ARTICLE Asia-Pacific Management and Business Application 5 (1) 1 - 15 ©UB 2016 A Decision-Making Model for Community-Based University of Brawijaya Food Industry to Support Poverty Alleviation in Malang, East Indonesia: Case Study of East http://apmba.ub.ac.id

Ratih Dyah Kusumastutia* Fanny Martdianty b Rifelly Dewi Astutic Nurmalad a,b,c,d Department of Management, Faculty of Economics and Business, Universitas Indonesia, Depok, Jakarta, Indonesia.

Abstract Provinces in the eastern part of Indonesia still have the high percentage of residents living below the poverty line. However, some provinces are the producers of food commodities. The One Village One Product (OVOP) movement has been proven to be able to reduce the poverty level and can be implemented in East Indonesia, especially by developing the community-based food industry. The objective of the research is to develop a decision- making model to determine the best suitable community-based food industry to be developed optimally in East Indonesia using Analytic Hierarchy Process (AHP). We identify five criteria for the model from the literature and interviews with experts, namely resources, demand, supporting industries, strategy, and competitiveness, and supports from government and other parties. We apply the model to the case of of the (NTT) province, to select from alternatives, namely cassava, banana, corn and peanut-based food industries. The results show that banana-based industry is chosen as the best-suitable community-based food industry, mainly due to the uniqueness of the banana- based product and high production of banana in the area.

Keywords community-based, food industry, poverty alleviation, analytic hierarchy process, Indonesia. Received: 9 May 2016; Accepted: 22 June 2016; Published Online: 30 August 2016 DOI: 10.21776/ub.apmba.2016.005.01.1

Introduction

Indonesia is considered as one of the the economy has grown significantly, countries with steady and fast economic the country is still facing the problem growth. Based on the data from the of poverty alleviation. The number of Indonesian Statistics Body (BPS), the residents living below the poverty line Indonesian economy has grown with an has reached 11.18 percent or 28.5 million average of 5.42 percent in the period of people (BPS, 2016b). According to the data 2001 to 2014 (BPS, 2016a). Even though from BPS (2016c), the poverty severity

*Corresponding author Email: [email protected] Asia-Pacific Management and Business Application, 5, 1 (2016): 1 - 15 ISSN: 2252-8997 2 Ratih Dyah Kusumastuti, et. al index was slightly increased from 0.48 implies that the gap between the rich and in 2013 to 0.51 in 2015, indicating that the poor has grown as indicated by the the average expense per capita deviated increasing trend of the GINI ratio (see even farther from the poverty line. It also Figure 1).

Figure 1. Gini Ratio of Indonesia (BPS, 2016d)

In order to accelerate the Indonesian MP3EI strategy is to divide Indonesia into economic development, the government 6 corridors, based on the resource-based has established the Masterplan for approach which considers the resource Acceleration and Expansion of Indonesia’s potential of each corridor (see Table 1). Economic Development (MP3EI). The Table 1. Economic Corridors in MP3EI Regions Corridors Center for production and processing of natural resources and Sumatra the nation’s energy reserves Java Driver for national industry and service provision Center for production and processing of national mining and Kalimantan energy reserves Center for production and processing of national agricultural, Sulawesi plantation, fishery, oil and gas, and mining Bali-Nusa Tenggara Gateway for tourism and national food support Center for development of food, fisheries, energy, and national Papua-Moluccas mining Source: Indonesia-Investments (2013)

As can be seen in Table 1, the provinces those with a large number of residents in the eastern part of Indonesia, such as living below the poverty line. According Nusa Tenggara Timur (NTT), Papua and to BPS data, in the NTT province, for Moluccas are considered to be the national instance, the number has reached 22.58% food support corridor since those provinces in 2015 (BPS NTT, 2016), and in one of are the regions with a high production its regency, East Sumba, 28.5% of the rate of the food commodity. However, residents (in 2013) are living below the the provinces are also considered to be poverty line (BPS Sumba Timur, 2016a,

