ENTREPRENEURIAL CHARACTERISTICS OF LOCAL PEOPLE AT ECOTOURISM ECONOMIC ACTIVITY IN BROMO TENGGER SEMERU NATIONAL PARK, EAST , INDONESIA1

Iwan Nugroho Agribusiness Department, University of Widyagama, ,

ABSTRACT This study was aimed to measure an entrepreneurial test and to analyze the relationship between entrepreneurship components and ecotourism activities of the local people in the Bromo Tengger Semeru National Park (BTS NP). The survey was conducted in three villages: (i) Ranu Pane, Senduro sub-district, Lumajang , (ii) Ngadas, Poncokusumo sub-district, , and (iii) Ngadisari, Sukapura sub-district, Regency. The methods of analyses employed were the entrepreneur test adopted from CRE (2003); and the Structural Equation Modelling (SEM) approach. The research found that the score of entrepreneur test was 35.84, categorized as somewhat entrepreneurial; and community support test was 14.61, categorized as mixed support. Meanwhile, the score of government support test in Ngadisari, Ranupane and Ngadas were 17.34, 15.31 and 14.36 respectively. The study showed that the community in Ngadisari perceived that the government has given a significantly entrepreneurial support. In Ranupane dan Ngadas, such government support was categorized as mixed one. The direct effect of government entrepreneurship on individual entrepreneurship was inot significant. This relationship was rather indirect if social entrepreneurship was used as an intermediate component. This research proved that social entrepreneurship development is a necessary condition for the government to develop individual entrepreneurship in ecotourism activities.

Keyword: ecotourism, entrepreneurial test, social entrepreneurship, national park, Bromo Tengger Semeru

JEL Q01, Q26, Z13

INTRODUCTION Ecotourism is an entry point serving as a real economic sector in the framework of local culture and environmental conservation. Efforts made in developing ecotourism involving the local people are very crucial. Empowering entrepreneurial capability of the local people is the keyword to operate ecotourism economic activities and improve their welfare. It is necessary to develop a learning process in such a way that the local people

1 The research was funded by Directorate of Higher Education, Ministry of National Education, Government of Indonesia, in Financial Year 2008/2009 2

may comprehend ecotourism entrepreneurship (Juma and Timmer, 2003). Thereby, ecotourism activities are necessarily understood as that of farming activities that provide jobs and living and also generate income and welfare. In general, entrepreneurship characteristics are determined by individual, social and governmental factors (Juma and Timmer, 2003; CRE, 2003; Burnet, 2000). Successful stories of entrepreneurial ecotourism activities, such as in Tangkahan or Bali, need a high participation from entire stakeholders to realize the local people’s welfare. Conversely, the ecotourism entrepreneurship in BTS NP is generally under developed. Furthermore, empirical experiences of the BTS NP are necessary to be analyzed in order to identify the entrepreneurial ecotourism activities. A specific study concerning ecotourism entrepreneurship based on local people in Indonesia showed a rather descriptive matter. Entrepreneurship characteristics of ecotourism need to be analysed more comprehensively and quantitatively so that a model for development of local people entrepreneurship in ecotourism activities may be developed. Entrepreneurship characteristics can be measured through individual entrepreneurship (entrepreneurship test), social entrepreneurship (community support test) and governmental entrepreneurship (government support test) (CRE, 2003) This research is aimed to measure an entrepreneurship test and to analyze relationship forms that influence entrepreneurship characteristics of ecotourism based on local people in BTS NP.

RESEARCH METHOD A survey was conducted in three villages in BTS NP authority area, namely: (i) Ranu Pane, Senduro,sub-district, , (ii) Ngadas , Poncokusumo sub-district, Malang Regency, and Cemorolawang, Sukapura sub-district, Probolinggo Regency. In those areas the local people have made some ecotourism activities in different management practices and experiences. Structured interviews were done for exploring ecotourism entrepreneurship characteristics on the local people. The analysis methods employed were individual entrepreneurship (entrepreneurship test), social entrepreneurship (community support test) and governmental entrepreneurship (government support test) (CRE, 2003). The relationship between the factors in entrepreneurship characteristics was analyzed using Structural Equation Modeling ( SEM). 3

The components of the structural model were individual characteristics, experiences, incomes, individual entrepreneurship, social entrepreneurship and governmental entrepreneurship. The framework of the model was based on the theoretical conception of entrepreneurship (Juma and Timmer, 2003; CRE, 2003; Burnet, 2000). Validity and reliability of the model were applied to obtain the relationship accuracy between the involved variables.

