation of Business World in Order to Support Regional
Development Financing in East Java
Achmad Murdiono
*
, Suryo Hadi Wira Prabowo, Adelia Shabrina Prameka, Rayie Tariaranie
Wiraguna, Yana Respati Dewi
Management Department, Faculty of Economics, Universitas Negeri Malang,
Jl. Semarang No. 5, Malang, Indonesia
Keywords: Empowerment of Small and Medium Enterprises, Partitioning the Business World, Regional Development
Financing
Abstract: This study aims to find out how much business participation in development financing, especially the
development of SMEs in East Java. Based on the research objectives, this research variable consists of 5
(five) types namely (1) Fields and types of companies, (2) Mechanisms for implementing business
cooperation, (3) Fields and patterns of cooperation, (4) Problems faced, and (5) Needs and hopes for
developing cooperation. This study uses the subjects of companies and SMEs in 15 districts / cities spread
in East Java Province. This research is an explorative study designed using the approach of Mixing
Methods, which is research with qualitative and quantitative approaches, which want to examine in depth a
phenomenon (in-depth interview) in the community by not manipulating the research variables (expose
facto) and not connecting between variables statistically. The results show that (1). The corporate and SME
business sectors that conduct partnership partnerships are generally in accordance with the policy direction
for the development of the long-term program of East Java as a leading, competitive and sustainable
agribusiness center, (2). The partnership mechanism starts with the identification of partners, the selection
of partner SMEs, the making of the MoU, the development of SMEs, technical assistance, mentoring and
monitoring and evaluation, (3). Most corporations and SMEs collaborate with SMEs in the field of
production, with a pattern of intra-national partnerships that are carried out through intermediate
partnerships and initial partnerships, (4). Most corporations and SMEs say the obstacles faced in the
partnership are relatively very small and can be overcome, (5). Almost all corporations and SMEs agree to
continue partnership cooperation with conditions of market absorption conditions, continuity of product
supply, and product quality produced by SMEs.
1 INTRODUCTION
The global financial crisis will inevitably have an
impact on Indonesia. In many countries, including
Indonesia, the Central Bank begins to reduce interest
rates and the government talks about the fiscal
stimulus (Kompas, 12 January 2009). Indonesia's
economic prediction in 2009 is expected not to be
too bad compared to other countries. In an
increasingly competitive environment, companies
face increasing uncertainty. The current sluggish
world economy has an impact on Indonesia's
exports. The results of research on exports (formed
by USAID) show that Indonesia's exports this year
and in the coming years will certainly decline.
There are at least three reasons that underlie
developing countries regarding the importance of the
existence of SMEs, which is first because the
performance of SMEs tends to be better in terms of
producing a productive workforce. Second, as part
of its dynamics, SMEs often achieve increased
productivity through investment and technological
change. The third is because it is often believed that
SMEs have advantages in terms of flexibility than
large businesses (Berry, et al., 2001). Furthermore,
Murdiono, A., Prabowo, S., Prameka, A., Wiraguna, R. and Dewi, Y.
Empowerment of Small Medium Enterprises (SMEs) through Participation of Business World in Order to Support Regional Development Financing in East Java.
DOI: 10.5220/0008783302210229
In Proceedings of the 2nd International Research Conference on Economics and Business (IRCEB 2018), pages 221-229
ISBN: 978-989-758-428-2
Copyright
c
 2020 by SCITEPRESS – Science and Technology Publications, Lda. All rights reserved
221

small businesses and household businesses in
Indonesia have played an important role in
absorbing labor, increasing the number of business
units, and supporting household income (Kuncoro,
2002). Based on the 2006 census above, of 38
million East Java residents around 4.2 million of
them are people engaged in the SME sector. If each
SMEs is able to absorb 2 to 4 workers, then how
much labor is absorbed by SMEs. This implies how
important the existence of SMEs is in reducing
unemployment in East Java.
