Assessment of Innovation Potential of Gayo Coffee Agroindustry

114 QUALITY INNOVATION PROSPERITY / KVALITA INOVÁCIA PROSPERITA 21/3 – 2017
Assessment of Innovation Potential of Gayo Coffee
Agroindustry
DOI: 10.12776/QIP.V21I3.888
Rahmat Fadhil, M. Syamsul Maarif, Tajuddin Bantacut, Aji Hermawan
Received: 06 March 2017
Accepted: 21 October 2017
Published: 30 November 2017
ABSTRACT
Purpose: The purpose of this study is to perform an assessment on the
innovation potential of Gayo coffee agroindustry, as a basis of policymaking as
an effort to promote agroindustry and to increase the revenue.
Methodology/Approach: Innovation potential assessment was performed with
“Map of the Company Innovation Potential” through a stakeholder survey by
using questionnaire and confirmation.
Findings: The result of the study shows that innovation potential of Gayo coffee
agroindustry is good enough to be developed by considering today’s reality and
condition, based on innovation potential assessment that had been performed.
This condition is very possible for the development of innovation activity in the
form of work and the agroindustry program of Gayo coffee becomes more
serious concern, so that the potential of innovation improvement can continue to
grow and evolve by involving various parties to create a synergy in supporting
innovation development.
Research Limitation/implication: This study describes the condition of
innovation potential of Gayo coffee agroindustry in six aspects of assessment,
which are: strategy and planning, marketing, technological process, quality and
environment, logistic and human resources.
Originality/Value of paper: This article is according to field data from an
interview with the stakeholders, field trip, and quantitative analysis. This study is
very helpful for the policy maker in expanding Gayo coffee agroindustry, and
become a contribution to analyze innovation potential in other agroindustry.
Category: Research paper
Keywords: agroindustry; Gayo coffee; assessment; innovation potential
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1
INTRODUCTION
The concept of regional expansion that is most relevant in 21st century is through
a concept of expansion based on technology and innovation, whose one of the
indicators is the human resources capacity. Technology and innovation are main
strength in order for the efficiency in agricultural to occurs that is seen from the
comparison of the input and output (Mosher, 1966; Alkadri, 1999). A form of
intervening changes in society and industry is process of innovation transfer.
This process can go through the diffusion of innovation that is communicated to
various channels in a certain period and in a certain system. By this diffusion of
innovation, it is expected for the innovation adoption to occur so the capacity and
competency of human resources will increase along with the ability to adopt the
introduced innovation (Rogers, 2003). Process of policy making of innovation is
a process where an individual receives a foreknowledge of an innovation to form
an attitude towards the innovation, to make a decision; whether to adopt or to
refuse, the performance of new idea, and to confirm the decision that will be
implemented.
A systematic innovation management is a main supporter to increase the
competitiveness of small and medium-scale industry. The successful realization
of vision and innovation strategy in business practice is subject to conditions
existence which is determining related innovation activity (Sabadka, 2012;
Špaček and Štěpán, 2013). MERIT Centre (Maastricht Economic and Social
Research and Training Centre on Innovation and Technology) published a study
about innovation in the member state of the European Union (MERIT, 2008).
Nevertheless, most of studies and literatures are focused on the companies as the
generator of innovation. Every company has potential to become creative and
innovative. According to Goffin and Mitchell (2005), the key of innovation is the
changes in client (customer) needs, the changes in business environment, the
increased in competition, and new technology.
Practically, today’s study of innovation is focused on the assessment of
innovation or audit of innovation and innovation management. In the process of
designing company’s strategy, it is important for the top management to get used
to prioritize the competitive excellence of the company in the field of
innovations. Thus, innovation is not only about producing creative business
ideas, but it is about paying more attention on the idea by identifying people that
is possible to become a success innovator. Unfortunately, many companies and
organizations make mistakes in refusing an idea that is potentially innovative and
even supporting other ideas that are less innovative (Baumgartner, 2010).
