Role of Learning Process in Capability Development and Business Performance of East Java Manufacturing Firms: Resources as Moderator

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ISSN No: 2456
International
Research
Role of Learning Process in Capability Development a
Business Performance o
Resources a
Faculty of Business, Widya Mandala
Catholic University Surabaya, Indonesia
ABSTRACT
The purpose of this research is to analyze how the
influence of internal learning of employees, external
learning obtained from suppliers and consumers, and
ownership of processes and equipment, on the
performance of the company. This research also
examines the role of human resources as moderator in
the relationship between process ownership and
equipment with performance. The research population
that became the object of this research covers all
manufacturing companies operating in Indonesia. The
population is a manufacturing company registered by
the Manufacturing Company Directory published by
the Statistics Centre Bureau of, 2010. The sample is
determined by using purposive sampling technique,
and the sample selected is a manufacturing company
with criteria that have medium and large scale. From
the results of hypothesis testing then some of the main
findings are presented in this section. First, internal
learning positively affects technological capabilities,
indicating that ownership of tools and technologies is
encouraged or enhanced by improving the internal
learning process. The main findings of both studies
indicate that external learning will encourage
companies to increase their ownership of equipment
and technology. Humans are recognized as controllers
in the use and utilization of technology.
the first step to undertake the development of
empirical studies by considering further factors that
determine success in resource management and
technology primarily through organizational learning.
Furthermore, the findings of this study also indicate
the factors of operating strategy that moderate
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ISSN No: 2456 - 6470 | www.ijtsrd.com | Volume
International Journal of Trend in Scientific
Research and Development (IJTSRD)
International Open Access Journal
Role of Learning Process in Capability Development a
Business Performance of East Java Manufacturing Firms:
Resources as Moderator
Lena Ellitan
Faculty of Business, Widya Mandala
Catholic University Surabaya, Indonesia
s research is to analyze how the
n resources as moderator in
the relationship between process ownership and
ing company registered by
the Manufacturing Company Directory published by
the Statistics Centre Bureau of, 2010. The sample is
ium and large scale. From
the results of hypothesis testing then some of the main
findings are presented in this section. First, internal
learning positively affects technological capabilities,
indicating that ownership of tools and technologies is
ged or enhanced by improving the internal
learning process. The main findings of both studies
indicate that external learning will encourage
companies to increase their ownership of equipment
and technology. Humans are recognized as controllers
and utilization of technology. This study is
the first step to undertake the development of
empirical studies by considering further factors that
determine success in resource management and
technology primarily through organizational learning.
, the findings of this study also indicate
the factors of operating strategy that moderate
ownership of tools and technology companies to
performance.
Keywords: Internal Learning, External Learning,
Capability Development and Performance
INTRODUCTION
Continuous competitive advantage is the goal all
companies aim to achieve in a dynamic and
unpredictable competitive environment. In an effort to
achieve these goals, the company faced the challenge
of increasingly critical consumers to get personalized
service, fulfilling specific product needs with short
waiting time and high quality. To respond to the
changes that occur requires the company's willingness
to change the perspective in the manufacturing
process and the willingness to apply new regulations
by changing the concept of corporate management
into individual self management and from process
content of strategy into day to day operations.
To achieve this competitive advantage, companies
need to apply flexible strategies to developments and
changes that occur. Companies must have the
capability to create competitive advantage with
limited resources. A resource
provides a solution for companies to achieve a
continuous competitive advantage through a unique
set of resources owned by the company. Resource
based strategies focus on firm specific resources more
than industrial structures, and show competitive
advantages and strategies to exploit competitive
Dec 2017 Page: 116
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Scientific
(IJTSRD)
International Open Access Journal
Role of Learning Process in Capability Development and
f East Java Manufacturing Firms:
ownership of tools and technology companies to
Internal Learning, External Learning,
ity Development and Performance
ntinuous competitive advantage is the goal all
companies aim to achieve in a dynamic and
unpredictable competitive environment. In an effort to
achieve these goals, the company faced the challenge
of increasingly critical consumers to get personalized
ice, fulfilling specific product needs with short
waiting time and high quality. To respond to the
changes that occur requires the company's willingness
to change the perspective in the manufacturing
process and the willingness to apply new regulations
changing the concept of corporate management
into individual self management and from process
content of strategy into day to day operations.
o achieve this competitive advantage, companies
need to apply flexible strategies to developments and
t occur. Companies must have the
capability to create competitive advantage with
limited resources. A resource-based view of strategy
provides a solution for companies to achieve a
continuous competitive advantage through a unique
the company. Resource-
based strategies focus on firm specific resources more
than industrial structures, and show competitive
advantages and strategies to exploit competitive

International Journal of Trend in Scientific Research and Development (IJTSRD) ISSN: 2456-6470
@ IJTSRD | Available Online @ www.ijtsrd.com | Volume – 2 | Issue – 1 | Nov-Dec 2017 Page: 117
advantage (Hart, 1995). Resource-based in the
concept of strategy is defined as the resources and
capabilities of different companies with other
companies and has a special advantage over the long
term (Barney, 1991; Chuang, 2004).
