ABSTRAK

In this paper, we examine the relationship between cost management practices and the
competitiveness of strategic priorities of small and Medium Enterprises (SMEs). Based on
resource based view theory, we argue that cost management is an important resource to develop
the competitiveness of strategic priorities of SMEs. This paper posits that there is a positive
relationship between costs management practices and competitiveness of strategic priorities of
SMEs. Questionnaire surveys were mailed to either owners or senior management of SMEs in
Malaysia. This study applies factor analysis and regression to test the hypothesis. Consistent with
Previous research, the results of this study provide evidence that the cost management practices
is is positively associated with SME’s competitivenessof strategic priorities. A further analysis
demonstrates that the relationship between cost management practices and SMEs
competitiveness of strategic priorities is mediated by entrepreneurship capabilities. This study
contributed to the literature on resource based view by extending the understanding of integrated
effects from cost management practices and entrepreneurship on competitiveness of strategic
priorities. In terms of practical contributions, the results of this study can be used by regulators,
policy makers and SMEs owners in developing the right resources to enhance the
competitiveness of SMEs strategic priorities.
 DAFTAR ISI

ABSTRAK ....................................................................................................................................

DAFTAR ISI.................................................................................................................................

BAB 1: PENDAHULUAN ...........................................................................................................

1.1 LATAR BELAKANG .....................................................................................................

1.2 RUMUSAN MASALAH .................................................................................................
1.3 TUJUAN ..........................................................................................................................
BAB 2: PEMBAHASAN ..............................................................................................................
2.1 DEFINISI UKM .............................................................................................................
2.2. ASAS DAN TUJUAN ...................................................................................................
2.3 PRINSIP DAN TUJUAN PEMBERDAYAAN .............................................................
2.4 MANAJEMEN UKM .....................................................................................................
 BAB 1
PENDAHULUAN

1.1 Latar Belakang

Small Medium Enterprise (SME) merupakan bagian proporsi yang besar dalam ekonomi
dan dianggap sebagai mesin pertumbuhan di negara maju dan negara berkembang (Boocock
and Shariff, 2005). Meskipun demikian, Small Medium Enterprise (SME) tidak dapat
berjalan tanpa adanya modal yang mendukung proses operasionalnya. Salah satu masalah
yang dihadapi pebisnis terutama pada SME adalah permodalan. Masalah ini tak hanya terjadi
di Indonesia saja, melainkan menjadi sebuah masalah klasik sektor UKM di dunia.”
Permodalan sangatlah penting bagi kelangsungan usaha, baik human (intelligence) capital
maupun financial capital. Namun, hal yang menjadi sorotan utama dalam penelitian ini
adalah kemampuan perusahaan dalam melakukan pengendalian baiya sehingga dapat
meningkatkan produktivitas kinerja pada usaha kecil dan menengah. Dalam kegiatan
meningkatkan kenerja, permodalan biasanya berbanding lurus dengan kegiatan bisnis yang
akan dilakukan, semakin besar lingkup dan kegiatan bisnis yang akan dijalani maka akan
semakin besar dana yang dibutuhkan.
Pengelolaan bisnis bertanggung jawab pada kelembagakan dan mempertahankan sistem
pengendalian internal yang efektif. Sistem ini meliputi kegiatan, struktur dan proses yang
membantu organisasi manajemen untuk mengurangi risiko yang terkait dalam pencapaian
tujuan organisasi secara efektif (Charan, 2006). Efektivitas pengendalian internal
menunjukkan optimalnya sebuah organisasi. Hal ini akan terlihat dari apa yang dihasilkan
dalam implementasi di dalam dan luar organisasi.
Permasalahan efisiensi produksi juga dipengaruhi oleh produktivitas tenaga kerja.
Dengan demikian, kemampuan tenaga kerja pada usaha kecil dan menengah sangat
mempengaruhi keberlangsungan usaha tersebut. Kemampuan kewirausahaan dapat
membantu organisasi untuk mencapai keunggulan kompetitif dan menciptakan diferensiasi
pasar. Kempampuan kewirausahaan juga akan mempengaruhi efektivitas praktik manajemen
UKM.
1.2 Rumusan Masalah
Apakah praktik manajemen biaya pada UKM dapat mempengaruhi daya saing prioritas
strategis?