RESULTS AND DISCUSSION Entrepreneurship Test Table 1 showed the scores of the entrepreneurship test for individual, social and governmental entrepreneurships. As a whole, the average score of individual test was 35.84. The highest score was found in Cemorolawang (=38.21), followed by Ranupane (=36.00) and Ngadas (=34.45). According to CRE (2003), the local people in the research are categorized as somewhat entrepreneurial (in range from 30 to 39). Meanwhile, the average score of social entrepreneurship test was equal to 14.61. The highest score was found in Ranupane village (=15.56), followed by Ngadas (=13.90) and Cemorolawang villages (=13.69). According to CRE ( 2003), those scores are in the range of 11 to less than 16, and may be categorized as mix support. It means the local people perceive that there is a half support in expanding the entrepreneurship.

Table 1. Score of entrepreneurship test for individual, social and governmental entrepreneurship

Individual Social Governmental Village Areas entrepreneurship entrepreneurship entrepreneurship Cemorolawang 38.21 13.69 17.34 Ngadas 34.45 13.90 14.36 Ranupane 36.00 15.56 15.31 Average Area 35.84 14.61 15.33 Note: The Entrepreneur Test (Individual entrepreneurship) 40 to 50 Points =Very Entrepreneurial; 30 to 39 Points =Somewhat Entrepreneurial; 20 to 29 Points =Mixed Entrepreneurial Traits; 10 to 19 Points =Limited “E” Traits; 0 to 9 Points =Not Very Entrepreneurial The Community Support Test (social and governmental entrepreneurship) 21 to 25 Points = Highly Supportive; 16 to 20 Points = Supportive; 11 to 15 Points = Mixed Support; 6 to 10 Points = Indifferent; 0 to 5 Points = Hostile

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The average score of government support test in the areas was 15.33. The highest score was found in Cemorolawang (=17.34), followed by Ranupane (=15.31) and Ngadas (=14.36). According to CRE (2003), these results showed that the Cemorolawang people perceived that there was a governmental support to expand entrepreneurship (16 to less than 21), whereas the local people of Ranupane and of Ngadas, showed that the government gave half support (11 till less than 16). The studies in United States concerning with individual and social entrepreneurship test showed that the scores were 37.9 and 12.7 respectively (CRE, 2003). The scores are not significantly different with those made in this present research, even if the figures of society perform a relatively higher degree of education. In general, results of individual entrepreneurship test are in line with existing situation of villages. The local people of Cemorolawang have relatively better skills and services management compared to those of Ranupane and of Ngadas. In Cemorolawang, there are many home-stays, cafes, transportation modes (off-road, horse) and other accommodations managed by local people. In Ranupane, a low-priced home-stay was found, namely Tasrip Home-stay, managed by the family of the village chief. The Tasrip homestay is well published on the guidance tourism books or in the internet, whereas in Ngadas, no formal home-stay is found. A significant entrepreneurial ability of local people of Cemorolawang is well known. The local people established a cooperative business unit for serving various economic activities. Visitors should make payment in bank first for using off-road transportation. The payment slip should be handed down to the staff and the staff then gives a departure order to the driver of the car, similar with a taxi service in airport. Thereby, visitors obtain comfortable services and enjoy safari traveling in the sand ocean in the Bromo mountain. Efforts of institutionalizing the economic activities in Cemorolawang are fully initiated and supported by the formal village chief. Although the chief is a local tribe of Tengger, He is an insightful and moderate person and he is trying to empower the local people and to promote the local economic activities. And he is a master of management . He is very open to any idea in developing ecotourism under the framework of cultural and environmental conservation. Thus, the existence of institution, economic activities 5

