Vol 7, No 6 (2016) > Industrial Engineering >

Innovation and Productivity in Indonesian it Clusters: The Influence of External Economies and Joint Action

Iwan Inrawan Wiratmadja, Rajesri Govindaraju, Dwi Handayani



Literature studies
indicate that information technology (IT) clusters encourage innovation and
increase firm-level productivity by providing external economies and facilitating
joint action for its members. The purpose of this study is to identify the
external economy and joint action factors that affect firm innovation and
productivity in the IT cluster. A research model was developed based on earlier
models of joint action and external economies. The model consists of three external
economy related factors, i.e., access to skills, finance, and infrastructure, as
well as three joint action related factors, i.e., vertical, horizontal, and
research and development (R&D) cooperation as the independent variables,
firm innovation as the intervening variable, the firm’s absorptive capacity as
the moderating variable, and firm productivity as the dependent variable. Data
collection was conducted through a survey with respondents from 32 IT firms
located in three clusters in Bandung and one cluster in Cimahi (West Java –
Indonesia). The partial least square (PLS) approach was used for hypotheses
testing. The results indicate that horizontal cooperation, access to
infrastructure, and access to skill have a positive impact on productivity,
while horizontal cooperation and R&D cooperation have a positive impact on
innovation. Finally, firm innovation is proven to positively influence firm

Keywords: Cluster; Indonesia; Information technology; Innovation; Productivity; PLS

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