Regarding the strategic role of partnership
cooperation, the East Java Provincial Government
continues to strive to improve the role of SMEs
through a strategy focused on three main things,
namely capital, marketing, and resources. All that
can be easily obtained only with easy criteria.
Revolving fund loans have been launched by the
East Java Provincial Government since 2004, which
until now has reached Rp. 300 billion with an
interest of 6%.
The problem is, SMEs in developing countries
(including Indonesia) are generally in a desperate
position and are rivaled by large and medium scale
businesses, so the government is encouraged to
develop and protect them (Tatik, 2002). For this
reason, empowering SMEs through partnerships
with advanced companies is an alternative solution
that is important for SME development.
The development of SMEs through partnerships
has been widely carried out but its effectiveness is
still questionable by various interested parties. For
this reason, understanding and selection of
partnership patterns with nuances of dependence are
very important to be put forward (Siswoyo, 2006).
The collaboration that is good and beneficial for
both parties is certainly based on the following
principles: (1) Cooperative, which is a combination
of two elements, namely the ability and effort. The
first element means the ability of companies to join
and work together to achieve goals, while the second
element relates to how far each company tries to
contribute and make the relationship successful; (2)
Interdependence, is an important variable in
contractual relations.
Differences in organizational functions and
specializations enable business organizational
interdependence. The statement above shows that
interdependence arises when there are two
organizations that have different functions and
specializations; (3) Trust, is a basic component to
form a cooperative relationship. Trust as a belief that
the statements of other parties can be relied on to
fulfill their obligations. Whereas distrust occurs in
line with the lack of information exchange in
planning and measuring performance; (4) Goal
congruence is how far business organizations
simultaneously achieve their goals, or how far an
organization realizes that in an employment
relationship, achieving goals is also influenced by
the actions of other organizations as partners.
Alignment of purpose enables the establishment of
openings in the exchange of information and other
interactions so as to reduce distortions that hinder
the effectiveness of cooperative relationships
(Siswoyo, 2003).
The government has provided support through a
policy of productive economic growth in SMEs, on
the other hand partnerships between medium and
large businesses with micro-small businesses have
been intertwined with existing limitations. But to
what extent the successes, fields and types of
companies that carry out partnership cooperation,
the mechanism of implementation of cooperation,
patterns of cooperation, activity capacity, SME
capabilities in the implementation of cooperation,
implementation strategy of cooperation,
sustainability of cooperation, problems faced by
companies and SMEs, as well as needs and the
company's and SME's hopes in maintaining
sustainability and developing cooperation are not
known with certainty. For this purpose it is
necessary to conduct a survey on the participation of
the business community in order to support the
financing of regional development in East Java.
2 LITERATURE REVIEW
There are several literature reviews that used in this
research.
2.1 Corporate Partnership Program
with SMEs
Since the 1997 financial crisis, Indonesia's (macro)
economy has continued to experience significant
pressure. Many large-scale economic actors
experience difficulties, whereas MSEs prove
themselves to be 'immune' economic actors from the
influence of the crisis. It is proven that MSEs in both
the formal and informal sectors are currently
supporting the economic resilience of this nation,
although a number of obstacles still confront it. In
addition to capital problems, the inequality of
production technology with the times, access to
marketing, and the quality of human resources are
often the complaints of small entrepreneurs. In the
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case of capital, banking services do not want to
'greet' small micro-enterprises (SMEs), because of
the reasons for collateral and other technical bank
requirements.
