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Intan Jingga Independent management consultant Abstract The purpose of this research paper is to look at how social entrepreneurship is emerged in small businesses in Indonesia. This research paper will find out what social entrepreneurs who have small businesses perceive social entrepreneurship as. The comparison of social entrepreneurs or activities underlying social entrepreneurships in Indonesia will be generally reviewed, then focus on small businesses who venture on social entrepreneurship from the beginning or at later stage. This research will focus on the comparison of intentionally and unintentionally planned social entrepreneurship of small business owners through case studies of one Agribusiness and one Batik Craft business. It will overview their motivations in being social entrepreneurs, planned or unplanned. It will also look at whether the intentionally or unintentionally planned social entrepreneurship and social entrepreneurial behaviors are necessary as to survive the businesses and the social enterprises. In doing so, it will observe the social wealth being created or to be created, and analyzes the impact of social entrepreneurship on the social entrepreneurs themselves. It will find and discuss factors that encourage small business people in overcoming the challenges of obtaining entrepreneurial behaviors and entrepreneurial skills and other barriers, thus survive the market. Key words: Social Entrepreneurship, Small Business, Underlying Motivations, Overcoming Challenges, social wealth
In western context, social entrepreneurship is perceived as non-profit venture to create social value or change that will eradicate social challenges with innovation in new scheme, or innovative process, or management or funding strategies by those with strong ethical fiber (Mair and Marti, 2006). While in Asian, which comprises of most developing countries, the definition of social entrepreneurship is similar to above description except that it needs profit as well for its’ financial sustainability (Prahalad, 2005) and it requires not only one leading social entrepreneur but many grassroots entrepreneurs (Bornstein, 2004). It is as Yunus (2003), the founder of Grameen Bank, contend that social entrepreneurship is not for ‘personal gain’ but it is a ‘socialconsciousness-driven enterprises’ that can compete with ‘greed-based enterprises.’
As the purpose of this research paper is to look at how social entrepreneurship emerges in small businesses in Indonesia, it will find out definition of social entrepreneurship in Indonesia context. Next, the comparison of social entrepreneurs or activities underlying social entrepreneurships in Indonesia will be generally reviewed, then focus on case studies of small businesses who venture on social entrepreneurship. Although 50.8% Indonesian live in villages with agribusiness as main livelihood (World Bank., 2007) and Indonesian textile was one of the growing top three major contributors to Indonesian export since 1990 (ADB, 2008), both producers in this two sectors earn low profit margin or lowest wage with 42% of textile workers earning below the minimum wage (ADB, 2006). Therefore, this research will focus on the comparison of intentionally and unintentionally planned social entrepreneurship of small business
owners through case studies of one agribusiness, and one hand craft traditional textile business.
II. Social entrepreneurship in Indonesia Context
By interviewing 300 respondents in Indonesia, Suprapto (2006) conceptualizes that social entrepreneurship in Indonesia context is ‘not only civic innovations but included also various traditional to modern means in combining social and business.’ These civic innovations include ‘arisan’ – traditional savings-and-loans system and nonprofit organizations that separate profit making business with theirs social ventures, while there are various types of traditional cooperative.’ This is reflected in Indonesian institutional social entrepreneurs of NGOs, who are seeking to empower poor stakeholders to have full ownership of the enterprise through intermediation and empowerment. The activities vary from enabling access to market (intermediation) through fair trade practices for marginalized art producers by Pekerti Foundation; replicating Grameen Bank model of microfinance by Yayasan Mitra Usaha NGO to enhance poor family income and children’s education; and empowering small animal breeders in poor village area to have skills and livelihood in husbandry by Dompet Dhuafa Foundation (Dacanay, 2004).
