Analysis of the uncertainty sources and SMEs’ performance

Abstract

The objective of this paper is to explore uncertainty sources which influence SMEs performance. A framework of uncertainty sources from previous literature was tested against empirical data based on a hundred and two SMEs operating in clothing/textile and leather industry in Indonesia. The data was collected through survey. Structural Equation Modelling (SEM) was applied to test the theoretical framework against the empirical data. The results indicate that the framework receives reasonably support from the data. The study demonstrates that the uncertainty related to product specification seems to be the highest uncertainty perceived by SMEs. The structural model reveals that both the internal supply chain and external uncertainties significantly impact SMEs performance, whereas internal organization uncertainty gives a non-significant impact. By understanding uncertainty sources impacting SMEs performance, SMEs could identify the root causes and formulate appropriate strategies to minimize and mitigate uncertainties, rather than perform reactive interventions based on current conditions.

RÉSUMÉ

L’objectif de cet article est d’explorer les sources d’incertitude qui influencent la performance des PME. Un cadre de sources d’incertitude déterminé à partir de recherches antérieures a été testé par rapport à des données empiriques provenant de cent-deux PME opérant dans l’industrie de l’habillement et du textile, et celle du cuir en Indonésie. Les données ont été recueillies par le biais d’une enquête. La modélisation par équations structurelles (SEM) a été appliquée pour tester le cadre théorique par rapport aux données empiriques. Les résultats indiquent que le cadre est raisonnablement soutenu par les données. L’étude démontre que l’incertitude liée à la spécification du produit semble être la plus forte perçue par les PME. Le modèle structurel révèle que tant la chaîne d’approvisionnement interne que les incertitudes externes ont un impact significatif sur la performance des PME, tandis que l’incertitude de l’organisation interne a un impact non-significatif. En comprenant les sources d’incertitude qui affectent la performance des PME, ces dernières pourraient identifier les causes profondes et formuler des stratégies appropriées pour minimiser et atténuer les incertitudes, plutôt que procéder à des interventions réactives basées sur les circonstances actuelles.

Keywords:

• Uncertainty sources
• SMEs
• empirical study
• developing economy

MOTS-CLÉS:

• sources d’incertitude
• PME
• étude empirique
• pays en développement

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Notes on contributors

Bertha Maya Sopha

Bertha Maya Sopha is an Associate Professor at the Industrial Engineering Program, Department of Mechanical and Industrial Engineering, Universitas Gadjah Mada (UGM), Indonesia, where she is currently a director of the Industrial Engineering Undergraduate Program. Her expertise includes supply chain engineering (i.e. humanitarian logistics, city logistics, and SCM practices in SMEs), complex system modeling and simulation, and industrial ecology. Her educational backgrounds are a master’s degree from the Division of Transportation and Logistics, Department of Industrial Economics and Technology Management, Chalmers University of Technology, Sweden, and a Ph.D. from the Industrial Ecology Programme, Norwegian University of Science and Technology (NTNU), Norway.

Ferry Jie

Ferry Jie is the Associate Professor in Supply Chain and Logistics Management, in the School of Business and Law, Commerce Discipline. In addition, Ferry is a Deputy Director, Centre for Innovative Practice. Associate Professor Ferry Jie has maintained a high quality of research throughout his academic career including international scholarly leadership in the areas of supply chain management and logistics, including being invited to be keynote speaker and to give public lectures at symposiums and international conferences in Indonesia, Malaysia, Vietnam, China, UK and Australia. From 2013 to 2018, Dr Jie has published 33 refereed journal articles (including 8 (eight) articles in A Ranked Journal - ABDC Journal Lists) and 20 refereed conference papers. Furthermore, Dr Jie has received research grants/awards to the amount of $1,304,604.07 between 2010 and 2018. Dr Jie has professional and community engagement activities to contribute significantly to improve the university’s reputation through contribution to the wider community.

Maira Himadhani

Maira Himadhani is a former research assistant who was involved in the research project of the practices of supply chain principles in Indonesian SMEs under the supervision of Prof. Sopha.