How is the Impact of Networking, Government Support, and Resources on Micro-Enterprises Near the Train Station
Main Article Content
Micro, Small, and Medium Enterprises (MSMEs) in Indonesia contribute 60.5% to the national GDP and employ 96.9% of the workforce, positioning them as the cornerstone of the national economy. Strengthening MSME performance is thus critical to accelerating economic development and escaping the middle-income trap on the path toward Golden Indonesia 2045. This research aims to explore the extent to which MSME network structures (density and centrality) enhance access to government support and, in turn, optimize organizational resources and performance. A quantitative research approach was employed, targeting micro-enterprises operating near train stations in major Indonesian cities (Jakarta–Bogor and Medan). Data were collected from 130 eligible respondents through an online survey. Hypotheses were tested using structural equation modeling with SmartPLS. The findings reveal that network centrality has a positive and significant effect on access to government support, while network density does not. Government support significantly influences resource optimization, which in turn strongly affects MSME performance. However, the direct effects of network density, network centrality, and government support on performance are insignificant, indicating that resource optimization mediates the relationship. These findings suggest that MSMEs should focus on strengthening their centrality within networks, rather than relying solely on communal ties, to secure government support that enhances resource utilization and performance outcomes. Policymakers are advised to design support programs that are accessible, needs-based, and complemented by capacity-building initiatives.
Keywords:
Government Support, MSME Performance, MSME Resources, Network Centrality, Network Density
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Folmer, E., Nederveen, C., & Schutjens, V. (2018). Network importance and use: commercial versus social enterprises. Social Enterprise Journal, 14(4), 470–490.
Geringer, J. M., & Hebert, L. (1991). Measuring performance of international joint ventures. Journal of International Business Studies, 22(2), 249–263.
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Hammarfjord, M., & Roxenhall, T. (2017). The relationships between network commitment, antecedents, and innovation in strategic innovation networks. International Journal of Innovation Management, 21, 1750037.
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Hara, M. (2025). Sustainable business and global supply chains in ASEAN: Escaping the middle-income trap. American Journal of Business Science Philosophy, 181–199.
Ibarra, H. (1993). Network Centrality, Power, and Innovation Involvement: Determinants of Technical and Administrative Roles. Academy of Management Journal, 36(3), 471–501.
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Koka, B. R., & Prescott, J. E. (2008). Designing alliance networks: the influence of network position, environmental change, and strategy on firm performance. Strategic Management Journal, 29(6), 639–661.
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Naude, P., Zaefarian, G., Tavani, Z. N., Neghabi, S., & Zaefarian, R. (2014). The influence of network effects on SME performance. Industrial Marketing Management, 43(4), 630–641.
Neneh, B. N. (2018). Customer orientation and SME performance: the role of networking ties. African Journal of Economic and Management Studies, 9(2), 178–196.
Pakpahan, H. T., Kurniasih, S., Fauziah, A., Eka, A. P. B., Tahir, M. I., Andayani, Q., Fachri, A., Sumartono, E., & Budaraga, I. K. (2024). Konsep Pemberdayaan Masyaraka. CV Hei Publishing Indonesia.
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Ratten, V. (2014). Future research directions for collective entrepreneurship in developing countries: a small and medium-sized enterprise perspective. International Journal of Entrepreneurship and Small Business, 22(2), 266–274.
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Schreiner, M., Kale, P., & Corsten, D. (2009). What really is alliance management capability and how does it impact alliance outcomes and success? Strategic Management Journal, 30(13), 1395–1419.
Scott, M. (2010). Job creation versus job shedding and the role of SMEs in economic development. African Journal of Business Management, 4(11), 2288–2295.
Sekaran, U., & Bougie, R. (2016). Research Methods for Business: A Skill-Building Approach. In Leadership & Organization Development Journal (Vol. 34, Issue 7). https://doi.org/10.1108/lodj-06-2013-0079
Sheng, S., Zhou, K. Z., & Li, J. J. (2011). The effects of business and political ties on firm performance: Evidence from China. Journal of Marketing, 75(1), 1–15.
Shoham, A., & Ruvio, A. (2008). Opinion leaders and followers: a replication and extension. Psychology & Marketing, 25(3), 280–297. https://doi.org/10.1002/mar.20209
Smallbone, D., & Welter, F. (2001). The role of government in SME development in transition economies. International Small Business Journal: Researching Entrepreneurship, 19(4), 63–77.
Tambunan, T. (2008). SME development, economic growth, and government intervention in a developing country: the Indonesian story. Journal of International Entrepreneurship, 6(4), 147–167.
Tatham, R. L., Anderson, R. E., Babin, B. J., Black, W. C., & Hair, J. F. (2006). Multivariate Data Analysis (6th ed.).
Thongsri, N., & Chang, A. K. H. (2019). Interactions among factors influencing product innovation and innovation behavior: Market orientation, managerial ties, and government support. Sustainability, 11(10), 2793.
Tseng, C. Y., Lin, S. C., Pai, D. C., & Tung, C. W. (2016). The relationship between innovation network and innovation capability: A social network perspective. Technology Analysis & Strategic Management, 28(9), 1029–1040.
