INNOVATION IN DISTRIBUTION CHANNEL(S) & COST EFFICIENCY ON SMALL & MEDIUM ENTERPRISE SCALES’ PERFORMANCE: IMPLICATIONS OF THE STUDY

INNOVATION IN DISTRIBUTION CHANNEL(S) & COST EFFICIENCY ON SMALL & MEDIUM ENTERPRISE SCALES' PERFORMANCE: IMPLICATIONS OF THE STUDYFurther study by Sumeet et al,, seeing the evidence of North American Free Trade Area (NAFTA), Asean Free Trade Area (AFTA) which is developed by the members to create a free flow of goods, services, investment, and a free capital flow, equality economic growth and poverty alleviation (Lloyd et al, 2004 in Suumet et al, 2011), identified barriers be significant in smoothing the goods’ flow especially from one country to others.

In the context of SMEs category in Java Indonesia, in terms of efficiency, study of distribution channel innovations as addressed earlier, showed when the innovations in distribution channels were conducted collectively or together as seen in the result(table 3), the innovations are not supposed to be implemented fully as only certain innovations were significant with distribution efficiency performance that lead to firm performance.
However, when innovation in distribution channel conducted partially as seen in the correlation (table 2), most of each distribution channel innovations explain the efficiency performance and the significances are high-except for order handling innovation. As the interaction among the innovations were positives, these findings can be implicated that, if SMEs were established or operated and focus on one type of particular industry only- for instance SMEs export oriented focus on inventory innovation industry only, SMEs export oriented focus on packaging innovation industry only, SMEs export oriented focused on transportation innovation industry only and et citera, the innovations are highly significant to improve efficiency and lead to firm performance. Koschatzky Knut found innovations in supplier intensified firms to do more in interregional networking to enhance firm performance. Further study by Kotz Andong et al, emphasized that the economic growth in china relied on export.

Another study confirmed by Dunusinghe found export activities are significant with GDP in Srilangka. Another study by Michael Mullen, et al stated further that international trade is associated with economic growth. Here, realizing that SMEs establishments are dominating in numbers in global economy, the SMEs in illustration table 2 can absorb much more employment, add much more value, and give much more contribution to economic growth. The last but not least, instead of racing with other SMEs manufacturings, embracing other competitors by establishing the complemented industries become wise option. The illustration (table 2) also be relevant with individual perspectives(Schumpeter 1934, March et al, 1958), the theory of transaction cost(Williams,1979,1989), depot theory(Leo in Bruce,1967), resource base view theory (Chakraborty, 2011). It can be explained tangible and intangible asset of innovations explain the efficiency of SMEs export oriented industries leading to competitiveness, at last, enhance overall firm performance.