International Journal of Research in Business, Economics and Management

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Implementation Of Government Policy Towards Business Performance Through Environmental Adaptability In Small-Scented Craftsman In Supporting Mea In Malang Raya

Samiadji Master of Management at Wisnuwardhana University, Indonesia

ABSTRACT

This research has the general aim to examine empirically and to analyze the effect of government regulation on business performance through environment adaptability. The specific goals of this research are : (1) to examine empirically the effect of the government regulation on environmental adaptation; (2) to examine the effect of government regulation on the business progress ; (3) to examine the effect of the government regulation on the business progress by environmental adaptability. The research takes place in east java and is in Malang county amount 239 business units. Collecting data in this study was done by using a proportional random sampling technique of 150 business units. The data analysis uses she Structural Equation Modeling (SEM) by Amos program. The result of this research showed that: (1) The government regulation has no effect to improve progress, and only had a significant effect through entrepreneurial orientation, (2) The government regulation has no significant effect to increase business progress, and only had a significant effect by environmental adaptation, (3) The government regulation could increase the business progress of the underlined chip business in East Java by environmental adaptability.

Keywords: Government regulation, environmental adaptability, business performance

INTRODUCTION According to BPS data for 2018, almost all of them are dominated by weak economy groups, namely 99.76%, medium businesses are only 0.14% and the remaining 0.01% are large businesses. The abundant natural potential in Malang, as well as the wide variety of agricultural and plantation products, have made icons for each region. Based on this fact, the researcher wants to help give thought to be able to develop SME chip crafters in Malang. Several studies in several regions in East Java show that MSMEs have a significant role in economic growth, absorb labor through job creation, provide goods and services at relatively low prices, reduce unemployment, and can overcome poverty. MSME is a form of entrepreneurship (entrepreneurship) that reaches all business activities both large and small and is a type of industry that can "survive" in times of economic crisis that is the use of labor-intensive production concepts and is a hope for Developing Countries (NSB) to improve economic conditions (Neshamba, 2003) so that it will automatically increase labor demand. However, the development of Micro, Small and Medium Enterprises (MSMEs) in East Java, including in Malang Raya, experienced many obstacles or obstacles. Tambunan Research (2016:

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179) mentioned that these obstacles or constraints included limited working capital and investment, difficulties in marketing, distribution, procurement of raw materials, limited access to information about market opportunities, limited workers and high expertise (low-quality human resources), technological capability, communication limitations, high costs due to complex administrative and bureaucratic procedures such as business permit processing and uncertainty of unclear or undirected economic policies and regulations. Taking into account the results of the UMKM research, the government must solve three classic problems that often afflict MSMEs, such as market access, capital, and technology that have been discussed at seminars and conferences. Government policies and regulations that still apply today not maximal. The facts indicate that government policies tend to be excessive and ineffective so that policies become less comprehensive, undirected, and confusing. Market opportunities that should be controlled by MSMEs have not been successfully optimized. Entrepreneurs themselves as movers of MSMEs are often unable to grasp the symptoms of changing consumer tastes. One problem that is considered fundamental is the tendency of the government to run programs for the development of MSMEs which is often a corrective action against other policies that have a detrimental effect on small businesses, because they are patchy meaning that the policy makes the continuity and consistency of regulations and their implementation impossible so that the objectives the development of UMKM has not been maximally achieved. Based on the description above, then the thing that must be considered is how to anticipate the weaknesses and obstacles faced by business people, the crafters of chips. It should be noted that entrepreneurs in dealing with environmental dynamics including environmental adaptability to select and implement management and strategies in an integrated manner, so that performance improvement and competitive advantage of chip crafters can be achieved. According to Denison (2001: 98-109), there are four components of organizational culture: (1) involvement, (2) consistency (3) adaptability (adaptability) and (4) mission (mission). The four organizational cultures have different effects on several criteria for effectiveness and not all the characteristics of this organizational culture have the same effect on business performance. Samsir (2012: 215) show that government policy is very important both directly and indirectly towards improving the performance of the songket weaving industry in Riau Province. The results of the previous study encourage researchers to reexamine the influence of government policies on business performance through environmental adaptability, especially in chip crafters in Malang, with the hope that chip crafters in Malang Raya can contribute to greater GDP, as an industry that has bright prospects, especially for the market good domestic and managerial performance. Following the introduction that has been described, the research objectives are: (1) Analyzing the effect of government policies on the environmental adaptability of chip crafters in Malang (2) Analyzing the effect of government policies on the business performance of chip crafters in Malang (3) Analyze the effect of government policies on.