Wang, M. C., & Fang, S. C. (2012). The moderating effect of environmental uncertainty on the relationship between network structures and the innovative performance of a new venture. Journal of Business & Industrial Marketing.
Yin, Y., Yan, M., & Zhan, Q. (2022). Crossing the valley of death: Network structure, government subsidies and innovation diffusion of industrial clusters. Technology in Society, 71, 102119. https://doi.org/10.1016/j.techsoc.2022.102119
Zulu-Chisanga, S., Chabala, M., & Mandawa-Bray, B. (2020). The differential effects of government support, inter-firm collaboration and firm resources on SME performance in a developing economy. Journal of Entrepreneurship in Emerging Economies, 13(2), 175–195. https://doi.org/10.1108/jeee-07-2019-0105
Agyemang, O. S., & Ansong, A. (2017). Corporate social responsibility and firm performance of Ghanaian SMEs. Journal of Global Responsibility, 8(1), 47–62.
Boso, N., Story, V. M., & Cadogan, J. W. (2013). Entrepreneurial orientation, market orientation, network ties, and performance: study of entrepreneurial firms in a developing economy. Journal of Business Venturing, 28(6), 708–727.
Christoffersen, J., Plenborg, T., & Robson, M. J. (2014). Measures of strategic alliance performance, classified and assessed. International Business Review, 23(3), 479–489.
Cooper, D. R., & Schindler, P. S. (2014). Business Research Methods. McGraw-Hill Education.
Crona, B., & Bodin, O. (2006). What You Know is Who You Know? Communication Patterns among Resource Users as a Prerequisite For Co-Management. Ecology and Society, 11(2), 7.
Desai, D. A., & Shaikh, A. J. A. (2018). Reducing failure rate at high voltage (HV) testing of insulator using six sigma methodology. International Journal of Productivity and Performance Management.
Doh, S., & Kim, B. (2014). Government support for SME innovations in the regional industries: The case of government financial support program in South Korea. Research Policy, 43(9), 1557–1569.
Folmer, E., Nederveen, C., & Schutjens, V. (2018). Network importance and use: commercial versus social enterprises. Social Enterprise Journal, 14(4), 470–490.
Geringer, J. M., & Hebert, L. (1991). Measuring performance of international joint ventures. Journal of International Business Studies, 22(2), 249–263.
Gilsing, V., Nooteboom, B., Vanhaverbeke, W., Duysters, G., & van den Oord, A. (2008). Network embeddedness and the exploration of novel technologies: technological distance, betweenness centrality and density. Research Policy, 37(10), 1717–1731.
Gnyawali, D. R., & Madhavan, R. (2001). Cooperative networks and competitive dynamics: A structural embeddedness perspective. Academy of Management Review, 26(3), 431–445.
Gomes, C. K., Ferreira, I. M., Guedes, C. N., & Rodrigues, R. C. (2020). Renal involvement in leptospirosis: An overview. Revista Do Instituto de Medicina Tropical de São Paulo, 62, e35.
Guan, J., & Yam, R. C. (2015). Effects of government financial incentives on firms’ innovation performance in China: Evidences from Beijing in the 1990s. Research Policy, 44(1), 273–282.
Hair, J. F., Ringle, C. M., & Sarstedt, M. (2013). Partial least squares structural equation modeling: Rigorous applications, better results and higher acceptance. Long Range Planning, 46(1–2), 1–12.
Hammarfjord, M., & Roxenhall, T. (2017). The relationships between network commitment, antecedents, and innovation in strategic innovation networks. International Journal of Innovation Management, 21, 1750037.
Han, Y. J., Chung, J. Y., Son, J. S., & Kwon, S. J. (2017). The effects of the innovation types of venture firms and government support on firm performance and new job creation: Evidence from South Korea. Academy of Strategic Management Journal.
Hara, M. (2025). Sustainable business and global supply chains in ASEAN: Escaping the middle-income trap. American Journal of Business Science Philosophy, 181–199.
Ibarra, H. (1993). Network Centrality, Power, and Innovation Involvement: Determinants of Technical and Administrative Roles. Academy of Management Journal, 36(3), 471–501.
Kang, K. N., & Park, H. (2012). Influence of government R&D support and inter-firm collaboration on innovation in Korean biotechnology SMEs. Technovation, 32(1), 68–78.
Koka, B. R., & Prescott, J. E. (2008). Designing alliance networks: the influence of network position, environmental change, and strategy on firm performance. Strategic Management Journal, 29(6), 639–661.
Kongolo, M. (2010). Job creation versus job shedding and the role of SMEs in economic development. African Journal of Business Management, 4(11), 2288–2295.
Krasniqi, B., & Branch, D. (2018). Institutions and firm growth in a transitional and post-conflict economy of Kosovo. Journal of Entrepreneurship in Emerging Economies, 12(2), 187–204.
Kumagai, S., & Nakamura, M. (2026). Economic Development Strategies: Insights from Malaysia on Overcoming the’Middle-Income Trap’. Springer Nature.
Lind, D. A., Marchal, W. G., & Mason, R. D. (2002). Statistical Techniques in Business and Economics: With PowerWeb. McGraw-Hill/Irwin.
