Development of Women-Led Micro and Small Enterprises in Indonesia: Their Motivations and Main Constraints

Introduction

It was only after the Asian financial crisis in 1997-1998 that the public’s (policy makers, academics, and practitioners) interest in the development of women entrepreneurship in Indonesia began to emerge. This transpired for three primary reasons. First it was undeniable that the number of women entrepreneurs in Indonesia was increasing significantly each year. Traditionally, Indonesian women who were actively involved as entrepreneurs were found primarily in micro and small enterprises (MSEs). Today, there are still only a few women that manage or own big companies in Indonesia. By sector, they are mostly found in the trade and services sectors, managing and/or owning enterprises, such as small shops, food service stalls, beauty salons, boutique/fashion businesses, and catering companies. In rural areas, women who own their own businesses are mostly petty traders operating within traditional market centers. In industry, they are predominantly owners or managers of small-sized handicraft, food, and garment industries (Tambunan, 2009c, 2015).

As their numbers continue to increase, women entrepreneurs in Indonesia have been labeled the new engines for economic growth, to bring prosperity and welfare to the country. Over the past two decades, many stakeholders worldwide have viewed women entrepreneurs as an important untapped source of economic growth and development in developing countries. Secondly, Indonesia joined the UN-initiated Millennium Development Goals (MDGs) that ended in 2015 (which was followed up by Millennium Sustainable Goals [MSG]), in which the empowerment of women was among MDG/MSG goals. Thus, the Indonesian government realized that the development of women entrepreneurs was crucial in order to achieve that particular goal. The third reason was the issue of poverty, which is still a serious problem, not only socially, but also politically. The government recognized the active involvement of women in economic activities outside the home—not only as wage-paid workers in labor-intensive industries (e.g. textile and garments, leather products, food, beverage, and tobacco products), but also as business owners or entrepreneurs—would have a significant impact on reducing poverty (Tambunan, 2015).

However, as in many other developing countries, despite the important role of women entrepreneurs being recognized by the Indonesian government, the gender gap in entrepreneurship in Indonesia persists (Tambunan, 2015; WEF, 2015; GEM, 2015)). The availability of studies and literature on women entrepreneurs in Indonesia is very sparse, because national data on the total number of women entrepreneurs and their key characteristics in Indonesia are limited. Even, the Indonesian Women Entrepreneurs Association (IWAPI) does not have a comprehensive database of the total number of women entrepreneurs in Indonesia, except for its own member list, who are primarily owners of large-scale/modern businesses located in big cities. Additionally, as mentioned earlier, public interest in women entrepreneurship in Indonesia was just revealed after the 1997-1998 Asian financial crisis, which was driven chiefly by the introduction of the Millennium Development Goals (MDGs) (Tambunan, 2015) .

The goal of this chapter is to examine the development of women entrepreneurs in Indonesia, especially their foremost personal motivations or reasons in choosing to operate their own businesses, and the major constraints they have encountered in running their own businesses. The primary personal motivations to be identified may provide an idea as to whether the current development of women entrepreneurs in Indonesia is a direct reflection of an entrepreneurial spirit among women or, on the contrary, as a direct result of the economic hardships faced by many women in the country. The primary business constraints to be identified may show the current condition of women entrepreneurship development and growth of businesses owned or managed by females in Indonesia.