1.3 Tujuan
a. Untuk mengerahui hubungan antara manajemen biaya dan daya saing prioritas strategis
b. Untuk mengetahui apakah hubungan antara praktik manajemen biaya dan daya saing
prioritas strategis UKM dapat dimediasi oleh kamampuan kewirausahaan.
 BAB 2
PEMBAHASAN

2.1 Definisi Usaha Kecil Menengah (UKM)

Menurut UU RI No 20 Tahun 2008:
 Usaha Mikro adalah usaha produktif milik perorangan atau badan usaha perorangan
yang memenuhi kriteria Usaha Mikro sebagaimana diatur dalam Undang-Undang ini.
 Usaha Kecil adalah usaha ekonomi produktif yang berdiri sendiri, yang dilakukan oleh
perorangan atau badan usaha yang bukan merupakan anak perusahaan atau bukan cabang
perusahaan yang dimiliki, dikuasai, atau menjadi bagian baik langsung maupun tidak
langsung dari Usaha Menengah atau Usaha Besar.
 Usaha Menengah adalah usaha ekonomi produktif yang berdiri sendiri, yang dilakukan
oleh perorangan atau badan usaha yang bukan merupakan anak perusahaan atau cabang
perusahaan yang dimiliki, dikuasai, atau menjadi bagian baik langsung maupun tidak
langsung dengan Usaha Kecil atau Usaha Besar dengan jumlah kekayaan bersih atau
hasil penjualan tahunan sebagaimana diatur dalam Undang-Undang.
 Usaha Besar adalah usaha ekonomi produktif yang dilakukan oleh badan usaha dengan
jumlah kekayaan bersih atau hasil penjualan tahunan lebih besar dari Usaha Menengah,
yang meliputi usaha nasional milik negara atau swasta. Dan usaha asing yang melakukan
kegiatan ekonomi di Indonesia.
2.2 Asas dan Tujuan
Asas
a. Kekeluargaan
b. Demokrasi ekonomi
c. Kebersamaan
d. Efisiensi berkeadilan
e. Berkelanjutan
f. Berwawasan lingkungan
g. Kemandirian
h. Keseimbangan kemajuan
 i. Kesatuan ekonomi nasional
Tujuan
Usaha mikro, kecil, dan menengah bertujuan menumbuhkan dan mengembangkan usahanya
dalam rangka membangun perekonomian nasional berdasarkan ekonomi yang berkeadilan.
2.3 Prinsip dan Tujuan Pemberdayaan
Adapun beberapa prinsip pemberdayaan Usaha Mikro, Kecil, Dan Menengah, yaitu:
1. Menumbuhkan kemandirian, kebersamaan, dan kewirausahaan Usaha mikro, Kecil, dan
Menengah untuk berkarya dengan prakarsa sendiri
2. Perwujudan kebijakan publik yang transparan, akuntabel, dan kerkeadilan
3. Pengembangan usaha berbasis potensi daerah dan berorientasi pasar sesuai dengan
kompetensi usaha mikro, kecil, dan menengah
4. Peningkatan daya saing usaha mikro, kecil, dan menengah
5. Penyelenggaraan perencanaan, pelaksanaan, dan pengendalian secara terpadu
Adapun beberapa tujuan pemberdayaan usaha mikro, kecil, dan menengah, yaitu:
1. Mewujudkan struktur perekonomian nasional yang seimbang, berkembang, dan
berkeadilan
2. Menumbuhkan dan mengembangkan kemampuan usaha mikro, kecil, dan menengah
menjadi usaha yang tangguh dan mandiri
3. Meningkatkan peran usaha, mikro, kecil, dan menengah dalam pembangunan daerah,
penciptaan lapangan kerja, pemerataan pendapatan, pertumbuhan ekonomi, dan
pengentasan rakyat dari kemiskinan
2.4 Manajemen UKM
Manajemen UKM adalah proses perencanaan, pengorganisasian, pengarahan, dan
pengawasan terhadap usaha kecil dan menengah dengan memanfaatkan sumber daya yang
dimiliki secara optimal, memanfaatkan segala potensi sekitar guna menjawab peluang usaha
dan mengharapkan tercapainya tujuan usaha yang efektif, efisiem serta kemandirian
finansial.
 COST MANAGEMENT, ENTREPRENEURSHIP AND COMPETITIVENESS OF
STRATEGIC PRIORITIES FOR SMALL AND MEDIUM ENTERPRISES

