RJOAS, 6(66), June 2017

DOI https://doi.org/10.18551/rjoas.2017-06.05

ANALYSIS OF THE INFLUENCE OF EXTERNAL AND INTERNAL ENVIRONMENTAL

FACTORS ON BUSINESS PERFORMANCE: A STUDY ON MICRO SMALL AND MEDIUM
ENTERPRISES (MSMES) OF FOOD AND BEVERAGE

Ontorael Rizal*, Suhadak, Mawardi Mukhammad Kholid

Department of Business Administration, Faculty of Administrative Science,
University of Brawijaya, Indonesia
*E-mail: [email protected]

ABSTRACT
This study aimed to analyze and explain the influence of external environmental factors on
internal environmental factors, along with the influence of external and internal environmental
factors on business performance. This research was an explanatory research, using the
questionnaire as the primary data and appointing the owners/managers of the enterprises as
the object of the research. The total sample of this research was 108 respondents of MSMEs
in the sector of food and beverage that were registered in the Office of Cooperatives, SMEs,
Industries, and Trades of Batu City. The data analysis of this research indicated that external
environmental factors had a positive and significant influence on internal environmental
factors. Similarly, external and internal environmental factors also had a positive and
significant influence on business performance.

KEY WORDS
External environmental factors, internal environmental factors, business, performance.

Micro Small and Medium Enterprises (MSMEs) have an important role in the national
economic development and growth in all countries, not only in developing countries but also
in developed countries. In addition to its contribution to gross domestic product (Tambunan
2008), MSMEs also play a role in employment, income making, and community economic
movement. In Indonesia, MSMEs have a significant role in national economic development.
MSMEs can be accessed as a rescuer in the national economic recovery because MSMEs
can survive and thrive in the storms of economic crisis since 1998 (Utami and Lantu, 2014).
The development of Micro Small and Medium Enterprises (MSMEs) in Indonesia is one
of the priorities in national economic development. This is because businesses become the
backbone of people’s economic system, which is to not only reduce the gap issues among
income groups and business actors, or intended for poverty alleviation and labor absorption
(employment). Moreover, its development is able to intensify the economic basis and give a
significant contribution to improving the regional economy and national economic resilience.
These conditions and facts are in line with the results of the small empirical research
conducted by Demirbag et al. (2006), indicating that the success of small and medium
enterprises has a direct impact on the economic development in both developed and
developing countries. Micro Small and Medium Enterprises (MSMEs) have the ability to
create cooperation with a minimum cost. They are pioneers in the world of innovation and
have a high flexibility that enables the businesses to meet the consumers’ needs.
The contribution of Micro Small and Medium Enterprises (MSMEs) to the national
economy can be seen from several aspects, including from the aspects of business units,
labor absorption (employment), and the contribution of Gross Domestic Product (GDP).
Based on the data published by the Ministry of Cooperatives and Small and Medium
Enterprises in 2013, the contribution of MSMEs reached 57.895.721 or 99.99% of the total
number of business units. If reviewed from the aspect of labor absorption (employment), the
contribution of MSMEs in 2013 amounted to 114,144,082 people or approximately 96.99%.
Meanwhile, the contribution of Gross Domestic Product (GDP) in 2013 amounted to
5,440,007.9 billion or 60.34%. The data suggest that the MSMEs sector is one of the
important pillars of the national economy.