THEORETICAL FRAMEWORK

Government Policy

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Government policies for micro, small and medium enterprises (MSMEs) are implemented with the development and development of human resources (HR) through entrepreneurship, technical skills, managerial, education, training and consulting. What the government has done in growing MSMEs is by launching the People's Business Credit (KUR) program and cooperating with banks to encourage banks to extend credit/financing to MSMEs. All of them are carried out with a determination and enthusiasm so that the growth of MSMEs in Indonesia can develop healthily and strongly, so that they can become an integral part of overall business activities, become more competitive economic actors, especially in providing goods and services needed by the community so that they can contribute which is significant in structural changes and strengthening the domestic economy (Aziz, 2010). The Government, represented by the State Minister for Cooperatives & SME Affairs and the Minister of Home Affairs issued Joint Decree No.04 / KEP / M / V / 2001 regarding the establishment of the Guarantee Institution for cooperatives, Non-Bank Microfinance Institutions and MSMEs in the regions. Some programs that have been implemented by the government to protect MSMEs are (1) Conducive business climate creation program. The program aims to open up opportunities for business as widely as possible and ensure business certainty by taking into account the principles of efficiency as a prerequisite for the development of MSMEs. Whereas the target to be achieved is a decrease in transaction costs and an increase in the scale of MSME's business in economic activity. (2) Program to increase access to productive resources. The program aims to improve the ability of MSMEs to take advantage of open opportunities and potential resources, especially available local resources. While the target is the availability of supporting institutions to increase MSME access to productive resources, such as human resources, capital, markets (marketing), technology and information (3) Entrepreneurship development programs and competitive advantage MSME entrepreneurs. This program aims to develop entrepreneurial actors and improve the competitiveness of MSMEs. While the target is to increase knowledge and entrepreneurial attitudes and increase the productivity of MSME entrepreneurs.

Environmental Adaptability One of the organizational cultures is adaptability, which is the ability to make internal changes in response to the environment has the opportunity to improve performance (Denison, 1996). Therefore environmental adaptability requires organizations to develop norms and beliefs that are supportive of the ability to accept and then interpret as signals that originate from the environment and translate into cognitive and behavioral changes. Organizational success depends on internal adaptation to the environment (Gibbon P.T. 2003). Dess Study G.D. Lumpkin GT Covin JG (1997) explains that organizations that can adapt to the environment are indicated by the following indications: 1) Organizations continually adjust changes by making strategies according to market-based feedback 2) Product and business planning processes adjust or involving, customers, suppliers, and providers of funds 3) Organizations quickly make adjustments to environmental changes. Adaptability is an important variable that needs to be considered in explaining the meaning of organizational culture for organizational success. Hessket & Kotler's (1992) study of 200 companies in several Asian, European and American countries found that a strong and