Azriyah Amir, Sofiah Md Auzair and Rozita Amirudin

1. Introduction
What are the factors that could influence small and medium enterprises (SMEs)
competitiveness of strategic priorities? This is the question that many SMEs and regulators
aim to solve ensure the sustainability and successfulness in creating market differentiation
among SMEs. This study seeks to explain does SMEs cost management practices influence
competitiveness of strategic priorities by examining SMEs cost management practices in
Malaysia.
SMEs are important for Malaysian economy significant to contribution to the country’s
income, providing employment and source of suppliers to bigger corporation (Ates et al.
2013; Mohd Nizam 2012; Kamilah 2014; Kamar et al. 2011). Despite its important, several
studies also document that SMEs have to overcome many challenges in other to survive and
sustain. For example, SMEs should have appropriate strategic priorities to overcome problems
such as lack of funding, low productivity, lack of management capabilities, as well as access
to technology and controls (Saleh & Nububisi 2006; Ting2004). Ting (2004) also suggests
that there are possibilities for SMEs to have high risk on their sustainability of they do not
process competitive advantage through appropriate strategic priorities. SMEs competitiveness
of strategic priority is very important because it can directly affect firms’ performance. Thus,
the first objective of this study is to investigate the relationship between cost management and
competitiveness of strategic priorities for SMEs.
Previous studies on cost management practices in Malaysia mainly focused on the types
of management controls techniques. For example, studies in budgeting behavior (Kamar et al.
2011), management accounting practices (Kamilah, 2014), and performance management
(Mohd Nizam 2012). However, there is little evidence on the study that looks at the
relationship between cost management and the formation of organizational competitiveness
and competitive strategies of SMEs. additionally, Henri (2006) and Hult and Ketchen (2001)
identify that entrepreneurship capabilities could assist organizations to achieve competitive
 advantage and create market differentiation. Entrepreneurship capabilities will also affect the
effectiveness of management practices of SMEs (Ates et al., 2013; Mohd Nizam 2012). Thus,
the second objective of this study is to examine whether the relationship between cost
management practice and SMEs’ competitiveness of strategic priorities can be mediated by
entrepreneurship capabilities.
Questionnaire surveys were mailed to either owners or senior management of SMEs.
Respondents are selected randomly from SME Corp listing. We perform factor analysis to
scale down our questionnaire items into variables and regression analysis to test the
hypothesis. This study also used the macro analysis in SPSS which is a macro process
introduced by Hayes (2013).
This study contributes to resource-based theory by testing the role of cost management
practices to achieve SMEs’ competitive advantage. We also consider entrepreneurship
capabilities as the mediating role in the relationship between cost management practices and
competitiveness of strategic priorities. Our study provides unique evidence on the role of cost
management practices in SMEs environment in achieving competitiveness of strategic
priorities in comparison to prior studies that are only evidenced in larger firms.
The remainder of this paper is organized as follows: First we provide background
literature; second, we describe the resource-based view theory and develop hypotheses; third,
we present the empirical analysis; and finally, we provide some concluding remarks.

