The Effect of Age, Sales Volume and Number

of Employees on MSMe Business Performance

in South Sulawesi, Indonesia
Zainal Abidin Faisal Rizal Zaenal
Institut Teknologi dan Bisnis Nobel Indonesia Institut Teknologi dan Bisnis Nobel Indonesia
Makassar, Indonesia Makassar, Indonesia
[email protected]

Nur Asia Hamid Ummul Chair

Universitas Muslim Maros Universitas Muslim Maros
Maros, Indonesia Maros, Indonesia

Abstract — Micro, Small, and Medium Enterprises (MSMEs) gas exports expand annually [2]. SMEs have a contribution of
are vital business sectors supporting a country's economy. The 60.3% against product domestic gross and are capable give
MSMEs sector absorbs a lot of labor and supports the country's contributions of about 97.2% absorption power work with
Gross Domestic Product (GDP), especially in developing huge potential _ for growth economy national and regional,
countries. This study aims to analyze the effect of age, sales
volume, and the number of employees on business performance
so SMEs need get attention in all aspects for increase power
in micro, small and medium enterprises (MSMEs) in South competition. SME development is able to create a potential
Sulawesi Province, Indonesia. The locus of this research is in the source economy because of the growing export of non-oil and
province of South Sulawesi, Indonesia. The research sample is gas every year increase [14]. By and large, it has been stated
227 SMEs in South Sulawesi. This type of research is in the literature that micro, small, and medium-sized
quantitative descriptive with multiple linear analysis using SPPS enterprises (MSMEs) in developing countries are important
version 25. The results show that business age and the number for social and economic reasons due to their wide distribution
of employees have a positive but not significant effect on MSME in rural areas and therefore are crucial for the development of
business performance in South Sulawesi, while sales volume has the rural economy, their capacity to absorb large numbers of
a positive and significant effect on MSME business performance
in South Sulawesi. Business age, sales volume, and the number
workers, their roles as a receptacle for the development of
of employees together have a significant effect on business entrepreneurship and business skills, especially in rural areas,
performance, with a determination (R2) of 42.6%. In and as a source of opportunity effort [21]. MSMEs'
comparison, 57.4% is influenced by variables not examined in contributions to the economy include their ability to create
this study. Sales Volume is the most influential variable on the jobs due to their labor-intensive nature, their contribution to
business performance of MSMEs in South Sulawesi. regional economic growth, their role as complementary
partners for large businesses, and their role as training for
employers and young workers in the development of business
Keywords — age, sales, employees, business performance and interpersonal skills [9].
South Sulawesi, being the eastern gateway to Indonesia,
is anticipated to play a significant role in bolstering the
I. INTRODUCTION nation's economy. The province of South Sulawesi, located
MSMEs, or micro, small, and medium-sized businesses, on the southern peninsula of the island of Sulawesi, consists
are a crucial part of the Indonesian economy. MSMEs in of three municipalities and twenty-one districts. This
Indonesia are increasingly significant in the country's province is home to roughly 8,771,970 people in 2018, with
economic growth. At first, it was thought that the existence of an annual growth rate of 0.94 percent, making it the ninth
MSMEs was a key factor in the creation of fieldwork and the most populous in Indonesia. Four ethnic groups dominate
major development of rural regions' economies. However, in South Sulawesi Province: Bugis (41.9%), Makassar
the age of globalization, MSMEs are playing an increasingly (25.43%), Toraja (9.02%), and Mandar (6.1%). In five years,
significant role, such as serving as a source of foreign South Sulawesi will be the second province with the highest
currency for exporting Indonesian non-oil and gas companies, economic growth (7.07%). South Sulawesi is renowned for
who have also developed during times of crisis and are now its contribution to the agriculture, forestry, and fishing
capable of becoming the main sector of the Indonesian industries. Sectors contributed 21.28 percent to Product
economy [5]. Small and medium-sized enterprises (SMEs) Domestic Regional Growth (GRDP) in 2019, the driving
provide 60.3% of gross domestic output and can absorb force of the province's economy [22]. South Sulawesi is a
97.2% of the power needed to build national and regional province with extremely quick growth, and this growth will
economies. As a result, SMEs require attention in all areas to have a transformative effect on a province that has become
boost power competition. SME development is able to one of the most prominent in Indonesia. South Sulawesi's
generate source potential for the economy since non-oil and

