Innovation Strategy in Sustaining Small Businesses: Study of Songket Handycraft Home Industries in Palembang - Indonesia

10 Pages Posted: 14 Jan 2017  

Sarfilianty Anggiani

Trisakti University - Department of Management

Date Written: November 30, 2016

Abstract

Dynamic changing environment is a challenge condition to home industry businesses as small businesses. Some of the crucial challenges facing the industries are changing in the external environment such as competition, demand and technology. Songket Palembang woven by hand with threads of gold and silver and are generally worn on formal occasion. The competitors are from songket handicrafts that is also made in Palembang and also from other area such as Padang and Malaysia, Brunei as well. To sustain the business, one of the strategies that can be used is the innovation strategy. Innovativeness has been recognized as a very important factor in the industrial competition.

The study objective is to observe and explain how business decision as innovation strategy can promote the performance and the sustainability of songket handicraft home industries as small businesses. The study is developed by the characteristics of the owners as leader or leader itself, and also the innovation strategy that applied to the business. The sampling method in this study was using purposive sampling. The respondents are the songket handicraft home industry owners or leaders that have been doing the business more than ten years and have at least one more additional branch in other city in Indonesia. The questionnaires based survey was conducted to gather data from the respondents. The questionnaires were informed by previous studies on characteristic owners or leaders of small businesses, characteristics of small businesses, owners or leaders orientation of innovation, types of innovation, sources of innovation and level of innovation. The questionnaires were gathered by hand directly to respondents. A Total of 46 usable responses were received and analyzed by descriptive statistic using the SPSS.

The result of the study that the owners or leaders that have been successful in sustaining the business are characterize as the middle ages (between 40-55 years old) and more than 10 years are doing the business, and most of them are continuing their family businesses. The overall effort of innovation strategy is very important factor in sustaining the business. The innovation strategy involved songket handicraft home industries as follows: (1) The owners or leaders orientation to support innovation is a mayor successful factor to sustain the business; (2) Type of innovation that most used in the business is the product innovation; (3) Source of innovation that involved to the business is external sources, especially the competitors; (4) Level of innovation that achieved in the business is incremental innovation that focus on changing in raw material and design. Furthermore, the innovation strategy should start from the effort of leader orientation of innovation. The strategy must be followed and applied by the employees in order to develop future innovative products to compete with competitors. It is proven that innovation is important strategy in improving the small business performance to sustain in the market.

Originality/value – Although the songket handicraft home industries take the important role in social and economy in Palembang - Indonesia, iinnovation in handicraft sector has received little previous attention from researchers. This study makes an important contribution by finding the role of owners or leaders orientation and type of innovation as the sustaining strategy. Moreover, it encourages and develops the understanding of the leader from other handicraft industries to improve innovation strategies for their business.

Keywords: Home industries, Innovation strategy, leaders orientation, sustainability, type of innovation

Suggested Citation

Anggiani, Sarfilianty, Innovation Strategy in Sustaining Small Businesses: Study of Songket Handycraft Home Industries in Palembang - Indonesia (November 30, 2016). OIDA International Journal of Sustainable Development, Vol. 09, No. 11, pp. 73-82, 2016. Available at SSRN: https://ssrn.com/abstract=2898399

Sarfilianty Anggiani (Contact Author)

Trisakti University - Department of Management ( email )

Jl. Kyai Tapa No.1, Grogol, RT.6/RW.16
Tomang, Grogol petamburan, Kota Jakarta Barat
Jakarta, Daerah Khusus Ibukota
Indonesia

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