The Effect of Entrepreneurial Activities of Broiler Farm on Business Growth in Indonesia

Abstract

The world had entered the fourth civilization as the creative era that puts innovation as a driving force of economic growth. Innovation is an important element in entrepreneurship, so that entrepreneurial activity is the attribute key to the success of economic development, particularly in agriculture sector. Entrepreneurial activity has been described by Schumpeter in 1911 which stated that the incorporation of technological advances generated by the innovation made by economic actors (eg. agricultural companies) to maximize profits or utility. The main hypothesis of Schumpeter's theory of economic development that there are linkages between economic growth and entrepreneurship. As Indonesia is a country with great agricultural resources, the agricultural entrepreneurship can be a target of the agricultural economic development policy. One of the agricultural subsectors i.e. the livestock subsector has been growing rapidly. Among the livestock subsectors, broiler business has the highest growth. The broiler business started in the '80s, and the broiler's population has currently reached 2 billion. This is presumably due to entrepreneurial activities, i.e. great innovations in broiler farms such as the breed and feed technological innovations, and harvest acceleration is also drawn by innovative processed products of broilers. Therefore, entrepreneurship activities of broilers in economic growth with reference to Schumpeter's theory of economic development are required to be analyzed. Thus, the purpose of this study was to (1) Identify and analyze the effect of internal and external factors of broiler farms on entrepreneurial activity, (2) Analyze the effects of broiler farms entrepreneurial activity on business growth, and (3) Analyzing variability of broiler farms entrepreneurial activity and business growth in the three forms of broiler farm, ie firms, individuals, and partnerships. The research was conducted in Bogor, West Java, Indonesia for six months from November 2012 to April 2013. The research population was an Indonesian independent communal broiler farm (ICBF-peternakan broiler rakyat mandiri). The data of 381 broiler farmers that operated at the time of the study in Bogor were collected by sampling “census” technique. The primary data were collected through the questionnaires by face to face interview. Data were analyzed by multivariate analysis method, namely Structural Equation Modeling (SEM) and cross-tabulation analysis. SEM analysis is used to find the relationship between the variables of entrepreneurial activities of broiler farms and variables of economic growth. Cross-tabulation analysis is used to analyze the variability of entrepreneurial activity and economic growth in the form of firms, individuals, and partnership. SEM analysis results showed that the individual internal factors that effect the entrepreneurial activity of broiler farms are innovation and risk. Innovation formed by the contribution of research intensity (finding new things ) stronger than the innovation intensity (doing a better change). Morever, the farmers had a willingness to take the risk of loss and lost all their business assets. Internal factors that effect the entrepreneurial activity of broiler farm are production and labor. Production efficiency, ie the wasted lack of feed , the low of mortality, and timely harvest, relatively contributed higher than the production cost control. The labor attitude contributed higher than knowledge production of labor, because labor was getting tight social control. External factors that effect the entrepreneurial activity of broiler farms are the government policies of job creation and technical assistance. Government policy has contributed greatly to the entrepreneurial activity of broiler farms. As an entrepreneur who apply entrepreneurial principles in managing the broiler farm, significantly the farmer contributed positively to the business growth that explained by the farm growth and income levels. Assuming cateris paribus, broiler farm that growing and their welfare increasing continously, encourage the production capacity of a strong economy through increased productivity as an indication of the success of economic development, both the region and nationally. Entrepreneurial activity of partnership farmers is relatively higher than the individual and firms. This is due to the transfer of knowledge and technology, market guarantees and risk-sharing. Partnership farmers have a better chance to be creative in developing ideas to improve broiler farm performance. The implication, the government can accelerate economic growth through the business growth policies that encourage the growth of innovator and increased risk takers. Partnership policy is the best alternative in developing small scale broiler farms. However, this study has limitations on its scope, namely can not be generalized to other agricultural sectors. Nevertheless, the study of entrepreneurial activity broiler farm, the government may consider to achieve high economic growth targets through the growth of the number of entrepreneurs in broiler farms particularly and agriculture generally.