Technology Innovation Adoption to Improve the Performance of Dairy Small-Medium Enterprises: Case Study in Pangalengan-Bandung Regency, West Java, Indonesia

TECHNOLOGY INNOVATION ADOPTION TO IMPROVE THE
PERFORMANCE OF DAIRY SMALL-MEDIUM ENTERPRISES:
CASE STUDY IN PANGALENGAN-BANDUNG REGENCY,
WEST JAVA, INDONESIA

NUNI NOVITASARI

GRADUATE SCHOOL
BOGOR AGRICULTURAL UNIVERSITY
BOGOR
2015

DECLARATION
I, Nuni Novitasari, hereby declare that the thesis entitled Technology
Innovation Adoption to Improve the Performance of Dairy Small-Medium
Enterprises: Case Study in Pangalengan-Bandung Regency, West Java,
Indonesia, submitted for the award of Master of Science from Bogor Agricultural
University Indonesia and Master of Applied Innovation and Entrepreneurship
from The University of Adelaide in the framework of international double degree
program between both universities, is my work through the guidance of my
academic advisors and to the best of my knowledge it has not been submitted for

the award of any degree in any other academic institutions. This thesis does not
contain any pieces of work of other person, except those are acknowledged and
refrain herein.
Bogor, July 2015
Nuni Novitasari
NIM F351137101

SUMMARY
NUNI NOVITASARI. Technology Innovation Adoption to Improve the
Performance of Dairy Small-Medium Enterprises: Case Study in PangalenganBandung Regency, West Java, Indonesia. Supervised by TITI CANDRA
SUNARTI and NASTITI SIWI INDRASTI.
SMEs have an important role as the backbone of the economy in Indonesia.
SMEs contribute significantly to the GDP, which amounts approximately to 60
percent and the number of workers absorbed by the sector stood at 97 percent of
the total available workforce. However, there are several challenges faced by the
SMEs in developing countries, such as sourcing financial capital, human resource
competency and technology adoption. The majority of SMEs in Indonesia still
apply traditional practices in terms of production processes and marketing, which
indicates the low level of technology adopted. This condition is also observed in
the Indonesia dairy sector.

Pangalengan is a sub-district of Bandung Regency that serves as the centre
of milk production in West Java. There are many establishments of SMEs of dairy
products producing milk caramel, milk nougat, milk dodol, and milk crackers.
Initially, the smallholder dairy farmers’ motivation was to utilize the fresh milk
that could not be absorbed by the milk processing plant due to quality issues.
Most of dairy SMEs in Pangalengan were lack of technology adoption and GMP
implementation, with resulting inconsistency in the quality of the product and
limited area of product distribution. This has resulted in the product’s low
marketability when compared with the milk candy found in the national market
which consists of mainly imported products.
This study intends to explore the conditions and the problems of the
production and quality of the product faced by the Small Medium Enterprises
(SMEs) of dairy products in Pangalengan-Bandung Regency and to propose the
technology that might be accepted and adopted to address the problem in the
framework of Good Manufacturing Practices (GMP). The outputs of this study are
recommendations on the technology adoption to improve the quality of the
products and identification of factors that may influence the adoption of
technology innovation by the dairy SMEs. The conceptual frameworks that are
used in this study consist of Good Manufacturing Practices (GMP) and the
perceivable attributes of innovation in the theory of innovation adoption by

Rogers (2003).
This research takes the form of an exploratory case study because it aims to
explore the condition of SMEs of dairy products in Pangalengan-Bandung
Regency with the conceptual framework of Good Manufacturing Practices and
technology innovation adoption theory. The data were collected by doing
literature study, field observations in the SMEs of dairy products and conducting
interviews with the five respondents.
This research recommends the technology adoption that might be acceptable
and adopted by the dairy SMEs to address the problem as follow: (1) Establishing
a process control system. A Process control system for the SMEs can be achieved
by establishing: the raw material specification, the raw material composition and
formulation, SOP of production process, SOP of personal hygiene and SOP of

sanitation; (2) Introduction of processing machinery for key processing stage,
such as manual mixing to be replaced by the mechanically operated mixer,
moulding and cutting machines, and the use of boiling pans equipped with the
thermocouple; (3) Improvement of the product’s packaging to enhance protection
of the product thus will extend the shelf life. It is suggested to modify the
secondary packaging using standing pouch aluminium foil.
Factors that may influence the adoption of technology by the SMEs have

been identified. The positive factors are the motivation and efforts to improve the
quality and performance of the product; consumers’ demand for quality and good
manufacturing practices; government or regulatory enforcement; and increasing
production volumes. The negative factors are limited knowledge and educational
background of the SMEs’ human resources; the reluctance of the SMEs to change
their current traditional practices; and financial cost.
This study also evaluates the perceived attributes of innovation / technology
of GMP. The SMEs perceived that the relative advantage of GMP implementation
is low due to the cost that arises as a result of facilities and equipment
improvement. Implementation of GMP and the new technology embodied in it are
perceived as complicated by the SMEs. This is caused by their limited knowledge
of the concept of GMP and the new technology itself. However, the SMEs
perceived that GMP implementation is compatible with their values, needs,
consumer’s demand, and government regulatory.
Keywords : dairy SME, milk caramel, quality improvement, technology
innovation adoption

RINGKASAN
NUNI NOVITASARI. Technology Innovation Adoption to Improve the
Performance of Dairy Small-Medium Enterprises: Case Study in PangalenganBandung Regency, West Java, Indonesia. Dibimbing oleh TITI CANDRA