2.2 Micro-Small Business Development
(SMEs) Policy
The policy direction for the development of Micro-
Small Enterprises (SMEs) in Indonesia is stated
explicitly in the 1999 State Policy Guidelines
(GBHN). This Country Policy guideline underlines
28 points regarding the direction of national
economic development policies for the 1999-2004
period. Following are the three policies framework.
a. The populist economic system is based on the
market mechanism with fair competition and takes
into account economic growth, justice, priority on
social, quality of life, environment and sustainable
development. This system guarantees equal business
opportunities and employment opportunities,
consumer protection and fair treatment of the
community.
b. The creation of a conducive business climate to
empower SMEs to be efficient, productive and
competitive. This policy aims to create a fair
mechanism whereby SMEs can benefit
proportionally and can compete fairly with other
business players.
c. The policy of increasing the capacity of SMEs
which aims to make SMEs able to compete in the
free market with other business actors. Basically this
policy aims to eliminate all obstacles faced by
SMEs, such as limited capital, markets and inputs to
produce, lack of management capabilities, lack of
workers with technical expertise, business,
technology and limited access to information and
business partners.
2.3 Integrated Mentoring Program for
SMEs
The SMEs mentoring program is a SMEs
development model that focuses on efforts to
improve institutional systems (capacities building)
and managerial aspects of SMEs, carried out
intensively and continuously, by actively involving
professional SMEs consultants. The consultants are
tasked with providing advice (advisory) and
consultancy, especially those related to the daily
operations of SMEs.
Some of the scopes of work of the SMEs
consultant in the mentoring program include at least:
a. Planning, which is to assist SMEs entrepreneurs
in formulating plans (action plans) and future
business targets in a measurable, directed and
fair manner.
b. Implementation, namely accompanying SMEs
entrepreneurs in carrying out the plans that they
have prepared, helping to find solutions when
entrepreneurs face obstacles and problems.
c. Evaluation, which is to give an assessment of the
performance achieved by the company, and
assist entrepreneurs in finding the cause of the
deviation from the target that has been made.
d. Development, which is helping SMEs
entrepreneurs in developing development plans
from the results achieved so far.
2.4 The Pattern of Corporate
Partnership Cooperation with
SMEs
The partnership is a business strategy carried out by
two or more parties within a certain period of time to
achieve mutual benefits with the principle of mutual
need and mutual nurturing (Mohammad, 2003).
The application of business ethics in a
partnership that is realized by real action is identical
to building a foundation for a house or building.
Consistency in business ethics will be directly
proportional to the stability or sturdiness in
supporting the pillars above. Mariotti (1993)
proposes six basic business ethics in which the first
4 are relationships of human interaction and the rest
are business perspectives. The six basic business
ethics are (1) character, integrity and honesty, (2)
trust, (3) open communication, (4) fair, (5) personal
desire from partners, and (6) balance between
incentives and risk.
Several types of partnership patterns have been
implemented, are.
a. The plasma core pattern is a partnership between
small businesses (UK) or small and medium
enterprises (SMEs) and large businesses in which
large businesses act as the core, and SMEs as
plasma.
b. The subcontracting pattern is a pattern of
partnership relations between SMEs and large
businesses where SMEs produce components
needed by large businesses as part of their
production.
c. General trading pattern, is a pattern of
partnership relations between SMEs and large
businesses, where large businesses market the
production of SMEs and SMEs supply the needs
needed by large businesses as partners.
Empowerment of Small Medium Enterprises (SMEs) through Participation of Business World in Order to Support Regional Development
Financing in East Java
223

d. Agency pattern, is a partnership relationship
where SMEs are given special rights to market
products (goods and services) of large businesses
as partners.
e. Franchising, is a pattern of partnership
relationships where large businesses as
franchisors provide the right to use licenses,
trademarks, and distribution channels to
franchise recipients (SMEs) with assistance from
management guidance.
3 METHODS
This research is an explorative study designed using
the approach of quantitative approaches. These study
concerns events that have occurred that relate to
current conditions. This research will explore
dynamic data individually through interview
techniques, observation, documentation and Focus
Group Discussion (FGD). Determination of the
sample using purposive cluster sampling technique.
Based on this technique (taking into account
population homogeneity) samples are determined as
many as 15 districts / cities. The research sample
was obtained by 148 sample corporations (which
carry out CSR) that involved target CSR recipients
from individuals, community groups, organizations,
villages and or sub-districts.