The importance of the role of resource-based
strategies for the improvement of corporate
performance and the achievement of competitive
advantage, attracts both researchers and practitioners
to research and implement resource-based strategies
and their impact on corporate performance. Various
researches on manufacturing strategy and company
performance have been done by several researchers.
Hayes and Wheelright (1984) found an important role
of manufacturing capability in determining the
company's competitive position in the market, and the
importance of ownership of processes and equipment
is a key key that will lead to the achievement of
corporate competitive advantage. Swamidass and
Newel (1987) concluded that capability and
competence are important components of
organizational capability in achieving low cost, high
flexibility, and high quality. In this case the role of the
manufacturing process as a potential resource, the
determination of human role in organizational activity
and organizational factors is an important factor in
achieving the company's competitive advantage.
Several previous studies have reported that the
influence of corporate resources on business
performance is influenced by manufacturing strategy,
business strategy (Grant, 1991, Russo & Fouts, 1997).
Schroeder, Bates, and Junttila (2002) conducted a
study focusing on the production process with the
development of a group of company capabilities to
achieve improved company performance. Resource-
based strategy research was undertaken by Schroeder,
Bates, and Junttila (2002) who developed a
conceptual model of resource-based manufacturing
strategy and suggested that the concept of learning
within a company is developed based on a resource-
based view that focuses on causal knowledge,
ambiguity, and social factors complexity. Through
internal and external learning processes it is expected
that companies have patent rights over processes and
equipment that provide a competitive advantage for
the company. The company's competitive advantage
can be measured or assessed through company
performance.
The manufacturing enterprise used as a sample of this
research is defined as a unit of business which carries
out economic activities aimed at producing goods,
situated in a particular building or location, and has its
own administrative records concerning the production
of the cost structure and there is one or more who is
responsible for Such businesses (BPS, 2010). Ellitan
(2005) investigated the structure of Indonesian
industry, and the results show that manufacturing
industries such as chemical and heavy industries have
very fragile structures with high import dependency,
while raw materials, intermediate and component
industries can not meet the needs. Under these
conditions, any increase in demand for both domestic
and import demand will only increase imports which
will further increase the current account deficit. In
contrast, light industry in Indonesia is growing quite
well, production growth is increasing, export growth
is good, industry linkage is big enough and
comparative advantage is high enough. Based on the
description of the condition of Indonesia's
manufacturing industry, this research is conducted to
test whether the conceptual model of resource-based
manufacturing strategy, is still relevant if applied in
different research settings that is in medium and large
manufacturing companies in East Java. This research
is conducted with the following objectives:
1. To provide empirical evidence that internal
learning affects ownership of production
processes and equipment.
2. To provide empirical evidence that external
learning affects ownership of production
processes and equipment.
3. To provide empirical evidence that ownership of
processes and equipment affects company
performance.
4. To provide empirical evidence that the availability
and quality of human resources moderate the
ownership relationship of processes and
production equipment with performance
LITERATURE REVIEW
2.1. The Importance of Developing Competitive
Capability of Companies
Schroeder et al. (2002) developed three factors or
types of resources and capabilities in the production
functions that are difficult to imitate and transfer,
namely proprietary process and equipment, internal
learning, and external learning. Manufacturing
practices are adopted by imitating "world class
manufactures" that can contribute to a competitive
balance but not for competitive advantage. The

concept of learning within a company is developed
based on a resource-based view that focuses on causal
knowledge, ambiguity, and complex social factors.
Internal learning includes multifunctional training for
workers and empowering workers in production
processes and development, so it is hoped that the
practice will bring organizations to be more adaptive
(Schroeder, et al., 2002). Schroeder, et al. (2002), the
learning process is the only source of sustainable
competitive advantage. The learning process can
occur in unpredictable and risky ways, sometimes
even occurring in a way that is difficult to codify,
leading to the deployment of resources that have a
causally ambiguous impact.
Schroeder, et al (2002) suggests that external learning
in the context of manufacturing enterprises is an
interorganizational learning process through problem
solving that arises in the interaction with consumers
and suppliers that can create tacit knowledge that is
not easily imitated . External learning can be either
supplier input in new products or process design and
supplier involvement in quality creation and
continuous and routine improvement. Organizational
learning capabilities should produce an idiosyncratic
manufacturing process, including appropriate process
technologies that contribute to the achievement of
competitive advantage (Permana, et al., 2017)
Ownership of production processes and equipment
includes patent-protected equipment and undisclosed
equipment, state of the art equipment and processes
that have been exclusively developed by the company.