SUNARTI dan NASTITI SIWI INDRASTI.
Industri Kecil Menengah (IKM) memiliki peranan penting sebagai tulang
punggung ekonomi di Indonesia. IKM berkontribusi signifikan terhadap PDB,
sebesar 60 persen dan jumlah tenaga kerja yang terserap oleh sektor ini mencapai
97 persen dari total tenaga kerja yang tersedia. Namun, ada beberapa tantangan
yang dihadapi oleh IKM di negara-negara berkembang, seperti permodalan,
kompetensi sumber daya manusia dan adopsi teknologi. Mayoritas IKM di
Indonesia masih menerapkan praktek-praktek tradisional dalam hal proses
produksi dan pemasaran, yang menunjukkan rendahnya tingkat teknologi yang
diadopsi. Kondisi ini juga diamati di sektor peternakan susu Indonesia.
Pangalengan adalah suatu kecamatan di Kabupaten Bandung sebagai pusat
penghasil susu sapi di Jawa Barat. Sebagai daerah penghasil susu, maka di
Pangalengan banyak berdiri IKM produk olahan susu yang menghasilkan produk
caramel susu, noga susu, dodol susu dan kerupuk susu. Pada awalnya, pendirian
IKM susu ini didorong oleh motivasi para peternak susu untuk memanfaatkan
kelebihan susu segar yang tidak dapat diserap oleh Industri Pengolah Susu (IPS)
karena masalah kualitas. Tingkat adopsi teknologi dan implementasi Good
Manufacturing Practices (GMP) sebagian besar IKM produk susu di Pangalengan
masih tergolong rendah sehingga kualitas produk yang dihasilkan tidak konsisten
dan terbatasnya daerah jangkaun distribusi produk. Hal ini mengakibatkan daya

saing dan tingkat pemasaran produk lebih rendah bila dibandingkan dengan
permen susu di pasaran yang sebagian besar berasal dari produk impor.
Penelitian ini bertujuan untuk mengeksplorasi kondisi dan masalah produksi
dan kualitas produk yang dihadapi oleh IKM produk susu di PangalenganKabupaten Bandung dan untuk merekomendasikan teknologi yang bisa diterima
dan diadopsi untuk mengatasi masalah tersebut dalam kerangka teori Good
Manufacturing Practices (GMP). Output dari penelitian ini adalah rekomendasi
adopsi teknologi untuk meningkatkan kualitas produk dan identifikasi faktorfaktor yang dapat mempengaruhi adopsi inovasi teknologi oleh IKM produk susu.
Penelitian ini dilakukan melalui metode studi kasus eksplorasi dengan
kerangka konseptual GMP dan teori Adopsi Inovasi/Teknologi (Rogers, 2003).
Pengumpulan data dilakukan dengan studi literatur, observasi lapangan di IKM
produk susu dan wawancara dengan lima responden.
Penelitian ini merekomendasikan adopsi teknologi yang sekiranya dapat
diterima dan diadopsi oleh IKM susu untuk mengatasi masalah kualitas produk
sebagai berikut: (1) Menetapkan dan menerapkan sistem pengendalian proses.
Sistem pengedalian proses untuk IKM bisa dicapai dengan menetapkan:
spesifikasi bahan baku, komposisi bahan baku dan formulasi, SOP proses
produksi, SOP higiene karyawan dan SOP sanitas; (2) Mekanisasi dalam tahapan
kunci proses pengolahan, seperti tahapan mixing menggunakan alat yg
dioperasikan mesin, penggunaan alat pencetak dan pemotong, dan penggunaan
katel yang dilengkapi dengan alat monitor suhu; (3) Perbaikan kemasan produk

untuk meningkatkan perlindungan terhadap produk sehingga dapat
memperpanjang masa simpan. Disarankan untuk mengubah kemasan sekunder
menggunakan standing pouch aluminium foil.
Faktor-faktor yang dapat mempengaruhi adopsi teknologi oleh IKM produk
susu telah diidentifikasi. Faktor-faktor positif adalah motivasi dan upaya
perbaikan kualitas dan kinerja produk; perrmintaan konsumen akan kualitas dan
praktek produksi yang baik; penegakan peraturan oleh pemerintah; dan adanya
peningkatan volume produksi. Faktor-faktor negatif adalah keterbatasan
pengetahuan dan latar belakang pendidikan sumber daya manusia IKM;
keengganan IKM untuk mengubah praktik tradisional mereka saat ini; dan biaya
keuangan.
Penelitian ini juga mengevaluasi atribut inovasi/teknologi GMP yang
dipersepsikan oleh para responden. IKM mempersepsikan bahwa keuntungan
relatif dari pelaksanaan GMP rendah bila dibandingkan dengan biaya yang harus
dikeluarkan untuk perbaikan peralatan dan fasilitas produksi. Pelaksanaan GMP
dan teknologi baru yang terkandung di dalamnya masih dianggap sebagai rumit
oleh UKM. Hal ini disebabkan oleh pengetahuan mereka yang terbatas mengenai
konsep GMP dan teknologi baru itu sendiri. Namun, IKM mempersepsikan bahwa
pelaksanaan GMP sesuai dengan nilai-nilai yang dianut, kebutuhan, permintaan

konsumen, dan peraturan pemerintah.