procedures, and community participation can explain the high score of governmental entrepreneurship. The village chief properly has functioned to create a new balance which increases prosperity for local people (Martin and of Osberg, 2007) The score of social entrepreneurship was higher in Ranupane than in others, even though they are still under the same category, i.e., a half support to expand entrepreneurship (in the range 11 to less than 16). Based on previous studies, people in Ranupane village come from widespread areas where the number of population from outside area exceeds the local people. Thus, the people become more open to the influence of economic activities. In this village, cellular telecommunication relay-station, electricity, roads, particularly those to the access to Lumajang Regency are available. Ranupane also become the last gate where staff of BTS NP issues permissions for climbers going to the Semeru mount in all year periods. A high interaction between local and outside people can explain such a high economic activity, so it enhances development of social entrepreneurship.

Structural Model of Entrepreneurship

An analysis of the structural model of entrepreneurship is presented in Figure 1. The conceptual framework of the model shows that the government entrepreneurship influences some components such as individual and social entrepreneurship, and also individual characteristics and experiences. At the same time, the individual entrepreneurship is also influenced by social entrepreneurship, individual characteristics, and experiences. The model also explained that the individual entrepreneurship positively is correlated with incomes in the ecotourism activities. As a whole, the model design has fulfilled statistical and reliable requirements.

Relationship between entrepreneurial components

The results of the analysis showed the regression coefficients which operates in relationship between involved variables (Figure 1 and Tables 2). In this case, significantly direct effects are shown as follow: Governmental entrepreneurship - Social entrepreneurship Governmental entrepreneurship - Individual characteristic Social entrepreneurship - Individual entrepreneurship Experience - Individual characteristic 6

Individual characteristic - Individual entrepreneurship Individual entrepreneurship - Income Social entrepreneurship - Individual characteristic

0.529 -0.334 Individual Social characteristic entrepreneurship

0.476 0.313 0.812 2.012 Individual entrepreneurship Governmental Experience 0.255 entrepreneurship

Income

0.083

Figure 1. Entrepreneurial structure

Table 2. Relationship between entrepreneurial component

Governmental Social Individual Individual entrepreneurship entrepreneurship Experience characteristic entrepreneurship Direct effect Social entrepreneurship 0.812 0.000 0.000 0.000 0.000 Experience 0.083 0.000 0.000 0.000 0.000 Individual characteristic 0.529 -0.334 2.012 0.000 0.000 Individual entrepreneurship 0.105 0.313 -0.069 0.476 0.000 Income 0.000 0.000 0.000 .000 0.255 Indirect effect Social entrepreneurship 0.000 0.000 0.000 0.000 0.000 Experience 0.000 0.000 0.000 0.000 0.000 Individual characteristic -0.105 0.000 0.000 0.000 0.000 Individual entrepreneurship 0.450 -0.159 0.957 0.000 0.000 Income 0.142 0.039 0.227 0.121 0.000 Total effect Social entrepreneurship 0.812 0.000 0.000 0.000 0.000 Experience 0.083 0.000 0.000 0.000 0.000 Individual characteristic 0.424 -0.334 2.012 0.000 0.000 Individual entrepreneurship 0.556 0.154 0.888 0.476 0.000 Income 0.142 0.039 0.227 0.121 0.255 Regression coefficient above (absolute value) 0.3 show significant effect

A direct relationship with positive sign in the regression coefficients is consistent with the conceptual building of entrepreneurship. But, there are two matters which need to be 7

