The Relationship between Industrial Clustering and Operational Performance within Indonesian Manufacturing SMEs

Abstract

The main objective of the research is concerned with investigating the relationship between industrial clustering and operational performance constructs. This research treats both industrial clustering on operational performance as multidimensional constructs. Industrial clustering consists of four dimensions and operational performance encompasses three dimensions. Two different goals were pursued, namely examining the multidimensional and individual relationship between the two constructs. The data used in the analysis were perceptual measures that were derived from a cross sectional survey using a single respondent design. The sample used is limited to 112 manufacturing SMEs located in Cikarang Industrial Cluster, West Java Province of Indonesia. This research applied a Structural Equation Modeling and Multiple Regression Analysis in relation to the developed hypotheses testing. As has been hypothesized in this research, industrial clustering was found to have a positive effect on operational performance of manufacturing SMEs. The results also confirmed that the local network, the presence of related industries, the government support, and the local advantage contributed positively, but not equally to the operational performance of manufacturing SMEs

Keywords: industrial clustering, operational performance, manufacturing SMEs