Assessment of innovation potential is important for the continuity of an industry,
that various studies had been developed in various methods to find a way of how
to measure the potential level of an innovation. Several studies about innovation
potential, among others are, matrix of innovation potential (Sabadka, 2012),
evaluating innovation potential through the measurement of innovation behavior
in company (Jiřinová and Scholleová, 2015), measuring value of innovation
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potential in an organization in India (Khanapuri, Soni and Sharma, 2011),
assessing innovation potential in the development of regional business
environment in Russia (Parshukov, et al., 2015; Zemstov, 2014), strengthening
value innovation potential with industrial orientation in Taiwan (Chang, 2013),
agricultural innovation and new business by assessing commercial potential
(Gray, et al., 2004), evaluating innovation idea (Baumgartner, 2010), concept of
service innovation in United States (Ezell, Ogilvie and Rae, 2007), identification
of innovation and innovator with high potential in the field of information,
communication, and technology, competition program and innovation
framework, also horizon 2020 of European Union (De Prato, Nepelski and Piroli,
2015), and assessing innovation potential of company in Romania (Scarlat, Alexe
and Scarlet, 2011).
Agroindustry of Gayo coffee in Aceh province-Indonesia is one of businesses
that is important in improving the community economy in that region,
particularly in coffee Gayo-producing region, which are Central Aceh Regency,
Bener Meriah Regency, and Gayo Lues Regency. Gayo is a name of a highland
that is located in Bukit Barisan Mountain whose region is administratively
located in Aceh province, and involving the three regencies mentioned above.
However, regions that are dominant in producing Gayo coffee are only two
regencies; Central Aceh Regency and Bener Meriah Regency. Coffee plants in
this area has been existed since 1908, and now it reaches 81,000 hectares of
coffee plantation (Putri, Fariyani and Kusnadi, 2013).
Gayo coffee is usually exported to the member state of European Union, United
States, and Japan in the form of coffee beans or green bean (ICCRI, 2008;
Silitonga, 2008). In the International Coffee Organization Report (2011) it
mentioned that the trend of Gayo coffee trading to the importing countries is
increasing. This condition is in accordance with the increased trend of Arabica
coffee demand in world market that reaches 0.5% per year.
One important aspect in promoting agroindustry is by developing technology and
innovation, because technology is a system that is closely linked to the
engineering context from several fields of science appropriately to increase the
value-added of the product resulted, while innovation is defined as an idea,
method, practice, or product (goods and services) that is perceived as novelty by
a unit for adoption (Rogers, 2003). The presence of technology and innovation
certainly need an excellent implementation by the user community (Maulana,
2013).
The purpose of the study is to perform innovation potential assessment of Gayo
coffee agroindustry as a model for the development of coffee industry in
Indonesia for the increasing in revenue and better competitiveness.
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2
METHODOLOGY
One method that is more complete in assessing innovation potential is the one
that was developed by Vacek, et al. (2001). They developed an indicator for
innovation potential that is called as “Map of the Company Innovation Potential”
and had been applied in assessing innovation in a manufacturing industry. Based
on the method, authors made an adjustment to be applied in assessing innovation
potential in agroindustry (agricultural industry). To evaluate innovation potential,
a questionnaire guide was comprehensively designed, covering 6 aspects as
assessment criteria (Fig. 1). In each aspect, there are 6 questions with 4 answer
choices with ordinal scale; strongly agree, agree, disagree, or strongly disagree.
Figure 1 – Innovation Potential
Assessment Framework
2.1 Procedure of Research
The prepared questionnaire covers several groups that are interrelated to assess
company’s innovation potential (Tab. 1). Questionnaires is to describe the
situation of the Gayo coffee company (agroindustry) in general in Aceh
province-Indonesia by assessing the level of high and low state of the company
to create an environment for developing the innovation effectively. This includes
how a company able to implement innovation in its various activity. The purpose
of this innovation activity is a part of effort to increase customer’s and other
stakeholder’s satisfaction. The final result will be classified in four classes (Tab.
2).
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Table 1 – Assessment Aspects and Questions Object (Adopted from Vacek, et al.,
2001)
Assessment Aspects
Questions Object
Strategy and planning
1. Idea about the future of agroindustry
2. Vision and worker
3. Agroindustry innovation program
4. Modification of planning
5. Planning of financial indicator
6. Project management
Marketing
1. Monitoring current market trends
2. Evaluating market competition position
3. Customer’s orientation
4. Monitoring customer’s respond towards the product
5. Market information flow
6. Marketing and financial control
Technological process
1. Future agroindustry competition
2. Changes in technology use
3. Collecting stimulation to perform technology change
4. Evaluating the return of investment in accordance with the
planned changes.
