THE ROLE OF GOVERNMENT, TRADITIONAL INSTITUTION, AND SOCIAL CAPITAL FOR EMPOWERING SMALL AND MEDIUM INDUSTRIES

ABSTRACT There are some factors which are deemed to have an effect in empowering the small and medium industries (SMIs). This study determines the roles of government, traditional institutions, and social capital for the empowerment of SMIs. Purposive Sampling method was used to determine the district/city in the sample. Sample units in each selected district/city were used Stratified Random Sampling method as many as 204 people. Structural Equation Modeling (SEM)-based variance is used as analysis technique aided by program Partial Least Square (PLS). The results showed that: 1) the role of government through the relevant agencies has not been able to directly influence the empowerment of SMIs. 2) The role of traditional institutions through social roles, cultural, economic and financial has a positive effect for the empowerment of SMIs. 3) Social capital has a positive effect on the role of government to empower SMIs. 4) Social capital has a positive effect on the role of traditional institutions for the empowerment of SMIs. 5) Social capital is not directly affecting the empowerment of SMIs. 6) The role of government through the relevant agencies has a positive influence on the role of traditional institutions for the empowerment of SMIs.