47
 RJOAS, 6(66), June 2017

Despite having a very important role in the economy of Indonesia, Micro Small and
Medium Enterprises (MSMEs) still face various external and internal issues such as: complex
legal and regulatory constraints, lack of access to external financing, low human resource
capacity, lack of management skills and training, and low technological capacity. This is in
line with the opinion of Urata (2000), stating that the problems faced by small businesses can
be grouped into two, namely financial and nonfinancial problems (business management).
The financial problems include (1) lack of compatibility (mismatch) between available funds
and the funds which can be accessed by small businesses; (2) the absence of a systematic
approach to funding small businesses; (3) high transaction costs, caused by complicated
credit procedures that take a lot of time while the amount of credit disbursed is very small; (4)
lack of funds access to formal fund sources, either caused by the absence of banks in
remote areas or the inadequate information; (5) high interest on loans for investment and
working capital; (6) the large number of small businesses that have not been bankable, either
due to the lack of transparent financial management or lack of managerial and financial
capabilities. In another side, the non-financial problems (business management) include: (1)
lack of knowledge of production technology and quality control, caused by the lack of
opportunities to follow technological developments and lack of education and training; (2)
lack of marketing knowledge, caused by the limited information on market that small
businesses can reach, and limited number of small businesses that can provide
products/services in accordance with market demands; (3) limitations and lack of skilled and
creative human resources; and (4) lack of small businesses' understanding of accounting
and finance.
Based on the problems stated above, MSMEs should be ready and prepared in
capturing every opportunity as well as develop it optimally. If viewed from the existing
perspective, the business opportunities must certainly be supported with a good performance
by companies. Glencey (1998) defined that a performance refers to the level of achievement
or attainment of a company within a certain period. The performance of a company is highly
crucial for the development of the company. The company’s goal is to maximize the value of
the company reflected in various performance measures. The performance of a small
business can be seen from the profitability and growth of the level of sales.
Jauch and Glueck (1998) explained that performance is the level of achievement or
attainment of a company within a certain period. A company’s performance is very influential
on the development of the company. The company objectives, including: to remain standing
or exist (survive), to gain profit (benefit), and to be able to develop or grow (growth), can be
achieved if the company has a good performance. The performance of a company can be
seen from the level of sales, profit levels, payback (return on capital), turnover rates, and
market share achieved. One of the factors that must be implemented before formulating the
goals and strategies applied in a company is environmental analysis and diagnosis. It is
difficult for corporate leaders to know the problems faced until it can eventually lead to
ineffective strategy formulation.
An effective planning serves to anticipate the negative things occurring or try to lead
the environment to a favorable direction. The environmental analysis carried out commonly
includes two things: the analysis of the external environment producing the images of
opportunity and threat that will be faced by a company and the analysis of the internal
environment creating the images of strength and weakness owned by a company. There are
many factors affecting the achievement of a small company, including internal and external
environmental factors. The success of the company depends on the company capability to
manage these two factors through the analysis of environmental factors as well as the
formation and implementation of business strategy. Internal challenges for MSMEs,
especially in its development, cover a broad aspect of improving the quality of human
resources, organizational-technological management capabilities, entrepreneurial
competence, wider access to capital, transparent market information, other production input
factors, and a healthy business climate that support innovation, entrepreneurship, business
practice and fair competition. The increased value of entrepreneurship, marketing, and
technological skills, as well as financial management will certainly improve the achievement

48
 RJOAS, 6(66), June 2017

or performance of the business. Similarly, the success of external factors, including social
networks, legality, government support, coaching, technology, and access to information will
be achieved if there is a correspondence between external and internal factors through the
application of appropriate means.
Based on the background and previous studies, the researcher has been interested
and intended to examine the influence of external and internal environmental factors on
business performance. This research was conducted on food and beverage MSMEs located
in Batu City. The purpose of this study was to analyze and explain what factors that might
affect business performance and what the impacts are given from the influence of external
and internal environmental factors on business performance.

THEORETICAL REVIEW

Definitions and Characteristics of MSMEs. Law No.20 of 2008 on Micro Small and
Medium Enterprises has provided a clear definition of each business. It is written in the Act
about who will carry out the business, capital limitations, and annual sales results. It is also
explained that a micro business refers to a productive business conducted by an individual
and/or business entity (enterprises) in accordance with the criteria of micro business as
regulated in the Law. In contrast, small businesses are stand-alone economic enterprises,
not a subsidiaries or branches of medium-sized or large-scale business, done by an
individual and/or business entity. Furthermore, medium-sized businesses are independent
economic enterprises, not subsidiaries or branches of companies and not cooperating with
small or large business entities with the total assets and turnovers as stipulated in the Law.
Micro Small and Medium Enterprises (MSMEs) are business units that continue to develop
until now. According to Law No.20 of 2008, Micro Small and Medium Enterprises (MSMEs)
aim to grow and expand its businesses in order to build a national economy based on a just
economic democracy. In Indonesia, there are different views on the definition of MSMEs
based on different perspectives such as the amount of assets/capital or the number of
employees. Based on Law No.20 of 2008 and the Central Bureau of Statistics (BPS), the
characteristics of MSMEs can be summed up as follows:

Table 1 – The Characteristics of MSMEs

Law No.20 of 2008 BPS
n/n
Total Net Worth/year Total Sales/Year Number of Employees
Micro < Rp. 50.000.000 < Rp. 300.000.000 < 4 employees
Small Rp. 50 – Rp. 500 M Rp. 300 – Rp. 2,5 M 5 – 19 employees
Medium Rp. 500– Rp. 10 M Rp. 2,5 M – Rp. 50 M 20 – 99 employees
Source: Law No. 20 of 2008 and BPS (2017).