of its business units (Kuncoro, 2008). Therefore, the progress of small scale industry would highly correlate not only with employment and business opportunities boost in Indonesia and its rural areas, but also with export and GDP development (Tambunan, 2009, Kuncoro, 2008). 3.1. Social Entrepreneurship Concept and Underlying motivations In the case studies of this research paper, the social entrepreneur in agribusiness views social entrepreneurship as an attitude or intention to empower other people by developing their potential to become independent, and a willingness to enhance one’s own life while caring as well as sharing with others. Whereas, the social entrepreneur in Batik business defines social entrepreneurship as a business that have social responsibilities toward the Batik craft producers in sustainability of their livelihood, activities, facilities, skills, healthy living conditions and environments. The key message here is social entrepreneurship is about giving and sharing back to the community and producers in the same business sectors or areas. Refer to Table 1 below. In addition, the Agribusiness owner also mention that one of the reasons that motivates him to overcome challenges in his social enterprise would be to always hope that rural/ district community can grow in the future so that economic sector grow to have equity in growth that it can force down the speed of increasing poverty in Indonesia because the influence of poverty toward the future will be very bad impact to all people especially in time of crisis like this In my analysis, the underlying motivations of both social entrepreneurs are highly related to poverty eradication and provision of sustainable improved livelihood (financially, socially, and environmentally) and living conditions for
III. Case Studies
The case studies will focus on social entrepreneurship by two small business owners in Agribusiness and hand craft traditional textiles (Batik and Weaving). We will refer the later as Batik business. The methods used in the case studies research were partly questionnaire, partly interview, and email correspondences. Small businesses are used as the case studies in this research paper because 22.7 million companies in Indonesia, which consist of micro and small businesses, take up 84.4 % of Indonesia’s employment and 99.1%
producers in their sectors in both rural/district or urban areas. Table 1: Overview the motivations in being social entrepreneurs, planned or unplanned. No Business Reason for social entrepreneurship Planned
The commencement of social entrepreneurship is while Yes developing business plan as to: • create maximum work environment in term of performance • enforcement of values • sustain a place in the market • help people to grow their potential (because just can help, not change people) The commencement of social entrepreneurship is after running the Batik business because: • Realizing the impact of traditional textile business on the community and producers. • Seeing the poor living condition of the producers and have compassion to do something for them Not at the beginning
2 Batik Business
3.2. The Role of Social entrepreneurship and Social Entrepreneurial Behaviors Both social entrepreneurs in the case study view that business entrepreneurship is
necessary for their business. While, in term of social entrepreneurship, only Batik business owner sees it as important for survival. The detailed explanations are in the following table:
Table 2: Social entrepreneurship qualities possessed and its importance in the business
Social Entrepreneurship Qualities Owned Agribusiness: Behaviors: accountability to A. Seedlings of organic community, Initiative and vegetables mission to create and sustain B. Creation of organic social value, Sincere, Want to fertilizers help others, concern for C. Organic Vegetables sustainable development crop production and selling (environment and community D. Mengkudu (Noni) juice and financial) production and selling (job openings) Skills: Networking, leadership, E. Empowerment of mentoring, self development Farmers to have own business unit in seedlings, Example: Mentoring friends and/or making fertilizers, (since 3 years a go)and now his and/or Organic Vegetables personnel’s about attitude and crop production and selling business skills like basic accounting and self development
Business & Activities
Important for survival? (why) No, but the social enterprise help smooth the path business development. Agribusiness Owner find it necessary for business as ‘to achieve continuous business because social entrepreneurial have become part of market strategy that is very needed this time as well as to upgrade capacity and mindset of workers or team that are involved in my business whether it is in production, marketing or Human resource development.’
Batik Business: A. Adopt national textile community by subprovince working group. B. Register copyrights for the ethnic motif to sustain its existence as each regions cultural identity. C. Vocational Training & Women Empowerment, collaborating with local women’s organizations. D. Introducing and enforcing ways of cleanliving among the villages in rural area by providing suitable facilities.
Behaviors: accountability to community, Initiative and mission to create and sustain social value, Sincere, Want to help others, concern for sustainable development (environment and community and financial), family, creative, tenacious with unshakeable motivation Skills: understanding context and local culture, recognize social problem and solve it together with community, empower community, Fund raising, create value for society, promote equity Example: collective and community owned activities, equity promotion
Yes, because of the intention in this business is not to be like other middle men whose focus is only on money. The social enterprise would hold on to products’ philosophy and beliefs that the owner can tolerate in each region to create meaningful products. Batik business owner sees that ‘Indonesians base the working philosophy on familiar relationship and their orders. Maintaining good relationship means we must provide activities to maintain close contact and intensive updates among each party.’
As to exhibit opinions of social entrepreneurs on the impact of social entrepreneurship on
themselves and the social wealth being created or to be created, please refer to Table 3.
