4.1 Entrepreneurial Characteristics as Factors to Gradually Progress
Indonesian SMEs maintain and develop themselves during a crisis. The SMEs build internal foundations to run their businesses, and they have the entrepreneurial character to create value-added based on a spiritual or social welfare philosophy. Most Indonesian SMEs set their firms or organisations in value-added creation, so they are agile. Moreover, the SMEs’ philosophy is to educate the public, preserve the culture, and create material value for their goods/services. In other words, SMEs can progress to success with an entrepreneurial-based business. This study collected the following statements.
“SMEs management should always focus on value-added as a behavioural denominator as an entrepreneur, not a trader. Therefore, I used philosophical values, such as sustainable, integrated, intellectual, healthy, fun, and prosperous” (IF07-2.22 & 8, IF10-8).
“I adopt Chakra Hindhu philosophy to strengthen my beliefs that could let out uncertain boundaries and gain genuine creativity” (IF16-1.2 & 6.3, IF14-8.1).
“As an entrepreneur, I develop all my staff, so they have high work and mental qualities. On the other side, I emphasise knowledge dissemination to all the staff” (IF10-6.1, IF11-12.3).
The authors summarise the SMEs’ sociodynamics to capture the potential market and global trends (Sandström et al., 2014). We identify those entrepreneurial characteristics that can develop business enlargement and differentiation. Furthermore, this study elaborates on the SMEs’ acquisition of philosophical values to enhance their beliefs, attitudes, and behaviour. First, Indonesian SMEs create a specific business to fulfil market demands with unique goods or services. Second, most Indonesian SMEs search for knowledge to make products and adjust to improve their businesses. These SMEs develop their products through research and development, technology usage and staff enhancement programs. Third, organisational behaviour for Indonesian SMEs depends on their intelligence in searching integrative information (Candas et al., 2019; Mesquita & Boiger, 2014). In other words, these SMEs set their organisational agility by thinking dynamically, liberating their relationships, and adapting flexibility.
The authors explain that most SMEs build their organisational agility through two approaches. The first approach is occupational staff treatment for team building (Schlosser, 2015; Schoonjans, Van Cauwenberge, & Vander Bauwhede, 2013). The treatment includes the internalisation of philosophical values. Then, the SMEs’ owners continue to treat the behaviour of their staff. The second approach is the empowerment of the firms’ internal control systems (Aschauer, Moro, & Massaro, 2015). These systems are intended to defragment the business processes. Moreover, these systems comprehend all kinds of business cycles, such as human resources, inventories, marketing, financial management, etc.
4.2 Incremental Knowledge to Empower Business Readiness
This study captures the Indonesian SMEs’ readiness in stages, building internal capacity strengths and developing their business plans. The SMEs that acquire the accumulated knowledge gained from practice and experience find incremental information to furtherly enhance their business (Guttentag, 2015; Hartarto, Panjaitan, & Sumiyana, 2020; Lehner & Simlinger, 2019; Sumiyana & Susilo, 2021). This study identifies SMEs capability to assemble small-scale improvement processes that are sustainable in the long run but have a significant impact on change. This study presents some comments from the interviews below.
“As an SME player, I collaborate with cloud systems, impacting on improving learning and improving business. Moreover, SMEs should diversify and somehow replace old products with new ones” (IF15-6.2-3; IF10-1.1; IF 14-1.1; IF17-1; IF20-1.1)
“The characteristics of Indonesian SMEs are usually step-by-step changes. I don’t dare to leapfrog. I measure this business by its internal stages of readiness” (IF17-4.1-2, IF07-1.1, IF09-5.2, IF13-1, IF14-1.1; IF15-1.1-2, IF19-5.2).
This research identifies that SMEs continuously improved and shaped their business maturity. SMEs should be skilled in looking at a business’s complexity, immediately adapting it to survive in fluctuating business conditions, and not ignoring regulations. The renewal revolution moves linearly with the needs and interests of particular market segments to achieve a competitive advantage (Nagy et al., 2016; Wan et al., 2015). SMEs identify business opportunities that provide options to take advantage of or create momentum within their internal businesses (Chen et al., 2017). Most of the SMEs’ players have taken advantage of the pandemic’s momentum by diversifying their products or services, diversifying their business lines, and enlarging their market areas. This study found that some of the SMEs’ players created new business breakthroughs during these crisis conditions. For example, some SMEs set up specialist and sub-specialist eye hospitals. In addition, other SMEs provided a breakthrough for organic egg breeders constrained by owning livestock.
4.3 Making Intensive Partnerships as Social Capital
The SMEs’ business progress cannot be achieved alone, even though their internal capacities and capabilities are pretty good. This study identifies that SMEs in Indonesia are always trying to build networks with strategic parties. These social networks could be formal or informal, but always consider the interests of the business actors in the functioning of the social networks, so they can build to increase their capacity from the mutual learning process (Dugundji & Gulyás, 2012; Murphey et al., 2014; Walley, 2013). The research informants expressed the following.