5. Calculating production cost and continuous monitoring in the
company
6. Creating resources for development
Quality and
Environment
1. Monitoring the changes in quality management condition in
company
2. Evaluating individual contribution to the quality system in
company
3. Quality of external audit in company
4. Monitoring the activity as the company’s effect to the
environment.
5. Effect of the quality monitoring on the change process in the
company.
6. Resources creation to the cost resulted from the modification of
standards, regulations, and law in the field of quality and
environment.
Logistics
1. Organizing the purchasing and the distribution channel in
company
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Assessment Aspects
Questions Object
2. Optimizing company logistics
3. Transfer of information and communication with partner
companies
4. Flexibility of logistics process
5. Introducing innovation in logistics
6. Logistics and financial control
Human Resources
1. Workers satisfaction
2. Workers motivation
3. Management and communication
4. Conflict resolution
5. Company information system
6. Company culture
Table 2 – Classification of Company Innovation Potential (Adopted from Vacek,
et al., 2001)
Classification
Score
Definition
A
3.50 – 4.00
The agroindustry company has met all conditions and
innovation potentials to keep growing well.
AB
2.50 – 3.49
The agroindustry company has met some conditions to work
effectively with innovation potentials that are still possible to
be improved.
B
1.50 – 2.49
The agroindustry company has work environment which has
not met the expectation in developing its innovation activity.
C
0.50 – 1.49
The agroindustry company is not conducive or not appropriate
yet for the implementation of innovation activity; a radical and
systematic change is necessary either in the activity or in the
organization.
2.2 Stakeholder Survey
This study uses stakeholder survey to make an assessment towards innovation
potential of Gayo coffee agroindustry so that it can be used as reference for the
policymakers in directing various activity which are as efforts in building and
developing innovation. The stakeholders that are considered competent to give
rating are the parties that are directly associated with Gayo coffee agroindustry.
In this innovation potential assessment process, a poll was performed of five
stakeholders consisting of a lecturer from Gajah Putih University (UGP)
Takengon-Aceh, coffee farmer, local coffee entrepreneur, Forestry and Estate
Crops Service of Central Aceh Regency, and coffee community. The combined
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opinion was analyzed until a mode of opinion selection is achieved as an
innovation potential value to the existence of today’s Gayo coffee agroindustry.
3
RESULT AND DISCUSSION
The result of innovation potential assessment towards agroindustry of Gayo
coffee shows that it occupies AB (Good) classification class with score by 2.72.
it means that agroindustry in this category has fulfilled the preconditions to work
more effectively with innovation potential it has. This means that it is in
accordance with basic standard which is capable to use changes and innovation to
ensure its continuity in the future and even a part of it has gone through
certification process to get into more advanced and more developed stages. This
condition is very helpful for Gayo coffee agroindustry in developing their
innovation potential through organization or human resources development
program with various facilities for training and developing the existing
individuals’ potentials.
In general, it seems that Gayo coffee agroindustry has excellence in logistics, and
weakness in the aspect of strategy and planning (Fig. 2). The aspect of strategy
and planning occupies category B (Fair, 2.17) which means that agroindustry in
current condition has strategy and planning system that is still weak, so that the
innovation potential is also still too little to meet the desired expectation. A
number of activities are necessary in arranging various future plans, includes
various strategy that may be necessary to be prepared for facing sundry possible
changes that may occur.
Figure 2 – Chart of Innovation Potential Assessment
Aspect of logistics (3.17), technology (3.17) and marketing (2.83) is quite
encouraging because they are in AB class (Good). This is in accordance with the
prevailing conditions that all this time, several certifications have been made in
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coffee agroindustry system (since 1992), such as fair-trade, rain-forest, organic,
and geographical indications (Taylor, 2005; Raynolds, 2009; Putri, Fariyani and
Kusnadi, 2013; ICCRI, 2008; Waroko, et al., 2008; Yantu, et al., 2010; Ardiyani
and Erdiansyah, 2012; Fadhil, et al., 2017), that it causes logistical process
associated with distribution and marketing become better than other aspects.