carefully discussed. First, governmental entrepreneurship does not influence individual entrepreneurship significantly. This case implicates that the government cannot directly intervene individual entrepreneurship in ecotourism development. Therefore, this phenomenon needs to be more deeply analyzed concerning with the indirect relationship between corresponding variables. Second, it is important to study a negatve relationship between social entrepreneurship and individual characteristic. Literature cited before (Mair and Marty, 2006; Martin dan Osberg, 2007) stated that social entrepreneurship is developed and stimulated by individual innovation for the prosperity of society as whole, not for individual interest. This explanation actually shows such a negative relationship or even nothing relation at all between both variables. This matter is obviously clear because individual characteristics such observed variables as gender, age, occupation and education, do not contain learning element as the main component of entrepreneurship (Juma and Timmer, 2003). Meanwhile, significantly indirect influence is found at the relationship between (i) government to individual entrepreneurship; and (ii) experience to individual entrepreneurship. Those relationships involve intervening variables as a bridge to explain the phenomenon truthfully, namely: Governmental Entrepreneurship - Social Entrepreneurship - Individual Entrepreneurship Governmental Entrepreneurship - Individual Characteristic - Individual Entrepreneurship Governmental Entrepreneurship - Experience - Individual Entrepreneurship Experience - Individual Characteristic - Individual Entrepreneurship.

The influence of governmental entrepreneurship on individual entrepreneurship could be bound by such intervening variables as social entrepreneurship, individual characteristic and experience, each with cumulatively regression coefficient of 1.125, 1.005 and 0.014, respectively. The results indicate that social entrepreneurship becomes the strongest bridge for explaining effect of government entrepreneurship to individual entrepreneurship, in which this relation is directly not significant. Thereby, this research is able to prove that development social entrepreneurship is a necessary condition to develop individual entrepreneurship in the ecotourism economic activities. More importantly, the governmental entrepreneurship becomes a starting point to develop trust building to the local people and ecotourism economic activities. 8

The influence of the individual characteristic variable in relation to governmental entrepreneurship and individual entrepreneurship, and also the same variable among experience and individual entrepreneurship; show significant regression coefficients. Specific implementation of this relation is that government has an important role in the development of the policy of education for building individual entrepreneurship. The people whose education level increases, would improve the way of their thinking and upgrade knowledge capacity; so their entrepreneurship ability is well developed. Determinants of component entrepreneurship The structural model also yielded a regression coefficient in relation to observed and unobserved variables. Basically, the unobserved variable is another form of entrepreneurship components as discussed above. This relationship could explain variables affecting the entrepreneurship component significantly (Tables 3) Looking further at ten variables influencing individual entrepreneurship, there is a tendency to the increase of the regression coefficient from x31 to x310, as that is from cognitive to psychomotoric aspect. This pattern indicates that individual entrepreneurship is influenced particularly by psychomotoric aspect. This phenomenon is basically in line with the concept of entrepreneurship. Hence, the conceptual framework of individual entrepreneurship has been well understood and implemented in ecotourism economic activities. Meanwhile, there are three variables with the highest scores: having business networking ( 0.893), being ready to do business ( 0.853), and having done business with others ( 0.824). Similarly, there are two variables markedly influencing social entrepreneurship: people understanding the entrepreneurial meaning for development (1.018) and people supporting the development of a new business (0.788). Meanwhile, in respect to variables of x41 to x45, as that is from cognitive to psychomotoric aspects, the coefficient of regression is declining. This pattern indicates that social entrepreneurship is particularly influenced by the cognitive aspect This means that the social entrepreneurship is not yet understood completely, therefore it is not implemented in the economic behavioral aspect of entrepreneurship.

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Table 3. Effects of observed variable on entrepreneurship components

Entrepreneurship Regression Observed variable components coefficient Individual x31 Very creative and innovative when it comes to business. 0.482 entrepreneurship x32 Very risk tolerant and flexible in dealing with business 0.518 challenges x33 Very resourceful in finding answers that enable the 0.605 business to prosper. x34 Very independent and able to move ahead without 0.561 constant help from others. x35 A very dynamic person who is able to perceive emerging 0.696 business opportunities. x36 Growth-oriented – very interested in growing the 0.544 business. x37 Has strong business skills or is able to find resources to 0.752 meet business skill needs. x38 Is very good at networking with others to find new 0.893 markets, business inputs, or necessary business expertise. x39 Is ready to work with investors and/or employees. 0.853 x310 Is open to business collaborations with other businesses. 0.824 Social x41 Most people in my community understand that 1.018 entrepreneurship entrepreneurs are critically important to the future development of our economy. x42 People in my community really support someone who is 0.788 creating a new or expanding an existing business. x43 People in my community continue to support an 0.661 entrepreneur who fails and is trying again with a new enterprise. x44 My community has developed programs to assist 0.572 entrepreneurs to develop and grow. x45 My community is supporting a youth entrepreneurship 0.522 program in the schools. Governmental x51 Government has provided programs for entrepreneurship 0.931 entrepreneurship development x52 Government has conducted community sevice programs 0.996 for entrepreneurship development. x53 Government has provided a technical and financial 0.840 assitance for business activitiy x54 Government has conducted promotion programs to 0.647 develop business activity

