JRSSEM 2022, Vol. 01, No. 6, 711 – 720
E-ISSN: 2807 - 6311, P-ISSN: 2807 - 6494
DOI : 10.36418/jrssem.v1i6.81
CLUSTER BUSINESS DEVELOPMENT MODEL OF
AGRIBUSINESS-BASED MSMES DURING THE COVID-19
PANDEMIC
Mariyudi1*
Ikramuddin2
Khairil Anwar3
Faisal Matriadi4
1,2,4Department of Management, Faculty of Economics and Business, Universitas Malikussaleh,
Lhokseumawe, Aceh, Indonesia
Department of Economic Development, Faculty of Economics and Business, Universitas
3Malikussaleh, Lhokseumawe, Aceh, Indonesia
fmatriadi@unimal.ac.id4
*Correspondence: mariyudi@unimal.ac.id
Submitted: 30 November 2021, Revised: 12 January 2022, Accepted: 17 January 2022
Abstract: Currently in Indonesia, Micro, Small and Medium Enterprises (MSMEs) play a strategic
role in the development of the national economy. This study aims to develop an integrated
framework that incorporates the innovation and strategic sustainability behaviors into the cluster
business development model of agribusiness-based MSMEs during the COVID-19 pandemic. This
study uses mixed methods with quantitative and qualitative approaches. The subjects in this study
were 150 members of the center member entrepreneurs, managers of the Regional Innovation
System (SIDa), cooperative administrators/managers, related agencies, universities and other
parties involved in the implementation of the SIDa program, and MSMEs business development.
The results of the analysis using the radar scale and scoring analysis show that there are twelve
potentials and economic opportunities for MSMEs business spread over three zones. The results
of the mapping using the value-added matrix found that most of the MSME business characteristics
had a "none" or "simple" value. This study also found developing an integrated framework that
incorporates the innovation and strategic sustainability behaviors into the cluster business
development model of agribusiness-based MSMEs during the COVID-19 pandemic. The main
theoretical contribution of this paper is that this study proposes a model that explains how the
different elements of strategic sustainability behavior and innovation types that focus on the cluster
business into the model affect the business performance, business sustainability, and business
survival of the cluster business of agribusiness-based MSMEs during the COVID-19 pandemic.
Keywords: cluster business; agribusiness; innovation; MSME; COVID-19.
Mariyudi, Ikramuddin, Khairil Anwar, Faisal Matriadi | 712
DOI : 10.36418/jrssem.v1i6.81
INTRODUCTION
Micro, Small and Medium Enterprises
(MSMEs) play a strategic role in the
development of the national economy
especially in Indonesia (Mariyudi, 2019)
Moreover, it is related to Indonesia's export
performance (Salim, 2013) Data shows that
in 2018 there were more than sixty-four
million MSMEs (or about 99% of the total
business units) and employed more than
116 million workers (or about 97% of the
total workforce in the economic sector)
(Winarso, 2020).
The MSMEs sector is very important for
national socio-economic development,
both for developed and developing
markets and the economy (Forsman &
Temel, 2011). They are important drivers in
the process of structural change in
emerging markets and economies (Szirmai,
Naudé, & Goedhuys, 2011) They are
important for local entrepreneurship and
innovation activities and are able to take
advantage of the opportunities of
globalization (Lari, Hamid, & Lari, 2020).
Their important role continues to be
important in diversifying sources of
national income, in increasing
competitiveness and economic
development, and in contributing to the
flexibility and resilience of the Indonesian
economy (Mariyudi, 2019) MSMEs play a
role in fields related to entrepreneurship,
innovation, productivity, competition, job
creation, diversification, income, and
growth (Mariyudi, 2019). Entering the 21st
century, the literature shows that active and
stretching agribusiness clusters have a
strategic role for the long-term
transformation process in the food
economy (Molema, Segers, & Karel, 2016).