Corporate Environment. Jones (1995) explained that corporate environment is a series

of resources that surrounds the company’s organization to support the business success in
facing competition. Strategic managers should be involved in environmental observations,
both of the internal environment (to know the strengths and weaknesses) and the external
environment (to see opportunities and threats that may occur). Crijns and Ooghi (2000)
revealed that each stage of company growth is the result of the two environments where the
company does its business, namely the internal and external environments that affect each
other. The important external factors influencing the company growth are industry, market,
competitors, and economic climate. While the internal factors that affect the growth of
company are the characteristics of entrepreneurs. This is in line with the research conducted
by Bouazza, et al. (2015), stating that the growth of SMEs in Algeria is hampered by several
interrelated factors, including the factors of the business environment that are beyond the
control of SMEs and internal factors of SMEs.
External Environment. Wheelen and Hunger (2001) described the external environment
as a power outside the company that has direct influence and interest to the company, such
as governments, trade unions, creditors, trade associations, shareholders, special interest

49
 RJOAS, 6(66), June 2017

groups, and the communities surrounding the company. This is in line with the views of
Pearce and Robinson (2014) and David (2009), stating that external environment is factors
beyond the control of a company that may affect the success of the company. Furthermore,
the results of the research conducted by Alkali and Isa (2012) indicated that external
environmental factors consist of access to capital and government supports, which have a
positive and significant influence on company performance. This suggests that access to
capital is highly important in running and developing business along with its impact on
company performance. In order to achieve the goals of a business, a company needs capital
to finance the business well. The statement is in accordance with the research results of
Bouazza et al. (2015), stating that some factors, including unhealthy competition of the
informal sectors; complicated procedures and bureaucracy; burdensome laws, policies and
regulation; inefficient tax systems; lack of access to external financing; and low human
resource capacity are the main external environmental factors, consisting of economic,
political, technological, and socio-cultural factors, have a positive and significant effect on
organizational performance.
Internal Environment. Pearce and Robinson (2014) argued that the experiences of
large and small companies show that an in-depth environmental understanding and internal
company assessment are very crucial in developing a company’s success. Considering that
the internal environment encompasses various aspects within a company, the analysis of the
internal environment should consider the strengths that laid the foundations for corporate
strategy. Wheelen and Hunger (2001) divided the internal environment into three important
categories: 1) structures – the way in which a company is organized in terms of
communication, authority, and workflow; 2) cultures – the pattern of beliefs, expectations,
and values shared with the members of an organization in which organizational norms
specifically conjure up and define the acceptable behaviors of the members of top managers
to operational employees; and 3) resources – the assets in the form of raw materials for
production process of goods/services contained in the organization of the company. In
another side, David (2009) divided the internal forces into six important categories, consisting
of the functions of management, marketing, financial/accounting, production and operation,
research and development, and management information system. If the various things in the
internal environment are done well, it will be very potential that the success of a strategy can
be achieved as desired by the company (Pearce and Robinson, 2014).
Duncan (1972) and Williams (2009) in Abolaji and Oni (2015) stated that the internal
environment of an organization consists of factors related to the firm that influences its ability
to achieve the stated objectives, and develop as well as implement feasible plans, which
consequently contribute to its performance. The internal environment can also be described
as internally controlled forces operating within the organization itself that has a direct impact
on organizational performance. This includes financial resources, information and
knowledge, corporate capabilities, incentives, organizational demographics such as the size
of inter-institutional relationship, corporate objectives, and employee skills (Freeman and
Reid, 2006 in Abolaji and Oni, 2015). Meanwhile, the research results of Bouazza et al.
(2015) indicated that entrepreneurial characteristics, low managerial skills, lack of marketing
skills, and low technological capacity are the major environmental factors affecting the
growth of SMEs in Algeria.
Business Performance. Jauch dan Glueck (1988) described that performance refers to
the level of achievement or attainment of a company within a certain period. The
performance of a company is crucial in the development of the company. The objectives of a
company, including: to remain standing or exist (survive), to gain profit (benefit), and to be
able to develop or grow (growth), can be achieved if the company has a good performance.
The performance of a company can be seen from the level of sales, profit levels, payback
(return on capital), turnover rates, and market share achieved.
Researchers have proposed the sales growth, employment growth, income growth,
and market share growth as the most important measurement of small enterprises
performance (Kim and Choi, 1994; 1996; Luo, 1999; Miles et al. 2000; Hadjimanolis 2000).
This is also based on an argument stating that growth is a more appropriate and accessible

