MODEL DEVELOPMENT OF OPERATIONAL RISK MITIGATION STRATEGY BASED ON ORGANIZATIONAL LIFE CYCLE AND STAKEHOLDERS AT MICRO, SMALL, AND MEDIUM ENTERPRISE: HISTORICAL CASE STUDY THE MACHINERY AND MECHANICAL TOOLS INDUSTRY SECTOR FOR METALWORK

• Main Author: Suryati, Asih
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/84745
• Institution: Institut Teknologi Bandung

Micro, Small, and Medium Enterprises (MSMEs) play a strategic role in the Indonesian economy. Although MSME dominates the business in Indonesia, MSME contributions to national GDP are not proportional to the number of existing businesses. Therefore, Indonesia's government is trying to focus on several priority industries, one of which is the machinery and machine tool industry for metalworking. This industry is a supporting industry for the metal-based manufacturing industry sector. In fact, MSMEs face various uncertainties in developing their businesses which can threaten their survival. Moreover, MSME organizations often face changes in the demands of their key stakeholders. In addition, The inability to meet those demands will create risks that can threaten MSME organizational goals. MSME organizations have limited resources and capabilities. Without an appropriate risk mitigation strategy framework for MSME organization context, there is a possibility that the applied risk mitigation activities are not optimal. In this study, risk is defined as an event that if it occurs can have a detrimental effect or negative on the achievement of organizational goals. Operational risks include risks that occur in the organization's business processes related to the organization's stakeholders. Operational risk mitigation strategy frameworks that are appropriate to the context of MSME organizations can be a solution so that MSME organizations can survive, grow, and develop. This study aims to develop operational risk mitigation strategies frameworks based on organizational life cycle and dependency structure with its stakeholders in machinery and mechanical tools industry sector for metalwork MSMEs. The research model was developed by applying two different constructs in dependency structure, which is dependence asymmetry and mutual dependence. Not only customer and supplier, the model was also developed to examine dependency structure between organization and employee. The stages of this research are identifying the growth stage of the organization, identifying stakeholders involved and risks in the core business processes of MSMEs in the metalworking machinery vi and machine tool industry, identifying risk perceptions related to stakeholders, and identifying dependency structures between the organization and stakeholders. The research was conducted using a historical case study method in one MSME company with two different stakeholders sectors, namely telcommunications and automotive sectors in machinery and mechanical tools industry for metalwork. Data collection was conducted by conducting in-depth interviews, document studies, and field observations. Data processing was carried out using thematic analysis. Based on the results of the case study, it can be concluded that PT ABC has gone through four stages in organizational life cycle, namely entrepreneurial, growth, expansion, and decline. Risk perception related to its stakeholders differ throughout organizational life cycle depending on the risk probability and/or impact or organizational resources/capabilities. The dependency structure of the organization with its stakeholders also shows changes throughout the stages of the organizational life cycle except between the organization and employees, which has not changed since the company was founded. The dependency structure identified in this study are stakeholder dominance, organizational dominance, and interdependence with a high or moderate level of mutual dependence. Risk mitigation strategies were formulated based on risk perception and dependency structure between the organization and its stakeholders. The strategies identified in the telecommunications and automotive sectors are proactive relational, reactive relational, and passive strategy. The results show that MSME organizations tend to use relational strategies throughout the growth stage of the organization.For reactive relational risk mitigation strategies, customer-related risks can be managed by communicating and achieving win-win solutions for both sides, supplier-related risks can be managed by communicating and requesting cooperation, employee-related risks can be managed by giving warnings and conducting evaluations. For proactive relational risk mitigation strategies, employee-related risks can be managed by involving customers in the implementation of business processes.