Systems Dynamics Study of SMEs’ Value Re-creation: Case of Embroidery Center Tasikmalaya

Abstract

Since 1980 Tasikmalaya known as "City of SMEs" because of many SMEs are scattered throughout the city. From the various SMEs, embroidery industry covers 45% of the total SMEs, growing rapidly and absorb a lot of labor. But in recent years the industry does not run as well as expected, instead of grow, a lot of SMEs close their business. Preliminary research conducted by in-depth interviews with 56 entrepreneurs indicate that in their opinion, low profit margins and the difficulty of marketing, especially after global products enter the market are considered as a major problem. Unlike most similar previous research, this study was conducted with systems dynamics approach. Until now there has been little research about SMEs conducted with this approach, hopefully this study can give idea for other researchers to take advantage of systems dynamics in deciphering what is happening in a period, and bring insight when build a theory. Here, systems dynamics bring in awareness of the importance to discover business’ critical sussess factors and the importance of value re-creation to maintain business in global market.