© The Author(s) 2023

N. N. Illiyyun et al. (eds.), Proceedings of the 2nd International Conference on Democracy and Social Transformation (ICON-DEMOST 2023),
Advances in Social Science, Education and Humanities Research 793,
https://doi.org/10.2991/978-2-38476-174-6_26
156 Z. Abidin et al.

gross regional product in 2019 was Rp. Five hundred five researched on companies that have gone public, so research
trillion with a 5.0 percent growth GDP [7]. this we analyze from the three factors in a study this to MSME
performance.
MSMEs are one of the most encouraging economic
growth sectors in South Sulawesi. Small- and medium-sized
businesses are able to play an essential role in a particular
II. METHOD
region, particularly as a first-mover in a growing economic
area. Micro-, small-, and medium-sized companies (MSMEs) Study this is type study quantitative. Quantitative
are viewed as a tool for introducing unique products to a method research involves the quantification and analysis of
region and providing opportunities for perpetrator businesses. variables in order to get a result. This involves the
In addition, the role of micro-, small-, and medium-sized exploitation and analysis of numerical data, with a focus on
companies (MSMEs) has been deemed crucial for increasing answering questions such as who, how many, what, where,
per capita income and the economy. Therefore, an effort is when, how much, and how [4]. This research utilizes primary
necessary for micro, small, and medium-sized companies data collected using a google form questionnaire sent to
(MSMEs) to take an active part in building the nation's respondents. Respondents will be prompted to provide their
economy [12]. The number of MSMEs in South Sulawesi has business's age, sales volume, labor force, and profit for 2019-
reached 751,802 units, comprised of 659,098 micro 2021. This research was conducted in the province of South
companies, 88,095 small enterprises, and 3,129 medium Sulawesi, Indonesia, which consists of 24 cities/regions. This
firms. In contrast, the number of business units belonging to study's sample includes as many as 227 MSMEs dispersed
large corporations has recently reached 1,309. From South across the province of South Sulawesi.
Sulawesi's 7.16 percent economic growth, MSMEs make a
Study this using SPSS version 25 as a tool for analyzing
considerable contribution [11].
data that has been collected. The data processing process
Small- and medium-sized enterprises (SMEs) must carried out namely:
constantly be encouraged to grow as pillars of the national
and regional economy. Age, sales volume, and the number 1) Assumption Test Classic
employees are all factors that assist the growth of SMEs. The objective of the Assumption Test Classic's
Business on stage important, after gathering many Normality test is to determine if the regression model,
experiences, source power, and network built for maintaining variable bound, variable free, or both have a normal
operation they from time to time, but company sort of that can distribution. A good regression model has normal data
stagnant or even back off if not managed well, about 50% of distribution or the distribution of statistical data along the
new businesses in Europe cease operations after the third diagonal axis of the chart.
year, and this effect occurs outside of the normal age range
for businesses in the fifth through seventh years [13]. Keep 2) Analysis Regression multiple
continuing to develop social connections inside the business Use the method of multiple linear regression to test the
and with external organizations to sustain cost-effective hypothesis in this research. The election approach is based on
learning of new roles and responsibilities. Novelty can be a a study with the goal of determining the effect from one
highly risky degree of growth effort that will ultimately lead variable free to variable bound [1].
to failure [17]. Increased sales volume is the most relevant
metric for describing the effect of internal and external 3) Test Hypothesis Partial (t-test)
variables on fundamental company competitiveness. First, the Partial employs a test hypothesis for test hypothesis
internal factor is originating factor from within companies research to determine the variable effect person [19].
that can influence company performance and can be regulated
and controlled by the company; such as decision additional 4) Test Hypothesis Simultaneous (F Test)
company capital power work, determination proportion profit Test Hypothesis Simultaneously demonstrate that
detained, merger, acquisition, debt determination for regression models provide better t values on data than models
investment, structure managerial, etc. by the firm such as that do not include independent variables. The objective is to
pricing ingredient standard, competitive conduct, test what whole-beneficial regression models are [20].
macroeconomic and political situations, ethnicity flower
loans, business climate, and market structure [10]. Because 5) Determination Test
man is the executor of action in the skeleton of the Coefficient determination is defined as the sum of
organization attempting to attain its objective, the success of squared regression results divided by the sum of squared total
the organization will depend heavily on the success of the outcomes. Typically, R2 is viewed as the proportional
person in completing the given duty. One destination representation of the variation in the dependent variable as
company is for increasing employee performance, which will explained by the change in the independent variable [8].
lead to improvement in corporate performance. High
performance will boost the company's production, reduce
staff turnover, and validate its management style. On the other III. DISCUSSION
side, low employee performance might decrease job quality
and productivity, increase employee turnover, and decrease Heteroscedasticity is a classic condition in the analysis
corporate profits [15]. of linear regression that must not occur, meaning that residual
variance must be the same. Using the SPSS version 25
Study this aim to analyze how the age of business, sales software package, heteroscedasticity may be identified using
volume, and the number of employees affect SMEs' scatterplot graphs that are changeable and reliant on the figure
performance in South Sulawesi. If research previously 1.
focused on large, long-term companies ripe, even many have
 The Effect of Age, Sales Volume and Number of Employees on MSMe Business Performance 157