Kata kunci:

adopsi inovasi teknologi, karamel susu, IKM produk olahan susu,
perbaikan kualitas

 Copyright 2015 of Bogor Agricultural University
All Rights Reserved
1. No part of or entire of this thesis maybe excerpted without inclusion and
mentioning the sources.
a. Excerption only for research and education use, writing for scientific papers,
reporting, critical writing or reviewing of a problem.
b. Excerption does not inflict a financial loss in the proper interest of Bogor
Agricultural University.
2. No part of or entire of this thesis maybe translated and reproduced in any form
or by any means without written permission from Bogor Agricultural
University.

TECHNOLOGY INNOVATION ADOPTION TO IMPROVE THE

PERFORMANCE OF DAIRY SMALL-MEDIUM ENTERPRISES:
CASE STUDY IN PANGALENGAN-BANDUNG REGENCY,
WEST JAVA, INDONESIA

NUNI NOVITASARI

A thesis
Submitted to the Graduate School in Partial Fulfillment of
the Requirement for
Master of Science Degree in
Agroindustrial Technology

SEKOLAH PASCASARJANA
INSTITUT PERTANIAN BOGOR
BOGOR
2015

External Thesis Examiner

: Dr. Ir. Hartrisari Hardjomijojo, DEA

Thesis title

: Technology Innovation Adoption to Improve the Performance
of Dairy Small-Medium Enterprises: Case Study in
Pangalengan-Bandung Regency, West Java, Indonesia
Name
: Nuni Novitasari
Registration No. : F351137101

Approved
Advisory Committee

Dr. Ir. Titi Candra Sunarti, MSi
Chairman

Prof. Dr. Ir. Nastiti Siwi Indrasti
Member

Agreed

Coordinator of Major
Agroindustrial Technology

Dean of the Graduate School

Prof. Dr. Ir. Machfud, MS

Dr. Ir. Dahrul Syah, MScAgr

Examination date: 11.06.2015

Submission date:

ACKNOWLEDGEMENTS
First and foremost, I am deeply grateful to Allah SWT for giving me
tremendous blessings and protections. My deepest appreciation to my advisers,
Dr. Ir. Titi Candra Sunarti , Prof. Dr. Ir. Nastiti Siwi Indrasti, Dr. Barry Elsey and
Dr. Wendy Lindsay for their critical and valuable insights, guidance and
encouragement through the whole process of my thesis writing. My appreciation
also to Dr. Hartrisari Hardjomijojo, DEA as an external examiner for her valuable
inputs and suggestions.
I would also like to acknowledge individuals who have helped me through
the process although it does not make them responsible for the final text. Ir. Agus
Sudibyo, MP and Drh. Asep Rahmat Hoerudin who were willing to share their
knowledge, insights and time for this study as expert respondents. Ateng Zailani,
Nusep Rohmat, and Ucup Tosin who were willing to share their knowledge,
insights and time for this study as respondents. Ms. Amina Omarova & Ms.
Nicole Rizzo-Gray for their assistance and guidance during my study in
University of Adelaide.
My sincere thank further to all my fellow friends in double degree program
of TIP-IPB and University of Adelaide for their support, cooperation and
assistance during my study: Anindita, Dwi, Yani, Arum, Nur Aini, Chicha Dena,
Farda, Karim, Tri, Dickie, Iwan, Danang, Andar, Benny, Koko, Rudh, and Ardy.
Finally I would like to thank my parents, Bapak Nana Suryana and Ibu
Mintarsih; my husband, Nindya Malvins Trimadya, and my daughter, Lira Nesya
Kamila for their love & support for me. To them I dedicate this piece of work.

Bogor, July 2015
Nuni Novitasari

TABLE OF CONTENT
TABLE OF CONTENT
LIST OF TABLES
LIST OF FIGURES
LIST OF APPENDICES

v
vi
vi
vi

1 INTRODUCTION
Background and Need
Problem Statement
Objectives of the Research
Research Questions
Significance to the Field
Limitation

1
1
2
3
3
3
4

2 LITERATURE REVIEW
Quality Assurance
Good Manufacturing Practices (GMP)
Technology Innovation Adoption
Summary

5
5
6
9
11

3 METHODOLOGY
Setting
Participants
Measurement Instrument and Protocols
Data Analysis

12
13
13
13
14

4 FINDINGS AND DISCUSSIONS
Description of Dairy SMEs’ Profile in Pangalengan
Identification of Current Processing Technology
Evaluation of the GMP Implementation by the SME
Problems of Production and Quality of the Product faced by the Dairy
SMEs in Pangalengan
Identification of Technology Innovation might be Accepted and
Adopted by the SMEs in Implementing GMP to Address the Problems
Factors that may Influence the Adoption of Technology by the Dairy
SMEs in Pangalengan
Implications of Research

15
15
16
17
19
20
25
29

5 CONCLUSION AND RECOMMENDATION
Summary
Recommendation

30
30
30

REFERENCES
APPENDICES
AUTOBIOGRAPHY

31
33
41

LIST OF TABLES
Table 1 Dairy cows’ population and milk output by main provinces in
Indonesia (2013) ................................................................................... 1
Table 2. Detailed description of the respondents .............................................. 13
Table 3 Profile of dairy SMEs in Pangalengan................................................. 15
Table 4 Nonconformities related to the GMP found at the observed dairy
SMEs .................................................................................................. 18
Table 5 Raw Material Composition and Formulation ...................................... 20
Table 6 Proposed standardized production process .......................................... 22

LIST OF FIGURES
Figure 1. Flow chart of milk caramel production process ................................ 17