Table 3: Social Wealth and Impact of Social entrepreneurship on social entrepreneurs No 1 Theme Social wealth that is being created and will be created Agribusiness ‘Unity in the society that diminishes the differences so that we can fill each other with each other’s potentials thus can create peaceful environment and increase economic standard of involving parties.’ Batik Business ‘Technology patent……… colour from cinnamon, block of woods, techniques, if with technology from powder to minimize cost. Patent and then give free to producers who have passion to protect community.’
Impact on social entrepreneurs
‘very influential, because in the application, I learn and can directly apply knowledge that I get to the business and my life, like leadership, care, self development, attitude, and skill that in the future will surely influence the sustainability of my life and business to face the full of challenge conditions ahead.’
‘During the whole process of building this social enterprise, I will also have the opportunity to increase my social wealth.’
The social wealth created and to be created in Table 3 through the social enterprises above varies from unity, relationship, improvement of economic standard, and intellectual property that belongs to or to protect community. Those social wealth mentioned and the explanation of why social entrepreneurship is important in Table 2 are all related to what Remenyi and team (2004) as capital for poverty eradication, which include financial, human, institutional, social, natural, liquid capital. The social wealth is not directly related to monetary value but more to the increased trust that enhance partnering relationship, which later will enhance the enterprise. This is because trust could add value in ‘improving possible benefits; mitigating risks; linking opportunity, motivation and ability (Theingi, 2008).’ As comparison, Tambunan’s (2009) study of cases in Bali, Jepara, Padang (provinces in Indonesia) showed that business relationship in small and medium enterprises (SMEs) are mainly sup- ported by personal relationship rather than formal agreements, especially in rural areas. As asserted by Theingi (2008) that ‘building trust is a deliberate strategy in developing an individual's network structure,’ the impact of social entrepreneurship on the social entrepreneurs increase their own social wealth and also encourage them to have self development. There is a high correlation between social entrepreneurship with social capital called ‘trust’, which in turn will affect social entrepreneurs’ own social wealth and
self development in positive direction. Moreover, synergic alliance of private enterprise, policy makers and producers who have social concern for living standard of farmers and batik crafters in social initiatives would result in joint culture, social, and economic gain (Papanek, 2006, Pasaribu, 2006). 3.3. Challenges in venturing social entrepreneurship As for challenges in the case studies, both social entrepreneurs in venturing social entrepreneurships come across social, economic, politic and technology issues. In regard to social issue, human resources’ mental is viewed to be most challenging for its low exposure to education and old long formed mind set. As of Batik business, other than the reason mentioned afore, the human resources availability is also inadequate because the regeneration of technical and intellectual skills is indisposed. The human resources availability is administered through cultural practice which reduces craft workers capacity to fulfill buyers’ orders on time. And because of economic recession, thus less demand for traditional textile, some of the batik and weaving hand craft community have switched livelihood to be factory workers within or outside their province. Rutten (1999) explains that the mindset issues mentioned above is highly related to cultural factors like specific mental and business cultures which result in dependent behavior of
the entrepreneurial class in Southeast Asia. As of Indonesia, the case studies show that the mindset of producers is greatly influenced by the political environment in Indonesia where the network and law enforcement set by government have corruption, collusion and nepotism issues. In term of Agribusiness, the connection influences the provision of fertilizer and determination of retail price. Moreover, after district autonomy is enforced in Indonesia, the prices in the distribution line increase sharply in which district tax varies and district authority shows little interest in helping agribusiness in comparison to Orde Baru (the new regime) government and other governments in Thailand, Vietnam and other ASEAN countries. As Marshall and team (2006) utter that after the new regime government, there is a shift of communal to private ownership of land and other productive assets which hinders the underprivileged small rural farmer communities’ access. In term of Batik business, the development or availability of raw materials often time is influenced by Indonesian political current. The Batik producers often will buy supply of raw materials owned by the present ruling regime. The politic is highly influential in the economic challenges for both social entrepreneur- ship activities (as shown in Table 2) in Agribusiness and Batik business. Both social entrepreneurs say that the support of government is needed to make social enterprises more affordable and accessible in term of licenses, training, knowledge, technology and technology management. For example, In the case of Agribusiness, Organic plant which should not be expensive because all materials are taken from nature has become very expensive. This is because it is labeled as upper class item, which affects the high cost of the permit and organic raw materials. In the case of Batik business, the price of raw materials is highly influenced by global commodity market price of imported cotton and silk. The Batik business owner gives good example of the challenge in accessing technology for producers at community level:
