JRSSEM 2023, Vol. 02, No. 6, 1108 – 1121

E-ISSN: 2807 - 6311, P-ISSN: 2807 - 6494

DOI : 10.36418/jrssem.v2i06.366 https://jrssem.publikasiindonesia.id/index.php/jrssem

THE EFFECT OF SOCIAL NETWORK ON PARTNERSHIP

PROGRAMS AND MSMES PERFORMANCE

Junaidi

Zulkarnain Lubis

Ihsan Effendi

University of Medan Area, Indonesia

e-mail: junaidisp87@gmail.com, zulkarnainlubis@gmail.com, ihsaneffen[email protected]

*Correspondence: junaidisp87@gmail.com

Submitted

: 29

December 2022

Revised

: 16

Januaery 2023

Accepted

: 25

January 2023

Abstract: The goal of this research is to determine the influence of social networks on the

partnership program and the performance of SMEs and the role of the partnership program in

mediating the social network on the performance of MSMEs. Concerning the study's population,

MSMEs assisted at PTPN III, a total of 243 MSMEs business actors were declared successful in

MSMEs development. A saturated canoe was used as the sampling method. As a result, the sample

size for this study is 243 MSMEs business actors. The information was gathered using a

questionnaire tailored to each variable indicator item. Structural Equation Modeling with Amos was

used for data analysis. The findings revealed that social network has a significant impact on the

partnership program and MSMEs' performance; partnership program has a direct and significant

impact on the MSME's performance; partnership program has a significant indirect influence on

the performance of MSMEs by mediating social networks.

Keywords: Social Network, Partnership Programs, MSMEs Performance, PTPN III, Structural

Equation Modelling.

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Zulkarnain Lubis

Ihsan Effendi

| 1109

INTRODUCTION

In recent years, the government has

begun to take an approach that encourages

the formation of collaboration between the

government and entrepreneurs in relation

to the government's partnership policy. In

many things can be done collaboratively by

the government and entrepreneurs

through various programs. A government-

business partnership is a type of

cooperation between the government and

the business sector that allows them to

share common resources, risks, and

benefits aimed at changing existing

environmental practices with innovative

findings (Lin, 2019).

The role of MSMEs in a nation's

economy cannot be overstated; micro,

small, and medium enterprises (MSMEs)

play an important role in economic

development and growth, not only in

developing countries but also in developed

countries. MSMEs are very important in

developed countries not only because they

absorb the most labor compared to large

businesses, as is the case in developing

countries, but also because in many

countries their contribution to the

formation or growth of gross domestic

product (GDP) is greater than that of large

businesses (Franco & Haase, 2020).

Because of the large potential for

developing MSMEs, many MSMEs have

emerged that are managed in an

unprofessional, particularly from a

managerial standpoint. As a result, many

MSMEs underperformed and went

bankrupt. The performance of MSMEs is

the result or evaluation of the company's

work accomplished by a person or group

with the division of activities in the form of

tasks and roles over a specific time period

in accordance with the company's

standards (Mutegi et al., 2015). However,

the performance of MSMEs has not been

able to achieve maximum results thus far,

particularly for failed assisted MSMEs.

Around 15% of MSMEs are

mismanaged, causing their businesses to

fail; failing to focus on the type of business

they are engaged in contributes to MSMEs'

failure. Furthermore, many MSMEs

managers change business types solely

because they are enticed by the success of

other MSMEs (Hasanuddin, 2009). Thus,

considering the strategic role of MSMEs

and their limited ability to develop, MSMEs

should not be managed with the origin and

without good management (Hendratmoko,

2021). Partnerships between MSMEs and

programs aimed at business continuity,

improving resource quality, increasing

partner income and income, and increasing

business scale in order to grow and

improve partner groups' business

capabilities.

This pattern of collaboration is one

solution for improving the performance of

MSMEs (Wulandari & Nadapdap, 2020).