Those happened in social entrepreneurship phenomenon are also found almost equally in governmental entrepreneurship. The governmental entrepreneurship was mainly influenced by cognitive aspects, bringing about variables with two highest regression coefficients, i.e. government providing programs in term of developing entrepreneurship (0.931) and government conducting a community service for the development of entrepreneurship (0.996). This means that governmental entrepreneurship is not fully understood for whether producing economic behavior in ecotourism activities or not. 10

The last two findings in term of social and governmental entrepreneurships are not fully in line with the conceptual framework of entrepreneurship. It seems that this needs further studies especially on ecotourism activities. Efforts to study the social and governmental entrepreneurships are not enough just to explore the community. Such studies also require some more explorations on components of the government such as the staffs of the national park or others relevant institutions.

CONCLUSIONS AND SUGGESTIONS Conclusions This research yields an average score of individual entrepreneurship equal to 35.84. The highest score is found in Cemorolawang village (= 38.21), followed by Ranupane (= 36.00) and Ngadas villages(= 34.45). Hence, the local people in the research areas are categorized as somewhat entrepreneurial. The average score of social entrepreneurship is 14.61. The highest score is found in Ranupane village (=15.56), followed by Ngadas (=13.90) and Cemorolawang villages (=13.69). The local people in the research areas are categorized as mix support to entrepreneurship The average score of government support test in the areas was 15.33. The highest score is found in Cemorolawang (=17.34), followed by Ranupane (=15.31) and Ngadas villages (=14.36). These results showed that the Cemorolawang people perceived governmental support to have the entrepreneurship, whereas the local people of Ranupane and Ngadas, perceive a half support to the entrepreneurship Governmental entrepreneurship does not affect individual entrepreneurship indirectly. This effect is particularly on the indirect relationship performing social entrepreneurship as an intervening variable between two variables. Furthermore, the research proves that the social entrepreneurship development becomes a necessary condition for developing ecotourism entrepreneurship. Individual entrepreneurship is influenced particularly by psychomotoric aspects. This means that the conceptual framework of individual entrepreneurship has been well known in the ecotourism economic activities. Conversely, the government and social entrepreneurships are more influenced by cognitive aspects. This pattern shows that the 11

government and social entrepreneurships have not yet been understood completelly, so it has no impact on creating behavioral aspects in entrepreneurship.

Suggestions The governmental and social entrepreneurship has not been fully understood for creating behavioral aspect in entrepreneurship. This finding is not in line with conceptual framework of entrepreneurship. Efforts to study on the social and governmental entrepreneurship are likely not enough to explore community only. The study also requires more exploration from governmental components, for example staff of the national park or other relevant institutions.

LITERATURES CITED Burnett, D. 2000. Hunting for Heffalumps: The Supply of Entrepreneurship and Economic Development. Founder, Technopreneurial.com. September 2000 CRE (Centre for Rural EntrepreneurshiP). 2003. Entrepreneurship quick test: tools for energizing entrepreneurship. No 4 (June 2003). 10p. Juma, C. and V. Timmer. 2003. "Social Learning and Entrepreneurship: A Framework for Analyzing the Equator Initiative and the 2002 Equator Prize Finalists." Working paper of 5 December Mair, J. and I. Marty. 2006. Social entrepreneurship research: A source of explanation, prediction, and delight. Journal of World Business. 41: 36–44 Martin, R. L. and S. Osberg. 2007. Social entrepreneurship: the case for definition. Stanford Social Innovation Review. Spring 2007. 39p