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adaptive culture has a strength and a real contribution to improving organizational performance in the long run. The Yodang Lao study (1999) concludes that adaptability has a relationship with performance in small scale businesses. Following the strategy orientation paradigm, a company can achieve a competitive advantage through adaptability (Miles and Snow, 1978). Referring to Denison's organizational culture model (1990), there are four components of organizational culture, namely: 1) Involvement, 2) Consistency, 3) Adaptability and 4) Mission (mission). These four cultures have different effects on several effectiveness criteria and not all of these cultural characteristics have the same effect on business performance. Kotler & Heskett (1992) suggested that organizational culture that emphasizes adaptation to the influence of dynamic environments is more likely to show high performance. This is following the phenomena found in micro small and medium enterprises of chip crafters who face business performance problems as a result of changes in external environmental conditions and require high flexibility. This adaptability culture is appropriate enough as a representation of organizational culture to determine its effect on business performance. This research will focus on the role of environmental adaptability as a source of competitive advantage, which is empirically related to business performance (Marcoulides & Heck, 1993; Hansen & Wernerfelt, 1989).

HYPOTHESIS: Based on research objectives and theoretical studies, the following research hypotheses can be formulated: 1. Government policies have a significant effect on environmental adaptability in Malang. 2. Government policies have a significant effect on business performance in Greater Malang. 3. Government policies have a significant effect on business performance through environmental adaptability in Greater Malang.

METHOD Data collection technique The data collected in this study include two types, namely primary data and secondary data, while data collection techniques are carried out through: survey is a way of collecting data in which the researcher or data collector submits questions or statements to the respondent both verbally and in writing.

Population and Sampling Techniques Respondents in this study are business owners/owners/managers of micro, small and medium enterprises (MSMEs) to assess government policies, business adaptability, and business performance in micro, small and medium businesses. The population in this study are all micro, small and medium-sized crafters of chips that are owned and managed by their owners in Malang Raya. Members of the population in this study have the following criteria: (1) Standalone and not a subsidiary or branch company that is owned, controlled or affiliated directly or indirectly with

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large businesses (2) Has a business that is still productive and growing (3) Has been operating for at least 3 years in their fields (4) Has several workers between 1 - 99 employees (5) Has annual sales results of between Rp. 300,000,000.00 (Three hundred million rupiahs) up to a maximum of Rp. 50,000,000,000 (fifty billion rupiahs) (6) Has a location and production facility that can be observed by researchers (7) Has used information technology as a means of communication and expanded markets, increased insight and knowledge about innovative products, etc. Based on these criteria and the results of a preliminary survey of the number of micros, small and medium enterprises that are still active in running their business until now in Malang, there are 239 micros, small and medium enterprises that are still active, using the Slovin formula, then the number of a sample of 150 respondents.

Hypothesis test Hypothesis testing in this study is done by looking at the p-value (probability), if the p-value is less than 0.05, then the exogenous variable has a significant effect on the endogenous variable. Hypothesis testing one: Tabel 1. Government policies have a significant effect on environmental adaptability Hypothesis test results ADAP = ß2BIJAK + Z2

Factor Loading Variable Standardized Estimate S.E C.R P Regression Weight Environmental 0,663 0,696 0,081 8,542 0,000 adaptability

The test results show that the environmental adaptability variable has a critical ratio (CR) value greater than 2 and a p-value less than 0.05. In the form of a standardized loading factor coefficient, the environmental adaptability is worth 0.663. These results provide a decision that government policy variables significantly influence environmental adaptability. Thus hypothesis one is statistically tested and can be accepted.

Hypothesis testing two: Tabel 2. Government policies are not significant on business performance Hypothesis test results

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KIN = ß5 BIJAK + Z3

Factor Loading Variable Standardized Estimate S.E C.R P Regression Weight government policy 0,099 0,087 0,084 1,032 0,302

The test results show that government policy variables have a critical ratio (CR) value smaller than 2 and a p-value greater than 0.05. In the form of a standardized factor loading coefficient, the government policy is worth 0.099. These results provide the conclusion that government policy variables are not significant in business performance.

Hypothesis testing three: Government policies have a significant effect on business performance through environmental adaptability. Tabel 3. Test Results t (CR) The effect of government policies on business performance through environmental adaptability.