One factor influences the performance of

MSMEs, and that is the partnership

program. The partnership and community

development program has two (two)

programs. The first is a partnership

program with small businesses with the

goal of increasing small businesses' ability

to become strong and independent

through the use of funds from SOE profits.

The second is the environmental

development program, which is a program

for empowering the social condition of the

1110 | The Effect of Social Network on Partnership Programs and MSMEs Performance

community by using funds from SOE

profits. The maximum profit allowance for

program funding is 2% (two percent) of net

profit for partnership programs and 2%

(two percent) of net profit for

environmental development programs

(Prajwalita & Tarmizi, 2015).

The Partnership Program has been run

by PT. Perkebunan Nusantara III since 2002,

as mandated by the Minister of State-

Owned Enterprises. The Partnership

Program has been implemented

throughout North Sumatra by PT.

Perkebunan Nusantara III. From 2002 to

2011, PT. Perkebunan Nusantara III assisted

small businesses in North Sumatra through

its Partnership Program. However, the

partnership program is supposed to be the

locomotive that propels the micro-

economy forward, but in reality, this

partnership has not produced the desired

results. MSMEs' performance under the

auspices of PTPN III is expected to continue

to grow and develop in the face of existing

competition. As a PTPN III partner, you will

be in charge of the partnership program.

MSMEs are said to perform well if they can

increase existing sales, increase annual

profits, increase capital, increase the

number of customers each year, meet

targets, and meet existing needs. PTPN III

partnership program aims to provide

access to capital for business development.

This program is expected to improve

MSMEs' performance in the face of

business competition. The existing

partnership program, on the other hand,

may make it difficult for partners to pay the

agreed-upon installments. So far, the

fostered partners have shown no

willingness to honor the agreements that

have been made. In general, these partners

believe that loans are a form of giving that

does not have to be returned. Furthermore,

this partner will only pay if PTPN III

employees come directly to their homes or

business to collect monthly installments.

Finally, this partnership program is

regarded as a gift from PTPN III to people

involved in MSMEs.

However, the performance of MSMEs

has not been as expected. The increase in

partners who are unable to pay installments

is a problem in the existing partnership

program at PT. Nusantara Plantation III. It is

known that social networks are not

maximally owned by the fostered partners.

The existing partnership program is only

the provision of loan capital, not to the

guidance of the fostered partners. So that

all of this has an impact on the performance

of MSMEs, especially in increasing their

success in business development.

MATERIALS AND METHODS

Framework

The network's strength (network) is

also critical in micro, small and medium

enterprises (MSMEs). The network's

closeness can be seen when business actors

form cooperative relationships with outside

parties in order to sustain the business they

are running (Junaidi et al., 2022). A network

is a collection of social structures made up

of nodes that are linked together by links,

also known as edges or ties (Kusasi & MSi,

2019). The network's centrality is centered

on three actors: market administrators,

suppliers, and MSEs themselves, all of

whom play critical roles in sharing

information and resources for mutual

Junaidi

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success (Killa & Ratukani, 2020).

A business network is a type of

economic organization that is used to

regulate coordination and foster

cooperation among elements within the

organization. These elements are typically

in the form of business units, but they can

also be non-business units in a series that

aids in the implementation of business

units (Herlambang & Hendriyanto, 2015).

Social networks provide information and

knowledge, facilitating a better

understanding of developing strong and

flexible relationships with customers and

other supply chain members. Closer

relationships with suppliers will provide a

significant contribution to the company's

performance, including cost efficiency,

quality improvement, reliability, and the

fulfillment of always-available input needs.

Furthermore, suppliers can broaden their

sources of information about market

developments, new technologies, and

competitor movements. Successful

entrepreneurs understand the value of

networking when it comes to launching a

new business. Business networks can help a

company's growth and survival. The

presence of a business network assists

entrepreneurs in gathering the necessary

information and advice, which has an

impact on improving business performance

(Hendrawan & Wijaya, 2020).