The data collected in total is analyzed, directed
to obtain an overview of the participation of the
business community in financing development in
East Java. Thus it can be stated that the data analysis
technique used is the Discourses Analysis. Broadly
speaking, data analysis is carried out with the
following steps: a) Grouping data according to the
problems to be answered; b) Analyze the data
through the stages of checking, editing and
tabulation that are adjusted to the type of data.
Based on the research objectives, this research
variable consists of 5 (five) types namely (1) Fields
and types of companies, (2) Mechanisms for
implementing business cooperation, (3) Fields and
patterns of cooperation, (4) Problems faced, and (5)
Needs and hopes for developing cooperation. The
description of the 5 (five) main variables that exist in
general will describe the participation of the
business world in development in East Java, how it
is implemented, the benefits to the goals and
expectations in future development.
4 RESULTS
Following are several results that we got from this
research. The results of the study are described in
accordance with the objectives of this study.
4.1 Fields and Types of Corporate and
SME Businesses
4.1.1 Business Fields
Based on the research data recapitulation, it was
found that partnership cooperation was dominated
by corporations and SMEs engaged in agribusiness,
which included agriculture, plantation, fishery,
animal husbandry, forestry, and food and beverage,
the sixth percentage of these fields for corporations
and SMEs, each reaching 50.01% for corporations
and 53.95% for SMEs. If it is associated with its
trading activities (corporation 10.81% and SME
10.99%), the percentage of agribusiness activities
for corporations reaches 60.82%, and for SMEs it
reaches 64.94%. Whereas for other business sectors
such as manufacturing, mining, and chemical
industry (all three amounted to 20.94% for
corporations and 10.63% for SMEs) is
agribusiness’s businesses supporting.
The business sectors that support this
agribusiness program absorb as many as 803,185
people or 70.34% of the total workforce. While its
contribution to the cost of economic development in
East Java is Rp. 2.931.268.218.478 or 85.46% of the
total contribution to financing economic
development in partnership cooperation activities in
East Java.
4.1.2 Type of Business Entity
Based on the results of data analysis it is known that
most of the forms of business entities of partnership
partners are PT (44.59%), and individuals / UD
(37.16%). The rest is in the form of CV (13.51%)
and cooperatives (4.73%). There are 32.88% of
SMEs who do not have a law. PT was chosen
because of the consideration of the ease of obtaining
funds, and the business risks limited to the capital
included. Individual companies / UD are chosen
because of consideration of speed in decision
making, but on the one hand the responsibility for
business risk is unlimited or up to other personal
assets. The CV was chosen because it wanted to
integrate the characteristics of PT and individuals. In
the CV, active allies are distinguished (unlimited
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224

responsibilities), and active allies are responsible for
the amount of capital included.
4.1.3 Operational Scope
The results of the data analysis show that most of the
corporations (41.9%) in their operational scope are
domestic companies. In addition 33.11% belong to
multi-national companies, 22.3% belong to
international companies, and 3.39% global /
transnational company. Based on the data above,
there is still sufficient opportunity for corporations
to increase market share at the multi-national level
or even in international markets. For SMEs
marketing activities that are carried out
independently are still limited to the most in the city
(72.3%), between cities (24.07%) and between
provinces (3.27%) and between islands (0.36%).
This condition is highly dependent on the production
capacity of SMEs for those who market themselves
and depend on the location of large-medium
companies that are partners.
4.2 The mechanism for Implementing
Partnership Cooperation with
SMEs
The procedure for implementing partnership
cooperation is carried out in an effort to ensure the
security of investment for the corporation, and to
maintain the stability of market supply, and efforts
to develop market share. Most corporations identify
partners (79.1%), select partner SMEs (75%).
