Innovation Capacity Index Assessment of Natural Rubber Latex Based Industry: Comparative Study of Indonesia and Malaysia and Its Implications on the Development of The Industry

Abstract

The purpose of this study is to compare the natural rubber latex-based industry innovation capacities of two natural rubber producing countries namely Malaysia and Indonesia, and its implications for the improvement of the industry. Using purposive sampling method with the natural rubber industry experts from both countries as the respondents. This study was conducted through several stages, including: 1) determining attributes for each innovation capability dimensions: organization, process, service, product and marketing. These attributes are based on literature review and validated by experts, 2) distribution of questionnaires to experts in Indonesia and Malaysia, 3) Analysis of the innovation capacity index using multidimensional scaling. The Indonesia innovation capacity index is 60.22, while it is 78.80 for Malaysia. This shows that overall, in terms of its ability to innovate the industry in Indonesia is still lagging behind Malaysia. In addition, all attributes for each capability: organizational, processes, services, product/product development and marketing innovation capability, Indonesia is also still lagging behind Malaysia. It only compares the two natural rubber producing countries, namely Indonesia and Malaysia. The implication for Indonesia is the need of government's political commitment, legal direction for innovation, legal certainty, strong institutions, institutional restructuring to facilitate coordination, improvement the quality of human resources and ease of financial access. The research contributes in finding 25 attributes of innovation capabilities. Further, this study also maps the comparative capabilities of Malaysian and Indonesian innovations for each latex-based natural rubber industry innovation capability dimension, and the steps to improve the innovation progress, specifically for Indonesia in order to catch up.

Keywords: Innovation capacity, capacity index, Latex based industry, Multi-dimensional scaling and rubber latex

DOI: 10.7176/EJBM/12-11-05

Publication date: April 30^th 2020