The partnership program can be

interpreted as a program to help small

businesses become stronger and more self-

sufficient by utilizing funds from SOE profit

shares (Prajwalita & Tarmizi, 2015). This

partnership program aims to improve small

businesses' ability to become strong and

self-sufficient by providing capital as well as

professional and skilled Human Resources

training so that they can support marketing

and business continuity in the future

(D’Angelo & Baroncelli, 2020).

Data Source

In order to collect data for this study,

researchers used both primary and

secondary sources. Primary data and

secondary data are as follows (Sugiyono,

2009):

1. Primary Information

Primary data, that is, information

obtained directly from respondents via

questionnaires or questionnaires. The

questionnaire for the study was first

developed using indicators for each

independent, dependent, and intervening

variable.

2. Secondary Information

Secondary data, or data that

supplements primary data, can be found in

the form of reports, books, organizational

structures, the internet, and literature

related to this research problem. The

secondary data in this study is in the form

of a report on the partnership program's

evaluation results and the organizational

structure at PT. Plantation Nusantara III

Sampling Method

According to (Lubis, 2021), the sample

is a subset of the population determined by

Social

Network

Performance

Partnership

Program

1112 | The Effect of Social Network on Partnership Programs and MSMEs Performance

using specific methods and procedures in

order to accurately represent the

population. A saturated sample was used in

the sampling technique. When all members

of the population are used as samples, this

saturated sample can be interpreted as a

sampling technique. This method is

frequently used when dealing with small

population sizes or when attempting to

generalize with very small errors (Lubis,

2021). As a result, the sample size for this

study is 243 MSME business actors.

Partial Least Square Analysis

Combining regression with path

analysis to test hypotheses regarding direct

or indirect relationships between variables

that are quite complex can use the Partial

Least Square analysis method. PLS can

describe the entire relationship of the

dependent and independent variables in

one analysis.

One of the programs that can be used

for PLS analysis is the SMART PLS 3

program. The program is able to describe

all the relationships built in the theory

based model so that it is able to analyze the

effect of Fit Viability and the use of the

barcode system on Company Performance

and other variables that affect Fit Viability.

Some of the advantages of PLS

according to (Hair Jr et al., 2021) including:

1. Being able to operate complex models,

large number of dependent and

independent variables is not a problem.

2. Able to process data that has

multicollinearity problems between

independent variables.

3. Able to process even if there is missing

data or abnormal data, the results are still

solid and good.

4. Can be used on reflective and formative

constructs.

5. Can be used on small samples and the

data does not have to be normally

distributed.

6. Can be used on data with different scale

types, namely nominal, ordinal and

continuous.

SEM and PLS have some differences.

PLS is predictive whereas SEM generally

tests theory. PLS has a measurement model

and a structural model. The measurement

model is the relationship between the

observation variable and the latent variable.

While the structural model explains the

relationship between latent variables.

Therefore, the measurement model must

be valid and reliable, while the structural

model is assessed by evaluating the

explanatory power and the significance

level of the path coefficient.

The first step is to assess the outer

reflective indicator model There are 3

criteria to assess the outer reflective

indicator model: Convergent validity,

Compositer reliability, and Discriminant

validity. After everything meets the

requirements, the second step can be

carried out, namely assessing the inner

model. This test is done by looking at R-

square, Q-square, Goodness of fit (GoF) and

F-square. R-square is used to assess the

effect of the dependent latent variable

whether it has a substantive effect. Q-

square is used to measure how well the

observation value generated by the model

is. Goodness of Fit (GoF) is used to measure

whether the structural model is valid or not

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Zulkarnain Lubis

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Convergent Validity and Causality Test

Convergent validity test is obtained

from the measurement data of each

variable model (measurement model), this

test is conducted to determine the validity

of each estimated indicator, by measuring

the dimensions of the concepts tested in

the study. If the indicator has a nadir

(critical ratio) that is greater than twice the

error (standard error), it indicates that the

indicator has measured what it should have

measured in the model presented

(Hendrawan & Wijaya, 2020).