These structures are mainly co-created by
agribusiness entities, traditional
agricultural sectors, including MSMEs,
agricultural ownership, R&D sector entities
and social organizations related to
agriculture and food production (Skousen,
2016). MSME's business cluster
development approach has been
recognized globally for its role in driving
economic progress (Rwekaza & Anania,
2021), maintaining competitive advantage
(Rwekaza & Anania, 2021), and enhancing
the development of infrastructure for
professional, financial, legal, and other
specialist services (Rwekaza & Anania,
2021). The business cluster approach has
the potential to transform regional and
national economies in developed and
developing countries such as Europe,
Africa, Asia, and Latin America (Rawat &
Wang, 2017). The MSME business cluster
development approach has played an
important role in promoting equitable
regional development and economic
growth (Unido, Evvaluation, & Nations,
2013). MSMEs with a business cluster
approach have succeeded in employing at
least 45 percent of the workforce (Rwekaza
& Anania, 2021) creating job opportunities,
promoting exports and innovation and by
developing entrepreneurial skills. (Rwekaza
& Anania, 2021). Clusters enable the
production of different products and
services based on grouped companies and
allow them to manage competition.
MSMEs are business groups that can
survive when the economic crisis hits
developing countries such as Indonesia
(Dharmanegara, Sitiari, & Wirayudha,
2016). However, the current COVID-19
pandemic has had an impact on various
713 | Cluster Business Development Model of Agribusiness-Based MSMEs During the COVID-
19 Pandemic
sectors. At the global economic level, the
COVID-19 pandemic has had very
significant negative implications on the
country's domestic economy and the
existence of MSMEs, decreased
consumption and people's purchasing
power, decreased company performance,
loss of consumer confidence, the collapse
of the stock market which in turn led to
uncertainty, threats to the banking and
financial sector, as well as the existence of
MSMEs (Rahman & Velayutham, 2020).
In this pandemic situation, according to
ministry of cooperatives and SMEs, there
are around 37,000 SMEs who report that
they are very seriously affected by this
pandemic, which is marked by: around 56%
reported a decline in sales, 22% reported
problems in the financing aspect, 15%
reported on goods distribution problems,
and 4% reported difficulties in obtaining
raw materials (Gil et al., 2020). Other studies
also show relatively similar and worrying
results. Most of the total income fell due to
the COVID-19 pandemic. MSMEs found it
difficult to obtain raw materials and also
have been hit by an increase in raw material
prices, almost 88% of the MSMEs
experienced a decrease in demand, around
77% of the enterprises have had to cope
with lower revenues, more than 34% of
MSMEs faced a drop in their asset value by
20% to 40%, and almost 60% of the MSMEs
report that there have been changes in the
number of their workers (UI, 2020).
The current paper aims to provide a
theoretical foundation on how innovation
models can be integrated into the process
of developing agribusiness-based MSME
clusters in Indonesia. It is hoped that this
paper will contribute knowledge about how
innovation models can be integrated into
clusters, especially in terms of considering
key dimensions and determining the
prospects for developing innovation
clusters as well as forming policies,
strategies and business cluster
development coaching programs. In our
view, the innovation model could be one of
the best options for such initiatives. The
findings are in the form of a model that
describes how different strategic
sustainability behaviors can explain the
possibilities in the types of innovation
practices in Agribusiness-Based MSME
Cluster Businesses During the COVID-19
Pandemic.
However, empirical work on cluster-
based development has largely ignored the
role that innovation models can play in
creating strong and sustainable
business/industry clusters in developing
countries. From this point, this paper
focuses on contributing knowledge and
bridging the gap by laying the foundation
for how innovation models can be
integrated with business cluster
development initiatives during the COVID-
19 pandemic in various countries including
Indonesia.
METHODS
Research Approach
This research is a qualitative research
that thinks inductively. Qualitative case
studies are concerned with producing rich,
in-depth and quality data (Sinkovics, Penz,
& Ghauri, 2008). Qualitative studies have
the capacity to capture new realities, new
Mariyudi, Ikramuddin, Khairil Anwar, Faisal Matriadi | 714
ideas and theoretical insights into research.
However, qualitative studies are widely
considered to be less objective than
quantitative approaches (Ibeh & Kasem,
2011).