Variable Direct influence Indirect influence Total effect

Government policies on business 0,099 0,361 0,461 performance Government policies on business 0,347 0,663 X 0,347 0,577 performance through 0,230 environmental adaptability

The results of the analysis of the total influence between research variables (standardized total effects-estimates) indicate that the environmental adaptability variable is an intervening variable that can mediate government policy variables on business performance because the value of the total effect is greater than the direct effect. This means that government policies can increase business performance even more if through environmental adaptability. Thus the third hypothesis is statistically tested and can be accepted.

RESULTS AND DISCUSSION 1. Government policies have a significant effect on environmental adaptability. Government policies are technically carried out towards empowering human resources through management training, better use of technology, more efficient use of raw materials, easy access to capital without guarantees and certainty of getting capital. Marketing empowerment has not been fully

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carried out to develop small entrepreneurs and is more focused on production. An important finding in this research is that government policy through empowering human resources, with effective and efficient supervision of the workforce so that new ideas and work will be created together to create a change. To maintain the influence of external factors, chips entrepreneurs focus their efforts on the customer so that there will be continuity with the customer, that is, paying attention to customer comments, giving correct information, prioritizing the satisfaction of customer complaints. Thus it can be said that government policies that are more focused on empowering human resources will be able to increase environmental adaptability for entrepreneurs by focusing more on customers. This finding means that the higher the capacity for adaptive action and is supported by government policies through fostering and developing an entrepreneurial culture, the higher the environmental adaptability. The results of this study reinforce what was done by Rante (2011: 204) that the role of government has a positive impact on improving the performance of SMEs through a culture of environmental adaptability. Farrel (1992) states that the process of assisting the government can influence the improvement of environmental adaptability, which is the process of policies carried out by entrepreneurs in combining capital resources, conducting market expansion, increasing the number and variety of products. Bruno (1987), described that the assistance program from the government has an element of activity to increase the ability of a business, especially the skills of planning in companies that produce models to capture the opportunities that exist. The availability of more capable and skilled resources following the current competitive situation will be able to increase business. This research is no different from research conducted by Farrel, Bruno so that the discovery of government policies through empowering human resources by fostering and developing an entrepreneurial culture can encourage chips entrepreneurs to be innovative, creative and adaptive to the external environment so that these findings can be generalized to other research sites. 2. Government policy does not affect business performance. Government policies are technically carried out towards empowering human resources through management training, better use of technology, use of more efficient raw materials, easy access to capital without guarantees and certainty in getting capital. Marketing empowerment that has not been fully carried out to develop small entrepreneurs and is more focused on production. The results of the study indicate that marketing empowerment is less of a concern for government policy. This can be interpreted that the government must pay attention to marketing for the products produced so that they can be sold in the market in the hope of controlling market share. The results of this study weaken conducted by Samsir (2012: 185), that increasing small businesses cannot be separated from the role of the government through various policies implemented in the form of training following the needs of small businesses, providing convenience in accessing capital and developing business partnerships to increase business performance. The results of this study reinforce what was done by Farrel (1992), that government policies through programs in the form of capital sources, the development of product variations, training for small businesses do not have a positive impact on business development. Similarly, research conducted by Sato (2000: 168) in several clusters in the metal and machinery industry in Java (such as in Ceper and Sidoarjo) concluded that the successful development of these clusters was achieved so far without

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significant support from the government. Also, this study reinforces what was done by Kroon and Moolmann (1992), Westhead and Storey (1996) that government assistance in management training programs does not improve business viability and sales growth. This study is no different from research conducted by Farrel, Kroon and Moolmann, Westhead and Story so that the findings can be generalized to other research sites. 3. High environmental adaptability is needed by micro small and medium entrepreneurs of chip crafters in Malang Raya to be able to adapt to changes in the external environment to be able to create adaptive changes and learn signals from the environment to gain knowledge and develop the capability of microchip crafters and always micro-entrepreneurs. proactive in looking for new opportunities and carrying out more innovative activities.

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