Tabel 1. Critical Ratio Value

The causality test shows that all variables

have a causal relationship between

variables to other variables.

a. There is a significant social network

influence on the partnership

program. The critical value of

15,861 is greater than the standard

error value and the probability

value (p) has an asterisk which

means it is significant.

b. There is a significant influence of

social networks on the

performance of SMEs. The critical

value of 6.506 is greater than the

standard error value and the

probability value (p) which has an

asterisk which means it is

significant.

Sobel Test

The indirect effect test seeks to

identify the position of a model's mediating

variable. The nature of the mediating

variable can be investigated by multiplying

the value of the path coefficient of the

independent variable's influence on the

intermediate variable and the coefficient of

the intermediate variable's influence on the

dependent variable. While the total effect is

calculated by multiplying the value of the

direct influence coefficient by the product

of the value of the indirect influence

coefficient. Another approach is to examine

the Sobel Statistic Test (Rahmi Widyanti et

al., 2011) by comparing the Sobel statistical

value with a p-value of less than 5%,

indicating that the mediating effect applies

to the model under consideration.

The Sobel test can determine whether

mediation has a significant effect. As

previously stated, the Sobel test assumes a

large sample size and that the mediation

coefficient is normally distributed. The

Sobel test results provide an estimated

indirect effect value, which is then used to

calculate the t value by dividing the amount

of data by the standard error value and

comparing it to the t table. The mediation

effect is said to be significant if the t-count

value is greater than the t-table value, and

the t-value is 1.96.

The Sobel test is required to determine

whether or not the effect of mediation

indicated by multiplication coefficients p2

and p3 is significant. The Sobel test is

performed by computing the standard

error of the indirect effect coefficient

(Sp2p3)

Variab

Estima

Std.

Erro

Crit.

Ratio

Decisio

SN ->

1.568

0.09

15.8

Significa

SN ->

1.616

0.24

6.50

Significa

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Zulkarnain Lubis

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DOI : 10.36418/jrssem.v2i06.366 https://jrssem.publikasiindonesia.id/index.php/jrssem

Fig 2. Sobal Test for Mediation Test

Sp2P3 = =√𝑝32. 𝑆e𝑝22 + 𝑝22. 𝑆e𝑝32 +

𝑆e𝑝22. 𝑆e𝑝32

Sp2p3 = √ (-0,587) 2. (0,099)2 +(1,568)2.

(0,144) 2 + (0,099) 2. (0,144) 2

Sp2p3 = √0,345 x 0,010+ 2,459 x 0,021 +

0,010x 0,021

Sp2p3 = √ 0,0033771208 + 0,0509820273

+ 0,0002032335

Sp2p3 = √ 0.0545623816

Sp2p3 = 0.033585919

Based on the Sp2p3 results, the

following formula can be used to calculate

the t-statistic value of the effect of

mediation:

Because the value of t-count = -3.9404 is

greater than the value of t table with a

significant level of 0.05, which is 1.96, it can

be concluded that the mediation

coefficient is 0.033 significant, implying

that the partnership program has a

significant influence in mediating social

network on the performance of MSMEs.

RESULTS AND DISCUSSION

Social Network on Partnership Program

According to the findings of the study,

the social network has a significant impact

on the partnership program at PTPN

Nusantara III. Furthermore, the findings of

this study show that good relationships,

particularly with financial institutions, can

significantly assist SMEs in strengthening

the existing partnership program at PTPN

Nusantara III. Financial institutions, such as

banks, are eager to provide data or

recommendations, particularly to PTPN

Nusantara III, in order to reassure investors

that SME players are capable of making

installment payments.

The findings of this study are

consistent with the findings of a study

conducted by (Pinho & Prange, 2016),

which found that social networks have a

significant impact on the success of SMEs.

Then (Yousefi & Ghazizadeh, 2019)

concluded that social networks could

speed up the distribution of SMEs'

production.