of 28,216.25 or more. Any drop in age one unit effort will

result in a decrease of 28,216.25 in company performance.
3) Sales Volume Effect on Business Performance
leverage for sales volume is 26,002,349.54, and a
positive sign indicates a direct link between sales volume and
performance effort. The performance business will rise by
26,002,349.54 for every one unit increase in sales volume or
drop by 26,002,349.54 for every one unit decline in sales
volume.
4) Influence Amount Employee on Business Performance
A leverage coefficient value of 0.22 and a positive sign
indicating that the quantity of employees has a direct
correlation with performance effort. Every increase in the
number of one-unit employees will result in a 0.120 rise in
performance work, and every drop in the number of one-unit
employees will result in a 0.120 decrease in performance
work.
Figure 1. Heteroscedasticity Test
The t-test is used to determine if the partial impact of the
The points in the graph above are distributed arbitrarily independent variable is real or not. The significance level
and do not create a pattern, except that they are distributed utilized is 0.05. If the score is significantly smaller than the
above and below 0 on the Y axis. Therefore, degrees of trust, then we adopt the alternative hypothesis,
heteroscedasticity is not present in the regression model. which argues that variable independence is somewhat
Multiple regression analysis (multiple regression) using influenced by variable dependence. T-test analysis may also
SPSS version 25 indicates that there is a link between the be observed in the table 2.
independent variable and the independent variable, as well as Table 2: Hypothesis Test Partial
variance in the direction of that relationship. The impact and a
Coefficients
direction of the association are depicted in the table 1.
Table 1: Effect of the Independent Variable (X) on the Model t Sig.
dependent variable (Y).
1 (Constant) .680 .497
Coefficients a age .099 .921
Standardized Sales Volume 22,394 .000
Unstandardized Coefficients
Model Coefficients Number of Employees .045 .964
B Std. Error Beta a. Dependent Variable: Business Performance
1 (Constant) 15544297.941 22848990.303
age 28216,251 283776,019 .003 Influence Partial Age on Business Performance
Sales 26002349541 1161123,849 .653
Volume Age efforts have a t-count of 0.099 and a table value of
Number of .220 4.869 .001 = 1.652. Therefore, the t-count < t-table (0.099 < 1.652) with
Employees a score significance of 0.921, which is more than 0.05 (0,921
a. Dependent Variable: Operational Income
> 0,05), indicates that age effort has not significant impact on
According to the regression analysis presented in the business performance.
table above, all independent factors (age, sales volume, and
According to the findings of Mallinguh et al. (2020b)
employee numbers) positively influenced business
[13], the age of a firm is a key indicator of its financial
performance. From the findings of the investigation, the success, whether directly or indirectly. A positive correlation
following regression equation is derived: indicates that foreign investors prefer businesses that have
Y = 15,544,297.94 + 28,216.25X1 + 26.002,349.54X2 + 0.220 X 3 _ been on the market or in operation for longer than start-ups or
those yet in Step. One argument is that youthful firms are
The results of the equation for multiple regression can be read
more likely to be hazardous, have less expertise, and have
as follows:
access to unlimited sources of power than older organizations.
1) Constant (a) This study is also consistent with the research Radipere,
(2014) [16] indicating that corporate performance increases
This means that if age, sales volume, and quantity of
with age, for example, as a result of experience. More reports
employees have a value of 0 (zero) or constant, then
indicate that a company's performance increased until a
performance effort is 15,544,297.94.
particular age and then declined. If a firm does not
2) Age Effect on Business Performance. continuously produce fresh and inventive ideas to prevent
business people from being self-satisfied, the cycle of life will
The age leverage coefficient value was 28,216.25, and a
decrease and becomes a success.
positive sign indicates that age business has a direct
correlation with performance effort. Every rise in age, one Influence Partial Sales Volume on Business Performance
unit effort will result in an increase in company performance
The sales volume has a t-count of 22,394 and a t-table
value of 1.652. Therefore, t-count > t-table (22,394 > 1,652)
158 Z. Abidin et al.