The use of mixed methods in this study
reflects an attempt to capitalize on the
strengths of both quantitative and
qualitative approaches, while also
minimizing their weaknesses, such as radar
scale and scoring analysis, the value-added
matrix, and developing an integrated
framework of the model. This is an
increasing trend in research into the
internationalization of MSMEs, to further
enrich and clarify quantitative survey
results (Vissak, Ibeh, & Paliwoda, 2008). The
research location is a farming area based
on geographical identification which is in
the North Aceh Regency area.
RESULTS AND DISCUSSION
Scoring Analysis
In this study, zoning is divided into 3
areas, namely:
a. ZONATION I, are North Aceh Regency
West Region which includes the
following sub-districts: Sawang, Muara
Batu, Dewantara, Nisam, Banda Baro,
Kuta Makmur, Simpang Keuramat, dan
Syamtalira Bayu.
b. ZONATION II, are North Aceh Regency,
Central Region which includes the
following sub-districts: Samudera,
Meurah Mulia, Syamtalira Aron, Tanah
Pasir, Tanah Luas, Geureudong Pase,
Matang Kuli, Paya Bakong, dan
Lhoksukon.
c. ZONATION III, are North Aceh Regency
East Region which includes the
following sub-districts: Cot Girek,
Lapang, Baktiya Barat, Baktiya,
Seunuddon, Tanah Jambo Aye,
Langkahan, Pirak Timu, dan Nibong.
The scoring criteria in the scoring
analysis have values (1): small/low, (2):
medium/medium, and (3): large/high. The
results of the analysis are as follows:
1a
1b
1c
715 | Cluster Business Development Model of Agribusiness-Based MSMEs During the COVID-
19 Pandemic
1d
Figure 1. Priority economic clusters in
each Zone.
Note: Radar scales represent the
percentage of clusters based on the
potential and economic opportunities and
aspirations that exist in each Zoning by
using scoring analysis.
The results of the scoring analysis in
Zoning I (Figure 1a) show that the
proposed center/cluster that becomes
priority I, namely the center/cluster of
fisheries (processed products), the
proposed cluster that becomes priority II is
the embroidery/souvenir cluster, the
proposed center/cluster that becomes
priority III is the tourism cluster. Gunung
Salak, while the priority IV is the patchouli
product cluster. The data shows that the
Gunung Salak natural tourism industry and
patchouli products are the last priority with
supporting conditions that are still less
supportive of innovation.
The results of the scoring analysis in
Zoning II (Figure 1b) show that the
proposed centers/clusters that become
priority I, namely centers/clusters:
handicraft industry (caps, skullcaps), the
proposed clusters that become priority II
are centers/clusters: blacksmith, the
proposed clusters that become priority III is
cluster: traditional food industry, while the
fourth priority is center/cluster: furniture
industry. the data shows that the
centers/clusters of traditional food and
furniture industry are the last priority with
supporting conditions that are still less
supportive of innovation.
The results of the scoring analysis in
Zoning III (Figure 1c) show that the
proposed center/cluster that becomes
priority I, namely the salee banana food
industry center/cluster, the proposed
center/cluster that becomes priority II is the
livestock center/cluster (cattle and goat
fattening), the proposed cluster which
becomes the priority III is the center/cluster
of pepper industry, while priority IV is the
center/cluster of rice agriculture. the data
shows that of the four existing priorities,
centers/clusters: rice agriculture is the last
priority with supporting conditions that are
still less supportive of innovation.
Distribution Map of Priority Business
Centers/ Clusters/MSMEs
Increasing the competitiveness of small
and medium-sized businesses based on
agribusiness in North Aceh Regency can be
done by developing a cluster concept, the
main goal of the cluster is to increase
product competitiveness by emphasizing
the value of efficiency in the use of time and
distance in producing a product. This
increase in efficiency value will drive down
production costs and marketing costs of a
product, in the end the product is more
competitive in the market and has higher
competitiveness compared to similar
products produced by other regions.
Mariyudi, Ikramuddin, Khairil Anwar, Faisal Matriadi | 716
Agribusiness development efforts have
been carried out by the North Aceh
Regency government, but there are still
various obstacles, especially in maintaining
product quality that meets market
standards and product continuity in
accordance with market demand and to
support a downstream industry from
agricultural production.
Distribution map of priority business
centers/clusters/SME products in North
Aceh Regency based on zoning as shown in
the figure 2.
