Journal of Legal, Ethical and Regulatory Issues (Print ISSN: 1544-0036; Online ISSN: 1544-0044)

Research Article: 2022 Vol: 25 Issue: 4S

Business Communication Model Amid Pandemic: A Case Study of Creative Industry SMEs Phenomena in Indonesia

Donald Crestofel Lamtu, Institute Technology Bandung

Sri Hartati, Institute Technology Bandung

Kartib Bayu, Institute Technology Bandung

Naufal Shayed Alam, Universitas Padjajaran

Citation Information: Lamtu, D., Hartati, S., Bayu, K., & Alam, N.S. (2022). Business communication model amid pandemic: A case study of creative industry SMES phenomena in Indonesia. Journal of Legal, Ethical and Regulatory Issues, 25(S4), 1-10.

Abstract

 The aim of this study is to determine the communication maturity stage within an organization; each informant's responses are classified into three categories: internal relationship, new technology adaptation, and the presence of a communication role model in SMEs. The data were collected from interviews with SMEs which were then analyzed by qualitative analysis. This study divides the SMEs into three categories through a case study approach by selecting fifteen SMEs based on purposive sample criteria. Category A contains SMEs that survived during the pandemic without making significant strategy changes, category B contains SMEs that survived during a pandemic by large-scale reforming, and category C is for SMEs that did not survive. Based on this categorization, an internal and external communication analysis, category A internally shows business communications classified into adult and adolescence stages, shown by how they practice open and dynamic internal relationships, adapt new technologies comprehensively and place role models that exhibit an egalitarian and transparent communication skill. As for external communication, category. A adopt digital technology by utilizing social media, automatic transaction systems, and social commerce consisting of functional, hedonistic, and social aspects. Categories B and C both adopt digital technology, but do not consider the importance of social commerce.

Keywords

Business Communication, Communication Maturity Stage, Small Medium Enterprises, Social Commerce, Pandemic

Introduction

SMEs play an important role in the economy of Indonesia. According to data, most enterprises in Indonesia can be categorized as SMEs. The Ministry of Cooperatives and SMEs data shows that, in 2018, 99% of the total business units in Indonesia can be categorized as SMEs. These SMEs employ around 97% of the cumulative workforce in the economic sector (Ministry of Cooperatives and SMEs, 2020). To emphasize, SMEs, based on 2018 data, contributed 61.1% of the total national GDP (Handayani et al., 2020), indicating their major role in Indonesia’s economy. Unfortunately, the SME sector is extensively impacted by the outbreak of the Covid-19 pandemic.

The Indonesian government has implemented various policies to cope with the Covid-19 pandemic, such as the imposition of Large-Scale Social Restrictions and the distribution of vaccines in recent months. However, these government efforts seem insufficient to restore the economy, especially for business actors operating in vulnerable areas such as small and medium enterprises or SMEs (Lutfi et al., 2020; Winarsih et al., 2021). Research by LPEM FEB UI in 2020 shows that around 88 % of SMEs are experiencing a decrease in demand by 40%-60%. The impact of changes in profit margins on SMEs as a whole is reported to be around 30%. The majority of SMEs in this study (56%) reported employees layoff by 20%-60%. The other 22% chose to close their businesses as a short-term strategy in dealing with the pandemic (Rezki et al., 2020). The weakening of SMEs has resulted in a decline in Indonesia's economic performance since the first quarter of 2020, (Central Bureau of Statistics Indonesia, 2020a, 2020b). Until this research was written in early 2021, the number of affected SMEs is estimated to increase over time.

The Indonesian government recognizes creative industry development for its potential contribution to national economic growth and global agility. However, the pandemic hit hard in the middle of empowerment of the creative economy enterprises. These SMEs in the creative industry sector affected by Covid-19 have to make more adaptive steps for their businesses to survive (García-Vidal et al., 2020). One of the probable steps is to improve the business communication side (Chewning et al., 2013; Jahn & Johansson, 2018). The business communication model adaptation by SMEs during this pandemic must consider consumer behavior (Johansson et al., 2019) that has changed significantly, especially concerning transaction models that shift from offline to online. This consumer behavior change requires the new technology adoption and an understanding of digital literacy from SMEs both externally and internally (Guo et al., 2020; & Papadopoulos et al., 2020). In other words, SMEs need to transform their management, organization, and general company branding.

