SME Governance in Indonesia – A Survey and Insight from Private Companies

Jaswadi Jaswadi · Mohammad Iqbal · Sumiadji

40 citations0/0 files storedProcedia Economics and Finance

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Corporate Governance and Financial Management Corporate Finance and Governance Financial Literacy and Behavior

Abstract

In 2015, the national economy development platform will change as AFTA effectively enforced. Indonesia as major player with the empowering SMEs of 99 percent of total business units by employing 97.24% of the entire workforce, should considers that the Economy will grow, if SMEs grow. Therefore, it is crucial for economic stakeholders - government, banking and financial community, industry associations and chambers of commerce and service providers SMEs - collaborate to encourage the growth and sustainability of SMEs. One contributing factor to the development of SMEs is corporate governance by improving the operation's accountability and transparency, therefore SMEs will be more bankable and investable. The purpose of this study was to describe how good corporate governance is that could be implemented within a SME sector in Indonesia. The study was conducted by surveying the 150 prospective SMEs respondents in Malang, East Java Indonesia. There were 49 entities participated by returning research instruments and provided additional information about how adaptation of good corporate governance might be implemented on SMEs. Supervisory and Management Board need to collaborate generating innovative ideas for SMEs. Furthermore, supervisory board advises management board in regard to strategic plan, access to capital and gain lender's or investor's confidence. A good corporate governance pillars in a SME sector has been proposed as a supplement to the general guidelines issued by the National Committee on Governance (2006). Adaptation considers the difference of legal aspects of SMEs, role of a supervisory or an advisory board and presence of family governance mechanisms.

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