Figure 2. Distribution Map of Priority
Centers/Business Clusters/MSMEs in North
Aceh District Based on Zoning
Figure 3. Matrix Of Value Added to the
Output of Priority Centers/Business
Clusters/MSME Products
The results of the study also show that
the performance of these agricultural
products in the economy of North Aceh
Regency as a whole. For that we can use the
value added matrix to the output as
presented in Figure. The value added
matrix to output maps the added value
given from the production of a product and
the amount of output it produces. Before
being mapped, the added value and output
of each product is compared with the
average value added and output of the
observed product. Thus, information will be
obtained about products that provide
added value above (or below) the group
average value and which produce a total
output above (or below) the group average
output.
The figure 3 shows that the matrix plane
is divided into 4 quadrants. Quadrant 1 is
the product quadrant that has added value
above the average but has a lower output
than the average. Quadrant 2 is the product
quadrant that has added value and the
amount of output is above the group
average. Quadrant 3 is a product quadrant
that has added value and a smaller amount
of output than the group average. And
Quadrant 4 is a product quadrant that has
added value below the average but has a
higher number of outputs than the
average.
Cluster Business Development Model of
Agribusiness-Based MSMEs
Based on the discussion presented
earlier, this study develops an integrated
framework that incorporates the
innovation and strategic sustainability
behaviors into the cluster business
development model of agribusiness-based
MSMEs during the COVID-19 pandemic.
717 | Cluster Business Development Model of Agribusiness-Based MSMEs During the COVID-
19 Pandemic
Figure 4. Innovation Integrated Into the
Cluster Business Development Model of
Agribusiness-Based MSMEs During the
COVID-19 Pandemi
This model summarizes the elements
that must be considered in the cluster
business development model of
agribusiness-based MSMEs during the
COVID-19 pandemic. This model is a
refinement of the adapted framework
based on empirical evidence in the field.
First, this model considers the driving
factors and obstacles faced by MSMEs,
both externally and internally. The drivers
or driving forces that drive ecosystem
development and goal attainment are
important components (Rong, Liu, Mei, Li,
& Han, 2015), and can consist of factors
such as the economy, technological
improvements, and market demand. In
addition, adoptation barriers, cooperation
barriers, financial barriers, and
infrastructure barriers can hinder
ecosystem development (Zhang et al.,
2015). Regarding internal drivers and
barriers, most of the interviewees stated
that perception, motivation, and cost
efficiency can encourage ecosystem
development. as well, owner and manager
characteristics, firm characteristics, cost and
ROI, and product barriers in the cluster area
studied can hinder the development of the
ecosystem.
Second, in developing a model of
agribusiness-based MSMEs during the
COVID-19 pandemic, this study illustrates
how different strategic sustainability
behaviors can explain the possibilities in
this type of innovation practice. MSME's
strategic sustainability behaviors consist of
resistant, reactive, anticipatory, innovation-
based and sustainability rooted (Klewitz &
Hansen, 2014).
To contribute to sustainability,
innovation is an important means
(Schaltegger, Hansen, & Lüdeke-Freund,
2016). This study identifies innovation
practices at the product, process, and
organizational level (Klewitz & Hansen,
2014).
With regard to strategy formation, this
study proposes that there are deliberate
and emergent strategies. Deliberate
strategy, MSMEs can consciously formulate
a sustainability strategy that is
implemented and subsequently reflected in
the results of related innovations (ie
process innovation, organizational
innovation, and product innovation).
Therefore, deliberate strategies are usually
not explicitly articulated as they are
entrepreneurial strategies (Knott et al.,
2020). Of course, business practices often
represent the interaction between
deliberate and emergent strategy.
Innovation will occur at different levels
and innovative capacities (skills,
competencies, capabilities). To strengthen
Mariyudi, Ikramuddin, Khairil Anwar, Faisal Matriadi | 718
innovative capacity, MSMEs must interact
and collaborate with multi-stakeholders.
Collaboration is a key element for the
transition to sustainability. The principle of
sustainability must also be in accordance
with the business strategy and technology
of SMEs which requires SMEs to build
competence.
