Academy of Entrepreneurship Journal (Print ISSN: 1087-9595; Online ISSN: 1528-2686)

Research Article: 2019 Vol: 25 Issue: 1

Integration of Vocational School and Small-Medium Enterprises (SMEs) Learning An Effort of Elevating Entrepreneurship Spirit Based On Strength and Weakness In East Java

Agung Winarno, Universitas Negeri Malang

Trisetia Wijijayanti, Universitas Negeri Malang

Yuli Agustina, Universitas Negeri Malang

Yuli Agustina, Universitas Negeri Malang

Andi Basuki, Universitas Negeri Malang


This  paper  is  intended  to  carry  out  regarding  to  the  lack  of  students’  entrepreneurship interest  in  Vocational  School and  the  fact  that  Small  and  Medium  Enterprises(SMEs)  also  has some limitations, hence this research is attempting to combine those two factors so it results to a model  of  integrated  entrepreneurship  study.  This  model  of  entrepreneurship  study  integrated with  SMEsneed  to  be  implemented  in  higher  school  or  vocational  school  in  order  to  civilize entrepreneurship  spirit  to  students  that  later  can  elevate  their  interest  in entrepreneurship  and improve the quantity and quality of SMEs. Moreover, through entrepreneurship education which is  integrated  directly  with  SMEs,  it  is  expected  that  students  and  society  will  have  knowledge, skill and attitude of entrepreneurship so that they can create job vacancy in the future, either for themselves or even can recruit labor from the society. Therefore, the emerge of entrepreneurship education model integrated with local SMEswill affect to the emerge of new entrepreneurs who have tough skill, knowledge and soft skill as well as being able to compete in this globalization era.  Thus,  this  research  aims  to  discover  and  shape  a  model  to  cultivate  entrepreneurship education  values  integrated  between  Vocational  School  and  local  SMEsin  East  Java.  Besides, the  purpose  of  this  research  is  to  build  good  synergy  between  SMEspeople with  Vocational School  community  in  terms  of  product  competition  or  other  entrepreneurship  skills. This  is  a development  research  with  an  approach  of  Mix  Methodand  it  belongs  to  descriptive  research. The  respondents  of  this  research  were  students  of  Vocational  School  and  SMEsin  Malang, Probolinggo,  Madura,  Blitar  and  Jember.  The  result  of  this  study  is  an  established  integrated model   which   produces   entrepreneurship   cooperation   with   written   agreement   including marketing,   product,   financial   system,   production,   Human   Resources,   management   and sustainable training center.


Entrepreneurship, Small and Medium Enterprises (SMEs), Vocational School, Integrated and Partnership Model.


SMEs are key players in the economy and the wider eco-system of firms. Across countries at all levels of development, SMEs have an important role to play in achieving the Sustainable Development Goals (SDGs), by promoting inclusive and sustainable economic growth, providing employment and decent work for all, promoting sustainable industrialization and fostering innovation, and reducing income inequalities (OECD, 2017). Amidst the rigorous situation of global and domestic competition nowadays, the government, company and individual encourage the development of entrepreneurship aspect; hence competitiveness capacity becomes one of the key factors in winning the competition. The number of entrepreneurs who have entrepreneurship spirit becomes an indicator of economy growth. It means that the more the number of entrepreneurs, the bigger their contribution towards the economy growth, and the faster its progress in that country.

Entrepreneurship education is an education developing and improving students’ basic competence to start a business. The purpose of entrepreneurship education, however, is to increase students’ entrepreneurship competition and entrepreneurship spirit. Furthermore, it is intended to promote their attitude toward active working based on the competition interaction in operating action, competition in doing an action, competition in doing that action continuously and competition in stimulating action. Nevertheless, Vocational education is demanded to be able in preparing students as a middle labor who are ready to work in society. Therefore, the most frequently learning program implemented in vocational education is learning by doing concept (Saroni, 2012:129). Moreover, Saroni (2012:175) further discussed that in entrepreneurship education, the most important basic in entrepreneurship activity is struggling skill. Hence, the entrepreneurship activity can be managed or trained in such a way so that the students are skillful. In every educational institution, teachers are expected to be able in guiding students so they have particular skill that they can use as their basic. Nevertheless, Harner (2000:29) emphasized the importance on field based methods in entrepreneurship education implementation, such as through skill and ability training and a bit support from classroom based method, namely role play model and simulation. By this, the students are more interested in learning technique based on the real experience in the field compared to traditional lecturing approach (Aronsson, 2004:291).