Corporations that do not identify and select partners
are caused by references to personal guarantees,
usually played by the heads of similar business
groups. It is interesting to note that the corporation
also carries out guidance (60.8%), technical
assistance (48.6%) and assistance to SMEs (43.9%)
in the process of implementing partnership
cooperation. The role played by this corporation is a
very meaningful effort towards developing the
capabilities of small micro businesses in East Java.
Coaching, technical assistance and mentoring
applied by corporations for example in the form of
fish spawning training in order to provide good
seeds (the case in Tulung Agung) by Phok Pan.
Post-harvest processing techniques for tobacco
leaves to maintain good quality (case in Jember by
PT. Mayang Sari; Bojonegoro by UD Supiyanto).
Assistance is also provided to partner farmer groups
to produce good quality grain products for seedlings
(the case in Jember by PT. Sang Hyang Seri). Not all
corporations conduct a MoU with SMEs, especially
on products whose results are influenced by many
factors.
4.3 Fields and Patterns of Partnership
Cooperation with SMEs
4.3.1 Field of Cooperation
Partnership collaboration is carried out in various
fields. Most corporations collaborate with SMEs in
the field of production (49.76%), second in the
marketing of production (22.01%). The third order is
cooperation in the field of labor (16.27%), followed
by finance (8.13%). In essence, the partnership
pattern is the division of roles in the efforts of
efficiency and effectiveness. For example,
companies in the field of tobacco exporters (the case
of PT. Mayang Sari in Jember, Yulius in
Bojonegoro, PTPN 12 in Banyuwangi). Shrimp
Exporter Company (case in Sidoarjo). For
corporations engaged in manufacturing, mining and
chemistry, the role of partner SMEs is positioned as
marketers for domestic marketing (for corporations)
and the scale of one city for SMEs.
4.3.2 Business Cooperation Patterns
These patterns of cooperation reflect the business
fields developed. Most corporations carry out a
partnership pattern with SMEs in the form of a
plasma core pattern. The core plasma pattern is the
partnership relationship between small businesses or
small and medium enterprises (SMEs) and large
businesses in which large businesses act as the core,
and SMEs as plasma. This pattern is widely
developed in the field of agriculture on a large scale
(especially plantations and forestry). Farmers
prepare their own land and labor, while production
facilities (mainly fertilizer and seeds), technical
guidance, management, processing and marketing of
products are handled by the corporation. This pattern
is referred to as a subcontracting pattern that has
been applied by corporate samples in East Java as
much as 27.7%. While 28.38% of corporations
conduct general trading patterns (the case of
Pertamina’s marketing of lubricating oil; trade in
agricultural products).
4.3.3 Business Partnership Patterns
Based on the data analysis, it was concluded that the
partnership pattern that had been established
between the corporation and SMEs had been the
initial partnership pattern (47.97%) and the
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225

partnership between (52.03%), had not identified the
final partnership pattern. The partnership pattern is
more common than the initial partnership pattern,
indicating that in the partnership process there has
been participation from the UKM in the form of
capital participation in the form of production
facilities, for example agricultural land, production
facilities, and labor. Equity participation is still
considered as a burden for SMEs, because latent
problems in SMEs are lack of capital and access to
business information.
4.4 The Problems Faced by
Corporations on Partnerships with
SMEs
Based on the results of data analysis shows that the
obstacles faced by corporations generally (84.46%)
are relatively very small and can be overcome.
10.81% stated that it was quite a lot but could be
overcome, and 4.73% stated that there were
obstacles that were relatively difficult to overcome.
The data shows that generally there are relatively
small obstacles, but all of them can be overcome.
This shows that a partnership is a good solution to
overcome business development problems,
especially in SMEs.
4.5 Needs and Expectations for
Partnership Sustainability
The results of the data analysis show that almost all
corporations (95.27%) stated that the follow-up plan
for partnership cooperation with SMEs will be
continued with certain conditions. Something that is
required is among others in the form of market
absorption, consistency and continuity of products,
as well as the quality of products produced by
SMEs. For this reason, increasing the role of the
government in facilitating and creating conditions
that are more conducive to the growth and
development of SMEs is something that is highly
expected. For example, a Milk Cooperative
encountered a business diversification permit
problem related to dairy farming.