Finally, the model in the figure shows
that innovation integrated into the cluster
business development model followed by
appropriate strategic sustainability
behavior is expected to have an impact on
business performance, business
sustainability, and business survival (Adam
& Alarifi, 2021).
The model shows that the relationship
between innovation practices and strategic
sustainability behavior is influenced by
supports and barriers from the external
environment and the external environment
of MSME. Likewise, their integration into
the model affects the business
performance, business sustainability, and
business survival of the cluster business of
agribusiness-based MSMEs during the
COVID-19 pandemic.
CONCLUSIONS
North Aceh Regency has relatively few
natural resources, so that cluster
development in the context of local
economic development requires other
regions to provide inputs. In addition,
North Aceh Regency has a lot of potential
for human resources, but on the other
hand, unemployment and poverty rates are
relatively high. The development of
economic clusters will have a great
opportunity to reduce unemployment and
poverty rates in North Aceh Regency.
The results of the study show that most
of the characteristics of business/SMEs
have a value of “none” or “simple”. This
shows that cluster characteristics have not
appeared much in the observed centers. In
general, it appears that the center member
entrepreneurs have not been able to
encourage the interactions that occur into
a more advanced form of formal
cooperation towards industrial clusters.
However, business actors/MSMEs in North
Aceh Regency have high intentions,
attitudes and desires to change through
innovation.
Finally, innovation integrated into the
cluster business development model
followed by appropriate strategic
sustainability behavior is expected to have
an impact on business performance,
business sustainability, and business
survival of the cluster business of
agribusiness-based MSMEs during the
COVID-19 pandemic.
REFERENCES
Adam, Nawal Abdalla, & Alarifi, Ghadah.
(2021). Innovation practices for survival
of small and medium enterprises
(SMEs) in the COVID-19 times: the role
of external support. Journal of
Innovation and Entrepreneurship,
10(1), 1–22.
Dharmanegara, Ida Bagus Agung, Sitiari, Ni
Wayan, & Wirayudha, IDGN. (2016).
Job competency and work
environment: the effect on job
satisfaction and job performance
among SMEs worker. IOSR Journal of
Business and Management (IOSR-
JBM), 18(1), 19–26.
719 | Cluster Business Development Model of Agribusiness-Based MSMEs During the COVID-
19 Pandemic
Forsman, Helena, & Temel, Serdal. (2011).
Innovation and business performance
in small enterprises: An enterprise-level
analysis. International Journal of
Innovation Management, 15(03), 641–
665.
https://doi.org/10.1142/S1363919611
003258
Gil, Morayma Reyes, Barouqa, Mohammad,
Szymanski, James, Gonzalez-Lugo,
Jesus D., Rahman, Shafia, & Billett,
Henny H. (2020). Assessment of lupus
anticoagulant positivity in patients
with coronavirus disease 2019 (COVID-
19). JAMA Network Open, 3(8),
e2017539–e2017539.
https://doi.org/10.1001/jamanetwork
open.2020.17539
Ibeh, Kevin, & Kasem, Laila. (2011). The
network perspective and the
internationalization of small and
medium sized software firms from
Syria. Industrial Marketing
Management, 40(3), 358–367.
https://doi.org/10.1016/j.indmarman.
2010.08.004
Klewitz, Johanna, & Hansen, Erik G. (2014).
Sustainability-oriented innovation of
SMEs: a systematic review. Journal of
Cleaner Production, 65, 57–75.
https://doi.org/10.1016/j.jclepro.2013.
07.017
Knott, Brandon C., Erickson, Erika, Allen,
Mark D., Gado, Japheth E., Graham,
Rosie, Kearns, Fiona L., Pardo, Isabel,
Topuzlu, Ece, Anderson, Jared J., &
Austin, Harry P. (2020).
Characterization and engineering of a
two-enzyme system for plastics
depolymerization. Proceedings of the
National Academy of Sciences,
117(41), 25476–25485.
Lari, Mohamed Ahmed Darwish Abdulla,
Hamid, Norhadilah Abdul, & Lari,
Fatima Ahmed Darwish. (2020).
Ranking of Innovation Factors of
Employees’ Job Performance.
