Improvement of Printing SMEs Performance with Maintaining

Entrepreneurial Intellectual Capital Management

Aisyah

, Arif Qaaedi Hutagalung

and Sya’ad Afifuddin

Faculty of Economic and Business, Universitas Sumatera Utara, Medan, Indonesia

Keywords: Entrepreneurial Intellectual Capital, Performance, Printing Sme

Abstract: With the very fast advancement in the world of printing technology and information, demands that the

printing entrepreneurs to be able to manage and utilize Entrepreurial Intellectual Capital in their business

activity as an attempt to develop further the printing business to increase their competitiveness and

performance. The aim of this study is to find out the effect from increasing the business performance and

continuing of the business development to the printing business SME’s at Medan Baru sub-district area

Medan City after managing the aspects of Entrepreneurial Intellectual Capital which consist of few elements

that is Social Capital, Customer Capital and Technological Capital. As much as 35 printing business SME’s

at Medan Baru Sub-district area participate in this research. The data collected by interviews and

quettionnare which are self managed by us and analyze by using the multiple regression analysis. The

results shows that present SME are slow to follows the printing business technology trends. Furthermore,

the Entrepreneurial Intellectual Capital aspect plays an important role to stimulates the SME’s work

performance. And the most important aspect from Entrepreneurial Intellectual Capital are the Customer

Capital and Technological Capital to stimulates the performance from the printing business SME’s.

1 INTRODUCTION

1.1 Research Background

A very fast advancement in the world of printing

technology and information demands that the

printing entrepreneurs able to comprehend and

utilize it in the business activities as an attempt to

develop the printing business for increasing their

competitiveness and performance. The 4

industrial

revolution or Industry 4.0 become a giant leap for

industrial sector where the ITC are being utilized to

the fullest extent. Not just in the production process

the mastery of this technology also being utilized in

all of the industrial value chain so that it breeds a

new business model with a digital basis to achieve a

high efficiency rate and better products quality.

According to the annual observation, the

majority of SME’s in Indonesia especially in Medan

still have this tendencies using conventional based

and production based (traditional) in running their

business so that the product that’s they produce still

contains technology that haven’t reach full

development, if this company following the recent

developments which focusing at the management of

intellectual capital till its maximum capabilities then

the SME’s will be able to compete by using their

competitive advantages that were obtained through

innovative creations that they get from intellectual

capital owned by the company, the Innovation will

encourage the products creation that appealing to

the consumer and also a more effective and efficient

business activities.

Micro, small and medium enterprises have an

important role for Indonesian economic pace

especially at job creation and household

empowerment that supports their incomes, The

SMEs must be one of the sectors that the

government paid a lot of attention to seeing that

based from the data of The Ministry Of

Cooperatives and MSME that at the end of 2016

SME contributed 60,34% of product domestic bruto

(PDB). This numbers increased if compared from

the year before as much as 57,84%, right now the

numbers of SME that has been registered in North

Sumatra province are 2,5 million that’s 40% of it are

micro enterprises, 30% middle enterprises and 30%

small enterprises. Medan are the capital city of the

biggest province and the 3

biggest in Indonesia.

230

Aisyah, ., Hutagalung, A. and Aﬁfuddin, S.

Improvement of Printing SMEs Performance with Maintaining Entrepreneurial Intellectual Capital Management.

DOI: 10.5220/0009201902300235

In Proceedings of the 2nd Economics and Business International Conference (EBIC 2019) - Economics and Business in Industrial Revolution 4.0, pages 230-235

ISBN: 978-989-758-498-5

SMEs are a part of the economic business group that

are really important for the economy and one of the

priorities in economy development work program in

Medan. (http://pemkomedan.go.id).

Medan Baru Sub-distrct are one of the place that

becomes a gathering place for the printing

businesses that are well known in Medan. Thats

because Jl. Jamin Ginting and the surroundings of

Medan Baru sub district are a very strategic

locations for them because it’s near Universitas

Sumatera Utara (USU) or North Sumatra university

and a couple of offices complex. Based on the field

survey in 2019 that the SME’s printing

entrepreneurs that they haven’t run the business

with the idea of knowledge based business which

means that they haven’t utilize the social capital and

their customer capital well and optimally, With

crowded visitors everyday these entrepreneurs better

use this opportunity to increase social capital and

customer capital of their business. For Example is

that by knowing their customers characteristics so

they can produce a product that suits the wish and

needs of their customers so it may form some

customers loyalty.This could be a stimulant for the

entrepreneurship growth and SME’s sustainability.