On the other hand, entrepreneurship refers to individual’s ability in changing idea into action. This covers creativity, innovation and risk taking, and capability to set a plan and manage project to reach the goal. It supports all people in daily life, either at home or in society, makes the worker realize more on their job description, be able in taking an opportunity and providing a foundation for all entrepreneurs who manage their social and commercial activity (COM, 2006). Entrepreneurship education must not be misunderstood as business and general economics study, since it purposes to promote creativity, innovation and entrepreneur.

European Commission (2006) agreed that the existed activity and program will meet the requirement as education for entrepreneurship if they insert at least 2 elements as it follows:

1. Developing individual attitude and skill which are generally applied (horizontal) that shape the basic of students’ mindset and entrepreneurship attitude.

2. Improving students’ awareness on entrepreneurs and entrepreneurship as their career optional choice.

3. Working on project and company activity, for instance a student runs a mini company.

4. Giving special business skill and knowledge on how to start and be successful in running the company.

This program and entrepreneurship module offers student to think creative, effective and to share problem, analyze business idea objective and communicate, network, lead and evaluate every project given. Students feel more confidence in establishing their own business if they can test their educational idea and if there is supportive environment.

According to the recent studies conducted by Cedefop (2010), vocational training also contributes to the environment change; it further becomes the booster power for the success and competitiveness of economy and European society. It is affirmed the importance of Vocational Training (VT) in giving contribution to maintain economic development, stimulate capacity for business innovation, and increase productivity. Moreover, it also shows that there is a crucial empirical investigation that can orientate design and evaluation of public policy. Furthermore, Cedefop (2010) also discussed that VT research can act as reflection element for business person, academic, and public policy with the responsibility in Education.

In East java, Cooperative and Micro, Small and Medium Enterprises (MSME) Sector becomes the mainstay of economy. It happens since this sector does not only give a great contribution to the Gross Regional Domestic Product (GDRP) of East Java, but also it is able to survive and continue even in the sluggish global economy situation. Besides, according to the Governor of East Java, Cooperative and SMEs is the main sector that must be defended by the country in order to reconstruct the direction of national development, especially in establishing economy. This sector, however, has given a great lesson to this country on how facing uncertain economic situation. In East Java, cooperative and MSME grows rapidly. In 2008, there were 4.2 million MSMEs in East Java. In 2015, the number of MSMEs grew to 6.8 million with a high contribution to the East Java GRDP of 54.98% of the total East Java GRDP of 1,689.88 trillion Rupiahs, and absorbing 11.12 million workers or 92% of all workers in East Java (Bappeda, 2016)

This good development of MSME also has a positive impact on the economic performance of East Java. Although the global economic situation is sluggish, East Java's economic performance continues to increase. In the first quarter, the economic performance of East Java grew 5.34 percent, above the national level of 4.9 percent. Whereas in the Second Quarter, East Java's economy was superior, grew 5.5 percent, outperformed the national economy at 5.18 percent. In the third quarter of 2016, East Java's GRDP was recorded at 1,382 trillion Rupiahs, with economic growth or growth of 5.57%. While the national GDP in the third quarter of 2016 reached 9,245.40 trillion Rupiahs with economic growth of only 5.04%.

Seeing the students’ lack of interest in entrepreneurship and the fact that SME in East Java has grown rapidly, hence this research wanted to try to combine these two factors so it could result to a model of entrepreneurship education integrated with local SMEs in East Java. Entrepreneurship education model integrated with SMEs should be implemented in higher education or vocational school with an objection to cultivate entrepreneurship spirit in every student that can improve their entrepreneurship interest and also increase the quantity and quality of SMEs. Through the entrepreneurship education which is directly integrated with SMEs, it is expected that students and public will have knowledge, skill and entrepreneurship attitude so they can open job vacancy for themselves, or even can absorb labors from the society. Therefore, this entrepreneurship education model integrated with local SME will affect to the birth of new business person who has skill, knowledge, and robust soft skill that is able to compete in global education. As a matter of fact, the more new business person emerges, the more it affects to the economy growth, which is decreasing unemployment, poverty, increasing income and revenue distribution, and increasing foreign exchange reserves from the export of business products.