50
 RJOAS, 6(66), June 2017

indicator than financial performance indicators. Another alternative opinion is that

performance is multidimensional and therefore it is useful to integrate different dimensions of
performance in an empirical study (Lumkin and Dess, 1996). It is appropriate to view
financial performance and growth as different aspects of performance, in which each has an
important and unique information. Together, financial growth and performance provide a
wider description of the company’s actual performance rather than using individual
measurements. In this study, performance measurements were performed using non-
financial measures.

CONCEPTUAL FRAMEWORK AND HYPOTHESIS

This study actually was aimed to explain the external and internal environmental
factors influencing the success and performance of companies, particularly Micro Small and
Medium Enterprises. Both external and internal environmental factors can directly affect the
performance or success of businesses, and indirectly affect the success of Micro Small and
Medium Enterprises (MSMEs).
Based on the theoretical review and the adjustment with the Micro Small and Medium
Enterprises examined, this research used the variable of internal environment factors,
including: entrepreneurship characteristic factor, management capacity, marketing skill, and
technology capacity. Meanwhile, the external environmental factors include legal and
regulatory framework, access to external financing, and human resource capacity. These
factors are considered relevant in conducting the study on Micro Small and Medium
Enterprises (MSMEs) in Batu City.

H H

External Internal
Environmental Environmental Business
Factors Factors Performance
H

Figure 1 – Model of Conceptual Framework and Hypothesis

Based on Figure 1, the statements of hypothesis used in this research are as follows:
H1: External Environmental Factors have a significant effect on Internal Environmental
Factors;
H2: External Environmental Factors have a significant effect on Business Performance;
H3: Internal Environmental Factors have a significant effect on Business Performance.

METHODS OF RESEARCH

The type of this research was explanatory with quantitative approach. The number of
samples examined was 108 MSMEs in the field of food and beverage in Batu City, Jawa
Timur (East Java) Province, Indonesia, by having the owners/managers as the target
respondents. The source of data obtained in conducting this research derived from primary
and secondary data. The primary data were directly obtained based on the respondents’
answers on the questionnaires distributed to the MSMEs examined. The measurements
were made using Likert Scale, in which the respondents’ answers of each statement were
given a score of 5 (for the highest value) up to 1 (for the lowest value). The questionnaires
obtained from the overall food and beverage MSMEs have been met and adjusted with the
needs of the research, thus it was feasible to be forwarded to the stage of data analysis.
The technique of data analysis used in this research was Partial Least Square (PLS)
with the analysis tool of SmartPLS 3.0. The data analysis with PLS consists of two stages:
evaluation of measurement model (outer model) and evaluation of structural model (inner
model).The outer model evaluation consists of three criteria, namely convergence validity,

51
 RJOAS, 6(66), June 2017

discriminant validity and composite reliability. In the calculation of convergent validity

criterion, the minimum loading factor was 0.50 (Chin, in Ghozali, 2011). Discriminant validity
was measured by comparing the square root of AVE for each construct with the correlation
value between constructs in the model. Good discriminant validity, namely the square root of
AVE, for each construct was greater than the correlation between constructs in the model. If
the value of AVE root is higher than the correlation value between the constructs, then it
means that good discriminant validity has been achieved. The next test for analyzing the
outer model was observing the construct reliability of the latent variable measured by two
criteria, namely composite reliability and Cronbach alpha of the indicator block measuring the
construct. The construct was considered reliable if the values of composite reliability and
Cronbach alpha value are above 0.70. Table 2 shows the output of composite reliability and
Cronbach alpha.

