The Business Governance Model of Local Fruit Craftsmen as

Creative Industry

Tona Aurora Lubis

, Muhammad Safri, Firmansyah

Universitas Jambi

Keywords: Business governance, creativity, business performance, local fruit craftsmen.

Abstract: Business governance of local fruit craftsmen in Jambi Province, as a creative industry, has been not

implemented the great business management methods. It can be given impacts on the craftsmen business

performance, particularly on business survival as a creative industry. The purpose of this study to analyze

the influence of business governance and creativity to business performance. The method of this study is the

mixing method which the first phase researcher using the qualitative method and the second phase

researcher using the quantitative method. This study examines 240 samples of local fruit craftsmen which

are located in Jambi Province The result of this study indicated both creative aspects of the business have

significant effect to business governance and creative aspects have significant effect to business

performance. On the other hands, business governance has no significant effect on business performance on

local fruit craftsmen as a creative industry in Jambi Province.

1 INTRODUCTION

Indonesia is well known as a country which has a

wealth of fruits, particularly tropical fruit. Indonesia

fruits production has been increased every year

(BPS, 2013). With increasing production of fr

uit, fruit consumption society Indonesia from

year to year increases as well. Consumption of fruit

per capita per year on the year 2002 amounting to

29.38 kilograms and gradually increases reached 40

kilograms in the year 2010 (Ditjen horticulture,

2012). However, the level of consumption of

community fruit Indonesia is far from the standard

recommended by the Food Agricultural

Organization (FAO) of 65.75 kilograms per capita

per year. It makes Indonesia has a market

opportunity for all sorts of local fruits products.

Around regencies and city of Jambi province

also has a local fruit, including commodities duku,

durian, mangosteen, rambutan, jackfruit, pineapple,

jackfruit, banana, and others that are processed into

the craft, but it is used as the pre-eminent creative

craft products is still limited. For example, the

pineapple became one of the leading commodity in

Muaro Jambi Regency. Pineapple-producing area in

Muaro Jambi Regency, called Tangkit. On the other

hand, a very rich pineapple in Muaro Jambi Regency

made the fruit market could not afford them. It

resulted in a lot of pineapple fruit rotten and wasted.

Therefore, the craftsmen local fruit pineapple

processing into food products such as dodol and

chips.

Typical local fruits in Jambi province are

diverse, but it is used as the pre-eminent creative

handicraft products are still not optimal. It can be

seen from refined products variation of fruit that is

still minimal and many focus on the types of food

products. On the other hand, the management of the

business of local fruit craftsmen have yet to apply

good business management and properly, so that it

can have an impact on business performance that

goes slow. Business performance has not been

managed well will affect the survival of businesses

and have an impact on the well-being of the

craftsmen of local fruit.

Research on business performance on the object

of research of fruit including craftsmen, on research

Darmayani (2014) concluded that local fruit

companies in Lombok are engaged in handicrafts of

local dried fruit require a sales strategy, pricing

strategies, and more effective in managing good

business governance. Based on Yuliasih (2015)

research about the performance of the chilies

craftsmen in Bogor City concluded that the need for

strategy development and product development

204

Lubis, T., Safri, M. and Firmansyah, .

The Business Governance Model of Local Fruit Craftment as Creative Industry.

DOI: 10.5220/0008787002040209

In Proceedings of the 2nd International Research Conference on Economics and Business (IRCEB 2018), pages 204-209

ISBN: 978-989-758-428-2

business model applied in the craft business.

Furthermore, on research Andreastika (2017) it can

be concluded that the fruits of the businessman in

the city of Malang to improve business

competitiveness of fruit needed basic actions such as

improving the ability of business management and

encouragement of the Government in order to give

you an advantage in the business of local fruits.

Siregar (2017) posited in his studies of industrial

fruit-salak craftsmen in South Tapanuli Regency

requires strategies in improving the performance of

the business, especially seeing the opportunities and

huge advantages in sectors creative industries for

craftsmen and processing fruits salak, so that in the

future this will help the craftsmen salak fruit in

improving the welfare. Enjolras (2018) of traditional

fruit craftsmen in France, it can be inferred that the

craftsmen of fruit having problems in managing their

business. Fruit in French craftsmen have difficulties

in integrating the management of production and

marketing.

In this present day, Indonesia has been involved

in the creative industry era, this study is an

important and interesting aspect to be discussed.

Remembering the potential natural resources in

Indonesia are separated in some side, especially in

local fruits. Based on the phenomenon and research

gap of this study, then it became interesting and

important research.

2 LITERATURE REVIEW

2.1 Business Governance

Business governance generally according to the

Organisation for Economic Co-operation and

Development (OECD) is a set of integrated

relationship management of business entities. Tshipa

(2017) expressed business corporate governance as a

process of adaptation of a business to be able to

articulate requests in action, the courage to take

risks, learn from mistakes, and are able to make

changes. Llewellyn (2014) stated that the

governance of business as in showing the

adaptability in the face of the challenges of business

is considered important particularly in the face of

changes in the external environment. Klein (2012)

also suggests that good business entities are those

who can afford to responsive and responsible.