LIST OF APPENDICES
Appendix 1 Field observation checklist........................................................... 33
Appendix 2 GMP evaluation form.................................................................... 34
Appendix 3 Semi-structured Interview Questions ............................................ 37
Appendix 4 Standard Operating Procedure for Personnel Hygiene ................. 38
Appendix 5 SOP for sanitation process ............................................................ 39

1

1 INTRODUCTION
This study intends to explore the conditions and the problems of the
production and quality of the product faced by the Small Medium Enterprises
(SMEs) of dairy products in Pangalengan-Bandung Regency and to propose the
technology that might be accepted and adopted to address the problem in the
framework of Good Manufacturing Practices (GMP). The outputs of this study
are recommendations on the technology adoption to improve the quality of the
products and identification of factors that may influence the adoption of
technology innovation by the dairy SMEs. The conceptual frameworks that are
used in this study consist of Good Manufacturing Practices (GMP) and the
perceivable attributes of innovation in the theory of innovation adoption by
Rogers (2003).
This research takes the form of an exploratory case study because it aims
to explore the condition of SMEs of dairy products in Pangalengan-Bandung
Regency. The data were collected by doing literature study, field observations in
the SMEs of dairy products and conducting interviews with the five respondents.

Background and Need
Dairy is an important subsector of agriculture that contributes to the
development of the economy in Indonesia. In 2013, Indonesia’s dairy cattle
population was 636,000 head involving approximately 192,160 dairy farmers
managing about 3 cows each on average. Over the last five years, Indonesia’s
dairy cow population and milk production has increased annually by an average
of 7.4% and 14.6% respectively. Approximately 90% of dairy farms are
concentrated in West, Central and East Java with a small proportion of around
2% in Sumatra. As can be seen in Table 1, East Java is Indonesia’s largest dairy
production base accounting for 57.09% of all milk production. West Java is the
second biggest producer of milk in Indonesia, with the amount of 281,438
tonnes and 293,107 tonnes in 2012 and 2013 and contributed about 30% of
national milk production (Daryanto 2014). Bandung Regency is the largest
producer of milk in West Java, thus it becomes the potential location for the
establishment of dairy product’s SMEs.
Table 1 Dairy cows’ population and milk output by main provinces in Indonesia
(2013)
Province

East Java
Central Java
West Java
Other
Total

Dairy cows
number
(unit)
323,814
154,398
143,382
14,470
636,064

Dairy cows
(percent)
50,90
24,27
22,54
2,27
100

Milk
production
(tones)
560,398
107,982
293,107
20,099
981,586

Milk production
(percent)
57,09
11,00
29,86
2,04
100

Source: Daryanto (2014)
Dairy farming in Indonesia is characterized by its small scale and
household nature, where most dairy farms use traditional management practices

2

(Morey 2011). The quality of raw milk is not stable because of poor milking
hygiene practices and lack of milking technology, both on-farm and post-farm
gate. Milk is categorized as a perishable, high-risk product that can easily
become deteriorated. It needs to be immediately processed to avoid spoilage.
These conditions have stimulated the establishment of SMEs of dairy processed
products in the centre area of fresh milk production (Elvita 2003). They utilize
the fresh milk as a raw material for varied innovative new milk products such as
milk caramel candy, milk crackers, milk tofu, milk nougat and milk jam.
Pangalengan is a sub-district of Bandung Regency that serves as the centre
of milk production in West Java. There are many SMEs of dairy products
producing milk caramel, milk nougat, milk dodol, and milk crackers. Initially,
the smallholder dairy farmers’ motivation was to utilize the fresh milk that could
not be absorbed by the milk treatment plant due to quality issues. Therefore, they
were urged to innovate by processing the excess fresh milk to become more
valuable dairy products using simple and limited technology. This process is
known as the grass-root innovation. Bhaduri and Kumar (2010) define grassroot innovation as the innovation that was done by the grass-root people who
have grasped the corresponding techniques and skills and usually due to
necessity, hardships and challenges.
Pangalengan has a wide range of traditional dairy products that have been
known and appreciated by consumers for years. The main product they produce
is milk caramel which amounts to 80 % of total products. These SMEs in
Pangalengan produce milk caramel with production capacity ranging between
150 – 1000 l of milk per day involving 10 – 65 workers per each SME. These
SMEs contribute to the economy of the region by creating the added value of the
fresh milk (thus increasing income) and absorbing the workforce (thus reducing
unemployment). Such a contribution is significant in rural areas where farming
is the main economic activity. The farmers use their harvested commodity,
including dairy products, by consuming it locally to fulfil the basic nutritional
needs or by selling it in neighbouring urban markets to get the income, that
enable them to fulfil other needs not available in the surroundings area
(Benkerroum and Tamime 2004).
Milk caramel is a typical milk product of Pangalengan and is sought after
as a souvenir by tourists who visit Pangalengan area or Bandung Regency. Milk
caramel is a processed dairy product with a soft chewy texture and brown colour
identical to the result of the caramelisation process, and has a distinctive taste of
milk.
The problems of quality in the SMEs can be addressed by implementing
the quality assurance system. The simplest and most suitable quality assurance
system for the SMEs is implementing GMP. However, there is still limited
information and research regarding the technology adoption and GMP
implementation in the dairy SMEs, especially for the product of milk caramel.