The process of coordination in global business is the
process of developing corporate capabilities and
building a learning organization. The development of
core competence cannot be accelerated by investment,
not easily imitated and transferred by competing
companies, as well as providing a competitive
advantage for the company (Schoemaker, 1992). The
strategy to gain competitive advantage through the
effort to explore and build core competence has been
implemented by several companies of Sony,
Motorola, NEC, WallMart, and several other global
companies.
Competence needs to be managed through a cognitive
process, a process that requires understanding and
awareness of all the components involved (Jiao, &
Alon, & Cui, (2011). This process is very important in
building and developing the competence (competence
building and leveraging) company next. The success
of the establishment of competence depends on the
ability of managers to improve the flow of
information, knowledge, and ability to estimate the
company's conditions such as intensive structure and
desired organizational change. In developing core
competence for global learning the role of CEO is
very important because this strategy requires
communication, involvement, and cooperation of
every management function both intra and between
organizations. In addition, the resources that exist
within the company support each other to achieve the
goals and the company always follow the
development of technology and science more
proactive.
2.2 Theoretical Framework and Development of
Hypotheses
The Effect of Implementing Strategies On
Corporate Performance: Empirical Evidence
Various research on the contribution of strategy to the
improvement of company performance has been done
by several researchers. Hayes and Wheelright (1984)
argue that manufacturing capability plays an
important role in how firms compete in the product
market and how firms should develop capabilities.
Ownership of processes and equipment is a key key
that will lead to the achievement of a company's
competitive advantage. Swamidass and Newel (1987)
concluded that capabilities and competencies based on
specific manufacturing innovation processes are
important components of organizational capability in
achieving low cost, high flexibility, and high quality.
In this case the role of the manufacturing process as a
potential resource, the determination of human role in
organizational activity and organizational factors is an
important factor in achieving the company's
competitive advantage.
Schroeder, et al. (2002) conducted a study focusing on
the production process with the development of a
group of company capabilities to achieve improved
company performance. While Flynn and Schroeder
(1994) suggests a link between quality management
practices, JIT, manufacturing strategies, and company
performance. These studies are different from the
concept of resource-based views because in
researches the manufacturing strategy usually
investigates the adoption of specialized manufacturing
practices and how they affect the firm's performance.
Schroeder, et al., (2002) developed a conceptual
model of resource-based manufacturing strategy and

suggested that the concept of learning within a
company is developed based on a resource-based
view that focuses on causal knowledge, ambiguity,
and complex social factors. Paiva et al. (2008),
resource-based views are developed based on a
combination of internal and external learning
perspectives that are closely related to traditional
approaches in strategy implementation. This approach
emphasizes the company's ability to explain in detail
and clearly both in terms of manejerial, pactic,
competitiveness development, corporate profitability,
and core competencies of the company.
Alegre and Chiva (2008) define organizational
learning (organizational learning) as a process
undertaken by the company to do the learning. This
process is related to changes that occur in the
structure and management of the company to maintain
or improve the performance of the company as a
whole. Not a few empirical studies undertaken
emphasize the importance of the learning process in
the organization and how the learning process is
conducted (Bruton et al., 2004). The importance of
the role of the learning process within the
organization, in terms of learning orientation, learning
capabilities, and learner organizations, in all business
activities of enterprise performance data has been
documented in strategic management literature,
particularly in terms of manufacturing strategy
(Calantone et al., 2002; Prieto and Revilla, 2006).
Organizational learning has been recognized as a key
factor for improving the company's performance and
capability, and the ability to learn both through
internal as well as external sources (external learning)
as a source to create corporate competitive advantage
(Jiang and Li, 2008) .
Internal learning includes multifunctional training for
workers and empowering workers in production
processes and development, so it is hoped that the
practice will bring organizations to be more adaptive
(Liao et al., 2008). External learning in the context of
manufacturing enterprises, is an interorganizational
learning process through problem solving that arises
in the interaction with consumers and suppliers that
can create tacit knowledge that is not easily imitated
(Almeida et al., 2003). Through internal and external
learning processes it is expected that companies have
patent rights over processes and equipment that
provide a competitive advantage for the company.
The company's competitive advantage can be
measured or assessed through company performance.
Model and Hypothesis Research
This study focuses on manufacturing strategies that
are defined as capabilities and resources and their
relationship to organizational performance. There are
three factors or types of resources and capabilities
developed in the production function that are difficult
to replicate and transfer (Schroeder, et al., (2002) ie
proprietary process and equipment, internal learning,
and external learning Manufacturing practices are
adopted by imitating world class manufactures that
can contribute to a competitive balance but not for
competitive advantage.The model also emphasizes
that the role of learning and knowledge development
within the company is to produce processes and
equipment created through the process of "path
dependent problem Solving "that mediates between
the learning process and the company's performance.