2. Literature Review

2.1 SME competitiveness of strategic priorities

Competitiveness of strategic priorities refers to competition between strategic priorities in
meeting customer requirements and cost management efficiency. Competitiveness of strategic
priorities can also be referred as the successful outcome of strategic priorities based on the
strategic priorities of the competition of the firm (Chenhall, 2005). According to Miller et al.
(1992), strategic priorities depend on product features. Which is combination of cost
leadership strategies and differentiation strategies. Product differentiation strategy is focusing
on strategies that can meet customer needs that is to provide high quality products, flexibility
of product, customer service, fast delivery and product design. Cost leadership strategy refers
to the efficient management of costing. Through cost leadership, low cost production required
to enable the product or service is produced can be sold at a lower price than its competitors
(Porter 1985). Through a combination of product differentiation strategies and cost leadership
in strategic priorities can also produce products or services that can be competitive (Chenhall
2005, Chenhall & Langfield 1998, Miller et al. 1992). Studies on strategies conducted in
Malaysian SMEs are looking at their relationship on performance (Wong et al. 2013) and the
effectiveness and competitiveness of the strategies undertaken (Mohd Rosli 2012).

2.2 SME cost management

According to Hansen et al. (2007), cost management refers to the identification,

information collection, measurement, classification and reporting useful information to
management to determine the related cost of products, customers and suppliers as well as for
planning purposes, control, continuous improvement, and decision making. Fayard et al.
(2012) define cost management as the cost of portfolio management and business activities
that enable organizations to manage their costs and make cost management decisions.
The cost and management control techniques that have been examined in SMEs
environment are related to performance evaluation (Jarvis et al., 2000), budget (Kamar et al.,
2011; King et al. 2010), activities-based costing (Hopper et al. 1999; Hughes 2005), target
costing (Hopper et al. 1999; Kamilah, 2014), quality management (Kober et al. 2012; Sadiq &
Teo, 2003), balanced scorecard (Fernandes et al. 2006). These studies are largely focused on
management accounting practices and its implications on business performance. For example,
Jarvis et al. (2000) examined the performance evaluation small firms in the UK. Finding
found that as compared to the ratio of profitability, SMEs preferred cash flow as an indicator
of performance. King et al. (2010) examine the relationship between cost and performance
management through the relationship between budget and performance health business circles
in Australia. King et al. (2010) found positive relationship between budgeting practices and
business performance. Hopper et al. (1999) explored costing system and cost management
practices among SMEs using semi structured interviews with 13 small and medium
enterprises in Japan. Their findings show that the small and medium enterprises adopt costing
techniques such as standard costs, target costing and activity-based costing. A study
conducted by Kamilah (2014) in Malaysia also found similar results. Based on responses from
 160 accountants, it was found that traditional costing is being practiced most by SMEs in
Malaysia.

2.3 SME entrepreneurship capabilities

Based on previous literature, entrepreneurial capabilities can influence owners managers

of SMEs to overcome challenges and sustain the business. Barringer and Bluedorn (1999) and
Miller (1983) suggest that entrepreneurial capabilities should also be emphasized in all types
of organizations regardless of size. This can ensure that the organization can grow
consistently in a dynamic conditions. Entrepreneurial ability is important because it will affect
the style of management for the organization in decision making (Banfield et al. 1996).
Studies of entrepreneurial capabilities that were conducted in SMEs environment studied its
relations to performance (eg Amran et al. 2009; Rosli & Norshafizah 2013; Tat Keh et al.
2007) examine the effectiveness of entrepreneurship capabilities (eg Covin & Slevin, 1989,
Noor Hazlina et al. 2011) and factors that affect entrepreneurship capabilities (for example:
Jeen & Hishamuddin 2008; Gray, 2002). If SMEs have less entrepreneurship capabilities,
SMEs can be exposed to slower growth which eventually caused failure to the organizational
failure. Therefore, this study attemps to study entrepreneurial capabilities as a mediator
between cost management and the competitiveness of strategic priorities of SMEs.