Problem Statement
SMEs have an important role as the backbone of the economy in almost all
countries. In Indonesia, SMEs contribute significantly to the GDP, which

3

amounts approximately to 60 percent and the number of workers absorbed by
the sector stood at 97 percent of the total workforce available (Anggadwita and
Mustafid 2014). However, there are several challenges faced by the SMEs in
developing countries, such as sourcing financial capital, human resource
competency, and technology adoption. (Subrahmanya 2005). According to
Anggadwita and Mustafid (2014), the majority of SMEs in Indonesia still apply
traditional practices in terms of production processes and marketing, which
indicates the low level of technology adopted. This condition is also observed in
the Indonesia dairy sector.
Most of dairy SMEs in Pangalengan lack of technology adoption and GMP
implementation, with resulting inconsistency in the quality of the product and
limited area of product distribution. This has resulted in the product’s low
marketability when compared with the milk candy found in the national market
which consists of mainly imported products.

Objectives of the Research
The objectives of this research are:
1. To recommend the adoption of technology in implementing GMP in the
SMEs of dairy products (milk caramel) that may improve the quality of the
products.
2. To identify the positive and negative factors that may influence the
adoption of this new technology by the SMEs of dairy products.

Research Questions
The research questions in this research are identified as follow:
1. What are the problems of production quantity and quality of the product?
2. What type of technology innovation might be acceptable and adopted to
address the problems?
3. What are the positive and negative factors that may influence the adoption
of technology by the SMEs of dairy products?

Significance to the Field
The contribution of this research is to provide the information about the
SMEs of dairy products in Pangalengan with the characteristics and problems
they are facing regarding the production and quality of the product. This
research also provides the recommendation on the new technology adoption to
address the problems of production and quality of the products in dairy SMEs in
Pangalengan.

4

Limitation
This research is conducted on the small medium enterprises of dairy
products in Pangalengan- Bandung Regency, West Java, Indonesia. The research
focuses on the product of grass-root innovation, such as: milk caramel. The
research adopts a case study research approach conducted in Pangalengan, thus
the result may not be generalisable (typical findings) to another region. The
theoretical framework used in this study limits the discussion of the findings
based on the GMP theory and innovation adoption theory.

5

2 LITERATURE REVIEW
Quality Assurance
Quality is a diverse concept and may be defined in different ways
depending on the interest of the manufacturers or the consumer’s point of view.
The widely known concept of quality introduced by Juran (1988) defines quality
as “fitness for use” which means that the product or services should meet the
requirement and expectation of the consumers (Vasconcellos 2003). Industry
defines quality as
“A measure of purity, strength, flavour, color, size, maturity, workmanship
and condition, or any other distinctive attribute or characteristic of the
product” (Vasconcellos 2003: 12).

According to Vasconcellos (2003), there are four common standards of
referring the quality, they are as follow:
1. Legal standard (mandatory government regulation)
2. Company or voluntary label standard
3. Industry standard
4. Consumer’s grade or standards
Quality assurance describes and manages the activities of control,
evaluation, audits and regulatory aspects of food processing system to assure
that the product being produced conforms to the standards. Nowadays the
quality assurance systems that can be implemented by the food SMEs are those
in the ISO Series (ISO 9001:2008, ISO 22000:2005), Hazard Analysis Critical
Control Point (HACCP), and Good Manufacturing Practices (GMP) (Karipidis
et al. 2009; Vasconcellos 2003).
There have been numerous studies of factors that influence the
implementation and adoption of quality assurance systems by the SMEs.
Karipidis and others (2009) reviewed that the influencing factors can be grouped
into four categories, which are:
1. Internal benefits or advantages (e.g. improve company’s confidence to
produce quality product)
2. External benefits or advantages (e.g. improve market share and
competitiveness)
3. Internal barriers or disadvantages (e.g. limited trained human resources and
limited financial)
4. External barriers or disadvantages (insufficient quality tools and lack of
training or education).
There are four basic factors that may encourage SMEs to adopt QAS,
which are: their positioning in the marketplace when compared to the
competition, the effect of poor quality, the quality culture, and the effectiveness
of activities aiming to achieve quality goals (Karipidis et al. 2009).
Fernando et al. (2014) confirmed that the primary motive for adopting a
food safety system (GMP, MeSTI) in Malaysian food industry was to improve
product quality, while external factors influencing food safety adoption was
consumer awareness of food safety and the intention of industry to increase
customer confidence.

6

Elvita (2003) studied the implementation of the quality control system in
the product of milk caramel in a dairy SME in Bandung-Indonesia. The result
suggested that the problems faced by the SME in relation to milk caramels
encompass the raw materials quality, processing quality control, human
resources management, as well as the product marketing and distribution.
However, this study did not clearly evaluate the implementation of GMP as a
quality assurance system that is more practical and suitable for the food SMEs in
Indonesia (Pursito 2014). Thus, it needs further study about the technology that
can be accepted and adopted by the milk caramel SMEs to solve the quality
problems and improving the implementation of GMP.

