How Does The Marketing Portal Work for Small-scale Furniture Producers?

Abstract

Markets interconnect sellers and buyers. Rigid interconnectedness has a relatively low adaptive capacity, and, therefore, vulnerable to massive collapse. Previous value chain analysis (VCA) studies conducted in the wood-based furniture producing area of Jepara in Central Java, Indonesia found that most furniture producing small- and medium-size enterprises (SMEs) in the region are interconnected with buyers through directed and hierarchical types of governance networks, which are centralised to either domestic brokers or exporters. Centralised networks are too brittle for SMEs to adapt to new conditions. In 1998, the region’s furniture industry experienced a massive collapse, threatening not only economic, but also environmental sustainability. The collapse suggested that decentralising interconnectedness by giving SMEs more ‘autonomy’ to govern value chains was necessary to increase the adaptive capacity of Jepara’s furniture industry. One way of doing so was through the use of information and communications technology (ICT). Consequently, a collective marketing portal (http://www.javamebel.com) was developed, aimed at facilitating SMEs in Jepara to market their products collectively and link them directly to potential buyers, with the domestic niche market as its main target. This study evaluates the ‘usefulness’ of the portal from the SMEs’ perspective as well as appropriate institutions for its management. In addition to employing online statistical data, the study involved field surveys to investigate factors constraining marketing through the portal. Eighty-five days after its launch, javamebel had attracted relatively few SMEs and potential buyers. Though this is quite normal for a new innovation, we did establish that the portal’s ‘usefulness’ was determined by cohesiveness among SMEs, social resistance and buyer-seller trust. This suggests that in order to develop, the portal should improve its ‘orgware’, the institutional settings governing rules and incentive structures for the development and employment of technology, demanding continuous inputs via investments and appropriate incentives structures. We believe that campaigning, capacity building, equipment grants and extensions for stimulating expectations of the social benefits of collective action will accelerate the achievement of this goal.