5 DISCUSSION
Following are a discussion of this research.
Discussions of the study are described in accordance
with the objectives of this study.
5.1 Fields and Types of Corporate and
SME Businesses
5.1.1 Business Fields
Based on the research data recapitulation, it is
concluded that those who carry out partnership
cooperation are dominated by companies engaged in
agribusiness, which includes agriculture, plantation,
fishery, animal husbandry, forestry, and food and
beverage, totaling 50.01%. If linked to its trading
activities (10.81%), the percentage of agribusiness
activities reaches 60.82%. Whereas for other
business sectors such as manufacturing, mining and
chemical industry (all three amounting to 20.94%)
are agribusiness supporting businesses. From the
data collection on 148 corporations that carried out
partnerships, it was identified that with the number
of corporations capable of establishing partnership
involving 67,050 micro / small businesses with the
number of workers absorbed reaching 1,141,315
people. The business sector that supports the
agribusiness program (60.82%) absorbs 803,185
people or 70.34% of the total workforce. While its
contribution to the cost of economic development in
East Java is Rp. 2,931,268,218,478, - or 85.46% of
the total contribution of financing the economic
development of partnership cooperation activities in
East Java.
The data presented above illustrates that the
agribusiness sector is able to move and develop
micro / small businesses in large parts of the
countryside, as well as open employment
opportunities for the community. Therefore, the
strategy of placing Agribusiness as the focus of
economic development in East Java is a very
appropriate choice. In welcoming 2025, the current
East Java Provincial Government has launched an
East Java vision in the future: "East Java as a leading
agribusiness center, globally competitive and
sustainable". Furthermore, the East Java mission
announced for 20 years is: (1) technology
innovation-based agribusiness, (2) development of
an agro-based economic structure that is globally
competitive and sustainable, (3) the realization of
reliable, noble and cultured human resources, (4) the
realization of the ease of gaining access to improve
the quality of life, (5) optimizing the use of natural
resources and artificial, (6) the fulfillment of high
added value infrastructure, and (7) good governance.
The data presented above illustrates that the
agribusiness sector is able to mobilize and grow
micro-small businesses in most villages, as well as
open employment opportunities for the community.
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Therefore, the strategy of placing agribusiness as the
focus of economic development in East Java is a
very appropriate choice. In welcoming 2025, the
East Java Provincial Government has now launched
the East Java vision of "East Java as a leading
agribusiness center, globally competitive and
sustainable". The direction of the policy really
provides a considerable opportunity for corporations
and SMEs to improve their performance through a
partnership, which in turn is expected to support
quality and sustainable East Java economic growth,
while being able to overcome the problem of
poverty and unemployment and inequality between
regions and income.
5.1.2 Type of Business Entity
Based on the results of data analysis it is known that
most of the forms of business entities of
corporations are PT (44.59%), and individuals / UD
(37.16%). The rest is in the form of CV (13.51%)
and cooperatives (4.73%). PT was chosen because of
the consideration of the ease of obtaining funds, and
the business risks limited to the capital included.
Individual companies / UD are chosen because of
consideration of speed in decision making, but on
the one hand the responsibility for business risk is
unlimited or up to other personal assets. The CV was
chosen because it wanted to integrate the
characteristics of PT and individuals. In the CV,
active allies are distinguished (unlimited
responsibilities), and active allies are responsible for
the amount of capital included. Whereas
cooperatives are chosen because of consideration of
togetherness and common interests.