Good Manufacturing Practices (GMP)
Good Manufacturing Practices (GMP) is a guidance for food production
which is aimed to produce food products with quality, that are safe to be
consumed and in accordance with consumers’ requirements. Fardiaz (1996) as
cited by Herlinawati (2012) states that the objectives of GMP application in the
food industry are to:
1. Encourage the food processing industry to be responsible for the quality and
safety of products produced.
2. Improve the competitiveness of the food processing industry.
3. Improve the productivity and efficiency of the food processing industry.
GMP forms the basis of a foundational platform for a quality assurance
program upon which other systems such as food safety system (e.g. ISO 22000,
HACCP) could be built to produce consistent quality and safety of the food.
GMP provides the basic requirement to assure good practices related to the
workers, the facility and environment, the machinery or equipment and also
process control (Chandan et al. 2009; Dewanti-Hariyadi 2010). The benefits of
GMP implementation in small dairy factory as pointed out by Cusato et al.
(2013) are related to food safety, longer product shelf life, reduced losses, better
working environment, and consumer satisfaction.
The GMP standard in this study refers to the Regulation of Head of The
National Agency for Food and Drug Control (NADFC) Republic of Indonesia
No. HK.03.1.23.04.12.2206 year 2012 about Good Manufacturing Practices for
household and small scale industry (Pursito 2014). The scope of GMP covers the
following aspects:
1. Location and production environments
The location selection for food industry needs to consider the
circumstances and environmental conditions that may become a source of
potential contamination as well as the effectiveness of any reasonable
measures that might be taken to protect food. The location of the food
industry should be kept clean, free from litter, odour, smoke, dirt and dust.
The environment of the location should be maintained in a clean state. The
road should not be dusty, and the ditch functions well.

7

2.

3.

4.

5.

6.

7.

8.

Building and facility
Building and facility should assure that during the production process,
food will not be contaminated by the physical, biological, and chemical
hazards, as well as easy to clean and sanitize.
Production equipment
The layout of the production equipment ought to be designed to avoid
cross contamination. The equipment coming contact with food should be
designed and constructed to ensure the quality and the safety of the food
produced. Production equipment and containers should be made of materials
with no toxic effect, durable, and easy to clean and sanitize in its intended
use.
Water supply and facility
An adequate supply of potable water with appropriate facilities for its
storage, distribution and temperature control, should be available and meet
the requirement of clean water or drinking water quality standards.
Hygiene and sanitation facility and activity
Hygiene and sanitation facility and activity are needed to assure that
the building and equipment are in clean condition and to prevent the crosscontamination from the workers. Cleaning facility for washing of food,
equipment, supplies and building (floors, walls and others) should be
available and well maintained. Employee hygiene facilities such as hand
washing and toilet should be available in sufficient quantities and in a clean
state to ensure the hygiene of employees in order to prevent contamination
to food.
Personnel health and hygiene
An appropriate degree of personal cleanliness and health can assure
that the workers or food handlers are not the sources of food contamination.
Food handlers should maintain a high degree of cleanliness, where
appropriate, wear suitable protective clothing, head covering, and footwear.
Food handlers should avoid the non-hygienic practices that could result in
contamination of food, for example: smoking, spitting, chewing or eating,
and sneezing or coughing over unprotected food. Food handlers should not
wear accessories such as jewellery, watches, pins or other items that could
contaminate the food safety and quality.
Maintenance and sanitation hygiene program
Maintenance and sanitation program for production facilities
(buildings, machinery/equipment, pest control, waste handling and other)
shall be done periodically to ensure avoiding cross contamination to the
processed food. Cleaning should remove food residues and dirt that may be
a source of contamination.
Storage
Storage of materials used in the production process (raw materials,
food additives) and the finished products should be provided in such a way
to avoid the decreasing of quality and safety of the product. The storage of
raw materials and finished products must be separated in a clean room with
appropriate storage temperature and prevent access of pest infestation.

8

9.

Process control
The production process shall be controlled properly to produce good
quality and safe food product. Process control in food home industry or food
SME can be done through the following steps:
a. Establish the raw material specification
b. Establish the raw material composition and formulation
c. Establish the standard operating procedure for the production process of
food
d. Establish the type, size, specification of the packaging
e. Establish the detailed product information, including product’s name,
production date, expiry date.
10. Food labelling
Food should be labelled with clear information and instruction to
enable consumers to choose, store, handle and consume the food. The food
label should contain the following minimum required information:
a. Product’s name
b. List of raw materials and ingredients
c. Nett weight
d. Producer’s name and address
e. Expiry date
f. Production code
g. Food licence number
11. Supervision by the person in charge
A person in charge is required to supervise all stages of the production
process and control to assure the food product quality and safety.
12. Product recall
The owner of the food factory must recall the product if suspected to
cause illness/food poisoning/ and or not meet the requirements of food
legislations and regulations.
13. Records and documentation
Appropriate records and documentation are needed to facilitate
traceability of problems related to production and distribution process, to
prevent the distribution of products that exceed the expiry date, and to
improve the suitability and effectiveness of the food safety and quality
management system.
14. Training of employees
Managers and employees must have basic knowledge and competency
regarding the principles and practices of food hygiene, sanitation and food
processing in order to produce good quality and safe food.
Previous study on the implementation of GMP and HACCP plans in a nata
de coco company shows that it has addressed the issues of physical
contamination from equipment, environment, and workers, thus reducing the
rejected product from 14.43% to 5.32%. However, there are some issues
regarding the implementation of GMP in the developing countries such as: (1).
Industry scale; (2). Infrastructure; (3). Traditional production procedure; (4).
Behaviour/attitude of workers; and (5). Financial cost (Dewanti-Hariyadi 2010).
Applying GMP and HACCP to traditional food processing can effectively
manage and control hazards that may be associated with the traditional practices.