This study examines and analyzes how several creative industry SMEs in West Java Province, Indonesia adapted their business communication process during the Covid-19 pandemics. We aim to formulate a more comprehensive business communication model as a part of the business survival strategy in the pandemic era.

Literature Review

Business Communication

Business communication explores the importance of verbal and nonverbal communication aimed at the most fundamental goals in business, namely maximizing profits and welfare (Reinsch, 1991). Although they differ from other types of communication within the company, such as management communication or organizational communication, these two are often interlaced in discussions about business communication. The discussion of business communication generally explores the concept of communication focusing within the scope of the business context. Therefore, through the four communication functions in management and organization, the objectives in business can also be achieved. The four communication functions are as follows (Clutterbuck & Hirst, 2002): (1) Clarity of purpose (Rao Jada et al., 2019); (2) mutual trust between people at all levels (Albu & Flyverbom, 2019); (3) effective sharing of information (Johansson et al., 2019); (4) communication from the management (top management communication) (Shimizu, 2017).

The four points of communication function in management and organization above show the importance of communication within the company. It can even be said that information transparency has become a new reality in maintaining a company (Albu & Flyverbom, 2019; Chanana & Sangeeta, 2020; Schnackenberg & Tomlinson, 2016). In other words, the openness of communication, in this case, is a primary key in doing business. In today's information society, disseminating information as widely as possible will strengthen a company's position, both internally and externally, rather than keeping it a secret (Albu & Flyverbom, 2019; Heald, 2006).

The assessment of business communication maturity level within a company can be classified into four stages (Clutterbuck & Hirst, 2002): (1) Nascent is the stage of communicating only if necessary, there is much secrecy and communication takes place haphazardly at this stage; (2) immature is the stage of communication that is fragmented and discrete among company members but is mainly solid among the managers; (3) adolescents is the stage of communication that is integrated but is limited to their relationships with consumers and tend to have a superior-subordinate relationship pattern; (4) mature is the communication stage that is entirely integrated and is applied by employees of all levels (including superiors).

Social Commerce

Social commerce has risen as a new trend hastened with the reevaluation of social media marketing. It enables customers to create content and share information concerning a product. It also allows them to show social support to the products and other consumers by reviewing, rating, and recommending certain brands or products. The social media activity and customer response caused by social commerce create “social trust.” Social trust is established due to (1) customers discovering other customers’ content and posting their purchases and consumption, and (2) customers’ ability to trust the contents from the customer’s community more than those from the organization. Users will generate social trust and jointly create their values as the result of the improved interaction between customers and online companies and between customers (Algharabat et al., 2020).

Social commerce allows consumers to actively participate in the business communication process on social media platforms (Rana et al., 2019; Shareef et al., 2019; Shiau et al., 2017) and to create content that users can share on different social media platforms. Currently, there are two kinds of social commerce run (Algharabat et al., 2020): (1) Sites using Web 2.0 tools (such as Amazon) and promoting customer content, but this type restricts consumer interaction, for instance, they cannot tag others or send messages privately (Huang & Benyoucef, 2013); (2) SNS using e-commerce functions to give customers channels for social contact, encourage them to co-create value by sharing more experiences and information and create their content. Social commerce is a business activity with a place on social media platforms (Curty & Zhang, 2013). It consists of three dimensions: reviews and ratings, recommendations and referrals), and forums and communities (Hajli, 2015).

The concept of value co-creation emerged from producers–customers discussion and interaction, and co-creation by jointly constructing personalized services (Alalwan et al., 2017; Baabdullah et al., 2019). Therefore, the latest study on value co-creation in social media is based on the interaction of online businesses–their customers and among customers themselves (Schau et al., 2009). Thus, different values are constructed among customers by interacting and socializing (Baabdullah, 2018). Furthermore, previous studies show that, within SNSs, the value co-creation (Foster, 2010; Shareef et al., 2017) are consists of three dimensions: (1) functional (i.e., finding and updating information) (Lee et al., 2014), 2) hedonic (i.e., mood and sentiments) (Zhang et al., 2017), and (3) social value (i.e., customers’ social self-conception and intercommunication through various platforms of social media) (Jahn & Kunz, 2012; Yu et al., 2013).