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2016b). A policy that can be implemented industry to be developed optimally in East to reduce the poverty level in the area is Indonesia to support poverty alleviation. the community-based enterprise based The decision-making model is developed on the one village one product (OVOP) using Analytic Hierarchy Process (AHP) concept. from Saaty (1980), and the model is applied to the case of East Sumba regency The OVOP is a movement that was of the NTT province. originated in Oita prefecture, Japan in the 1970s with the aim of encouraging rural The remainder of the paper is as follows. development through community-oriented Relevant studies are discussed is presented, activities by employing local resources followed by the explanation of research and knowledge (Natsuda et al. 2012). One methodology is presented, discussions of of the principles of OVOP movement is decision-making model and the model thought globally, act locally, which means application in East Sumba is presented, creating globally acceptable products and conclusions and recommendations are and/or services based on local resources presented. (Shakya, 2011). The movement was later adopted in several Asian countries, such Relevant Studıes as Thailand, Philippines, and China. In The OVOP movement is based on three the implementation, the movement which basic principles (Shakya, 2011), namely: was originally meant to prevent rural depopulation has somewhat evolved into 1. Think globally, act locally. The local a direct state-involved policy, which has residents are expected to create been proven to be able to reduce poverty globally marketable products and/ in the area (Natsuda et al., 2012). or services which represent local people’s pride in material and cultural Provinces in the eastern part of Indonesia richness of their home villages/towns. can adopt the OVOP movement as well to alleviate poverty in the region by engaging 2. Self-reliance and creativity. The the people in the creation of unique realization of local potential resources products that represent their areas, and into valuable product/service at certain that are made using local resources. As village/town depends on the initiative previously mentioned, several provinces, and effort of the local people. in this region (such as NTT and Papua) 3. Human resource development. The are considered to be the producers of the movement emphasizes on visionary food commodity. Therefore, the poverty local leadership with challenging and alleviation program in the region will be creative spirit, because the success of optimal if it also engages the community any OVOP product/service mainly to create unique food products using the depends on its quality, and the product/ local resources, that can be sold nationwide service is developed and improved by or even globally. the local people themselves. The determination of the kind of food The OVOP movement was originally industry that is suitable to be produced meant to revitalize the economy in rural by the local community requires a Japan, and it was community-based decision-making model. Therefore, the with government playing a supporting objective of this research is to develop role (Shakya, 2011). However, in other a decision-making model to determine countries, the movement is adopted the most suitable community-based food as government-involved policy for

Asia-Pacific Management and Business Application, 5, 1 (2016): 1-15 4 Ratih Dyah Kusumastuti, et. al poverty alleviation, and it is seen as Pasuruan, Indonesia, while Natsuda et al. a way to improve local communities’ (2012) study about the OVOP program in entrepreneurial skill by utilizing local Thailand as a rural development strategy. resources and knowledge; creating value- Both studies also emphasize the significant adding activities through branding of local role of government in implementing the products; and building human resources in movement. the local economy (Natsuda et al., 2012). Research on CBE in Central Europe is The OVOP movement has been adopted conducted by Fink et al. (2013). The study in several Asian countries besides Japan, is about how to create favorable conditions such as Thailand, Malaysia, Philippines, for small business in Central Europe, and People’s Republic of China (PRC), and it suggests that the municipality and the Indonesia (Igusa, 2006). The movement business should work with and for each has been adopted in Thailand and other instead next to and against each European countries as a community-based other, it also suggests the need to create enterprise (CBE) (Natsuda et al., 2012; the region’s image through focused Fink et al., 2013). CBE is an alternative communication of regional characteristics model that is potential for the development and the municipality’s strength. More of the impoverished community (Paredo importantly, the study states the need to and Chrisman, 2006). CBE is based on create regional products, i.e. high a quality the understanding that collective and product with the regional identity. individual interests are fundamentally complementary, and by regarding com- The government, as indicated in previous munal values and the notion of the studies, plays an important role in common good as important elements in creating policy that is conducive to the venture creation. development of the industry, especially for small-scale industry. Igusa (2006), Research concerning the impact of OVOP also states that a clear guidance from the movement in various countries has been local government through knowledge done in the past decade. For instance, dissemination, such as marketing strategy, Chidumu (2007) studies the impact of innovative thinking, and the education the movement on household income in of community leaders, is required for Malawi and concludes that the movement the successful implementation of the results in higher household income. policy. In addition, Stenning and Koichi Rana (2008) studies the one town one (2008) emphasize the important role of product (OTOP) program in Mindanao, knowledge and networking in community Philippines, and states that partnership capacity development in the success of the between the national government, local OVOP movement in Oita. government unit, and the private sector plays a crucial role to support the program Beside the conducive government as it cannot sustain itself. Kader et al. policy and the community capacity, the (2009) study the success factors for small sustainability of the movement is also rural entrepreneurs under the One District determined by the competitiveness of One Industry Program in Malaysia and the OVOP products. According to Porter imply the significant role of government (1990), the creation of competitive in promoting the small business success. advantage depends on four factors, Kuswidiati (2009) discusses the imple- namely factor conditions (the condition mentation of OVOP in agro-tourism in of the factor of production), related and supporting industries, demand conditions,

