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1、International Journal of Business and Management; Vol. 8, No. 16; 2013 ISSN 1833-3850 E-ISSN 1833-8119 Published by Canadian Center of Science and Education 41 Local Economic Development Strategy Based on Localindust
2、rial Core Competence Rahab1, Najmudin1 Nurchayo et al., 2012). In Indonesia, the concept has been called one district one core competence (Huseini, 1999; Nurcahyo et al., 2012). Local development is a process that i
3、nvolves many elements, needs strategies and action plans to realize the www.ccsenet.org/ijbm International Journal of Business and Management Vol. 8, No. 16; 2013 43 have the following characteristics: it delivers real
4、 benefit to customers, it is not easy for competitors to imitate, and it opens access to quite a few markets. They are strategic assets and most relevant to business’s future market, product, and decision. Competence i
5、s integration between technology and production expertise. Markides and Williamson (1994)defined core competence as pool of experience, knowledge, and system to work simultaneously as catalyst to create and pool new st
6、rategic assets. Teece et al., (1997) concluded that core competence should root from an organization’s and its competitors’ products and services. The value of core competence can be increased by combining products and
7、 services with relevant complementary assets. Hafeez etal., (2002) defined core competence as business sources consisting of physical, intellectual, and cultural assets. Furthermore, core competence can be described as
8、 something “unique”, “special”, “hard to imitate,“ and “highly competitive“. Core competence can be defined as “deployment of resources“ or “skills“. Shieh and Wang (2007) argued that core competence consists of activi
9、ties by an organization to be more successful than its competitors and the market needs the product/s. In particular, an organization’s core competence is combination of competitive resources in all business strategies
10、. 2.3 Local Core Competence Within the perspective of local economic development, core competence consists of an integrated set of capabilities of a particular locality to develop its competitive advantage through its
11、uniqueness (Indonesian Ministry of Industry, 2007).By developing local core competence, empowerment will be focused, efficient, and effective in relevance with local potency. Core competence is a pool of unique organiz
12、ational resources and assets needed to achieve organizational goals (Nurcahyo et al., 2012; Rahab, 2012). The uniqueness makes it difficult for competitors to imitate. Analogous to the idea of one village one product (
13、OVOP), based on product uniqueness developed by Governor Hiramatsu in Oita, Japan, the objective of the development of local industrial core competence is to improve local resources or products that the international m
14、arket demands. In Indonesia, the concept of core competence has been adopted into one district one core competence (Satu Kabupaten Satu Kompetensi: SAKA SAKTI) as stated by Huseini. According to Huseini (1999), in order
15、 to develop local competitive advantage, core competence should be created. Such competence is required in order that all resources and capabilities are focused on efforts to create core competence. This concept is roo
16、ted on the belief that specialization in one commodity in an area will increase the expertise of people living there. Mulyadi (2010) argued that the development of local industrial core competence would bring about the
17、 following benefits: a. To exploit local resources at an optimum level. b. To distribute industrial sectors in many areas. c. To improve local competitive advantage based on local advantage. d. To increase value
18、 added for the supply chain of the local competitive product. e. To develop local uniqueness. f. To build collaboration among regions. g. To improve the welfare of local people. 3. Method This is a multidisciplinary
19、 study including management science, public policy, and development economics. This study employed qualitative as well as quantitative approaches. The qualitative approach used is case study, whereas to answer the ques
20、tions of why and how to develop local industrial core competence, Interpretive Structural Modelling approach was used. Quantitative approach was required to analyze the condition of small and medium industry, the poten
21、cies of human resources, market, profile of competitive product and to describe respondents’ responses and the decision upon local industrial core competence. Analytical Hierarchy Process (AHP) method was employed to d
22、etermine the local industrial core competence (Al Harbi, 2001). This study was located in Banyumas district. Data were collected using observation, interview, survey, and Focussed Group Discussion (FGD). Informants inc
23、lude businesspeople of small and medium industry, Regional Board of Development Planning of Banyumas district (BAPPEDA), local government agency on industry, trade, and cooperative (Dinperindagkop), Local Board of Legi
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