International Journal of Sustainable
Construction Engineering and
Technology, 11(2), 181–187.
https://doi.org/10.36418/jrssem.v1i6.
81
Mariyudi. (2019). Success factors of SMEs:
the case of Indonesia. International
Journal of Business Innovation and
Research, 19(2), 204–231.
Molema, Marijn, Segers, Yves, & Karel,
Erwin. (2016). Introduction:
agribusiness clusters in Europe, 19th
and 20th centuries. TSEG-The Low
Countries Journal of Social and
Economic History, 13(4), 1–16.
Rahman, Mohammad Mafizur, &
Velayutham, Eswaran. (2020).
Renewable and non-renewable energy
consumption-economic growth nexus:
new evidence from South Asia.
Renewable Energy, 147, 399–408.
https://doi.org/10.1016/j.renene.2019
.09.007
Rawat, Waseem, & Wang, Zenghui. (2017).
Deep convolutional neural networks for
image classification: A comprehensive
review. Neural Computation, 29(9),
2352–2449.
https://doi.org/10.1162/neco_a_0099
0
Rong, Yaoguang, Liu, Linfeng, Mei, Anyi, Li,
Xiong, & Han, Hongwei. (2015).
Beyond efficiency: the challenge of
stability in mesoscopic perovskite solar
cells. Advanced Energy Materials,
5(20), 1501066.
https://doi.org/10.1002/aenm.201501
066
Rwekaza, Gratian Cronery, & Anania, Paulo.
(2021). Full Issue and Text Available at:
http//www. mocu. ac. tz. Journal of Co-
Operative and Business Studies (JCBS),
6(1).
Mariyudi, Ikramuddin, Khairil Anwar, Faisal Matriadi | 720
Salim, H. S. (2013). Penerapan Teori hukum
pada penelitian tesis dan disertasi.
Schaltegger, Stefan, Hansen, Erik G., &
Lüdeke-Freund, Florian. (2016).
Business models for sustainability:
Origins, present research, and future
avenues. Organization & Environment,
Vol. 29, pp. 3–10. Sage Publications
Sage CA: Los Angeles, CA.
https://doi.org/10.1177/10860266155
99806
Sinkovics, Rudolf R., Penz, Elfriede, &
Ghauri, Pervez N. (2008). Enhancing
the trustworthiness of qualitative
research in international business.
Management International Review,
48(6), 689–714.
Skousen, Mark. (2016). The making of
modern economics: the lives and ideas
of the great thinkers. Routledge.
Szirmai, Adam, Naudé, Wim, & Goedhuys,
Micheline. (2011). Entrepreneurship,
innovation, and economic
development. Oxford University Press.
UI, LPEM F. E. B. (2020). Regional and Energy
Resources Brief.
Unido, Independdent, Evvaluation,
Country, & Nations, Uniteed. (2013).
United Nations Industrial Development
Orgaanization.
Vissak, Tiia, Ibeh, Kevin, & Paliwoda,
Stanley. (2008). Internationalising from
the European periphery: Triggers,
processes, and trajectories. Journal of
Euromarketing, 17(1), 35–48.
https://doi.org/10.1300/J037v17n01_
04
Winarso, Widi. (2020). e-Marketing:
Business in Developing SMEs in
Indonesia. International Journal of
Psychosocial Rehabilitation, 24(10),
1931–1937.
Zhang, Rong Qing, Lu, Jian Jun, Wang, Ru
Cheng, Yang, Ping, Zhu, Jin Chu, Yao,
Yuan, Gao, Jian Feng, Li, Chao, Lei, Ze
Heng, & Zhang, Wen Lan. (2015).
Constraints of in situ zircon and
cassiterite U–Pb, molybdenite Re–Os
and muscovite 40Ar–39Ar ages on
multiple generations of granitic
magmatism and related W–Sn
mineralization in the Wangxianling
area, Nanling Range, South China. Ore
Geology Reviews, 65, 1021–1042.
https://doi.org/10.1016/j.oregeorev.2
014.09.021
© 2022 by the authors. Submitted
for possible open access publication
under the terms and conditions of the Creative
Commons Attribution (CC BY SA) license
(https://creativecommons.org/licenses/by-sa/4.0/).