“Most SMEs develop their social networks with social media and the marketplace. The GoI and other private businesses in information and communication technologies facilitate those information technologies. On the other side, I strategically catch many kinds of communities to increase my network’s enlargement.” (IF11-2.2; IF19-2.3; IF10-2.3)
“The social networks facilitate product developments and marketing, from which many SMEs learn processes to be innovative. I recognise that social media supports not only the firm itself but also the collaborative ecosystems, including knowledge, regulations, and opportunities.” (IF07-6; IF02-6.2; IF17-3.1; IF20-6; IF03-2)
This study highlights that SMEs do not limit themselves to following social networks. SMEs use social media when they perceive potential in industrial, cross-industry, and other strategic environments (Graham, 2019; Svensrud & Åsvoll, 2012). Participation in social networks enhances their sociodynamic capability and increases active interaction to gain knowledge and diverse experiences. Then, these SMEs capitalise on their sociodynamic capacity to be intangible capital for aggregately developing their businesses in the practice of social networks, these SMEs select social networks that are functional and productive (Candas et al., 2019). That is when social media has no benefits, not being interpreted as mere financial losses, but the acquisition of the intensity of the exchange of ideas to carry out business processes (Candas et al., 2019). Therefore, this study underscores the need for alternatives to solve business processes and breakthrough forward-looking information’s acquisition.
This study suggests that SMEs strengthen their ties and select the effectiveness of the various social networks, considering their social influence capability (Hambrick & Lovelace, 2018). In other words, SMEs actors undergo a process of evolution and adaptation to increase their organisational capacity and capability as entrepreneurs (Mesquita & Boiger, 2014; Walley, 2013). In the next stage, SMEs leverage the capabilities of these social networks to strengthen their penetration into future business challenges. Furthermore, this study notes the SMEs’ concern for collaboration with anyone. Therefore, they consider linking and matching their business processes to the supply chain and customers. On the other hand, the GoI facilitates SMEs with a clustering pattern to form a business ecosystem upstream to downstream and connect with global markets (Blagoveshchenskaya et al., 2016; Mesquita & Boiger, 2014). Furthermore, the GoI facilitates collaboration with the private marketplace.
4.4 Acquiring Social Media ICT to Gain Valuable Forward-Looking Information
This study infers that most Indonesian SMEs, if armed with self-organisation, business readiness, and social networks, motivate themselves to innovate disruptively. However, the SMEs’ disruptive innovation capabilities require collaboration with the social media’s ICT in various aspects of life, as mentioned in the following statements.
“There is an increasing number of SMEs onboarding on e-commerce platforms before and during the pandemic. The increase is 7.9 million Indonesian SMEs in 1.5 years.” (IF03-2.1)
“We utilise digital controlling system (DCS) technology for the production process. The use of DCS aims to increase customers’ loyalty due to our increased capability to fulfil their orders.” (IF20-6.1; IF20-8.1)
This study indicates that Indonesian SMEs utilise social media and ICT to maintain and increase their businesses. In addition, they use social media’s ICT to adjust various business ends in their disruptive innovation capacity. Their disruptive innovation inducts the future probable business environment (Pandit et al., 2018). By these means, most Indonesian SMEs carried out disruptive actions that transcend their short-run needs and transform their competitive advantage. For example, these SMEs usually implement disruptive innovation in internal system improvements, the acceleration of production processes, dynamic accountability, market coverage expansion, and service quality (Bouwman et al., 2019). This study suggests that the SMEs stages for disruptive innovation with their businesses’ digitalisation were the right decisions and relevant to the demands of their businesses’ dynamics, considering their role as the main driver of the economy in Indonesia (Kala’lembang, 2021).
A digital platform provides various data as a basis for business analysis. Therefore, SMEs are increasingly adapting to business changes to gain added value, consumer confidence, and business levels locally, nationally, and globally (Gobble, 2016; Nagy et al., 2016). Furthermore, this study analyses that disruptive innovation must be carried out by these SMEs simultaneously from their internal control systems, business processes, products, and services, to obtain optimal results. Thus, SMEs can expand their market coverage, increase the scale of their businesses and strengthen their mission and goals. As a result, SMEs could contribute to economic prosperity and sustainability at the community and national scales.
4.5 Business Model Inducing Future Probable Economy Benefits Internally
Indonesian SMEs have succeeded in exceeding the obstacles to their businesses. They utilise their sociodynamic capabilities to find innovative new business models (Svensrud & Åsvoll, 2012; Walley, 2013). This research recognises that the SMEs’ sociodynamic capabilities encourage exchanging ideas to build disruptive innovation in their communities. This study picks the following statements.