with a score significance of 0.000 < 0.05 (0.000 < 0.005) fluctuation of the independent variable. The calculation result
indicates that sales volume has a significant impact on coefficient determination can be observed in the table 4.
business performance.
Table 4: Coefficient Test Determination
According to al Rachmat et al. (2022) [3], the Model Summary b
relationship between Volume Sales and Profitability is
unidirectional, indicating that the firm has determined that the Model R R Square
Adjusted R Std. Error of the
outcomes of end-sales obtained will fulfill the aim. The Square Estimate
coefficient test findings for regression indicate that Sales 1 .653 a .426 .424 571124007.56730
Volume has an influence on Profitability for the Food and a. Predictors: (Constant), Number of Employees, Sales Volume, Age
Beverage firm listed on the Indonesia Stock Exchange over b. Dependent Variable: Business Performance
the period 2017-2020. Also consistent with studies from Based on table 4, it was determined that age, sales
Effendi & Effendi (2020) [6] indicating a very high volume, and the number of employees had a 43.6% impact on
association between sales volume and profit. Calculation the performance of MSMEs in South Sulawesi. In
results indicate that the link between the second variable and comparison, the remaining 56.4% is a variable that has not
the first variable is unidirectional (positive), which suggests been studied in this research. Because the coefficient of
that as sales volume increases, so will profit. According to determination is greater than 4%, it can be stated that age,
Suartini et al. (2018) [18] research findings, sales volume has sales volume, and the number of very excellent workers
a considerable and negative impact on business performance. explain the performance of SMEs in South Sulawesi.
Influence Partial Amount Employee on Business
Performance
IV. CONCLUSION
The number of employees with a t-count as large as
0.045 and t-table = 1.652. Therefore, the t-count < t-table Based on our previous discussion of the research results,
(0.045 < 1.652) with a score significantly more than 0.05 we can conclude that age has a positive but not significant
(0.964 > 0.05) indicates that age effort has not significant effect on business performance, sales volume has a positive
impact on business performance. and significant effect on business performance effort, and the
number of employees has a positive but not significant effect
According to the findings of study done by (Vosloban, on business performance in South Sulawesi. Simultaneously,
2012), the key employee in a growing organization is the age, sales volume, and the number of employees jointly affect
point employee. Also, the study by Prasetya (2018b) [15] the business performance of MSMEs in South Sulawesi.
ndicates Variables that impact the performance of highly
good employees. Also, in accordance with research
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