Research Method

This research applies a qualitative case study method. Patterns that emerge from the case study are used to construct a proposed model. The choice of using the case study method is done because the method can provide an in-depth exploration of details and comparison between various contexts (Allen, 2017). A purposive sampling technique was employed, with the following inclusion criteria: (1) SMEs operating in West Java, Indonesia; (2) SMEs engaging in the creative industry; (3) SMEs using online channels in trading.

Selected SMEs were then divided into three categories as follows. Category A consists of SMEs engaged in the creative industry that thrives amid the pandemic without significant strategy modification. The SMEs in this category stay afloat in the industry without changing their business model and operation either before or after the pandemic in Indonesia. Category B consists of SMEs engaged in the creative industry that thrives amid pandemics with significant strategy modification. Category C consists of SMEs engaged in the creative industry that could not thrive amid the pandemic. The complete downturn of these SMEs was marked by the cessation of production activities.

This study conducted an in-depth interview with each SME to observe and perceive the organization's internal and external aspects as a reference for designing the model. The internal aspects of the company relate to the stages in communication maturity. The internal aspects are then classified into three categories: internal relationship, new technology adaptation, and the presence of a communication role model in SMEs. Furthermore, the external aspect of an organization refers to marketing strategy through online or e-commerce channels. Observations and interviews were carried out to see how these SMEs perform online strategies, especially concerning social commerce and customer participation.

Results

Internal Business Communication Analysis

Based on the interviews, category A SMEs shows an adult or at least adolescent stage of communication maturity. For instance, organization B held an open discussion for the best organizational strategy amid the pandemic. This openness has a noticeable impact on the sense of belonging for management and non-management workers. A sense of belonging towards an organization is a vital factor in the face of crises (Men & Bowen, 2017). A high sense of belonging can preserve and enhance work motivation within the employees (Einwiller, Ruppel & Stranzl, 2021). Interview results with other SMEs in category A, indicate communication openness through the acceptance of new technology. With the pandemic limiting direct communication, digital media adaptation is required to maintain internal communication. Furthermore, the good communication skill of the employees and, especially managers, in category A SMEs are seen as a contributor to openness. The existence of a role model communicator is the key to communication maturity runs in the company (Luthra & Dahiya, 2015). For example, the egalitarian attitude of a manager in external communication affects how the workforce behaves in a horizontal context. This kind of attitude can inspire respect towards the management. A previous study (Schraeder, Self, Jordan & Portis, 2014) shows that a role model communicator with good and open communication skills can enhance the organization member’s trust towards the management.

The interviews with SMEs in category B show communication maturity in an adolescent stage and an immature stage in some cases. For example, one of the organizations in category B decided to reduce human resources from eight to four people and reduce working hours from fourteen hours per day (two shifts) to ten hours per day as a survival strategy. Although the organization shows openness regarding the pandemic impacts on the organization; The decision concerning labor efficiency was held in a closed management forum. Another SME in category B state that new technology adoption is done with management or workforce close to the management in mind. For non-management workers, technology adoption is not a necessary part of internal communication activities. At times of crisis, it is important to conduct effective internal communication to reduce uncertainty and false rumors. The role communicator needs to lead managers to integrate digital communication tools as a part of adaptation amid the pandemic (Heide & Simonsson, 2019). Another SME from category B exhibit open communication focused on consumers. Intensive training for both management and labor on communicating with customers is provided without similar training for internal communication. The role model communicator in this company is oriented towards customer communication while struggling in conducting effective internal communication during the current crisis. Previous studies state that inadequate communication during a crisis can put employee engagement at risk (Frandsen & Johansen, 2011) and cause a negative impact on the organization's crisis management (Shen & Jiang, 2019).