Table 2 – Composite Reliability and Cronbach Alpha

Variable AVE Composite Reliability Cronbachs Alpha
X1 0.7819 0.9149 0.8618
X2 0.7920 0.9383 0.9123
Y 0.8742 0.9329 0.8561
Source: PLS, 2017.
Note: X1= External Environmental Factors, X2= Internal Environmental Factors, Y1= Business Performance.

Based on the Table 2, it can be seen that the outer model had met the criterion of good
discriminant validity with the AVE value above 0.5 and the construct was declared reliable
because it had complied the value of composite reliability and cronbach alpha above 0.70.
Moreover, the inner model or structural model testing was performed to see the
relationship between the construct of significance value and R-square of the research model.
The structural model was evaluated by using R-square for the dependent construct of t-test
as well as the significance of the structural path parameter coefficients.

Source: SmartPLS (2017).

Figure 2 – Structural Model (Inner Model)

The testing on the structural model was done by knowing the R-square, which is the
goodness-fit model testing.

Table 3 – R-Square
Variable R Square
X2 0.4265
Y 0.6046
Source: PLS, 2017.

52
 RJOAS, 6(66), June 2017

Based on the table above, the value of R-square for Internal Environmental Factors
was 0.4265. The R-square value indicated that 42.65% of Internal Environmental Factors
variable (X2) could be influenced by internal environmental factors (X1). And the rest of
57.35% was influenced by other variables out of what was examined. The R-square value on
Business Performance of 0.6046 showed that Business Performance variable (Y) was
influenced by External Environmental Factors (X1) and Internal Environmental Factors (X2)
(60.46%), while the rest of 39.54% was influenced by other variables out of what was
examined.
Evaluation of PLS model was done with Q2 predictive relevance used to measure how
good the value of observation produced by the model and also its parameter estimation.
The value of Q2 predictive relevance can be obtained by this equality:
2 2 2
Value of Q = 1 – (1 – R ) x (1 – R )
2
Q = 1 – (1 – 0.4265) x (1 – 0.6046)
2
Q = 1 – 0.02267
2
Q = 0.7732

Based on the calculation, the model has a predictive relevance because the value of Q2
obtained was > 0, that was 0.7732 and it belongs to strong category (Ghozali, 2011).

RESULTS AND DISCUSSION

In PLS, the statistical testing of each relationship hypothesized was done by using
simulation. In this case, a method of bootstrap was performed on the sample. The testing
with bootstrap method was intended to minimize the abnormalization problem of the data
research. The results of the testing with bootstrapping of the PLS analysis is as follows:

Table 4 – Path Coefficient (Mean, STDEV, T-Values)

Variable Original Standard Deviation T-Statistics
Relationship Sample (O) (STDEV) (|O/STERR|)
X1 -> X2 0.6531 0.084 7.7737
X1 -> Y 0.2398 0.0853 2.8128
X2 -> Y 0.5994 0.0892 6.7187
Source: PLS (2017).

The estimated parameter significance provided a very beneficial information on the

relationship between the variables of the research. The standard used in examining the
hypothesis was the value existing in output result for inner weight. The hypothesis testing
could be conducted by comparing t-statistic to t-table. T-table could be obtained from 108
respondents from whom t-table of 1.960 was obtained. Thus, it can be concluded that the
analysis results of the hypothesis testing are that H1, H3, and H3 are accepted.
Inferential Statistics Analysis. The results of the hypothesis testing with SmartPLS that
has been done in the previous indicate that all of the 3 hypotheses proposed in this research
are accepted. Here is the detail explanation:
Effect of External Environmental Factors on Internal Environmental Factors.
The results of the statistical tests showed that the t-statistical value of the influence of
external environmental factors on internal environmental factors was 7.7737. The test results
showed that the t-statistics > 1,960. Meanwhile, the coefficient of external environmental
factors path and internal environment factors was equal to 0,6531, meaning that external
environment factors had a positive and significant effect of internal environment factors. That
is, the better external environmental factors will influence the business performance through
internal environmental factors. The results of this study are in line with the theory put forward
by Pearce and Robinson (2008), stating that external environment is a factor outside the
control of a company which can influence the choice of direction and action, organizational
structure and internal processes of the company. The results of this research and theory are

