The Relationship of Decentralization, External Environment, and Organizational Performance in Food and Beverages SMEs

Abstract

Micro, small and medium enterprises (SMEs) is one important part of economic development in Indonesia. evertheless, the problems often experienced by SMEs is the lack of technology, which tends to be simple technology, capital and marketing. As an open system organization, SMEs will inevitably interact with their environment. Therefore, SMEs should be able to adapt through a specific mechanism to changes inside and outside the organization, particularly in the environment outside the organization, because the external environment is a source of strength, as well as a source of uncertainty for the organization so that the organization can continue to grow. This study aims to examine the moderating effects of decentralization in the relationship between external environment and organisational performance of SMEs in Pasuruan. In addition, to see the application of cleaner production in jack fruit chips SME are used as a pilot project. The findings of this study indicate that- : (1) Industrial environments have a significant effect in the negative direction on organizational performance, (2) Operational environment have a significant effect in the negative direction on organizational performance, (3) Remote Environment does not has significant effect on organizational performance, (4) Decentralization does not have significant effect in the relationship between external environment (which consists of the Industrial Environmental, Operations Environmental, and Remote Environmental) and Organizational Performance, 5) Food and beverage micro small and medium industries in Pasuruan, has a very high potential supp ort and demographic factors that cause natural raw materials are abundant and can be obtained easily, also has the potential of industrial waste that can be utilized economically and generate profitable new products. Jackfruit peel waste from the production of jackfruit chips and other fruits and vegetables, can be processed and produce fertilizer, firewood, and gas that can be used for the production process so as to save on operating costs and to minimize waste disposal. If this potential is able to be developed for all SMEs, one can imagine the magnitude of the benefits of this clean production process.