By utilizing technologies that being offered that

brings innovation and their own specialty compared

from products elsewhere that still using traditional

equipments and methods in their production

process.

The printing SMEs does must have the

knowledge for Entreprenual Intellectual Capital the

potential of Entreprenual Intellectual Capital

requires the community to understand a good

management towards social capital, social capital

and technological capital, therefore socialization and

communication are needed to manage Entreprenual

Intellectual Capital for increasing SMEs

performance. This research focused on the

utilization and managing Entreprenual Intellectual

Capital that are hoped can provide knowledge and

understanding and also can inspire the SMEs doer

specially in Medan Baru sub district,Medan on

utilizing Entreprenual Intellectual Capital as a tool

to run their business.

2 LITERATURE REVIEW

2.1 Intellectual Capital

Intellectual capital in general can be defined as the

difference between the company market value and

book value from the company assets or from the

financial capital. Intellectual capital by Nahapiet

and Ghoshal (1998) referring to the knowledge and

the skill that’s the social collectivity have like an

organization, intellectual community or professional

practices. Intellectual Capital represents a valuable

resources and an ability for some knowledge based

act.

Entreprenual intellectual capital are some

characteristics and habit that are owned by

entrepreneurs. Most of their activities that their

doing are purposely for inovating and using

technologies as a base tool for growing their

business. Their characteristics are persistence, took

up some calculated challenges and work committed

(Audretsch & Keilbach 2004). So that’s

Entreprenual intellectual capital that’s business

owned refers to an employee that’s innovative,

willing taking risk and contributes in their business

growth.

2.2 Social Capital

Coleman in Fukuyama (2002:12) defines that social

capital are an organization capabilities to work

together to achieve their common goals in various

groups and organizations. Theory about social

capital states that networks of communication are a

resources that can be used for daily activities.The

members of the “capital” networks, for example in a

special forms that can be used for various needs,

access, supplies, opportunities and social status.

2.3 Customer Capital

Customer capital also called relations capital, is a

knowledge that’s being embedded through skills and

being used by individual interactions or a

knowledge that’s embedded in the business

networks (Nahapiet and Ghosal, 1998 in Bataineh

and Zoaby, 2011). Customer capital covers growth,

customer knowledge, stockholder, supplier,

industrial association (government) and also the

community. So that’s this capital as a

comprehensive knowledge for marketing and

customer relations fields. The quality of the

relationship and an ability to find or attracts new

customer are a key factor for thr companies success

(Montequin et al., 2006 in Alipout,2012).

2.4 Technological Capital

Adeosun, et al (2009) conclude that the use of

technology gives a positive feedback for

management strategies that’s related with

Improvement of Printing SMEs Performance with Maintaining Entrepreneurial Intellectual Capital Management

231

communication,informatio, decision making, data

management and knowledge managements aspects

in an organization. Technologies can become a

strategic power and as a tool for the organization

profitable at promotion and competitive aspects

(Buhalis, 2003)

3 RESEARCH METHOD

3.1 Research Time

This research being held at Medan from March till

July 2019

3.2 Participant

The population are all of the printing SMEs at

Medan Baru sub district that have been operated at

least 5 years. We found as much as 35 SMEs with

the exact criteria. The sample being used are the

saturation sample at the whole population.

3.3 Data Collection Procedures

In this research data was collected to answer the

problems from the primary data that has been

gathered and being processed by certain

organization or peoples straight from the object

(Supranto, 2011). The data collection technique with

the survey done through interviews with related

party and answers through a questionare filleb by

respondents, besides that it will also be done a

literature review related to the growth of SMEs

work performance and Entrepreneurial Intellectual

Capital consisted of Social Capital, Customer

Capital and Technological Capital.