SMEs in category C show communication maturity in a nascent to an immature stage. Based on the interview with organization T, there was a strict hierarchy between management and non-management workers. Matters related to the company are private information for the management. Whereas non-management workers only have access to limited information. Vertical internal communications are nonexistent, even informally. Some suggest that managers need to exhibit authority and determination amid an unpredictable situation (Seeger, Sellnow & Ulmer, 2003). However, such an approach needs to be accompanied by appreciative and open communication to improve workers’ commitment and engagement. Furthermore, technology adoption has occurred in category C SMEs before the pandemic, but there has been no significant change during the pandemic crisis. Interview with organization D indicates that digital communication technology was not considered to be a solution. Digital technology, mainly online marketing channels, is treated as an extension of offline marketing. Role models in category C SMEs do not exhibit good and open communication skills. Communication activities are mostly carried out in a formal context. Informal conversations were done during recess, albeit rarely, and without any company context. This kind of role model makes the workforce less concerned and have less sense of belonging. Ultimately, when SMEs announced salary and labor cuts, a number of non-management workers decided to leave the company. The results of interviews and observations on the SMEs samples are classified in Table 1.

Table 1
Internal Business Communication Classification Based on
Communication  Maturity Stages

Internal Relationship New Technology Adaptation Role Model Communication Maturity Stage
Category A Dynamic and open communication between organizational elements Adoption of digital technology for external marketing and internal communication reinforcement Tends to convey egalitarian and open communication.

Adult, adolescent
Category B Open in conveying the generalities of company conditions. Communication regarding strategies is limited to management. Aims to enhance external communication Minimum internal communication adaptation. Tends to show openness towards public or consumers issues only. Adolescent, immature
Category C Strict hierarchy. The non-management workers were only granted limited information. Technology adapted and used as an extension to offline marketing. Internal communication tends to use standard channels. Often more formal and distant from non-management workers. Immature, nascent

The classification above shows that Category A SMEs are at adolescent or even adult stages of internal communication maturity. Meanwhile, Category B SMEs are at the adolescent or immature stage of internal communication maturity. Furthermore, Category C SMEs show an immature or even nascent internal communication maturity stage.

External Business Communication Analysis

The interviews with category A SMEs and observations of their activities show that they utilize some social media channels and adopt online marketplaces. The principal aspect that distinguishes SMEs in category A is their ability to do social commerce. For example, organization H in category A focuses on social commerce resulting in a strong bond with consumers. The strong bond prompts consumers to promote and recommend their products to others. Other SMEs in category A show particular consideration to social commerce by providing as much detail as possible of their products, including consumer reviews. They utilize digital communication technology to gather feedback. Another SME in category A also focuses on social value contents, such as educational value, rather than focusing on hard-selling aspects. A previous study (Hossain & Kim, 2020) states that adopting social value content as a purpose of e-commerce usage can exhibit a positive impression on online shopping intention. Social commerce also must present a hedonistic aspect or a pleasurable effect on consumers, in addition to functional and social-related aspects. This hedonistic aspect can be visually appealing and digestible (less symbolic). For example, some SMEs in category A use short videos to convey a hedonistic effect for the public. In social media, caption text is made as short and clear as possible to be digestible. Furthermore, building consumer trust through review features is of importance for category A SMEs. According to organization K, positive reviews and comments will attract more potential customers to buy their products. This relationship is referred to as social trust in the context of social media (Al-Tit, Omri & Hadj, 2020; Ventre & Kolbe, 2020).

In contrast, the interview results of category B SMEs indicate that digital communication technology is adopted without particular attention to social commerce. The content on social media of category B SMEs, although engaging and informative, is done without a specific intention or a distinguishing marketing strategy. Category B SMEs online sales are only carried out in a one-way marketing framework: from producers to consumers (without any consideration of feedback and word-of-mouth potential). SMEs in category B show that digital communication technology acts as a secondary channel to primary offline marketing to them. For example, when the pandemic started in Indonesia, organization G did realize the importance of using digital technology. However, in this case, there are no specific strategies in terms of digital marketing. Instead, most of the content is general information such as product pictures and descriptions.