Presidential Instruction No. 4 of 1995 concerning on the National Movement to Promote and Cultivate Entrepreneurship mandates that all Indonesian people should develop entrepreneurship programs. Furthermore, the government fully aware that business is the backbone of national economy, so it must be strived to be continuously improved. Through this movement, it is expected that entrepreneurship character will be the part of the work ethic of people, especially Indonesian people and nation so it can produce new business person who are reliable, resilient and independent. In addition, Suheman (2008) argued that it is very important regarding that entrepreneurship activity actually is not only in micro-economy state.

This entrepreneurship education model integrated with local SMEs is one of the ways to revitalize the policy of National Movement to Promote and Cultivate Entrepreneurship, given that the largest number of open unemployment comes from the graduation of educational unit in the level of elementary school and middle school. According to the data of open unemployment issued by Central Statistics Agency shows that there are still many people whose productivity needs to be boosted. If there is no serious handling of this problem, it is possible that the number of unemployment will keep increasing every year. In this context, entrepreneurship education should be suggested to encourage students to start to recognize and open a business or entrepreneurship. The mindset that is always oriented to be an employee should be changed to find employees. Thus, entrepreneurship can be taught through the cultivation of entrepreneurial values that will shape the character and behavior for entrepreneurship so that students can later be independent in working or independent in opening a business. Therefore, in this study, an integrated entrepreneurship education model between vocational schools and local SMEs is supposed to be able to change the pattern.

Research Methodology

This research is categorized as development research with an approach of Mix Method. Thus, it is expected to obtain more accurate data, information and in depth picture concerning on social life and values in it. The research method used was descriptive survey method, which is a method in studying the status of a cluster of human, an object, condition, system, thought or present event. The purpose of this research is to make a description or picture which is systematic, factual and accurate concerning on facts, traits and relation of examined phenomena.

The data type collected in this research was primary and secondary data both quantitative and qualitative. The primary data was directly obtained from the respondents through in depth interview technique, questionnaire distribution and field observation. Whereas, the secondary data was gained through an examination of some references and documents from related institutions, a report of research result that had been conducted before and other information which are relevant with this research.

The respondents in this research were students of Vocational Schools, which were Vocational School 1 Malang, Vocational School 1 Probolinggo, Vocational School 1 Bangkalan Madura, Vocational School 1 Kademangan Blitar and Vocational School 6 Jember and also local SMEs located in Malang, Probolinggo, Madura, Blitar, and Jember. The question given to vocational high school students is about how entrepreneurship subjects can grow the entrepreneurial spirit that is owned as well as knowledge about production, human resources, finance, management and marketing. Whereas for SMEs is given the question of how the business that has been running in terms of production, financial, management, human resources, risk management and marketing. The different stage of the research is shown in the Figure 1.

Figure 1: Stages Of The Research

Results And Discussions

In the initial stage, the researcher team conducted a survey based on the field needs and information discovery as well as problems identification developing to the research objects. From this survey result, it was determined 5 samples of research area which were Malang, Probolinggo, Bangkalan-Madura, Blitar and Jember. Besides, the survey result also strengthened the questionnaire preparation that would be developed by the Vocational Schools as the research samples, namely Vocational School 1 Malang, Vocational School 1 Probolinggo, Vocational School 1 Bangkalan Madura, Vocational School 1 Kademangan Blitar and Vocational School 6 Jember, meanwhile the SMEs samples were SMEs located around Vocational School and SMEs which had cooperation with that Vocational School. The cooperation stated is cooperation between SMEs and Vocational School placing the students as intern employees (industrial practice). Moreover, Vocational School and SMEs had strong relationship initiated by Vocational School when there was industrial practice to fulfill the students’ education requirement. This limited relation did not continue to the sustainable plan to get mutualism relation of Vocational School students.