3.4 Validity and Reliability of

Questionnaire

This research using a questionnare that’s arranged

by the research team based on the theoritical studies

that’s being adjusted with the condition and

language that suits The entrepreneurs. The validity

and questionnaire reliability test carried out to 30

printing entrepreneurs that are in Jalan Mesjid and

Jalan Ampel Area in Medan. Those who have been

following the research as a sample in the Validity

and reliability test are not chosen as a sample for the

research. The results have been summarized in

Table 1.

Variables

Number of

Statements

Cronbach's

Alpha

Conclu

sion

Social Capital

8 0.942 Reliable

Customer

ital

8 0.940 Reliable

Technological

Capital

6 0.939 Reliable

SME

Performance

7 0.939 Reliable

Table 5.1 shows that all the items are valid,

which can be seen from the calculated r that’s

greater than r table (0,361) at every variables. So

that’s it can be concluded that’s 29 valid questions

to use in this research.Table 5.1 shows that the value

of Cronbach Alfa > 0,80. Based from the Table

above confirms that’s our questionnare are reliable.

3.5 Data Processing and Analysis

Method

The data are analyzed using multiple linear

regression methods and analysis descriptive

methods, using SPSS. Analysis decriptive methods

by giving 35 question are for the SMEs in Medan

Baru sub district.The Descriptive statistics explains

about the respondents characteristics and the

variabel being used.

We used multiple linear regression methods to

analyze and find out the relationship between the

variables with the purpose to know the direct nor

indirect effects a bunch of variables to bound

variables.

Figure 1. Research Model

3.6 Hypothesis

We are using multiple linear regression methods to

evaluates the effects of each aspects of

Entreprenurial Intellectual Capital towards The

printing MSMEs performance in Medan.Our

Hypothesis covers this question

 Hypothesis 1 social capital have a positive

effect and significant towards the performance

Social Capital

Customer Capital

Technological

Capital

SME Performance

Customer

Capital

Social

Capital

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232

 Hypothesis 2 customer capital have a positive

effect and significant towards the performance

 Hypothesis 3 technological capital have a

positive effect and significant towards the

performance

4 FINDINGS

4.1 SMEs Owner Characteristics

The owners characteristics described to see the

character spreading or general characteristics from

the respondents. There are 4 characteristics

consisting of age, gender, education attainment, and

years of operations for the samples in Table 2 to

summarize our findings from the 35 respondents.

Table 2. Printing SMEs characteristics

Charactersitics

N Percentage

Age

21-30

4 11,43%

31-40

7 20%

41-50

14 40%

> 50

10 28,57%

Sex

Male

26 74,28%

Female

9 25,72%

Educational Attainment

Junior high school

7 20%

Senior High School

15 42,90%

Diploma

7 20%

Bachelor

5 14,25%

> Bachelor

1 2,85%

Years of operation

5-10 years

16 45,71%

10-15 years

9 25,71%

>15 years

10 28,58%

Table 2 shows that the majority SMEs are male

with the percentage of 74,28% so these only 25,72%

are females. The comparison are 3:1 shows that the

female have a good presence in the business. This

results also show that the females in Medan are

getting more independent in their household. The

majorities are high school graduates and most of

them aged 41-50 years old and most of them already

have 5-10 years of experience.

4.2 Regression Analysis

We use multiple linear regression to evaluate the

effects from every aspect Entrepreneurial

Intellectual Capital towards the SMEs performance

in Medan. The R value and the adjusted R value are

used to evaluate the relation between the predictor

variabel and bound variable. The summary gives us

information related to the determine coefficient that

Table 3 shows. Coefficient of correlation (R)

explains about the strength of the Variables with

the Bounded variables while the adjusted R-squared

explains the varians through the research models.

Table 3: Model Summary

Model R R Square

Adjusted R

Square

Std. Error of the

Estimate

1 .806

.650 .617 3.33113

a. Predictors: (Constant), Social Capital, Customer

Capital, Technological Capital

b. Dependent Variable: SME Performance

Table 3 shows that the model have a correlation

or a very strong bond between Entrepreneurial

Intellectual Capital towards the SMEs performance

for 80,6% (R=0,806). All of the aspects that have

been applied to shows as much as 61,7% varians

towards the performance. While the rest are 38,3%

can be explained by other factors that’s not covered

in this research. The Regression coefficients and

level of significance showed in Table 4.