Asia-Pacific Management and Business Application, 5, 1 (2016): 1-15 A Decision-making Model for Community-Based Food Industry 5 firm strategy, structure and rivalry, and two for fair, and three for good). Scores of all external factors, which are government indicators in each sub-criterion are then and chance. averaged, and the average score is the respective sub-criterion score. Thereafter, Research Methodology the score of each criterion is calculated The objective of the research is to select as the weighted sum of its sub-criteria the best the best-suitable community- scores. Lastly, the total score of the food based food industry to be developed industry is computed as the weighted sum optimally in East Sumba regency of the of all criteria scores. NTT province to alleviate poverty. The The Decısıon Makıng Model study uses a combination of qualitative and quantitative methods. Firstly, the The criteria to be used in the decision- literature review is carried out to identify making model are mainly adapted from criteria and sub-criteria to be included previous OVOP or CBE studies in other in the decision-making model. In-depth countries and Porter’s diamond model interviews (IDIs) are then conducted with (Porter, 1990). The OVOP principles two experts (representatives from the NTT implicitly state that the successful province office in Jakarta and the ministry implementation of OVOP requires the of industry and trade) to clarify the chosen local resources that can be converted criteria. into high-quality products with regional identity that can be sold nationwide or The decision-making model is then even globally, and the capacity of the local developed using AHP, Which is designed human resources that conduct the process. to cope with both rational and the intuitive Most OVOP/CBE studies (for instance, to select the best from a number of Rana (2008)) also state the important alternatives evaluated with respect to role of government and other parties several criteria (Saaty and Vargas, 2012). (the private sectors and the community In AHP, the decision maker performs leaders) in the successful implementation pairwise comparison judgments which are of the movement. Furthermore, Igusa then used to develop overall priorities to (2006) implicitly mentions knowledge, rank the alternatives. such as marketing strategy and innovative In order to determine the weights of thinking are also required to ensure the all criteria and sub-criteria, and to gain sustainability of the movement. insights concerning the community-based Taking into account the aforementioned food industries in the East Sumba, IDIs are success criteria and four factors from conducted with seven representatives from Porter (1990), the decision-making model the central government, NTT government, is developed as presented in Figure 2. East Sumba government and food business The objective of the decision-making communities. The nine-scale pairwise model is stated at the top. There are five comparisons are then performed by the first level criteria, namely resources, informants to specifically determine the demand, supporting industries, strategy, weights. and competitiveness, and supports from Secondary data for some of the indicators government and other parties. Selection are then collected. Based on the analysis of food industries to be included in the of secondary data and IDIs results, the decision-making process is carried out scores for all criteria and sub-criteria are based on the existing community-based assigned. The score of each indicator is industries in the area and the availability assigned a three-levels (one for poor, two of the main raw material.

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The criterion of resources consists of by the people in both regencies. The sub-criteria, namely human resources in product competitiveness sub-criterion the area, the existing infrastructure, the may include the indicator such as product natural resources that are required for the differentiation to represent the need for respective food industry, and the capital a unique product that bears the region’s for the business. The demand criterion identity and is able to compete in the consists of consumers’ needs and wants for market. the respective food product and its market Lastly, supports from governments and scope, growth, and trend. The existing other parties are needed to optimally supporting industries are also required to develop the food industry in the area. The ensure the continuity of the food industry. government’s support usually in terms This criterion comprises the supporting of providing the education and training industry itself (such as packaging and of the lower-income residents, providing tourism industries), the upstream supply initial capital for the community-based channel (access to obtain raw materials), businesses, and creating a policy that is and the downstream distribution channel conducive to the industry. Supports from (access to end customers). other parties, such as the leaders, religious organization, large businesses, and other Business strategy and product compe- non-governmental organizations (NGOs) titiveness are also needed to be considered are also needed for the success of the to ensure the success of the chosen food industry, because on the island of Sumba, industry. The business strategy sub- and religious leaders, for example, play a criterion further consists of production, significant role in the day-to-day life of the marketing, finance, and human resources residents. The local culture and religions management strategies. The production significantly dictate the residents’ way strategy, for instance, may have indicator of life. Descriptions of criteria and sub- such as production technology that criteria along with the indicators are should be simple enough to be adopted presented in Table 2.