1. Vocational School Student: Descriptive analysis in this research employed to picture students’ perception toward integrated entrepreneurship education model, furthermore, in this descriptive analysis, it could be described the frequency and respondent’s percentage in each category of questionnaire answer. The descriptive analysis of students’ answer as the respondents on entrepreneurship is presented in this Table 1 as follows.

Table 1
The Result Of Descriptive Analysis Of Students’ Perception Toward Entrepreneurship Education Model Integrated With SMES
Question Strongly Agree Agree Kind of Agree Disagree Strongly Disagree Average
f % f % f % f % f %
item 1 8 3.2 75 30.2 124 50.0 37 14.9 4 1.6 2.8
item 2 15 6.0 88 35.5 73 29.4 56 22.6 16 6.5 29
item 3 40 16.1 74 29.8 97 39.1 34 13.7 3 1.2 2.5
item 4 22 8.9 97 39.1 112 45.2 13 5.2 4 1.6 2.5
item 5 13 5.2 78 31.5 80 32.3 69 27.8 8 3.2 2.9
item 6 17 6.9 56 22.6 134 54.0 32 12.9 8 3.2 2.9
item 7 31 12.5 80 32.3 86 34.7 45 18.1 6 2.4 2.7
item 8 83 33.5 127 51.2 27 10.9 6 2.4 5 2.0 1.9
item 9 23 9.3 114 46.0 88 35.5 22 8.9 1 0.4 2.5
item 10 53 21.4 92 37.1 88 35.5 10 4.0 5 2.0 2.3
item 11 41 16.5 102 41.1 68 27.4 31 12.5 6 2.4 2.4
item 12 41 16.5 108 43.5 57 23.0 31 12.5 11 4.4 2.4
item 13 63 25.4 128 51.6 49 19.8 6 2.4 2 0.8 2.0
item 14 14 5.6 87 35.1 87 35.1 47 19.0 13 5.2 2.8
item 15 47 19.0 81 32.7 90 36.3 23 9.3 7 2.8 2.4
item 16 9 3.6 48 19.4 93 37.5 85 34.3 13 5.2 3.2
item 17 33 13.3 97 39.1 76 30.6 26 10.5 16 6.5 2.6
item 18 19 7.7 48 19.4 95 38.3 76 30.6 10 4.0 3.0
item 19 19 7.7 64 25.8 124 50.0 36 14.5 5 2.0 2.8
item 20 22 8.9 72 29.0 102 41.1 49 19.8 3 1.2 2.8
item 21 13 5.2 29 11.7 75 30.2 107 43.1 24 9.7 3.4
item 22 14 5.6 22 8.9 62 25.0 110 44.4 40 16.1 3.6
item 23 49 19.8 73 29.4 108 43.5 14 5.6 4 1.6 2.4
item 24 56 22.6 131 52.8 48 19.4 11 4.4 2 0.8 2.1
item 25 20 8.1 82 33.1 73 29.4 58 23.4 15 6.0 2.9
item 26 21 8.5 106 42.7 91 36.7 25 10.1 5 2.0 2.5
item 27 57 23.0 114 46.0 57 23.0 17 6.9 3 1.2 2.2
item 28 5 2.0 58 23.4 118 47.6 60 24.2 7 2.8 3.0
item 29 68 27.4 127 51.2 35 14.1 17 6.9 1 0.4 2.0
item 30 39 15.7 106 42.7 75 30.2 20 8.1 8 3.2 2.4

2. Small-Medium Enterprises (SMEs): Table 2 is the data summary of questionnaire distribution result for SMEs. SMEs as the major respondents, work on the business of food, besides the owner of SMEs is mainly graduation of Junior High School, and most of the company’s owner is woman. Many SMEs as the sample also never get training from any parties, and they rarely work together with other institutions in any field. Moreover, many SMEs also do not know that cooperation between Vocational School is open and they hope it can happen someday.