5.1.3 Operational Scope
The results of the data analysis show that most
(41.9%) of the operational scope are domestic
companies. In addition 33.11% belong to multi-
national companies, and 22.3% belong to
international companies. This shows that the
corporation that cooperates with SMEs is mostly a
corporation engaged in the export sector. This
export-oriented corporation requires output stability,
therefore the supply of raw materials and finished
goods from SMEs will greatly help maintain
sustainable exports. Thus the role of partnership
cooperation is needed in an effort to maintain the
continuity of export activities from corporations.
Based on the data above, there is still sufficient
opportunity for corporations to increase market
share at the multi-national level or even in
international markets.
5.2 The mechanism for Implementing
Partnership Cooperation with
SMEs
The role played by this corporation is a very
meaningful effort towards developing the
capabilities of small micro businesses in East Java.
Coaching, technical assistance and mentoring
applied by corporations for example in the form of
fish spawning training in order to provide good
seeds (the case in Tulung Agung) by Phok Pan.
Post-harvest processing techniques for tobacco
leaves to maintain good quality (case in Jember by
PT. Mayang Sari; Bojonegoro by UD Supiyanto).
Assistance is also provided to partner farmer groups
to produce good quality grain products for seedlings
(the case in Jember by PT. Sang Hyang Seri). Not all
corporations do MoU with SMEs, especially on
products whose results are influenced by many
factors. For example, fishing business (case in
probolinggo). Another reason for not implementing
the MoU is that corporations have provided
assistance that includes planning, implementation
and monitoring and evaluation (the case of
freshwater fish cultivation in Tulung Agung).
5.3 Fields and Patterns of Partnership
Cooperation with SMEs
5.3.1 Field of Cooperation
For corporations that are engaged in agribusiness,
partnerships in the field of production are very
important, because they require assets in the form of
vast land, a lot of energy. This is not possible to be
fulfilled by corporations independently. For
example, companies in the field of tobacco exporters
(the case of PT. Mayang Sari in Jember, Yulius in
Bojonegoro, PTPN 12 in Banyuwangi). Shrimp
Exporter Company (case in Sidoarjo). For
corporations engaged in manufacturing, mining and
chemistry, the role of partner SMEs is positioned as
a marketer for domestic marketing (for corporations)
and a city scale for SMEs.
5.3.2 Business Cooperation Patterns
The core company (Sugar Cane factory) provides
land, production facilities, technical guidance,
management, accommodates, processes and markets
production, in addition to the core companies still
producing the company's needs. While the business
partner group meets the needs of the company in
accordance with the agreed requirements so that the
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227

results created must have the competitiveness and
high selling value. In its development, the core
plasma pattern in East Java has undergone changes
in accordance with the developed business fields.
Corporations do not fully facilitate the concept of
PIR in forestry. In general, farmers prepare their
own land and labor, while production facilities
(mainly fertilizer and seeds), technical guidance,
management, processing and marketing of products
are handled by the corporation. This pattern is
referred to as a subcontracting pattern that has been
applied by corporate samples in East Java as much
as 27.7%. While 28.38% of corporations conduct
general trading patterns (the case of Pertamina's
marketing of lubricating oil; trade in agricultural
products).
5.3.3 Business Partnership Patterns
Based on the data analysis, it was concluded that the
partnership pattern that had been established
between the corporation and SMEs had been the
initial partnership pattern (47.97%) and the
partnership between (52.03%), had not identified the
final partnership pattern. The partnership pattern is
more common than the initial partnership pattern,
indicating that in the partnership process there has
been participation from the SMEs in the form of
capital participation in the form of production
facilities, for example agricultural land, production
facilities and labor. Equity participation is still
regarded as burdensome for SMEs, because latent
problems in SMEs are lack of capital and access to
business information.
The description above indicates that partnerships
still need to be improved both on corporate
initiatives and small micro businesses. Evidently the
partnership has been able to significantly improve
the performance of both parties. Furthermore, it is
expected that the partnership that has been
established will increase SMEs independence so that
the bargaining position becomes equal to the
corporation.
