Academic journal article International Journal of Business and Society

Co-Opetition to Promote Growth of Batik Small and Medium Enterprises

Academic journal article International Journal of Business and Society

Co-Opetition to Promote Growth of Batik Small and Medium Enterprises

Article excerpt

1.INTRODUCTION

Co-opetition is a phenomenon in which cooperation and competition among businesses coexist. This occurs because the cooperating companies are in the same industry (Gnyawali et al., 2006; Chen, 2008; Luo, 2007; Ketchen et al., 2004). This phenomenon has actually been going on long enough. Gnyawali and Park (2009) stated that more than fifty percent of the strategic alliance and cooperation occur between companies that are in the same industry or among competitors. The development of the expanding global business, for example Asean Economic Community, make co-opetition phenomenon is becoming increasingly urgent.

Batik small and medium industry is an industry that is experiencing rapid development and has great potential to be developed at this time. Batik is a technique of wax-resist dyeing applied to whole cloth, or cloth made using this technique. Batik is made either by drawing dots and lines of the resist with a spouted tool called a canting, or by printing the resist with a copper stamp called a cap. The applied wax resists dyes and therefore allows the artisan to color selectively by soaking the cloth in one color, removing the wax with boiling water, and repeating if multiple colors are desired. The batik of Indonesia has been designated by UNESCO as Masterpieces of the Oral and Intangible Heritage of Humanity since 2nd October 2009.

The Indonesian batik industry experience rapid growth in recent years. Based on data of Directorate General of SME, The Ministry of Industry of the Republic of Indonesia, in 2015 there were 47,755 batik SMEs in Indonesia. Batik industry contribute to employment by involving more than 200,000 workers. More than fifty percent of batik SMEs located in Central Java.

In Indonesia, Central Java is one of the areas of batik small and medium enterprises (SMEs) center which has great potential. Beside the Pekalongan and Solo batik, in the southern region of the Central Java province, there are centers of batik industry which has a distinctive and attractive patterns. This southern region of the Central Java province covers six districts, namely Banyumas, Cilacap, Purbalingga, Banj arnegara, Kebumen and Wonosobo. Batik produced from this region even attract customers from abroad. Nevertheless, the batik industry in this region facing various challenges. Small and medium size industries resulted in limited production capacity. When there is a large-scale orders, the batik entrepreneurs find it difficult to fulfill. In addition, the limitations of this scale also lead marketing limitations, limited supply of raw materials, limited technology development and limited communication with the government as an adviser and policy makers. This research focus on these six districts in Central Java because of the great potential, yet facing various problems.

To overcome obstacles and to encourage the development of batik SMEs, co-opetition between batik entrepreneurs is required. The literature on co-opetition stated that the need for co-opetition is greater in the context of small and medium enterprises (Gnyawali and Park, 2009). Morris et al. (2007) suggest small and medium enterprises to collaborate with their competitors so they can create economies of scale, mitigate risk, and leverage the resources together. The entrepreneurs in the same industry tend to facing same challenges and have the resources and capabilities that are relevant to each other. Small and medium enterprises can effectively deal with large-scale competitors if they collaborate with each other.

Co-opetition is unique to each industry and geographic region. Industry characteristics and the characteristics of the geographical area affect the pattern of co-opetition between entrepreneurs in it. Batik small and medium enterprises in the southern region of the province of Central Java, Indonesia, also requires co-opetition to be able to overcome various obstacles and encourage their growth. This paper aims to analyze the strategy of co-opetition between batik small and medium enterprises with a case study on batik SMEs in the southern region of the province of Central Java, Indonesia. …

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