In marketing aspect, coffee trading still suffers problem like very high price
fluctuations, and tend to be unfair among several agroindustry businessmen
(Adam and Ghaly, 2007; Giovannucci and Potts, 2008). Market mechanism is
not maximized yet, so the price is determined by other parties (trader) that is
relatively cheaper and sometimes the value of the product is not worth the
production cost (Bilhak and Maarif, 2014; Mujiburrahman, 2011). As well as the
quality and environment aspect, where several problems come up, such as lack of
maintenance – especially in pruning and replanting, there are still old plants by
about 10% from total coffee-producing plants –, fertilizing system that does not
follow the principles, such as not timely fertilization, excessive or deficient dose,
improper composition and fertilizing technique. Those are some problems that
need to get treatment (Hasni, 2011; Descroix and Snoeck, 2009).
Meanwhile, aspect of human resources is also low, although it is classified in
category AB (Good, 2.67). However, in this condition, it is realized that the
development of comprehension and management of knowledge in coffee
cultivation are still less, includes the application of the latest technology and
innovation, because they rely more on hereditary knowledge of family (Indra,
2011; Romano, 2009). The other problems associated with human resources are:
the development and enhancement of human resources are highly dependent on
counseling with lack of facility and limited number of officers; if compared to
the area of plantation that has to be addressed (Jaya, 2013; Silitonga, 2008), the
lack of human creativity and innovation in processing the products and lack of
process industry; particularly the one associated with post-harvest treatment and
preliminary treatment, such as fermentation, semi-wet processing, and water
usage efficiency (Fatma, 2011; Bilhak and Maarif, 2014). Continuous education
and training are necessary for coffee farmers so that the production quality could
be better in the future (Walker, 2015; Novita, 2012; Muiburrahman, 2011).
This study has given significant contribution towards the development of Gayo
coffee agroindustry, particularly the one related with innovation potential that
will be developed. Nevertheless, the study about innovation assessment and
innovation audit will continue to evolve in accordance with various advances that
lead to finding the best solution in facing global competition. An industry
(including agro-industry) is always demanded to evaluate how far the corporation
capability is to survive and evolve. Hence, application for innovation potential
assessment in Gayo coffee agroindustry become one of research contributions in
mapping ways for developing agroindustry innovation to become more
favourable.
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4
CONCLUSION
Innovation potential of Gayo coffee agroindustry is good enough to continue to
be developed by considering the current reality. Many efforts of creating possible
condition that will allow innovation activity to grow in the form of work and
program in Gayo coffee agroindustry must become serious concerns, so the
potential of innovation improvement and development can continue to grow and
evolve from time to time. The involvement of various parties, especially local
governor, college, related agencies, and extension agency, to synergize in
supporting the development of innovation, is necessary. Concerns that are most
in need of early treatment are aspect of strategy and planning, human resources
aspect, and also quality and environment aspect. These three aspects got low
score in innovation potential assessment of Gayo coffee agroindustry, compared
to other aspects that have shown better progress. Theoretically, innovation
potential assessment is noteworthy for the continuity of an industry, because the
condition of the industry innovation potential is a space for development that
impacts in competitiveness, and moreover, it promises industry sustainability in
facing global challenge.
ACKNOWLEDGMENTS
The authors thank and highly appreciate the local government of Central Aceh
Regency and Bener Meriah Regency in Aceh Province for their support in
performing this research. And also to the Directorate General of Higher
Education, Ministry of Research Technology and Higher Education, Republic of
Indonesia.
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ABOUT ABOUT AUTHORS
Rahmat Fadhil, STP., M.Sc., senior lecturer at Department of Agricultural
Engineering, Faculty of Agriculture, Syiah Kuala University, Banda Aceh,
Indonesia, e-mail: rahmat.fadhil@unsyiah.ac.id.
Prof. Dr. Ir. M. Syamsul Maarif, M.Eng., Dipl. Ing., DEA., professor at
Business School, Bogor Agricultural University (IPB), Bogor, Indonesia.
Dr. Ir. Tajuddin Bantacut, M.Sc., associate professor at Department of
Agroindustrial Technology, Faculty of Agricultural Engineering and Technology,
Bogor Agricultural University (IPB), Bogor, Indonesia.
Dr. Ir. Aji Hermawan, MM., assistant professor Business School, Bogor
Agricultural University (IPB), Bogor, Indonesia.
© 2017 by the authors. Submitted for possible open access publication under the
terms and conditions of the Creative Commons Attribution (CC-BY) license
(http://creativecommons.org/licenses/by/4.0/).
ISSN 1335-1745 (print)
ISSN 1338-984X (online)
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