9

Amoa-Awua et al. (2007) confirmed that GMP implementation is an effective
system for ensuring the quality and safety in the traditional processing of maize
in Ghana. In such traditional operations, GMP can be implemented at a minimal
cost by relying on simple techniques and instruments such as visual inspections,
using pH strips, thermometers, and timing of unit operations (Amoa-Awua et al.
2007).
Yuwono et al. (2012) identified internal and external factors that influence
the continuity of GMP application in the fish fillet processing plants. The
internal factors are lack of education and lack of experience, while the external
factors are lack of government policies in socialisation and training of GMP,
lack of potable water and ice supply, lack of law enforcement, and market
demand.
Addressing the issues of GMP implementation in food SMEs, government
plays a significant role, such as supporting and providing the infrastructure for
the SMEs (e.g. potable water, cold supply chain), providing training related to
the sanitary production process and good manufacturing process for SMEs and
conducting regular monitoring of GMP implementation (Herlinawati 2012;
Suhartono 2009).

Technology Innovation Adoption
The introduction of quality assurance concepts to the SMEs that is
embodied in the implementation of GMP and the processing technology
included can be regarded as new technology or innovation concept for the SMEs.
The implementation of GMP and technology included in it is aimed to improve
the product’s quality and competitiveness.
Rogers (2003) defines innovation as an idea, practice, or object that is
perceived as new by an individual or other unit of adoption. In this perspective,
the newness of an innovation is measured subjectively by the adopters and more
emphasizing in the usefulness and novelty. In the context of a developing
country, technological innovation is characterized as the process where a
company creates and/or applies the new design and/or new production process of
goods and services regardless of whether they are new to their competitors, their
customers or the world (Subrahmanya 2013). According to Subrahmanya (2013),
innovation will emerge only when a technically competent firm is able to
identify and respond to customer requirements by developing or improving
products/processes.
Technology innovation can be classified into hardware technology and
software technology. Hardware technology refers to the physical or material
objects such as tools, machinery, or equipment, while software technology refers
to information base or systems underlying the hardware technology (Rogers
2003). GMP can be classified as the software technology that underlying the
usage of hardware technology needed to improve the implementation of the
concept.
The rate of technology/innovation adoption is influenced by the perceived
attributes of the innovations. Rogers (2003) defines five characteristic of
innovations as perceived by the individuals as follow:

10

1. Relative advantage. This is the degree to which innovation is perceived as
better than the existing one. It can be measured by the economic perspective,
convenience, and satisfaction. The relative advantage correlates positively
with the rate of adoption.
2. Compatibility. This is the degree to which an innovation is perceived as
being consistent with the existing values, past experiences, and the needs of
the adopters. The compatibility correlates positively with the rate of
adoption.
3. Complexity. This is the degree to which an innovation is perceived as
difficult to be understood and to be applied. The complexity correlates
positively with the rate of adoption.
4. Trialability. This is the degree to which an innovation can be trialled prior to
full implementation in the real situation. The trialability correlates positively
with the rate of adoption.
5. Observability, it is the degree to which the result of an innovation can be
observed by others. The observability correlates positively with the rate of
adoption.
This study focuses on the relative advantage, compatibility, and
complexity of GMP and relevant technology needed as technological factors
because according to Rogers (2003b), these three factors have consistently
influenced in adoption behaviour of technical innovation than other factors.
In addition, Ram and Sheth (1989) argued there are five barriers that
weaken the adoption of innovation and may lead to the innovation resistance,
which are: usage barrier, value barrier, risk barrier, tradition barrier and image
barrier. The usage barrier happens when an innovation is not compatible with
existing workflows, practices or habits. It is the most probable cause for
resistance to innovations. The value barrier arises if the innovation does not offer
significant performance-to-price compared to its substitutes. Risk barrier refers
to the degree of risks an innovation entails (physical, economic and function).
Tradition barrier related to the changes an innovation may cause in daily
routines and deviate from established traditions. The image barrier arises due to
a stereotyped thinking and perception of an innovation.
Benkerroum and Tamime (2004) studied the technology transfer of some
Moroccan traditional dairy products to improve the traditional fermentation
process. The study proposed the schemes of standardized production stages, in
which the processing steps are basically the same as those used in traditional
method with the required adjustments for standardization and enhancement of
safety and quality of the final products. They included three main criteria as
follow: (1) Pasteurization of the raw milk due to its poor hygienic quality; (2)
Mechanization of some key processing stages; and (3) Improvements of the
product’s conditioning and packaging.
Yuwono et al. (2012) used the theory of perceived attribute innovation to
study the factors affecting the implementation of GMP in the fish fillet
processing unit in Java-Indonesia. The result of the study showed that there are
differences in how the respondent perceived the innovation that leads to the
decision on whether they continue to implement GMP or not. The respondents
who continue to apply GMP imply that the GMP implementation gave them
relative advantages by expanding export market orientation and reducing

11

rejected product. They also perceived that GMP is compatible with their values
and customer’s values (requirements of the customer and regulation of the
export destination countries). They have received education, training, and
manual guidance from the government thus they do not perceive GMP as
complex. On the other hand, the respondents who decided to stop the GMP
implementation perceived that the GMP implementation did not give them
relative advantages, not compatible, and difficult to apply.

Summary
The problems of quality in the SMEs can be addressed by implementing
the quality assurance system. The simplest and most suitable quality assurance
system for the SMEs is implementing Good Manufacturing Practices. There are
several studies that have been conducted to analyze factors affecting the SMEs
to adopt the quality assurance system and GMP as well as the new technology to
solve the problems of quality. Furthermore, the technology adoption rate is also
influenced by the perceivable characteristics of innovations.
However, there is still limited information and research regarding the
technology adoption and GMP implementation in the dairy products SMEs,
especially for the product of milk caramel. This research attempts to address the
problems of the product’s quality through the new technology adoption in the
framework of GMP concept and to identify the factors that may influence the
dairy products SMEs to adopt the new technology.

