The Influence of the Business Environment and Managerial Competence on the Decision to Choose Funding for a Small Craft Business
The Influence of the Business Environment and Managerial Competence on the Decision to Choose Funding for a Small Craft Business

Summary/Abstract: This paper discusses the causal relationship between the internal and external environment of business with managerial competence in the effort of deciding on choosing a craft small business funding. The researcher proposes a new concept and wants to explain the role of managerial competence as an intermediate variable. Using structural equations in 384 respondents drawn proportionally from a population of 36,343 handicraft entrepreneurs in East Java. Criteria for respondents are entrepreneurs who have actively conducted business activities for at least 1 year, while the sampling method uses proportional random sampling. The findings indicate that the proposed concept is accepted, and shows that the internal environment has no bearing on the decision to choose a craft small business funding. External environment, dominantly influences the decision to choose funding. Research also proves that managerial competence is an intermediate variable, and contributes positively to the decision to choose business funding. The novelty in this research is, the use of indicators: understanding the organization, leading and managing people, managing resources, and communicating effectively as indicators of managerial competence.

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