Figure 2. The Decision-Making Model

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Table 2. Criteria, Sub-Criteria and Indicators

Criteria Sub-Criteria Sub-Criteria Descriptions Indicators Type of Data (Level 1) (Level 2) (Level 3) Resources The conditions of Human resources Number business entities in the respective Secondary data local resources for industry the respective food Number of employees in the respective Secondary data industry, related to industry factors of producti- Literacy rate Secondary data on, such as skilled human resources, Percentage of residents graduated from Secondary data infrastructure, etc. elementary school that relevant to Percentage of residents in productive age Secondary data compete in the food Infrastructure Percentage of households with electricity Secondary data market Percentage of households with access to Secondary data clean water Percentage of households with fixed-line Secondary data phones Land transportation (road length in km) Secondary data Sea transportation (ship visits per year) Secondary data Air transportation (airplane visits per year) Secondary data Natural resources Production of main raw material in the Secondary data respective industry Farming area/seashore (ha/km) Secondary data Capital Access to Individual capital Judgmental Access to capital from cooperatives Judgmental Others Judgmental Demand Demand for the Consumers’ needs and Portion of expense for processed food (%) Secondary data food products wants National market for processed food Judgmental produced by the respective area Market scope, growth Market growth Secondary data and trend Current market scope Secondary data Supporting The existing of sup- Supporting industries Tourism industry (number of foreign and Secondary data industries porting industries domestic tourists) in a year Packaging industry (number of business Secondary data entities in packaging industries) Upstream supply channel Number of farmers Secondary data Access to suppliers Judgmental Downstream distribution Number of traditional markets Secondary data channel Strategy and Strategies in four Business strategy Production Production technology Judgmental competitive- aspects of business Product certification/licensing Judgmental ness and product compe- titiveness Marketing Distribution strategy Judgmental Promotion strategy Judgmental Finance Financial management Judgmental Human resources Training Judgmental management Human resources management and Judgmental development Work system Judgmental Product competitiveness Differentiation Judgmental Comparison to similar industry in other Judgmental provinces Supports The supports from Government supports Policy for the respective industry Secondary data from gover- the government and Budget for the respective industry Secondary data nment and other parties to de- other parties velop the respective Programs the development of the respective Secondary data food industry in industry the area Inter-institutions coordination Secondary data Other parties’ supports Community leaders Judgmental Religious organization Judgmental Non-governmental organizations and large Judgmental companies

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The Case of East Sumba Regency and it consists of 22 sub-districts (BPS Sumba Timur, 2016d). The majority of Description of East Sumba Regency the labor force (62.91%) earn their living The regency of East Sumba is located at in the primary sectors, namely farming, the eastern part of the island of Sumba and plantation, forestry, hunting, and fishery its capital is . It has a population (BPS Sumba Timur, 2016e). The GRDP of of 241,416 people in 2013 (BPS Sumba East Sumba in 2013 was around USD 69 Timur, 2016c) and an area of 7,000.5 million with the agriculture sector as the square kilometers comprises of the area highest contributor (BPS Sumba Timur, in the main island and three small islands 2016f). (Prai Salura, Mengkudu, and Nuha),

Figure 3. The East Sumba Regency (BPS Sumba Timur, 2014)

About 40% of East Sumba is an area of crops and fruits, such as corn, cassava, steep hilly, especially in the southern part, peanut and beans and banana (see Table where the hillsides are fertile land, while 3), and currently, there exist several hou- the northern regions form a rocky plateau sehold groups and micro and small and and less fertile. East Sumba has two se- medium enterprises (MSMEs) in East asons, dry and rainy seasons. In general, Sumba, producing processed food, such the rainy season is in the months of Janu- as corn-based, banana-based, cassava-ba- ary to April, while the other eight months sed, peanut-based and seaweed-based are dry, and therefore East Sumba is a re- food products. latively dry region. The regency produces Table 3. Crops Production in East Sumba 2013 No. Commodity Production (Ton) 1. Corn 34,446 2. Soy bean 17 3. Peanut 1,629 4. Green bean 203 5. Cassava 26,210 6. Sweet potato 4,071 7. Seaweed 0 8. Banana 21,671 Source: BPS NTT (2016b)