Table 4: Koefisien Regresi

Model

Unstandardize

d Coefficients

Standardize

Coefficients

Sig.B

Std.

Erro

Beta

1 (Constant)

1.758 5.500 .320

.75

Social

.128 .189 .092 .675

.50

Customer

.168 .214 .147 .786

.04

Technologica

.684 .205 .621

3.33

.00

a. Dependent Variable: SME Performance

Table 4 shows that the aspects of Entrepreneurial

Intellectual Capital that have been applied by the

Improvement of Printing SMEs Performance with Maintaining Entrepreneurial Intellectual Capital Management

233

SMEs significantly effects their performance, except

the social aspect although it has a positive effect but

it’s not really significant. The Technological Aspect

have the highest coefficient rate. This results shows

that the most important aspect to push the

performance are by doing investment and

development on Technology Capital that suits the

customer needs. Theres enough evidence to say that

the Technology Capital and Customer Capital will

effect the SMEs performance.

5 DISCUSSION

The results of this study support the previous

research, that the management activities of

intellectual capital in SMEs will have a positive

impact on performance achieved, such as increased

business profits and customer retention (Zuliyanti

and Delima 2017). Other than that the results shos

that the Technological Capital in Entrepreneurial

Intellectual Capital, have the most significant effect

towards increasing the performance. The appliance

and use of this technology that crates the

process,method and worktool that’s effective and

efficient become the key to increase SMEs

performance. The results also supports the previous

research that also stated that technology have a

positive effect towards the outcome.

Customer Capital or can also be called as

Relations capital also significantly effects the SMEs

performance. The business doers must evaluates

their Customer Capital including their knowledge

about their customers. Most of the SMEs doesn’t

have a clue about their customers characteristics and

profile as long as they sell their product they feel

that these “things” doesn’t really effect their

business sustainability. But in fact by knowing their

customers are one of the foundation and capital for

the marketing and customer relations aspects. To

maintain and gain a new customers are key factors

for their success. If some specific organization are

focusing on their customers and became the markets

leader then they will create some routinity and an

efficient ways to serve the customers well

The research also discussed it further about

Social Capital SMEs detailed, Descriptively this

aspect have lowest score from the Entrepreneurial

Intellectual Capital. Previous studies shows that

SMEs have a problem in managing their Social

Capital. For example is that they have a high

Turnover ratio in the business.Its difficult for the

SMEs to find an experienced operator to operate the

machines smoothly. Some of the SMEs doesn’t have

a good relationship to the employment bureau and

eventually they have to recruits regular people and

give them enough training and it leads to some of

the workers are not doing their job nicely because

they don’t have the set of skills.

6 CONCLUSION

Referring to the purpose of this rearch it can be

concluded that:

1. Technological Capital are the most important

aspect for increasing the SMEs performance in

Medan.The development and utilization of the

technologies have an important role in

increasing the performance and must always

be done so their products able to fulfill the

market demands.

2. Customer Capital effects the SMEs

performance in Medan. A good understanding

of the customers is a knowledge capital for the

marketing and customer relations. Their skills

to maintain and find new customers are key

factors for success. And its important to

maintain and understanding customer capital

so they may create a competition in their

activities to please the customers.

3. Social Capital have a positive effect but not

really significant to increase the SMEs

performance but it’s need to be recognized

although they’re not really significant but it’s

important for maintaining the social capital to

create a better teamworks and collaboration

between the entrepreneurs.

4. Based on the determinant coefficient (R)

shows that between the variables

(technological capital,customer capital and

social capital) have a very strong impacts and

bond towards the printing business SMEs

performance in Medan.

ACKNOWLEDGMENTS .

The Author gratefully acknowledge that the present

research is supported by Universitas Sumatera

Utara. The support is under the research grant Basic

Research of young college teacher Talenta USU

Year 2019 Nomer: 4167/UN5.1.R/PPM/2019 dated

01 April 2019.

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234

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