2.2 Creativity

Creativity definitely has to be innovative, gives an

original touch, and has unique characters. Creativity

is often used in some aspects around us, particularly

in business. Enjolras (2018) The craftsmen of local

fruits need to implement business strategies in the

exercise of its business. Darmayani (2014) stated

that the craftsmen of local fruit as a business entity

that is conducting its business activities of local fruit

production has a vision to become an exporter of

craft/crafts made from fruits that are developed and

can be introduces local handicraft Indonesia in the

eyes of the world, so that the fruits of the local

craftsmen need to do marketing strategies in order to

increase sales as well as compete in foreign markets.

Bujor and Avasilcai (2016) indicated twelve

indicator of creativity, such as, invent by himself or

herself, prioritize idea, to be nomad, define by

activities and way of thinking, to be adept of life

studying, exploit fame and celebrity, treat what is

virtual as real, to be good, to openly admire success,

ambitious and courageous, to have fun, efficient

communication.

2.3 Business Performance

Business performance is the business entity against

the understanding of the processes that are needed to

achieve strategic goals and then measure the

effectiveness of those processes to achieve desired

results. The core of the process of business

performance includes financial and operational

planning, consolidation and reporting, business

modeling, analysis, and monitoring of key

performance indicators related to the strategy.

Business performance is a series of processes that

help business entities in the business to optimize

performance guarantee the achievement of business

objectives (Endolras, 2018). Cruz, Jover, Gras

(2018) study have been identified business

performance indicators are sales growth and profit

growth. Further, Another study by Li, Shao, Zhang

(2017) has been founded that business performance

indicator is business income and growth asset.

3 METHODS

The method of this study is the mixing method

which the first phase researcher using the qualitative

method and the second phase researcher using the

quantitative method. The Qualitative method used

for The qualitative method of this study consists of

The Business Governance Model of Local Fruit Craftment as Creative Industry

205

four steps, such as finding the cases and the potential

objects of this study, using phenomenology

approach on theoretical studies, collecting and

analyzing data with an in-depth interview,

observation, and documentation, hypothesis finding.

The data analysis used data reduction and

conclusion, domain verification, and reflection. The

quantitative methods determined quantitative

samples of the population from the research object.

This study examines 240 samples of local fruit

craftsmen which are located in Jambi Province. The

sample of this study using quota sampling. The data

have been collected by using a questionnaire. The

questionnaire was done by using a Likert scale with

the range of assessment 1-5. The second step

managed primary and secondary data. Furthermore,

the third step does descriptive analysis and

inferential.

4 RESULTS

The result of this study consisted of 240

respondents. All of the respondents are local fruit

craftsmen in Jambi Province that selected by quota

sampling. Furthermore, characteristics of these

samples are the age of craftsmen, ownership type of

business, the age of business, a number of

employees, involved business on the business

association, accepted business assistance of capital,

workshop, and marketing. The details of these

characteristics and the percentage of this study will

be shown in Table 1 below.

Table 1: Characteristics and Percentage of Samples

Characteristics Percentage(%)

Age:

a.<31 years old

b.31-40 years old

c.41-50 years old

d.>50 years old

20%

30%

50%

Ownership type:

a. Self-ownership

b. Cooperating

c. Family ownership

100%

Age of business:

a. >10 years

b. 5-10 years

c. 2-5 years

d. < 2 years

80%

20%

Characteristics Percentage(%)

Business has been involved in

business association

a. Craftsmen have been involved

b. Craftsmen have not been

involved

80%

20%

Acceptance of business capital

assistance

a. Craftsmen have been accepted

b. Craftsmen have not been

accepted

80%

20%

Acceptance of entrepreneur

workshop

a. Craftsmen have been accepted

b. Craftsmen have not been

accepted

80%

20%

Acceptance of marketing

assistance

a. Craftsmen have been accepted

b. Craftsmen have not been

accepted

20%

80%

(references: Data by author)

The result of qualitative phase findings variable

and indicators, such as:

Table 2: Variables and Indicators of Study

(references: Data by author)

On the next phase of the quantitative using

component-based structural modeling, as the result

of this research calculate model can be seen as

follows:

IRCEB 2018 - 2nd INTERNATIONAL RESEARCH CONFERENCE ON ECONOMICS AND BUSINESS 2018

206

Figure 1: The result of Calculating Research Model

(references: PLS output)

Figure 1 above, showed that researcher propose

model which creativity has the effect to business

governance and business performance, and also

business governance to business performance.

Model of Figure 1 is a result of dropping out several

indicators from each variable, which has value under

point 0,6. As for several indicators that have been

dropped out from creativity variable are X2.1,

X2.10, X2.11. Furthermore, an indicator that has

been dropped out from business governance is X1.2.