3. Theory and hypotheses development

According to Barney (2001), resources are referred a group of tangible and intangible
assets, which include management organization, process, organizations and the operating of
the routine work as well as information and knowledge that can be controlled by the
organization. In order to have competitive advantage, Barney (1991), believes that resources
and capabilities that are controlled by the organization should be valuable resources and
capabilities, hard to be obtained, may not be copied and cannot be changed.
The resources of firms can directly or indirectly affect firm competitiveness. Previous
studies on firm competitiveness indicate that resource can be mediators (eg Fayard et al. 2012;
Henri 2006) and also moderators (for example: Crook et al., 2008; Newbert 2007). In this
study, we use resource-based theory to explain the role of entrepreneurship capabilities as
mediator to link between cost management and competitiveness of strategic priorities.
 According to Fayard et al. (2012), the source can be built on each other and can generate
new resources in a more unique and more valuable to organization. Similar to the features that
were described by Barney (1991), this study examines the combination of cost management
and entrepreneurial capabilities as more valuable resources for an organization. The
combination of these variables also makes the organization more unique, difficult to obtain
and may not be able to copied. Hence, the emphasis on competitive priorities results from a
combination of cost management and entrepreneurship capabilities to develop a type of
resources that neither be changed nor are similar to other organizations.

3.1 Hypotheses Development

The objective of cost management is to reduce costs efficiently and at the same time
strengthen the strategic position of an organization (Hansen et al. 2007). Previous studies
feature the relationship between the techniques of cost management and strategies. For
example the benchmarking technique helps achieve product strategy differentiation by
creating standards that follow the best practices used by high-performing organizations. These
best practice will stimulate the creation of a range of policies that can improve customer
service, distribution and delivery strategies (Chenhall & Langfiled 1998). Bisbe and
Malagueno (2012) and Gimbert et al. (2010) show that the role of management accounting is
not only as a mechanism for the implementation of the strategy but also plays a role in
shaping the strategy of the organization. It supports the view of Hansen et al. (2007) that cost
management plays an important role in making strategic decisions. Cost information is used
to formulate and implementation strategies and assess competitiveness continuously. Based
on these argument, our first hypothesis is as follows:

H1: There is positive relationship between cost management and competitiveness of

strategies priorities in Malaysioan SMEs

Entrepreneurial capabilities can lead to increased incompetitive advantage of the

organizations (Henri, 2006; Hult & Ketchen 2001) and influence the management of SMEs
(Ates et al., 2013; Mohd Nizam 2012). However, entrepreneurial capacities for SMEs should
be further examine because SMEs’ managers have a variety of duties and roles which
included in operation and strategy (Ates et al. 2013). SMEs’ managers normally have less
time and lack management skills. This paper suggest that proper cost management will
increase the ability of the owner or manager in managing organizations efficiently.
In order to ensure the success of the strategic priorities of SME competitiveness is
achieved, exiting entrepreneurial must willing to take risks, becoming more innovative and
proactive. According to Zahra et al. (1995), entrepreneurial capabilities that are ready to take
risks, innovative and proactive will help in identifying the opportunities to improve
competitiveness. Ahrens and Chapman (2004) finds that the customer satisfaction strategy
involves various activities that requres skills and style of management in formulating and
execution of business strategies. Thus, through the practice of cost management and
entrepreneurial capabilitied, managers can formulate and implement a more focused strategy
priorities that is good and relevant to customer needs and business goals.
Based on prior literature, it is expected that the relationship between cost management
with strategies competitive priorities mediated by entrepreneurship capabilities. Thus, the
second hypotheses of this study is as follows:

H2: The effect of cost management on competitiveness of strategic priorities will be

mediated by entrepreneurship capabilities.