Meanwhile, (Hendrawan & Wijaya,

2020) emphasizes that knowledge

accelerates the development of strong

and flexible relationships with customers,

as well as with other members of the

supply chain. Closer relationships with

suppliers will provide a significant

contribution to the company's

Social

Network (X)

Partnership

Program (Y1)

MSMEs

Performance

(Y2)

SeP2=0,09

SeP3=0,144

SeP1=0,248

P2= 1,568

P3=-0,587

P1=1,616

t = p2 p3 = -0,9204 = -3,9404

Sp2p3 0.033585919

Junaidi

Zulkarnain Lubis

Ihsan Effendi

| 1115

performance, including cost efficiency,

quality improvement, reliability, and the

fulfillment of always-available input

needs. Furthermore, suppliers can

broaden their sources of information

about market developments, new

technologies, and competitor

movements. Successful entrepreneurs

understand the value of networking when

it comes to launching a new business.

Business networks can help a company's

growth and survival. The presence of a

business network assists entrepreneurs in

gathering the necessary information and

advice, which has an impact on improving

business performance.

Furthermore, the findings of this

study show that good relationships,

particularly with financial institutions, can

significantly assist SMEs in strengthening

the existing partnership program at PTPN

Nusantara III. Financial institutions, such

as banks, are eager to provide data or

recommendations, particularly to PTPN

Nusantara III, in order to reassure

investors that SME players are capable of

making installment payments. According

to (Pasaribu, 2021), having a large

business network will enable SME players

to compete with larger corporations. It

should be noted that every SME actor

must understand the different types of

business networks that can be used to

build their business network.

Social Network on MSMEs Performance

The analysis results show that the

social network has a significant effect on

the performance of MSMEs at PTPN

Nusantara III, which is consistent with the

findings of a study conducted by (Ioanid et

al., 2018) titled The impact of social

networks on SMEs' innovation potential,

which states that social networks have a

significant effect on business product

innovation. Furthermore, (Nu’man et al.,

2020) states in the research title Social

Networking, and Firm Performance:

Mediating Role of Comparative Advantage

and Sustainable Supply Chain that social

networks play a significant role in

maintaining business actors' competitive

advantage in the face of competitor

pressure. Then, in the study A nexus among

strategic orientation, social network,

knowledge sharing, organizational

innovation, and MSMEs performance,

(Muafi, 2020) stated that social network has

a significant influence on the performance

of SMEs.

According to the findings of this study,

the social network of SMEs is built on

familial factors. In terms of marketing SME

products, this is therefore limited. SMEs

with a large number of relationships, such

as friends and family, are greatly aided in

meeting the minimum sales target. When

there is a perception of marriage or

circumcision of the apostle, this SME

product is typically used for the event. In

this case, the existence of social networks is

extremely beneficial to SMEs in the trade

sector. Finally, the stronger the existing

business network, the more opportunities

SMEs have to reduce the risk of business

failure.Social Networking is a competency

that must be prosessed by an MSME actor

(Aulia et al., 2021).

The ability to have a large business

network will allow SMEs to compete with

larger corporations. It should be noted that

every SME actor must understand the

1116 | The Effect of Social Network on Partnership Programs and MSMEs Performance

different types of business networks that

can be used to build their business

network. According to (Pasaribu, 2021), this

social network consists of the first

marketing network, where businesses need

to have a reliable marketing network, which

is always ready to absorb business products

and services with the right volume, price,

and time for success in marketing its

products and services. or assist with

marketing efforts As a result, this marketing

network may include a core network as well

as supporting networks. Marketing

intermediaries such as wholesalers,

retailers, agents, and other marketing

intermediaries may form the core network.