Table 2
Data Summary Of Smes Research Sample
1. Type of Business Food 25 3. Have participated in a training Yes 10
Drink 5 No 40
Agriculture/Plantation 3 4. Have had cooperation with other institutions Yes 5
Service 7 No 45
Trade 7 5. Have had cooperation with Vocational Schools Yes 15
Others 3 No 35
2. Latest Education of the Owner Not graduate from Elementary School 2 6. Do you want to cooperate with Vocational School Yes 40
Graduate from Elementary School 7 No 10
Not graduate from Junior High School 5 7. Do you know there is a business and management department in Vocational School? Yes 22
Graduate from Junior High School 22 No 28
Not graduate from Senior High School 4 8. Gender of Business Owner Male 24
Graduate from Senior High School 6 Female 26
University 4

In Table 3 below are the results of a descriptive analysis from the results of questionnaires for SMEs which show the results of the mean which are classified as low in some aspects of SMEs.

The descriptive analysis result of students in Table 1 identifies that students comprising of Vocational School students have less proper and improper frequency which is high on some items as the measurement of students’ entrepreneurship skill. The quite proper students’ perception are in item trying something new (1, 3-8), multitasking and risk management (14-19), public relation and communication (20, 23, 28), meanwhile improper students’ perception is in item 21 and 22 (commitment). The lesson taught by teachers in middle schools apparently has not been able to achieve the learning objection yet which is producing an entrepreneur who does not master competition skill yet (traditional). In other words, the students could not translate the theoretic knowledge into practical business creation.

Meanwhile, from the interview, it is obtained that so far Vocational School only cooperates with SMEs as a partner when there is an internship study of vocational training. Vocational School students do not really imply their knowledge gotten during learning at school due to the lack of knowledge taught at school and the reality in life. Entrepreneurship subjects/creative/innovation products have also not been able to sharpen vocational students to be a person who is aware of the importance of entrepreneurship and encourage the student to be an entrepreneur. Students' mindset is still compartmentalized in fulfilling the needs of the workforce, not focusing on producing graduates who can create a job. Therefore, despite some encouraging data, it seems that the absorption and effectiveness of entrepreneurship education in vocational schools in Europe is far from satisfactory (Europen Commission, 2009).

If it is seen from various entrepreneurship aspects started from production, marketing, finance, human resources, and research and development, Vocational School has many advantages in product creation innovation, packaging skill, and also simple finance administration application. Yet, unfortunately, Vocational School is still weak in terms of product marketing, networking, and technology. Frequently, the technology applied in Vocational School is out of date, since there is no specific demand related to that thing. In fact, it is greatly needed in improving the competitiveness and competence of Vocational School graduates.

The integration between Vocational School and SMEs has to be facilitated with a meeting and discussion between Vocational School teachers and SMEs to ensure that Vocational School curriculum, especially for entrepreneurship has included skill needed by SMEs in its operational process, besides, SMEs can hire Vocational School graduates based on its needs. On the other hand, Vocational School can also make SMEs as its partner to collaborate in elevating knowledge and curriculum. The improvement of curriculum which is suitable with the current development is greatly needed in preparing strong young generation to deal with competition.

In addition there to, descriptive analysis result (Table 3) shows that SMEs is a business that strives to survive from the increasingly tight market competition and customers. It is seen from the aspect of performance measurement, functional and risk showing that a quite low mean for the entire SMEs as the research sample. From the aspect of performance measurement, the mean obtained was 2.5 and the risk aspect of 2.94, whereas the functional aspect of each component reveals the mean of 2.95 (production), 2.78 (finance), 2.75 (installation) and 2.38 (Human Resources). The focus to survive seems kill creativity, productivity, control and management in business so that SMEs becomes immersed. Furthermore, the quality of Human Resources of Indonesian SMEs is one of factors in obstructing the performance of SMEs. Based on the analysis and discussion result with the business owner, it can be concluded that productivity of SMEs labor is still low, as well as the innovation level of that business. As a matter of fact, SMEs experiences many difficulties in production, research process and business development, finance and management aspect. The products sold are not really varied and out of date because it cannot update the customer’s taste in trend and development.

