“Promoting small and medium
enterprises with a clustering
approach: a policy experience
from Indonesia” by T. Tambunan
Cooperation and competition among firms
2013/2014
Manuela Andreassi
Maria Vittoria Lafronza
Jennifer Tierney
Aim of the lecture
The main aim of this presentation is to review
government policies on SME development with a
clustering approach, in Indonesia.
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What are the critical success factors of
development of SME clusters?
To what extent have government policies
contributed to the dynamics of SME clusters in
the country?
Two definitions of CLUSTER
• Local agglomeration of enterprises producing
and selling a range of related or complementary
products within a particular industrial sector or
subsector (UNIDO).
• A geographically proximate group of
interconnected enterprises and associated
institutions in a particular field, linked by
commonality and complementarity (Porter).
Benefits of a cluster
• It improve SME’s efficiency and productivity
adapting and being flexible as regard market
product and technology managment.
• It can be a powerful mean for succeeding in an
ever more competitive market environment.
• Through a cooperation of enterprises in a
cluster, they may take all the advantages of
external economies.
Two kind of cooperation
• Horizontal cooperationcooperation among
SME’s occupying the same position in the value
chain.
• Vertical cooperation  cooperation among
SME’s along the value chain.
Do all existing clusters in
Indonesia do well?
•
History of Indonesian clusters: located in
rural areas and established naturally
thanks to abundance of raw materials and
workers with special skills.
• The importance of clusters for the
development of SMEs and of the region :
Tegal Wangi, West Java and Jepara.
Four types of clusters according to
their level of development
1. Artisinal: micro enterprises, stagnated oriented,
primitive tools and illiterate workers, low levels
of cooperation and specialization.
2. Active: high skilled workers and better
technology, supplied national and export
markets, high levels of networks.
Four types of clusters according to
their level of development
3. Dynamic: extensive trade networks, internal
heterogeneity in terms of size, technology and
served market;leading firms have a decisive
role.
4. Advanced: high degree of cooperation and
specialization, well developed business
networks among stakeholders, cooperation with
governments and export oriented.
Clusters’ agglomeration
Sometimes the overlapping of advanced
clusters produces clusters’ agglomeration, also
called with the Italian terms of “Industrial
Districts”.
Does anybody want to make an
example of Italian or European
district?
Supporting Clusters
http://www.youtube.com/watch?v=dD3UBjuWALA
Limits to clusters’ development
• Neglecting existing and potential market
linkages of clusters.
• Neglecting or even eroding SME’s potential self
help organizations.
• Limited support from local government or
private organizations.
Example: coconut oil cluster near Polmas in
South Sulawesi.
The importance of cluster-oriented
SME development policies
Four factors of clusters’ development:
• Context for firms strategy and rivalry inside the cluster.
• Demand conditions.
• Related and supporting industries.
• Factor conditions.
The objectives of the policies are: reducing
uncertainty, stimulating early adoption and
encouraging innovation in product.
SME cluster development policies
in Indonesia
1970  BIPIK (National program by the Ministry
of Industry).
Donation of equipment-training programscommon services facilities.
1990  9.022 were the clusters that received
support fom the government.
Indonesian success stories
Public intervention is likely to have contributed to
a number of success stories.
Factors for success:
• Strong local sector associations.
• Long exposure to foreign taste brought forward by
international tourism.
• Considerable medium-scale direct investment.
• Strong role of trading houses in brokering and
organizing exports.
Example: wooden furniture cluster in Jepara.
Conclusions
The cluster is important at:
-Economic level;
-Social level;
-Juridical level.