Proceedings of the 4th Borobudur International Symposium on Humanities and Social Science 2022 (BIS-HSS 2022)

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Determinants of Profit Efficiency among Small and Medium-Sized Enterprises in Indonesia

Authors
Muhamad Wahid Ibrahim1, *, Ravindra Ardiana Darmadi1
1Department of Management, Universitas Muhammadiyah Magelang, Magelang, Indonesia
*Corresponding author. Email: ibrahim.muhamadwahid@gmail.com
Corresponding Author
Muhamad Wahid Ibrahim
Available Online 10 October 2023.
DOI
10.2991/978-2-38476-118-0_101How to use a DOI?
Keywords
Profit Efficiency; Profit Inefficiency; Stochastic Frontier Analysis; Small and Medium Sized Enterprises
Abstract

Small and medium-sized enterprises (SMEs) are essential to the world economy as they create employment and support economic growth [1]. This study estimated the profit efficiency of SMEs and its determinants by analysing the data samples from 106 companies across the industry sector in Indonesia with eight-year observation. There was a total of 848 data analysed in this study. The aim of this study is to understand the current condition of the efficiency level of SMEs and identify the factors that affect profit efficiency. The stochastic frontier analysis (SFA) and the model formulated by [2] were utilised to estimate the profit efficiency of the observed SMEs. The results showed that the average profit efficiency of SMEs in Indonesia was 15.65%. The findings also revealed that the size and age of the company have a negative effect on profit efficiency. Conversely, labour productivity, export activity and digitalization have a positive effect. Government assistant, however, did not affect profit efficiency since it was proven to be statistically insignificant. Finally, this study also has possible limitations and proposes strategic implications of the findings for policymakers, SMEs managers, and future studies.

Copyright
© 2024 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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Volume Title
Proceedings of the 4th Borobudur International Symposium on Humanities and Social Science 2022 (BIS-HSS 2022)
Series
Advances in Social Science, Education and Humanities Research
Publication Date
10 October 2023
ISBN
978-2-38476-118-0
ISSN
2352-5398
DOI
10.2991/978-2-38476-118-0_101How to use a DOI?
Copyright
© 2024 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

Cite this article

risenwbib
TY  - CONF
AU  - Muhamad Wahid Ibrahim
AU  - Ravindra Ardiana Darmadi
PY  - 2023
DA  - 2023/10/10
TI  - Determinants of Profit Efficiency among Small and Medium-Sized Enterprises in Indonesia
BT  - Proceedings of the 4th Borobudur International Symposium on Humanities and Social Science 2022 (BIS-HSS 2022)
PB  - Atlantis Press
SP  - 884
EP  - 897
SN  - 2352-5398
UR  - https://doi.org/10.2991/978-2-38476-118-0_101
DO  - 10.2991/978-2-38476-118-0_101
ID  - Ibrahim2023
ER  -