Table 3
The Result Of Descriptive Analysis Of SMEs
Sales rate 3.22 Opportunity Taking 3.2
Employment Acceptance Rate 2.38 Business Development 3.17
Business Stability Rate 3.12 Product Selling 3.28
Profit 2.88 Pre-opening business observation 2.94
Community Service Contribution 1.91 Business Losses Readiness 3.30
Industrial Leadership 2.41 Competition 2.12
Profit Utilization 2.61 Business Uncertainty 2.88
Operational Cost 2.27 Unsaleable Product in the Market 2.54
Raw-material Procurement 2.26 Solution for unsaleable product 3
MEAN 2.5 MEAN 2.94
Product based on consumer’s needs 3.12 Understand financial administration 2.98
Distinctive features of product 3.11 Financial administration and business development 3.03
Distinctive taste of product 2.95 Personal and business financial 2.41
Following the trend 2.67 Business financial and planning 2.28
Varied product 2.91 Profit from business and personal 3.22
MEAN 2.95 MEAN 2.78
Pre-production observation 2.89 Need no employee 2.40
Media utilization 2.55 Lowering profit 2.12
Proper price for consumer 2.54 Employee from family 2.50
Price determination based on cost and profit 3.27 Difficulty on seeking for employee 2.49
Price determination based on business competitors 2.51 Anxiety on employee recruitment 2.41
MEAN 2.75 MEAN 2.38

From direct interview with SMEs, it shows additional information about the difficulties faced such as: financing and accumulating, management of simple financial administration, ability in recognizing market opportunity, no product controlling system, performing product innovation, chance to develop and so on. Innovation system was based on the production system and “Human Resources Development” (Lundvall, 2002; Lundvall & Christensen, 2003). However, SMEs has quite good market controlling, so is with the production ability. SMEs often implements simple technology that can improve the company efficiency a bit. The correlation between the low skill and demand of SMEs labor with the supply of Vocational School is also still weak. It is often complained by SMEs which needs a special skill to run the business. Generally, SMEs itself gives special training so Vocational School graduates can be involved directly in production process and company operation. This condition should be overcome by the role of government through the involvement in accomplishing cooperation between Vocational School and SMEs. The structural characteristics of an area and knowledge infrastructure are regarded as an important basic condition in acting as stimulus in promoting innovative activity (Lundvall, 2002; Lundvall & Christensen, 2003). Moreover, in a qualitative study of innovation process by SMEs Basque, it is identified that between profit gained by SMEs and cooperation to innovation, a special concern must be provided for them giving effort in their interaction with the center of expertise training (Olazaran et al., 2009). On the other hand, there is a different study showing that an area is pretty crucial for tacit knowledge exchange and for preparation of skillful labor. Both are really relevant mechanism in innovation process of small company (Asheim & Coenen, 2005; Kauffmann & Tödtling, 2003; Grotz & Braun, 1997; Doloreux, 2003; Gebauer et al., 2005). Viewing several results obtained, an entrepreneurship education model can be shaped so it can integrate the strength and weakness of SME and Vocational School. The integration model of Vocational School and SMEs can be seen in this Figure 2.

Figure 2: The Integration Model Of Vocational School And SMEs


1. The purpose of Vocational School as the education administrator is to create expert in middle class and entrepreneur who are ready to compete in business world, yet the fact shows that Vocational School graduates are not ready yet in facing competitiveness in real life. Education system cannot sharpen characters in building competitiveness characters; it makes Vocational School graduates work as labor not a leader/a business creator.

2. SME with its all limitation in some functional business aspects strives to survive amidst the rigorous competition of business nowadays. The weakness of SMEs in innovating, bad management and limited finance networking make SMEs is immersed with business uncertainty. The solution given by the government apparently does not give “vitamin” for SME to work harder in improving the performance.

3. The integration model between SMEs and Vocational School is expected to make a new step in saving both parties to be a leader in their own capacity. This integrated model will shape a partnership cooperation with written agreement including the establishment of join market, collaboration of product creation innovation, simple financial system, simple production system and efficiency (production center), teaching industry (transfer of knowledge), management which is suitable with the needs, harmonious marketing system with market segmentation, and sustainable training center.

4. The research only discusses the functional aspects of entrepreneurship which consists of the spirit of entrepreneurship, production, human resources, marketing, management and finance. It is hoped that further research can add other aspects of entrepreneurship for more accurate results.

It is suggested that the policy need to be restructured by the government by involving Vocational School and SMEs to achieve harmony between both parties, so Vocational School and SME must move actively to catch up the backwardness and keep updating the knowledge to be able to survive in this tight business competition.


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