Many studies had been done by the government and their academic affiliations. [However,] lack of documentations and minimal exposure of their findings to the crafters community resulting in minimal knowledge development across Indonesian crafters community. Other than that, the environment in each district or province is far from identical; therefore each would need different politic, economic, social and technology solution approach. In addition, the challenges above are acknowledged as familiar challenges for other SMEs in Indonesia including lack of capital, difficulties in marketing and distribution, high transportation costs (Tambunan, 2009). Therefore, there is high probability that overcoming challenges in social enterprise will establish social entrepreneurs’ market position that will in effect assist other SMEs or producers related to the social enterprise. 3.4. Factors that Encourage Social Entrepreneurs in Overcoming the Challenges Furthermore, the catalyst of ‘highest level of self-fulfillment’ endowed in social entrepreneurship’s ventures in gaining profit and social returns (Yunus and Jolis, 2003) make overcoming challenges even more feasible. In the following section, the paper will discuss factors that encourage these small business owners in Agribusiness and Batik business to overcome the challenge in implementing social entrepreneurship. There is a sense of hope and nationalism in both of them, where one of them argue that he believes Indonesia will be recovered if every potential is maximized through endorsement of life values, which in turn will bring prosperity to every individual involved in the future. He dreams to have healthy affordable food supply chain and to empower farmers to be independent business owners of Agribusiness
products. The other has a dream to promote Indonesian traditional textile to global world as to promote Indonesian economic condition. Both social entrepreneurs perceive a sustainable process is important to achieve their dreams or visions, so their social enterprise will also help improve the producers’ lives. This factor of sense of hope and nationalism that encourage them to overcome challenges are closely related to the underlying motivation of the small business owners to start social entrepreneurships mentioned above such as poverty eradication and provision of sustain- able livelihood for both producers in Agribusiness and Batik business. This is as Yunus (2003) theorizes that the social entrepreneur- ship ‘not only brings businesspeople of the future closer to real life, but it also creates room for a socially and environmentally friendly global economy.’ The other factors that encourage social entrepreneurs to overcome challenges in their enterprises would be having vision shared with others, interactive network to exchange mind and expertise, good management, loyal customers, innovation and opportunity to learn. In my view, to have vision shared with others is not only strengthening one’s commitment to one’s dream but also inspire and unite community to face challenges as a team in the market in different aspects of politic, economic, social, technology and operational. Interactive network with community in the social entrepreneurship also open the opportunity for social entrepreneurs to facilitate mind- set change and training in community level. Whilst, Network with government would provide updated information of policies currently, hopefully it would provide the system that assists entrance to market and facilitate access to technology and its management for small producers at community level in the future. As for good management both social entrepreneurs perceive that efficient, practical and arranged mechanism of system procedures
and programs are necessary. In the end, in the process of doing social entrepreneurship, both correspondents hope to get opportunity to learn or practice from experts who has brilliant innovation and ideas as to achieve their business bottom lines with sustainable process. In their case, the theory that proposes ‘entrepreneurial ventures are socially embedded, and therefore pursue opportunities using innovative solutions to resolve social problems and satisfy a variety of stakeholders to attain legitimacy over time (Neck et al., 2009)’ fits. Instances of the innovative affordable environmental sustainable process after by the social entrepreneurs in the case studies are as follow: natural dye and other ancient techniques in Batik business and zero waste management for Agribusiness.
In the case studies, social entrepreneurship is viewed as good will and social responsibilities that come with assistances for the community and producers in the same business sectors or areas. The social entrepreneurs’ main intention to start social enterprises instead of just business for profit is encouraged by the compassion to help eradicate poverty in the lives of producers in their business with a sustainable process. In the midst of building the foundation of their social enterprises, they find out that they are to learn and to innovate even more if they want to compete in the market. However, the relationship built with producers in their fields and the learning and innovation would help them to sustain long term business growth and profit. The main reason that encourages them to overcome challenges is the same with their underlying motivation as to help community in their business line to live out of poverty line and have a sustainable livelihood in economic, social, environment, technology aspects. In the end, in various contexts of western world, Asian, Indonesian, and the case studies of small businesses in Jakarta, the social enterprise is fuelled by the altruism and satisfaction of gaining meaning of life in social entrepreneurship. This paper proposes that further research is needed to find simple, eco-
friendly, and economic technology to help small businesses in agriculture and traditional textile as to empower social entrepreneurs to help improve Indonesian’ economy at grass roots level.
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