The Effect of Productivity and Innovation on the Competitiveness of Batik SMEs in West Java Indonesia

Abstract

Objective - This research aims to test the effect of productivity and innovation toward competitiveness of batik SMEs in West Java.

Methodology/Technique - The study uses Partial Least Square (PLS) for data analysis, as well as an explanatory method and simple random sampling.

Findings - The results of the data testing show that competitiveness is effected by productivity and innovation by 71.7%.

Novelty - The objective of this study is to analyse the gap in productivity and innovation and its effect on the competitiveness of batik SMEs in West Java Indonesia. Batik centre in West Java was developed by the government in collaboration with the private sector to increase the level of production of batik SMEs. In reality, there is a gap in productivity between written batik and stamped batik. Written batik design innovations and production methods need to be improved to compete and survive in the batik industry. Porter (1995:5) describes competition as the core of the success or failure of firms. Productivity of written batik has declined in the past 5 years. From recent BPS data, processed by the Pusdatin Ministry of Industry 2017, the industry has declined by around 10% per year between 2012 and 2017.

Type of Paper: Empirical.

Keywords: Productivity; Innovation; Competitiveness; Batik; Small and Medium Enterprises

JEL Classification: M10, M11, M19