Economic contribution, innovation and labour creation in batik industry
Batik is one of the handicraft products that belongs to the textile-based category. Batik refers to fabric-dyeing method with the resist technique. Starting with small-scale activities, the batik industry has since developed into a successful rural industry, which is also known at the national le...
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| Format: | Thesis |
| Language: | English |
| Published: |
2017
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| Online Access: | http://psasir.upm.edu.my/id/eprint/70888/1/FEP%202017%2032%20-%20IR.pdf http://psasir.upm.edu.my/id/eprint/70888/ |
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| Summary: | Batik is one of the handicraft products that belongs to the textile-based category. Batik
refers to fabric-dyeing method with the resist technique. Starting with small-scale
activities, the batik industry has since developed into a successful rural industry, which
is also known at the national level. The Malaysian Handicraft Development Corporation
acknowledges batik as the primary contributor to the sales of handicraft products in
Malaysia. Despite its positive performance in the local market, some batik
entrepreneurships are still regarded as microenterprises in terms of small and medium
enterprise (SME) business classification. Hence, the firms are expected unable to reach
their full potential or can only gain day-to-day income. This then raises a question in
regards to the connection between the batik industry and the Malaysian economy.
Therefore, the first issue is on measuring the economic contribution of the batik industry
to the Malaysian economy. However, due to the limitation of series data related to batik
industry performance, the Malaysian Input-Output Table 2010 will be used to measure
the variables. Through the industrial linkage model, this study found that batik industry
contributes significantly through the backward linkage, indicating a stimulating growth
in terms of benefit from the batik industry to the other sectors rather than the batik
industry alone. Furthermore, decomposition analysis results show that the first-order
effect of injection in the private consumption of batik in final demand contributes to
second and higher-order effects in the other sectors of the Malaysian economic structure.
This is due to the additional input that is required to satisfy the increase in output
demand. This study offers a new finding for the input-output theory related interindustry
transactions between batik industry and other production sectors in the Malaysian
context. The second issue highlighted in this study is related to the impact of innovation on batik
firm performance. The evolution in the batik industry has led to innovation in the batikmaking
process, batik products, marketing and organisational methods. However, some
batik entrepreneurs follow traditional approach to manage their firm activities.
Meanwhile, the third issue addressed in this study is about labour creation in the batik
industry. Being a labour-oriented industry, batik entrepreneurs should have enough
workers to manage each stage in the batik-making process and save the time, so that the
number of production can be increased. However, at present, a majority of employees
consist of older folks and contract workers (daily wage). Being a rural industry, batikmaking
faces intense competition that may hinder its growth. In response to both issues,
this study used data acquired from face-to-face survey in Kelantan and Terengganu to
analyse the impact of innovation to the performance of batik industry and to determine
which firm resources that influence labour creation in the batik industry. There are 62
batik firms in Kelantan and Terengganu that participated in this study. For the second
objective, results from the ordinary least square method reveal that only product
innovation has significant impact on batik firm performance. This study also offers a
more detailed view on the effect of all four types of Schumpeterian innovation on batik
firm performance. By using the same method, the third objective produces evidence for
resource-based theory on labour creation. Results show that firm age and firm sales
greatly influence labour creation in batik industry. The information about contribution,
firm performance and labour creation in batik industry is important to help batik
entrepreneurs to enhance the economic well-being of local communities in terms of job
opportunities and household income. Overall, the batik industry is not only valuable to
the development of Malaysian cultural heritage, but it is also an important asset to the
country’s economic growth in the future, through its contribution as a successful rural
industry. |
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