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Determination of Criteria and Sub- the success of the community-based food criteria Weights industry in East Sumba regency, which is consistent with one of the principles of As previously mentioned, the weights of OVOP (creation of unique local products all criteria and sub-criteria are determined using local resources). by pair-wise comparisons performed by seven informants, namely two Concerning the resources criterion itself, representatives from the local government human resources have the highest weight, (Division of Industry and Trade, and indicating that the informants agree that Division of Cooperatives and Small the main problem in the regancy is the Businesses), three representatives from the human resources. This is also consistent food business, a representative from the with one OVOP principle (human resource NTT office in Jakarta, and a representative development). According to the informant, from the Ministry of Cooperative and most of the residents do not feel the need to Small Businesses. The resulting weights increase the community income, because can be seen in Table 4. they can live by consuming whatever they can harvest from their land. The residents The results show that resources criterion need a successful example to be motivated has the highest weight among other to engage themselves in a food processing criteria. It implies that the informants think business. resources are very important in determining Table 4. Criteria Weights for East Sumba Regency Level 1 Level 2 Level 3 Weights Resources 0.331 Demand 0.086 Supporting industries 0.170 Strategy and competitiveness 0.204 Supports from government & 0.209 other parties Human resources 0.300 Infrastructure 0.217 Resources Natural resources 0.259 Capital 0.224 Consumers’ needs and wants 0.735 Demand Market scope, growth and trend 0.265 Supporting industries 0.479 Upstream supply channel Supporting industries Downstream distribution channel 0.263 0.259 Strategy and competitiveness Business strategy 0.778 Product competitiveness 0.222 Supports from government & Government’ supports 0.626 other parties Other parties’ supports 0.374 Production 0.354 Marketing 0.161 Business strategy Finance 0.235 HR 0.250 Source: Data processed

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For the demand criterion, consumers’ Sumba, fried peanuts with garlic flavor, needs and wants criterion has the highest and fried floured peanuts). The selection weight, implying the need to always of food industries to be considered in consider customer requirements for the the model is carried out based on the success of the food industry. Considering uniqueness of the product, the existing the supporting industry criterion, home-based industries in East Sumba, the supporting industry itself has the and the production of the main ingredient highest weight, which means that the or raw material (see Table 3). We decide success of food industry also depends to select cassava-based, peanut-based, on the supporting industries, such as the banana-based, and corn-based food suppliers of raw materials, packaging industries to be considered in the decision- and tourism industries. For the strategy making process. The seaweed-based food and competitiveness criterion, business industry is not included in the selection strategy has the highest weight, implying process because of zero production of the that the success of the food industry in East seaweed in the Regency (see Table 3). Sumba requires strategic planning and implementation, especially the production Based on the analysis of secondary and marketing strategies. The final data and IDIs results, the scores of each products should be unique so that it can community-based food industry are compete with other food products locally determined (see Table 5). The secondary and nationwide, however, it should also data is obtained from published data be produced using a simple production from BPS Sumba Timur (2014), Natio- technology that can be adopted by the nal Socio-Economic Survey 2009-2013 community. (Ministry of Agriculture, 2016), and Roy Morgan Indonesia (2013). For most of Lastly, government support is still the indicators that characterize the local required to develop community-based condition of East Sumba regency and NTT food industry in East Sumba regency province or Indonesia, the score of the (consistent with statements from previous three industries is similar. Different scores OVOP/CBE research), especially in are observed especially for indicators that providing educations and training for are related to natural resources, demand, the business owners, however, supports upstream supply channel, business from and religious leaders and the private strategy and competitiveness. sectors are also needed especially in motivating the residents to increase the As can be seen in Table 5, the banana- community incomes through engaging based industry has the highest total themselves in the food business, and in score, followed by corn-based, cassava- providing the additional access to capital based, and peanut-based industries. In the and market. resource criterion, banana-based industry has the highest score mainly due to a high Determination of the Best Suitable score in natural resource criterion that is Community-Based Food Industry caused by high production of banana and its planting area in the Regency. The community-based food industry that currently exists in east Sumba are namely In the demand criterion, the cassava- cassava-based (cassava chips), banana- based industry has the highest score based (banana chips and Manggulu, a kind primarily because of higher consumption of sweets), corn-based (fried corn kernel of processed cassava at the national level and corn stick), seaweed-based (crackers compared to the others. However, from and snack), and peanut-based (Kacang the market scope and growth aspect, the