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3 METHODOLOGY
The exploratory case study methodology is applied in this study, with the
unit of analysis being the SMEs of dairy products in Pangalengan. An
exploratory case study is used to explore those situations in which the
intervention being evaluated has no clear, single set of outcomes (Yin 2013). For
the novice researcher, a case study is an excellent opportunity to gain useful
insight into a case. It enables the researcher to gather data from a variety of
sources and to converge the data to clarify the issues under investigation (Baxter
and Jack 2008).
This research was conducted through four stages as follow:
1. Identification of the dairy SMEs profile in Pangalengan.
The data of dairy SMEs profile in Pangalengan were collected from
the documentation of the SMEs report, doing field observation and semistructured interview. The data covered the number of SMEs, the production
capacity, the number of workers, the competency of the human resources,
the legal status, and monthly income. There were three SMEs in
Pangalengan included as respondents and being observed in this study, they
are: AA Enterprise, BB Enterprise and CC Enterprise. The detailed
description of the respondents can be seen in Table 2.
2. Identification of current conditions and processing technology of the dairy
SMEs.
This stage covers identification of current processing technology
being used, evaluation of the GMP implementation by the SMEs, and
identification of the problem of production and quality of the product. The
data were collected by doing field observation and semi-structured interview
with the owners and workers of the SMEs. The data covered production
flow process, the raw materials and equipment being used, the quality
control process, and the implementation of 14 elements of GMP
(conformities and non conformities).
3. Identification of technology adoption that might be acceptable and applied
to address the problem.
The information was collected by doing field observation and semistructured interview with the expertise of dairy processing technology and
the SMEs’ owner. Literature study was conducted to enhance the data
related with the Good Manufacturing Practices, milk candy processing
technology and dairy processing technology. The expert respondents
involved in this study consist of Ir. Agus Sudibyo, MP as a senior researcher
from Center for Agro-based Industry and Drh. Asep Rahmat H. as a
processing unit manager from Cooperatives of Bandung Regency Dairy
Farmers (CBRDF).
4. Identification of factors that may influence the adoption of new technology
by the SMEs.
The data were collected by doing semi-structured interview with the
expertise of dairy processing technology and the SMEs’ owner.

13

Setting
This study was conducted from May 2014 until May 2015. The interviews
and field observations were done in June 2014 and January 2015. The study took
place in the SMEs of dairy products in Pangalengan-Bandung Regency, West
Java, Indonesia.

Participants
The participants involved in this study were selected by using the
purposive sampling method. There were three SMEs of dairy products in
Pangalengan and two experts selected as respondents based on their expertise in
the dairy processing technology and Good Manufacturing Practices in the small
scale food industry. The SMEs respondents were selected based on the size of
the SMEs which were indicated by the production capacity and the sales
volumes. The selected respondents were the three biggest establishment SMEs in
Pangalengan. The details of the participants in this study can be seen in the
following Table 2.
Table 2. Detailed description of the respondents
Respondent
AZ (initial name)
NR( initial name)
UT (initial name)
Ir. Agus Sudibyo,
MP
Drh. Asep Rahmat
H.

Institution
AA Enterprise (SME)
BB Enterprise (SME)
CC Enterprise (SME)
Center for Agro-based Industry
(Research Institution)
Cooperatives of Bandung
Regency Dairy Farmers
(CBRDF)

Position

Respondent
code
Respondent 1
Respondent 2
Respondent 3
Respondent 4

Owner
Owner
Owner
Senior
Researcher
Processing Respondent 5
Unit
Manager

Measurement Instrument and Protocols
The measurement instruments being used in this study are an interview
question list and a field observation data checklist. The field observation was
done by visiting the three SMEs of dairy products in Pangalengan and observing
all aspects related to the elements of GMP, the production process and quality of
the product. A field observation checklist was used to implement the records of
the field observations. Photographs were also taken as records and additional
information to the field observation checklist. The detailed of field observation
data checklist and GMP evaluation form are provided in the Appendix 1 and
Appendix 2.
Semi-structured interview was conducted in this study in the process of
data collection. Using semi-structured interviews enables the exploration of the
perceptions and opinions of respondents regarding complex issues. It also
enables probing for more information and clarification of answers (Baxter and
Jack 2008; Barriball and While 1994).

14

The interviews were conducted face to face with the five respondents at
the site of their businesses. The interview question list was used as a guide, yet
the researcher was allowed to ask questions outside the list to further pursue the
respondent’s answer and explore more information or data. The detailed of
interview questions list guide is provided in the Appendix 3. The interviews
lasted for 1 – 2 hours. Sound recordings were taken of all of the conversations
during the interviews.

Data Analysis
The data analysis applied in this study is descriptive analysis (field
observation) and interpretive analysis (interview results). The collected data
from interviews were analysed by using a case study data analysis technique
(Yin 2013). It started by transcribing the interviews recording into a textual
report. Since interviews were conducted in the Indonesian language, the
transcription is also in the Indonesian language to have better understanding of
the analysis and to avoid misinterpretation by the researcher. The data of the
transcribed scripts were coded and grouped into more general themes. After that,
the themes were identified referring to or related to the research questions.
Finally, the analysed data were translated into English.
The field observation data were analysed by referring to