While the supporting network, which

consists of institutions/third parties that

play a role in promoting marketing success,

such as companies/institutions involved in

promotion, expedition, transportation,

market information, financing marketing

activities, providing marketing guarantees,

and others. These institutions/third parties

can include government agencies,

businesses, and other organizations. The

second network is the production or

operation network, which includes business

cooperation and relationships with various

parties (producers, suppliers, and other

parties) required to ensure the

production/operation process runs

smoothly. With a strong production

network, the company's production

capacity can be adjusted to meet the needs

(capability flexibility), a type of division of

production tasks can be carried out based

on the advantages of network members, so

that the production process can be carried

out more efficiently, large production can

be carried out through sub-

contracts/maklun or carry out consortium

to meet the huge demand in an economical

way. Finally, there is the financial/financing

network. The financial network is primarily

concerned with cooperation, relationships,

and access to financing sources, including

both bank and non-bank financial

institutions. This financial/financing

network is undoubtedly required by the

company, particularly in order to meet the

company's capital requirements effectively

and efficiently. Furthermore, a network with

financial institutions is required for the ease

of conducting business transactions.

Partnership Program on MSMEs

Performance

The analysis results show that the

partnership program has a direct and

significant impact on the performance of

MSMEs at PTPN Nusantara III. The findings

of this study are consistent with the

findings of a previous study by (Ghoniyah

et al., 2019) titled The Role Of Csr And Scm

Patterned Partnership In Promoting The

Role Of Smes As Beneficiaries Of Csr To

Local Economy, which states that

partnership programs play an important

role in assisting SMEs to progress and

develop. Partnerships can help SMEs

improve their financial performance and

protect themselves from competitive

pressures. Furthermore, according to

research (Mofokeng & Chinomona, 2019)

titled Supply chain partnership, supply

chain collaboration, and supply chain

integration as antecedents of supply chain

performance, partnerships have a

significant effect on the performance of

SMEs. Then come the study's findings

(D’Angelo & Baroncelli, 2020) with the

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research title Collaboration with whom?

According to SMEs at the Crossroads of

R&D Partnership Exploration and

Exploitation, mutually beneficial

collaboration can increase SMEs'

competitiveness. The partnership program

is thought to be the most effective in

growing the SME class to the point where it

can compete with other business units.

The findings of the research on

partnership programs at PTPN Nusantara III

through corporate social responsibility

activities are very beneficial to SMEs in

terms of improving their performance.

According to descriptive analysis, the

partnership program is in the form of ease

of obtaining additional capital and loan

terms that have enabled the fostered

partners, namely SMEs, to keep their

businesses from failing. PTPN Nusantara III

has never confiscated assets or collateral

from SME players who have fallen behind

on their payments.

Partnership can also be defined as a

form of strengthening between two or

more parties who form a cooperative bond

based on an agreement and mutual need

to increase income, business continuity,

production quantity, production quality,

improve partner group quality, and

improve the business capabilities of

independent partner groups. (Wulandari &

Nadapdap, 2020). The partnership system

is generally implemented in a variety of

ways, such as through contractual

agreements between partner companies

and partners (Mofokeng & Chinomona,

2019). Furthermore, (Semuel & Wibisono,

2019) formulated three important

partnership principles, the first of which is

equality (equity). His approach is not based

solely on power, but on mutual respect,

mutual benefit, and mutual trust. To avoid

antagonism, trust must be established. The

existence of awards, obligations, and ties is

part of equality. Second, there is

transparency. To avoid mutual suspicion

between partners, transparency is required.

Transparency in information management

and transparency in financial management

are both included. Third, it is mutually

beneficial. A partnership should benefit all

parties involved.

One of the programs offered by each

BUMN is the partnership program (Fitria &

Jurana, 2016). This program is a revolving

fund distribution program, which provides

additional business capital assistance to

SMEs on terms, procedures, and payback

times determined and agreed upon by both

parties (Ferraris et al., 2019). The

Partnership Program for Small and Medium

Enterprises implemented by SOEs is a form

of responsibility from State-Owned

Enterprises (BUMN) to the community

(Ghoniyah et al., 2019).