An indicator which has been dropped out from the

business performance is Y1.

Table 3: AVE dan Communality

Variable

AVE

Communality

Business

Performance

0,632171 0,632171

Creativity 0,520175 0,520175

Business

Governance

0,527723 0,527723

(references: PLS Output)

Table 3 shows the value of AVE and

communality above point 0.5 for all variables. It

means that all variables have the value of the

discriminant validity. Reliability in research, as well

as the consistency of the research instrument, is as

follows:

Table 4: Reliability Coefficient Cronbach Alpha dan Co

mposite Reliability

(references: PLS Output)

Table 4 indicated that the average value of

Cronbach's alpha and composite reliability for all

variables of this study above point 0.70, or it could

be said that all reliability instruments (questionnaire)

on this research revealed the "reliability" and tested

the establishment so that it can be used in further

research.

Figure 2: Bootstrapping Result to Research Model

Figure 2 shows that the highest indicator values

on the variable of creativity are X 2.8 (be good), and

the smallest is X 2.12 (efficient communication). As

for the variable, the value of governance indicators

is the highest X 1.4 (independence), and the value of

the indicator is the lowest X 1.1 (transparency). On

the business performance of the variable, the value

of the highest indicators is Y2 (profit growth), while

the lowest indicator value is Y3 (Growth asset). The

following table shows the influence between the

variables in this study:

Table 5. Path Coefficients (Mean, STDEV, T-Values)

Orig.

Sample

(O)

Sample

Mean

(M)

Std.

Dev.

Std.

Error

T-Stat

Creativity ->

Business

Performance

0,1816

0,2032

0,0628

2,8938

Creativity->

Business

Governance

0,5695

0,5796

0,0469

12,1366

Business

Governance

-> Business

Performance

0,0114

0,0231

0,0544

0,2105

(references: PLS Output)

The Business Governance Model of Local Fruit Craftment as Creative Industry

207

The influence of significance variable can be

seen from the statistic t value on the upper point of

1.96. Table 5 shows the influence of creativity

variable to business governance on point 0.18 and

significant, and creativity to business governance

shows the number on point 0.57 and significant,

while the influence of the business governance to

business performance is not significant.

5 DISCUSSION

The results showed that the influence of the local

fruit craftsmen towards business governance is

greater than the influence of the creativity of

craftsmen of the fruit against the business

performance. This shows that the more creative local

fruit craftsmen, mirrored by good character, it will

improve the governance of a fruit craft business

which was mirrored by growing its independent in

managing their business. Furthermore, the more

craftsmen fruit has a good character, it will improve

the business performance of craft business, which is

reflected by the growth profit. As a creative

entrepreneur fruit craftsmen in Jambi Province,

which has good character would be more gained

independence in the business, than gaining profitable

aspect growth. The independence of the craftsmen of

the fruit in this regard including the quality and

price.

This study further deepens the previous research

carried out by Bujor and Avasilcai (2015) that

examine all sorts of creative industry businesses,

while in this study examine the more specific object

of local fruit craftsmen as the creative industries.

This study further deepens the study of business

aspects in the creative industries by Jacobs, Combra,

Huysenruyt (2016). They indicated business

performance in general, while this research more

outlines indicators of business performance like

business sales, growth, profit and growth of their

assets. This study enriched Fahmi, Kotter, Van Dijk

(2016) research in creative industries with the

artisan, in developing countries in Indonesia. The

study also reaffirms research results by Dorry,

Rosol, Thissen (2016), that in industry needs to pay

attention to the aspects of creativity particularly in

doing business in the field of creative industries.

Based on the result of this study, local fruit

craftsmen are expected to improve their business

performance by accepting marketing assistance from

regional business association or government. Local

fruit craftsmen as a creative industry are also

expected to improve their business skills by

attending some workshops. The government should

give a huge marketing scope in order to help local

fruit craftsmen in selling their products, like in big

events and exhibitions. The government should also

make a regulation about a good business relationship

with the local business association, cooperation, and

craftsmen. A government such as the agency for

regional development, Indonesia Department of

Creative Economics, and Regional Department of

National Craft are expected to make a regulation

about local fruit craft business. Finally,

recommendation is made to any further researcher

who wants to make study in the field of creative

industry, particularly in local fruit craftsmen. Further

researcher is recommended to make a study in a

different place, because Indonesia is a wealthy

country of diverse fruit resources in some places,

because of geographically aspect.

6 CONCLUSION

The result of this study indicated both creative

aspects of the business have significant effect to

business governance and creative aspects have a

significant effect on business performance. On the

other hands, business governance has no significant

effect on business performance on local fruit

craftsmen as a creative industry in Jambi Province.

ACKNOWLEDGMENT

This research paper was supported by some previous

researchers. We would also like to show our

gratitude to the respondents for sharing their pearls

of wisdom with us in providing information about

this research. We are also immensely grateful to

Universitas Jambi Research Center for their material

and financial support of this research.

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