Abstract for: Using System Dynamics Approach to Support Sustainable Growth Of Small And Medium Enterprises’ Quantity In Indonesia

This paper has objectives to discuss and propose policies such as; first, from operational side: providing market information in order to give more access for market demand, market capacity. This strategy will in the long term lead to a better production planning. Second, from the financing side: using profit- sharing principle of financing (PSP) to cope with such dynamics behavior in order to support a sustainable quantity growth of SMEs. Simulation conducted in this paper has implemented two policy levers, which are first; a production coordination system through information sharing and second; financing mechanism with PSP contract for Small Enterprises (SEs). The paper also shows the added value creation of PSP principle in economy and minimization of the agency risk with double layers referencing method. This paper re-emphasizes first; the use of production coordination to support positive growth number of SMEs especially to prevent collapse after experiencing overshoot growth, and second; proposes a financing mechanism for SMEs based on PSP principle to prevent SMEs from the operational failure. This paper also proposes the use of double layer referencing system to minimize agency risk in the area of PSP contract agreement.