Asia-Pacific Management and Business Application, 5, 1 (2016): 1-15 A Decision-making Model for Community-Based Food Industry 11 banana-based industry a has higher score Regarding the strategy and competitiveness because currently, banana-based products criteria, the banana-based industry also such as banana chips and Manggulu (local has the highest score. For the business sweets purely made from banana and strategy criterion, the scores are the same peanut) have already reached other area for all food industries as they have the in NTT province, such as (the same condition in all business aspects. capital city of NTT province). For instance, the technology that is used by the four industries is relatively simple In the supporting industries criterion, all and thus suitable for home industry. industries have the same scores mainly due Similarly, from the aspect of distribution, to the similar situation that is experienced all products have already been distributed by all food industries. For instance, all to end customers through a souvenir and industries experience the same difficulty snack store in Waingapu, and for the case to procure packaging materials as there of Manggulu, the product has already be are no packaging material companies in sold in Kupang (the capital city of NTT the Sumba Island, so they usually buy the province) through a distributor agent. materials from the Java Island. Considering In the aspect of promotion strategy, the the upstream channels, the informants business owners in the four industries only state that they can easily procure the raw use minimal promotion strategy (mainly material from the suppliers. However, the word-of-mouth, WOM) for their access to the end customer (indicated by products, and as a result, the products are the number of traditional markets in the not popular for residents living outside of regency) is still limited. Sumba Island. Table 5. Scores for Each Community-Based Food Industry Criteria Sub-criteria (Level 1) Cassava Banana Corn Peanut Resources Human 1.600 1.600 1.600 1.600 Infrastructure 1.667 1.667 1.667 1.667 Natural 1.500 2.500 2.500 1.000 Capital 1.000 1.000 1.000 1.000 Weighted scores 1.454 1.713 1.713 1.325 Demand Consumers’ needs & wants 2.500 1.500 1.500 2.000 Market scope, growth & 1.000 1.500 1.000 1.000 trend Weighted scores 2.103 1.500 1.368 1.735 Supporting Industries Supporting industries 1.000 1.000 1.000 1.000 Upstream supply channel 2.500 2.500 2.500 2.500 Downstream distribution 1.000 1.000 1.000 1.000 channel Weighted scores 1.395 1.395 1.395 1.395 Strategy and Business strategy 1.515 1.515 1.515 1.515 competitiveness Product competitiveness 1.000 3.000 1.000 1.000 Weighted scores 1.401 1.845 1.401 1.401 Supports from government Government’s supports 1.250 1.250 1.250 1.250 &other parties Other parties’ supports 1.000 1.000 1.000 1.000 Weighted scores 1.157 1.157 1.157 1.157 Overall weighted scores 1.427 1.551 1.449 1.376 Source: Data processed