Partnership can also be defined as a

form of strengthening between two or

more parties who form a cooperative bond

based on an agreement and mutual need

to increase income, business continuity,

production quantity, production quality,

improve partner group quality, and

improve the business capabilities of

independent partner groups. (Wulandari &

Nadapdap, 2020). According to (Suryana,

2014), there are four indicators that can be

used to measure partnerships: access to

capital, coaching, management, and

mutually beneficial business links.

According to (Azizah & Maftukhah, 2017),

this partnership indicator consists of three

1118 | The Effect of Social Network on Partnership Programs and MSMEs Performance

indicators: trust, cooperation, and

dependence.

Mediation Effect: Social Networks on

MSMEs Performance Through Partnership

Programs

The data analysis results show that the

partnership program has a significant

indirect influence on the performance of

SMEs by mediating social networks. The

findings of this study back up the findings

of previous research (Odoom et al., 2017),

which found that social networks have a

significant impact on the performance of

SMEs mediated by partnerships. SME

actors who participate in this partnership

program will have many business networks

through which they will find common

ground or mutually beneficial business

models. Furthermore, according to the

findings of research (Qalati et al., 2021),

partnerships play an important role and are

the key to success for SMEs with limited

business networks. The availability of offers

from various parties ensures that SMEs'

business units will find potential partners to

support financial performance. The

following research finding (Tiwasing, 2021)

confirms that partnerships are an

important factor in allowing SMEs to

increase their sales transactions. The

establishment of a business network has

prompted SME actors to quickly interact

with various parties who are thought to be

capable of assisting their businesses.

The researchers conclude that PTP

Nusantara III's collaboration is one of the

efforts to build a business network for SME

partners. The SME program expands the

network of partners who help SMEs market

their products or services. PTP Nusantara III

assists partners in establishing good

relationships, particularly with the

government, such as industry and trade

offices, the South Labuhan Batu district

social service, and the Labusel Indonesian

Ulema Council.

According to (Pasaribu, 2021), this

social network consists of the first

marketing network, where businesses

need to have a reliable marketing

network that is always ready to absorb

business products and services at the

same volume, price, and time for success

in marketing its products and services.

appropriate or beneficial to marketing

activities As a result, this marketing

network may include a core network as

well as supporting networks. Marketing

intermediaries such as wholesalers,

retailers, agents, and other marketing

intermediaries may form the core

network. While the supporting network,

which consists of institutions/third

parties that play a role in promoting

marketing success, such as

companies/institutions involved in

promotion, expedition, transportation,

market information, financing marketing

activities, providing marketing

guarantees, and others. These

institutions/third parties can include

government agencies, businesses, and

other organizations. The second

network is the production or operation

network, which includes business

cooperation and relationships with

various parties (producers, suppliers,

and other parties) required to ensure the

production/operation process runs

smoothly. With a strong production

network, the company's production

Junaidi

Zulkarnain Lubis

Ihsan Effendi

| 1119

capacity can be adjusted to meet the

needs (capability flexibility), and a type

of division of production tasks can be

carried out based on the advantages of

network members so that the

production process can be carried out

more efficiently, large production can be

carried out through sub-

contracts/makeup or carry out

consortium to meet the huge demand in

an economical way. Finally, there is the

financial/financing network. The

financial network is primarily concerned

with cooperation, relationships, and

access to financing sources, including

both bank and non-bank financial

institutions. This financial/financing

network is undoubtedly required by the

company, particularly in order to meet

the company's capital requirements

effectively and efficiently. Furthermore, a

network with financial institutions is

required for the ease of conducting

business transactions.

CONCLUSIONS

The social network has a significant

impact on the partnership program and

MSME's Performance. Partnership program

has a direct and significant impact on the

MSME's Performance. Partnership program

has a significant indirect influence on the

performance of MSMEs by mediating social

networks. Social networks should be used

as a condition for determining MSMEs

actors who join the partnership program.

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