53
 RJOAS, 6(66), June 2017

also reinforced by the results of previous research, stating that a good external environment
will positively influence the internal environment and the results will have an impact on the
business performance improvement (Minzu, 2010). Similarly, the results found by Wilkinson
(2002) and Bouazza, et al. (2015) suggested that external environmental factors have an
effect on internal environmental factors and also on the growth and performance of SMEs.
That is, if the external and internal environmental factors can be utilized and managed
optimally, it will be an opportunity for MSMEs to develop the business and eventually result in
a success that is the improved performance of the business itself.
Effect of External Environmental Factors on Business Performance. The results of the
statistical test with SmartPLS which examined the relation between external environment
factor to business performance showed that the path coefficient test was 0.2398 and
t-statistic was equal to 2,8128 which was bigger than t-table (1,960) and significant or
p ≤ 0,05%. These results indicated that external environmental factors had a significant
positive effect on business performance. That is, the better the external environment is, the
better the business performance will be. It shows that MSMEs Food and Beverage in Batu
City have an external environment that supports the business performance. The greater
support from the government in the form of regulation/pro-business policy could make the
access to external funding (in this case, the easiness in obtaining capital from financial
institution/banks and capacity of skilled human resources) have an impact on the
improvement of Food and Beverage business performance in Batu City. The results of this
research support the previous studies, showing that external environmental factors affect
business performance (Banham, 2010; Alkali & Isa, 2012; Bouazza, et al., 2015; and Kraja &
Osmani, 2015).
Effect of Internal Environmental Factors on Business Performance. The results of the
third hypothesis test regarding the influence of the internal environmental factors on business
performance showed that the path coefficient of 0.5994 and the t-statistics of 6.7187 were
greater than t-table (1,960) and significant or p ≤ 0.05%. These results indicated that internal
environmental factors had a significant positive effect on business performance. It showed
that MSMEs Food and Beverage in Batu City had a good internal environment in supporting
business performance. Therefore, the better the owners/managers of the businesses
execute the management capacity, the product promoting, and the utilization and use of
technology in improving production efficiency, the more positive the impact on the
improvement of Food and Beverage business performance in Batu City will be. The results of
this study are in line with the results of the previous studies, revealing that internal
environmental factors have a positive and significant influence on business performance
(Sidika, 2012; Aylin, et al. 2013; and Kraja & Osmani, 2015; Abolaji and Oni, 2015; Bouazza
et Al., 2015). The results indicate that internal environmental factors can improve business
performance.
Research Limitations. The researcher realizes that, in the implementation of this
research, there are some obstacles and limitations, including:
The data used in this research were the data obtained from the owners/managers of
food and beverage MSMEs, in which the respondents' answers considered appropriate with
the respondents’ measures possibly have not yet reflected the variables that have not been
studied. Nevertheless, the researcher had tried to give the appropriate statements and made
it easier for the respondents to understand them, so that the best answers to reflect the
variables studied (external environmental factors, internal environment factors, and business
performance) could be achieved.
This research took only one type of sectors of Micro Small and Medium Enterprises
namely sector of food and beverage business, so the generalization result of this research is
limited.
The lack of theoretical review or reference of previous studies related to the effect of
external environment factors on internal environment factors of MSMEs has made the
researcher difficult to relate the results of this research with the previous studies.

54
 RJOAS, 6(66), June 2017

CONCLUSION AND SUGGESTIONS

The conclusions that can be drawn from the results of the analysis and discussion in
the previous section, as well as the relevance to the research objectives, are as follows:
1. The results of the analysis indicate that external environmental factors have a
positive significant effect on internal environmental factors on MSMEs of Food and Beverage
in Batu City. Legal and regulatory framework, access to external funding, and human
resource capacity are the factors of the external environment found to have a significant
influence on internal environmental factors.
2. The external environmental factors have a significant and positive influence on the
business performance of Food and Beverage MSMEs in Batu City. The factors found to
affect the business performance include the legal and regulatory framework, access to
external funding, and human resource capacity. The better the management of external
environmental factors is, the greater level of business performance of Food and Beverage in
Batu City will be.
3. The results of the analysis indicate that the internal environmental factors positively
and significantly affect the business performance in MSMEs of Food and Beverage in Batu
City. The entrepreneur characteristics, management capacity, marketing skills and
technological capacity are the factors of internal environment that are found to have a
significant effect on the business performance.
Based on the conclusion section, here are some suggestions expected to be carried
out for both practical interests and further research development:
1. For the government, the determined regulations should be directed to policies that
are pro-business of Micro Small and Medium Enterprises (MSMEs). The facilities and
mediation conducted by the government in providing convenience to entrepreneurs should
be focused on the ease of access to finance/capital resources, technical and managerial
training, ease of business license attainment, availability of business centers/locations and
market information.
2. For owners or managers of Micro Small and Medium Enterprises (MSMEs), they
need to increase the competence of entrepreneurship in order to be able to face competition.
With a maximum competence, it is expected that MSMEs can achieve better performance so
that they can still exist in any environmental conditions.
3. For further researchers, it is expected that the future studies can be done with a
developed model, by adding other variables that can influence the performance of food and
beverage MSMEs, as well as examine different objects.