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In the product competitiveness sub- is the most important factor followed criterion, differentiation of banana-based by supports from government and other product (Manggulu) is high due to the parties, and strategy and competitiveness. uniqueness of the product which cannot The model is applied to a case of East be found in other areas in Indonesia. Sumba regency, and analysis of secondary Moreover, Manggulu only requires data and IDIs results show that banana- banana and peanut without any additional based industry is chosen as the best ingredients, thus it is simple and can be suitable community-based industry to be branded as a healthy snack. developed optimally in East Sumba. This is mainly due to its high score in natural Regarding the supports from government resources and product competitiveness. and other parties, all food industries have the same score as there is no specific policy However, there are some aspects that for certain industry. The local government still need to be addressed to actually supports mainly in terms of providing develop banana-based food industry in training and equipment for the residents East Sumba regency. In order to increase to stimulate the community-based food the motivation of the residents to be industry. However, the aforementioned involved in CBE producing banana-based programs are not regularly conducted products, such as Manggulu, all the related due to limited budget availability. Lastly, divisions in the local government should based on the IDIs results, so far no NGOs coordinate among themselves to provide nor large companies (the private sectors) a better infrastructure for the CBE. They have been involved in supporting all the also need to work together with and community-based food industries. religious leaders to conduct education and training regularly for the residents Conclusıons and Recommendatıons (including farmers and potential CBE The paper presents a decision-making members). The local government should model to determine the best-suitable also promote Manggulu intensively in community-based food industries to the local, provincial or national events as support poverty alleviation in East the regency’s unique product, and partner Indonesia. The developed model consists with the private sectors to provide access of criteria that are adopted from previous to market the products outside the Sumba OVOP/CBE research and Porter’s Island and access to obtain capital for the diamond model, namely resources, CBE. demand, supporting industries, strategy, This research is an initial step toward and competitiveness, and supports the poverty alleviation in East Indonesia. The government and other parties. The decision-making model still needs to be weights of all criteria and sub-criteria are refined, for easier application. determined by using pairwise comparisons of the AHP, carried out by five informants Acknowledgment in East Sumba which represent the local government and business communities, We acknowledge with thanks to DRPM and two informants in Jakarta which UI, all the informants, and Putin Ara Zena represent the NTT province and central for their valuable support. This research governments. is funded by Directorate of Higher Education, Ministry of Education and The results show that for the first level Culture, Republic of Indonesia. criteria, the informants think that resources

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Notes on Contributors marketing, and entrepreneurship. Rifelly has published several articles related to her Ratih Dyah Kusumastuti is a Senior research interests. She holds a bachelor Lecturer in Management Department at degree in Management from Universitas the Faculty of Economics and Business, Indonesia, and Master of Management University of Indonesia. lecturer and from the same university. Currently, she researcher at Department of Management, is pursuing a doctoral degree at Faculty Faculty of Economics and Business, of Economics and Business, Universitas Universitas Indonesia, since 2008. She Indonesia. is specializing in the area of Operations Management. Her research interests Nurmala is a lecturer and researcher at include supply chain network design, Department of Management, Faculty of relief logistics, disaster mitigation, and Economics and Business, Universitas poverty alleviation. Ratih has published Indonesia, since 2009. She is specializing several articles related to her research in the area of Operations Management. Her interests. She holds bachelor degree research interests include humanitarian/ in Engineering Physics from Bandung relief logistics, and poverty alleviation. She Institute of Technology, and master holds a bachelor degree in Management degree in Industrial Engineering from from Universitas Indonesia, and Master the same institute. Her Ph.D. degree is of Management from the same university. from Nanyang Technological University Currently, she is pursuing a doctoral (NTU), Singapore, in the area of Supply degree at the Faculty of Economics Chain management. and Business Administration, Vrije Universiteit Amsterdam, Netherlands. Fanny Martdianty is a lecturer and researcher at Department of Management, Faculty of Economics and Business, References Universitas Indonesia, since 2006. She BPS (2016a). The growth rate of gross is specializing in the area of Human domestic product by industrial Resources Management (HRM). Her origin (Percent), 2000-2014. research interests include general HRM, Obtained from http://www.bps. HRM in SMEs, employee turnover go.id/linkTabelStatis/view/id/1202, and retention, job embeddedness, and accessed on 16 March 2016. poverty alleviation. Fanny has published several articles related to her research BPS (2016b). Number of poor people interests. She holds a bachelor degree in by province 2013-2015. Obtained Management from Universitas Indonesia, from http://www.bps.go.id/ and Master of Management from the same linkTableDinamis/view/id/1119, university. Currently she is pursuing the accessed on 16 March 2016. doctoral degree at the School of Business, Edith Cowan University, Australia. BPS (2016c). Poverty severity index by province 2013-2015. Obtained is a lecturer and Rifelly Dewi Astuti from http://www.bps.go.id/ researcher at Department of Management, linkTableDinamis/view/id/1122, Faculty of Economics and Business, accessed on 16 March 2016. Universitas Indonesia, since 2003. She is specializing in the area of Marketing BPS (2016d). Gini ratio by province Management. Her research interests 1996, 1999, 2002, 2005, 2007- include consumer behavior, strategic

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2014. Obtained from http://www. districts 2013. Obtained from bps.go.id/linkTableDinamis/view/ http://sumbatimurkab.bps.go.id/ id/1116, accessed on 16 March linkTabelStatis/view/id/4, accessed 2016. on 29 March 2016.

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