“I always exchange experiential knowledge with other SMEs to understand and capture ideas or solutions that are appropriate and suitable for the SMEs’ business level. ICT social media platforms capture future information to develop the business. Forums in social media platforms are to give each other opportunities as vendors.” (IF09-3.1; IF08-2; IF8-6.3)
“A forum in social media’s ICT supports Indonesian SMEs to enter new market segments. Most SMEs search for comprehensive foresight information to enlarge their markets and to fulfil market demands.” (IF09-6; IF03-2.2)
The authors infer that the SMEs’ sociodynamic capabilities focus on searching for specific cross-sectoral information to strengthen their social networks. These SMEs recognise that social networks interact with other SMEs for the learning process that gives birth to innovations. This study highlights that SMEs seek valuable foresight information induced for their business processes. On the other hand, inter-SME networks expand the supply chain by acting as suppliers of other SMEs’ raw materials, distributors, and marketing channels. All the SMEs recognise that an innovative business model is essential to spur growth. The size of these inter-SME social networks allows the SMEs’ players to continue in business (Hartarto et al., 2020; Latifi, Nikou, & Bouwman, 2021; Sumiyana & Susilo, 2021). For example, SMEs cooperate with other parties to offer new investments for the mutual ownership of shares. This study notes the characteristics of the SMEs’ social networks for the expansion or diversification of their business model innovations. In addition, the innovative business models of Indonesian SMEs usually create new market niches or produce marketable products.
4.6 Misfit GoI’s Policy and Consequence
This study marks that the SMEs’ current position is not equivalent to the GoI’s offering. Moreover, the authors highlight that most Indonesian SMEs have pursued their agility and dynamic flexibility. These SMEs make adaptive business innovations within social networks, such as supply-chain and customer relationships (Schoonjans et al., 2013; Sumiyana & Susilo, 2021). Moreover, most SMEs would probably make themselves ready for change (Hartarto et al., 2020), especially for flexibility and the commitment to change organizationally. This research presents some statements to strengthen this study’s arguments.
“The GoI, through the Finance Ministry, only measure SMEs by their total assets. Then, all the GoI’s policies relating to the fund for leveraging the SMEs’ businesses. However, the GoI identify the most suitable approach for these SMEs.” (IF01-11-11.1; IF02-13; IF03-5.4; IF04-11)
“From the banking perspective, the GoI has not been fully responsible, unlike Singapore. The worst is that SME development would be on a political party’s agenda. Moreover, too many GoI agents control and manage SMEs.” (IF05-11)
“I admit that the GoI’s policy does not fit with the current needs of the SMEs. Funds from the GoI for the SMEs’ enlargement are not appropriately placed with those requiring funds for their expansion. Most SMEs first need the knowledge about agility, dynamic flexibility, and sustainability, which is experiential knowledge.“ (IF07-8, IF10-3.2 & 10-1; IF18-12.2; IF11-13)
The authors infer that the end goals for these Indonesian SMEs are sustainability, agility and dynamic flexibility. These SMEs probably gain three capabilities through their sociodynamic factors and disruptive innovation. Meanwhile, the SMEs’ achievements would probably not be supported by the GoI due to different knowledge levels. The authors argue that the GoI, as a regulator and an aggregator, facilitates these SMEs. Most Indonesian SMEs need the GoI to facilitate integrated social media’s ICT for disseminating knowledge (Ainin, Parveen, Moghavvemi, Jaafar, & Shuib, 2015; Morgan, Colebourne, & Thomas, 2006; Scuotto, Del Giudice, & Obi Omeihe, 2017). This dissemination is helpful for these SMEs because it could enhance their knowledge efficiently and effectively. Of course, this enhancement is through the sociodynamics that the SMEs utilise for making disruptive innovation.
With another approach, the GoI enhance the SMEs’ knowledge using an industrial parenting scheme. This parenting system is relevant to the sociodynamic factors because knowledge transfers occur from the listed firms in the capital market to SMEs. This study argues that whether the SMEs’ sociodynamic capabilities within these firms’ parenting systems are achieved, the supply chain's connectivity is held automatically among the big firms and these SMEs (Bordonaba-Juste & Cambra‐Fierro, 2009; Tan, Smith, & Saad, 2006). In other words, the GoI could facilitate collaboration among them. Finally, intensive partnerships, supported by the GoI, would improve these SMEs’ social capital (Diehr & Wilhelm, 2017; Figueiredo & Piana, 2018; Roberts, Lawson, & Nicholls, 2006). Then, the GoI could direct these SMEs to induce helpful foresight information for gaining future economic benefits. Therefore, its policy could increase the SMEs’ sociodynamics simultaneously. Moreover, it would be better when the social media’s ICT supports these SMEs, controlled by the regulators.