Lu, Y., Zhou, L., Bruton, G., & Li, W. (2010). Capabilities as a mediator linking resources and the international performance of entrepreneurial firms in an emerging economy. Journal of International Business Studies, 41(3), 419–436.
Luo, X., & Sun, Y. (2015). On the relationship between the structure of innovation diffusion network structure and the innovation diffusion performance. Science and Technology Progress and Policy, 32(8).
Nakku, V. B., Agbola, F. W., Miles, M. P., & Mahmood, A. (2020). The interrelationship between SME government support programs, entrepreneurial orientation, and performance: a developing economy perspective. Journal of Small Business Management, 58(1), 2–31.
Naude, P., Zaefarian, G., Tavani, Z. N., Neghabi, S., & Zaefarian, R. (2014). The influence of network effects on SME performance. Industrial Marketing Management, 43(4), 630–641.
Neneh, B. N. (2018). Customer orientation and SME performance: the role of networking ties. African Journal of Economic and Management Studies, 9(2), 178–196.
Pakpahan, H. T., Kurniasih, S., Fauziah, A., Eka, A. P. B., Tahir, M. I., Andayani, Q., Fachri, A., Sumartono, E., & Budaraga, I. K. (2024). Konsep Pemberdayaan Masyaraka. CV Hei Publishing Indonesia.
Pan, X. F., Ming, Y., Li, M. N., Guo, S. C., & Han, C. C. (2019). Inter-regional innovation correlation effects and influencing factors in China. Business Process Management Journal, 26, 925–941.
Phelps, C. C. (2010). A longitudinal study of the influence of alliance network structure and composition on firm exploratory innovation. Academy of Management Journal, 53(4), 890–913.
Poole, D. L. (2018). Entrepreneurs, entrepreneurship and SMEs in developing economies: how subverting terminology sustains flawed policy. World Development Perspectives, 9, 35–42.
Ratten, V. (2014). Future research directions for collective entrepreneurship in developing countries: a small and medium-sized enterprise perspective. International Journal of Entrepreneurship and Small Business, 22(2), 266–274.
Savitri, C., Faddila, S. P., Irmawartini, I., Iswari, H. R., Anam, C., Syah, S., Mulyani, S. R., Sihombing, P. R., Kismawadi, E. R., Pujianto, A., Mulyati, A., Astuti, Y., Adinugroho, W. C., Imanuddin, R., Kristia, K., Nuraini, A., & Siregar, M. T. (2021). Statistik Multivariat Dalam Riset. CV Widina Media Utama.
Schreiner, M., Kale, P., & Corsten, D. (2009). What really is alliance management capability and how does it impact alliance outcomes and success? Strategic Management Journal, 30(13), 1395–1419.
Scott, M. (2010). Job creation versus job shedding and the role of SMEs in economic development. African Journal of Business Management, 4(11), 2288–2295.
Sekaran, U., & Bougie, R. (2016). Research Methods for Business: A Skill-Building Approach. In Leadership & Organization Development Journal (Vol. 34, Issue 7). https://doi.org/10.1108/lodj-06-2013-0079
Sheng, S., Zhou, K. Z., & Li, J. J. (2011). The effects of business and political ties on firm performance: Evidence from China. Journal of Marketing, 75(1), 1–15.
Shoham, A., & Ruvio, A. (2008). Opinion leaders and followers: a replication and extension. Psychology & Marketing, 25(3), 280–297. https://doi.org/10.1002/mar.20209
Smallbone, D., & Welter, F. (2001). The role of government in SME development in transition economies. International Small Business Journal: Researching Entrepreneurship, 19(4), 63–77.
Tambunan, T. (2008). SME development, economic growth, and government intervention in a developing country: the Indonesian story. Journal of International Entrepreneurship, 6(4), 147–167.
Tatham, R. L., Anderson, R. E., Babin, B. J., Black, W. C., & Hair, J. F. (2006). Multivariate Data Analysis (6th ed.).
Thongsri, N., & Chang, A. K. H. (2019). Interactions among factors influencing product innovation and innovation behavior: Market orientation, managerial ties, and government support. Sustainability, 11(10), 2793.
Tseng, C. Y., Lin, S. C., Pai, D. C., & Tung, C. W. (2016). The relationship between innovation network and innovation capability: A social network perspective. Technology Analysis & Strategic Management, 28(9), 1029–1040.
Wang, M. C., & Fang, S. C. (2012). The moderating effect of environmental uncertainty on the relationship between network structures and the innovative performance of a new venture. Journal of Business & Industrial Marketing.
Yin, Y., Yan, M., & Zhan, Q. (2022). Crossing the valley of death: Network structure, government subsidies and innovation diffusion of industrial clusters. Technology in Society, 71, 102119. https://doi.org/10.1016/j.techsoc.2022.102119
Zulu-Chisanga, S., Chabala, M., & Mandawa-Bray, B. (2020). The differential effects of government support, inter-firm collaboration and firm resources on SME performance in a developing economy. Journal of Entrepreneurship in Emerging Economies, 13(2), 175–195. https://doi.org/10.1108/jeee-07-2019-0105