The crucial difference between category B and category C SMEs is the use of an online marketplace. According to organization L (Category B), sometimes it is easier to use an online marketplace compared to social media. Although, the registration and verification process is more complex. However, a lack of trust in online systems can influence the decision to adopt this platform. For example, Organization U (category C) feels that utilization of social media is enough. Apart from the lack of trust in the online system, most category C SMEs are occupied with the company's internal conditions during the pandemic. Therefore, digital communication technology adoption is not a priority. Some SMEs in organization C even claim that adopting an online system is costly and is against efficiency efforts. Unlike category B SMEs which dismissed workers who only operate in offline areas, category C SMEs first reduced workers who only run in the online area. This phenomenon indicates that category C SMEs were less interested in continuing their online business. According to these SMEs, even if they adopt social media it is only for "formality" to follow the trend. The findings of interviews and observations are mapped in Table 2.

Table 2
 External Business Communication Analysis within Category A, B, and C

External Business Communication
Website and/ or Social Media Automatic Transaction System Social Commerce
Category A ? ? ?
Category B ? ? -
Category C ? - -

Based on interviews and observations of SMEs from all categories, findings illustrated that there are differences in the use of digital media concerning external business communications. In general, category A SMEs see the importance of adopting digital communication technology, with the concern about three aspects of social commerce: functional, hedonistic, and social. Attention to these aspects of social commerce is considered to be a crucial factor in the survival of category A SMEs. Meanwhile, in the category B and C SMEs, this aspect of social commerce is not given enough attention. In other words, online marketing is carried out only as an extension of the offline channels. In general, the main difference between SMEs in categories B and C is the use of an online marketplace. Category B SMEs consider the need for an online marketplace to maintain the continuity of the production-consumption process. On the contrary, category C SMEs generally do not consider the importance of this system in times of crisis.

Model Design

Based on interviews and observations of creative industry SMEs in West Java, Indonesia, a model is proposed as presented in Figure 1. The model proposed can be used as a reference for other SMEs in a similar context (creative industry, crisis situation). This model is developed with the aim of business development and improving business resilience in times of crisis.

Figure 1: Business Communication Model for SMES Amid Pandemic Crisis

This business communication model consists of two aspects: internal and external aspects. The internal aspect requires SMEs to carry out dynamic and open internal relations, adapt using digital technology, and adopt an egalitarian and transparent communication style. These internal business communication requirements are essential to achieve an adult or adolescent stage of communication maturity. Meanwhile, the external aspect requires SMEs to adopt online marketing, social media, and online marketplaces. These platforms are integral in part of the social commerce strategies related.

Conclusion

This study used a purposive sample for interviews and observation using a case study approach. Fifteen selected SMEs in the creative industry sector were grouped into three categories: category A containing SMEs that survived during a pandemic without making significant changes, category B containing SMEs that survived during a pandemic by carrying out a major overhaul, and category C consisting of SMEs that cannot survive or go bankrupt. Based on this categorization, an internal and external analysis was carried out related to SMEs business communication.

Category A SMEs internal communication maturity can be classified to be in the adult and adolescence stages, shown by how they practice open and dynamic internal relations, adapt to new technologies comprehensively, and place role models that can demonstrate egalitarian and transparent communication. From the external perspective, category A SMEs use digital technology to cover functional, hedonistic, and social aspects of social commerce. On the other hand, SMEs category B and C both utilize digital technology without social commerce, thus digital technology is only utilized as an extension of existing strategies. Moreover, category C only uses social media to follow the trend. The internal and external business communication strategy applied by category A SMEs is used as a basis for the communication model. This model provides a framework for SMEs facing similar contexts to develop business resilience through communication.

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Received: 09-Feb-2022, Manuscript No. JLERI-21-10208; Editor assigned: 11-Feb-2022, PreQC No. JLERI-21-10208 (PQ); Reviewed: 22- Feb-2022, QC No. JLERI-21-10208; Revised: 08-Mar-2022, Manuscript No. JLERI-21-10208 (R); Published: 19-Mar-2022.

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