REFERENCES

1. Abolaji, O. & Oni, I. (2015). The Effect of Internal Environment on the Performance of
Small and Medium Scale Enterprise in Kano Metropolis.International Journal of
Management and Commerce Innovations. ISSN:2348-7585, Vol.3.
2. Alkal, M. and Isa, A.H.M. 2012. Assessing the Influence of External Environmental
Factors, on the Performance of Small Business Manufacturing enterprises in Bauchi
state, Nigeria. Vol 4, No. 7
3. Banham, H.C. (2010). External Environmental Analysis For Small and Medium
Enterprises (SMEs). Journal of Business & Economics Research, Vol 8, No 10.
4. Bouazza, A.B., Ardjouman, D., Abada, O. (2015). Establishing the Factors Affecting the
Growth of Small and Medium-sized Enterprises in Algeria. American International
Journal. Vol. 4, No. 2.
5. Crijns, H. & Ooghi, M. 2000, Growth Paths of Medium Sized Entrepreneurial Companies.
De Vlerick School Voor Management, University of Ghent.
6. David, F.R. 2009. ManajemenStrategis. Konsep, Edisi 12, Terjemahan oleh Dono
Sunardi, Salemba Empat, Jakarta.
7. Demirbag, M., Tatoglu, E., Tekinkus, M. and Zaim, S. 2006. An Analysis of the
Relationship Between TQM Implementation and Organizational Performance: Evidence

55
 RJOAS, 6(66), June 2017

From Turkish SMEs.Journal of Manufacturing TechnologyManagement, Vol. 17 No. 6,

pp. 829-47.
8. Ghozali, I. 2011.Structural Equation Modeling Metode Alternatif dengan Partial Least
SquareEdisi 3”. Badan Penerbit Undip.,Semarang.
9. Jauch L.R. and Glueck W.F. 1998. Business Policy and Strategic Management, McGraw
Hill, New York.
10. Jones, G.R. 1995. Organizational Theory: Text and Cases. Addision-Wesley Publishing
Company, Inc. New York.
11. Munizu, M 2010. Pengaruh Faktor-Faktor Eksternal dan Internal Terhadap Kinerja Usaha
Mikro dan Kecil (UMK) di Sulawesi Selatan.Jurnal Manajemen dan Kewirausahaan, Vol.
12. No. 1, 33-41.
12. Pearce, J.A. & Richard, R.B. 2008. Strategic Managemen. Penerbit Salemba Empat.
McGraw Hill. Jakarta
13. Tambunan Tulus, 2008. SME Development, Economic Growth, and Goverment
Intervention in A Developing Country: The Indonesian Story. Journal of International
Entrepreneurship. Vol. 6: 147-167.
14. Urata, S. 2000. Policy Recommendation for SME Promotion in the Republicof Indonesia.
Japan International Coorporation Agency.
15. Utami, R.M. and Lantu, D.C. 2014. Development Competitiveness Model For Small-
Medium Enterprises among the Creative Industri In Bandung. Procedia-Social and
Behavioral Sciences Vpl. 115 305-323.
16. Wilkinson, B. 2002. Small, Micro and Medium Enterprise Development:Expanding the
Option for Debt and Equity Finance. Financial Sector Workshop, National Economic
Development and Labour Council (NEDLAC). Johanesburg, South Africa, Iris, April 6.
17. Wheelen, T. L. & Hunger, J D. (2001). Strategic Management and Business Policy (10th
ed). New Jersey: Prentice-Hall International.

56