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Examining network characteristic dynamics of kinship-based families on performance within Indonesian SMEs

Hardo Firmana Given Grace Manik (Department of Management, Faculty of Business, Duta Wacana Christian University, Yogyakarta, Indonesia)
Nurul Indarti (Department of Management, Faculty of Economics and Business, Universitas Gadjah Mada, Yogyakarta, Indonesia)
Andy Susilo Lukito-Budi (Faculty of Economics and Business, Universitas Gadjah Mada, Yogyakarta, Indonesia and Faculty of Economics and Business, Atma Jaya Catholic University of Indonesia, Jakarta, Indonesia)

Journal of Enterprising Communities: People and Places in the Global Economy

ISSN: 1750-6204

Article publication date: 11 February 2021

Issue publication date: 6 February 2023

451

Abstract

Purpose

This study aims to examine the moderating effect of firm age and size on the relationship between network characteristics (network centrality, network density and tie strength) and firm performance. This study also aims to investigate the difference in the effect of network characteristics on the firm performance of Javanese and Minang ethnic enterprises.

Design/methodology/approach

An explanatory research design was adopted, which involved a survey in the form of a structured questionnaire of target owners and managers of 34 Javanese ethnic enterprises in North Sumatra, Indonesia and 100 Minang ethnic enterprises in Yogyakarta, Central Java, Jakarta and Bogor, Indonesia. The data is analysed using structural equation modelling.

Findings

The findings of this study confirm resource dependency and social capital theory. Network centrality, network density and tie strength have a significant effect on firm performance. The results also show support for the moderating role of firm age on the relationship between network characteristics and firm performance. The moderating role of firm size is not supported. The comparative test of the influence of the three network characteristics on ethnic enterprise performance confirms that Javanese ethnic enterprises have identity-based networks, while Minang ethnic enterprises use calculative-based networks.

Originality/value

The originality of this study lies in the investigation of the role of family and external partners in the running of ethnic enterprises at start-up and during the growth phase. The definition of “family” is based on a kinship perspective due to the specificity of Asian cultures, particularly in Indonesia. Of the hundreds of tribes in Indonesia, the Javanese and Minang were chosen because both are well-known as entrepreneurial tribes, have unique cultural values and have active migrants to other provinces.

Keywords

Acknowledgements

This work is supported by the Indonesia Endowment Fund for Education and a department research grant from the Faculty of Economics and Business, Universitas Gadjah Mada. The authors declare that there is no conflict of interest.

Citation

Manik, H.F.G.G., Indarti, N. and Lukito-Budi, A.S. (2023), "Examining network characteristic dynamics of kinship-based families on performance within Indonesian SMEs", Journal of Enterprising Communities: People and Places in the Global Economy, Vol. 17 No. 1, pp. 72-97. https://doi.org/10.1108/JEC-03-2020-0021

Publisher

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Emerald Publishing Limited

Copyright © 2021, Emerald Publishing Limited

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