5.4 The Problems faced by
Corporations on Partnerships with
SMEs
5.4.1 Basic Cooperation Sustainability
The results of the data analysis show that the
determinant of the sustainability of corporate
cooperation with SMEs is mostly (60.1%) due to the
consideration of the frequency of cooperation that
has been carried out; 33.8% stated that it was due to
the influence of the agreed contract period; and as
many as 17.6% due to other reasons. This corporate
statement shows that the frequency of cooperation is
the most respected, meaning that SMEs that have
repeatedly made partnership partnerships are
considered competent, proving that they are capable,
therefore the partnership deserves to be continued
with it.
5.4.2 Cooperation Sustainability is seen
from the Level of Dependency
The results of the data analysis show that the
determinant of the continuity of cooperation with
SMEs is mostly (52.7%) due to cooperative reasons
or not interdependent. This shows that the
partnership cooperation carried out is relatively
unstable, there is a lack of business attachment
between the two. Whereas the continuity of
cooperation with obligate reasons or the existence of
interdependence of 41.89%. This finding indicates
that the partnership cooperation is categorized as
well, meaning that both understand the importance
of positive synergy in developing joint ventures.
This obligate pattern in the development of future
partnerships needs to be developed in order to
ensure sustainable business development and
stability.
5.5 Needs and Expectations for
Partnership Sustainability
Based on the results of data analysis shows that the
obstacles faced by corporations generally (84.46%)
are relatively very small and can be overcome.
10.81% stated that it was quite a lot but could be
overcome, and 4.73% stated that there were
obstacles that were relatively difficult to overcome.
The data shows that generally there are relatively
small obstacles, but all of them can be overcome.
This shows that a partnership is a good solution to
overcome business development problems,
especially in SMEs.
6 CONCLUSION
Following are several conclusion that we got from
this research. the conclusion of the study is
described in accordance with the objectives of this
study.
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1. Fields and Types of Corporate and
SME Businesses
The corporate and SME business sectors that carry
out partnership cooperation are generally in
accordance with the policy direction for the
development of East Java's long-term program as a
leading, competitive and sustainable agribusiness
center. The form of corporate business entities is
generally in the form of PT and Individual / UD,
while SMEs are mostly in the form of Individuals,
others are not legal entities.
2. The mechanism for Implementing
Partnership Cooperation with SMEs
Partnership cooperation mechanism starts with
partner identification, selection of partner SMEs, the
creation of MoU, SME coaching, technical
assistance, mentoring and monitoring and
evaluation. SME development, technical assistance,
mentoring and monitoring and evaluation are carried
out by the corporation as an effort to ensure that the
production process carried out by SMEs will
produce products that are in line with the
specifications expected by the corporation. This
provides benefits: First, it is a guidance for
improving the capacity of SMEs in their business
activities; second, provide guarantees for the
corporation against the sustainability of its business
(safety play).
3. Fields and Patterns of Partnership
Cooperation with SMEs
Most corporations and SMEs collaborate with SMEs
in the field of production, with a pattern of intra-
social partnership that is carried out through an
intermediate partnership and initial partnership. This
condition illustrates that SMEs have not been
supported by adequate resources.
4. The Problems faced by Corporations
on Partnerships with SMEs
Most corporations and SMEs say the obstacles faced
in the partnership are relatively very small and can
be overcome. This shows that each party is able to
carry out its duties and responsibilities in accordance
with the agreements that have been made together.
5. Needs and Expectations for
Partnership Sustainability
Almost all corporations and SMEs agree to continue
partnership cooperation with conditions of market
absorption conditions, continuity of product supply,
and product quality produced by SMEs. The
conditions proposed by SMEs are smooth payment,
and sustainable transfer of technology from
corporations.
ACKNOWLEDGMENT
Our acknowledgment for all parties involved in this
research. All parties involved in this research are the
SMEs that we have observed, the government
provides data for this research, and other supports
that we cannot mention one by one.
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