Internal and External Learning
The concept of learning within a company is
developed based on a resource-based view that
focuses on causal knowledge, ambiguity, and complex
social factors Internal learning includes
multifunctional training for workers and empowering
workers in production processes and development, so
it is hoped that the practice will bring organizations to
be more adaptive (in Schroeder, et. Al., 2002). The
focus of learning and company performance has a
positive relationship. According Schroeder, et. al.,
(2002), the learning process is the only source of
sustainable competitive advantage. The learning
process can occur in unpredictable and risky ways,
sometimes even occurring in a way that is difficult to
codify, leading to the deployment of resources that
have a causally ambiguous impact.
Schroeder, et. al (2002) suggests that external learning
in the context of manufacturing enterprises, is an
interorganizational learning process through problem
solving that arises in the interaction with consumers
and suppliers that can create tacit knowledge that is
not easy Imitated. External learning can be either
supplier input in new products or process design and
supplier involvement in quality creation and
continuous and routine improvement.
Ownership of Production and Equipment
Processes
Schroeder, et. al., (2002) suggest that organizational
learning capabilities should produce an idiosyncratic

manufacturing process, including appropriate process
technologies that contribute to the achievement of
competitive advantage. Therefore, in this research
focused on the assessment of the company's
production process as a competitive overall, and the
level of conformity of the production process.
Ownership of production processes and equipment
includes patent-protected equipment and undisclosed
equipment, state of the art equipment and processes
that have been exclusively developed by the company.
Hypothesis 1a: Internal learning affects ownership of
production processes & equipment
Hypothesis 1b: External learning affects ownership of
production processes & equipment
Company Performance
The manufacturing capability that determines a firm's
competitive advantage is measured through company
performance. Many of the company's external factors
can change the influence of resources in the
production process on measures of financial
performance such as sales and profitability. In this
research used index measurement of some
performance variables are the cost of representing the
percentage of sales, the appropriate quality, timely
delivery percentage of time cycle from acceptance of
raw materials to acceptance to consumers, and length
of time or production schedule. Hayes and
Wheelwright (1984) cited in Schroeder, et. al. (2002)
argue that the development of process and equipment
ownership leads to competitive advantage through the
achievement of good corporate performance. The
company's performance variable consists of four
dimensions of performance measurement that include
quality, delivery, flexibility, and boarding.
Quality focuses on the importance of producing
products and services that can satisfy the
specifications and needs of consumers. Therefore,
companies need to pay attention to the problem of
quality improvement so as to reduce the cost of
production, because by doing something right when
the first goods and services produced can eliminate
waste. Quality improvement is one way for
organizations to improve business performance (Ward
et al., 1995). Flexibility is the ability to respond
quickly to changes in products, services, and
processes. Manufacturing flexibility is defined as the
ability of manufacturing firms to allocate and
reallocate their resources effectively in response to
changes in the environment and internal conditions
(Gordon and Sohal, 2001). While Currie and Seddon
(1992) states that flexibility includes the machine,
process, product, volume, and lay out.
Delivery includes the ability to respond to customer
bookings. Currie and Seddon (1992) defines delivery
strategy as delivery capability (by meeting delivery
schedule and delivery promise) and speed of delivery
(acting fast on customer order). Measurement of
delivery performance emphasizes on activities that
focus on improving delivery reliability such as on
time delivery, accuracy in inventory status, and
delivery times. Cost strategy as the production and
distribution of products with the lowest cost and
minimum waste resources. A quality strategy is
defined as a company's activity to produce products
that meet specifications or meet consumer needs.
Lower prices can increase demand for products or
services but also reduce profit margins if the product
or service can not be produced at a lower price. In
order to compete in a cost-based business
environment, an operations manager needs to offer
products and services at a low cost per unit of labor,
material, scrap and other overhead costs.
Hypothesis 2: Ownership of processes and equipment
affects company performance
Effect of Moderation of Human Resources
Human Resources / Labor. Based on the concept of
intangible resources and some issues raised by Hall
(1993), it can be concluded that human resources
(skills, knowledge, talents, etc.) are intangible
resources. But until the last few years, little effort has
been made to identify and provide structures on the
nature and role of intangible resources in strategic
management. Human resource capabilities and skills
are important to the company. The issues that now
arise are related to the acquisition. Human resources
can join in a company that has high compensation,
career development programs and the like (Ellitan,
2002). According to Hall (1993), human resources
can bear functional and cultural capabilities due to
experience, ability, values, integration in the company
and other factors. Therefore, resource-based theory
suggests that human resources can create or sustain
competitive advantage through competence
development and knowledge transfer. Human
resource skills and capabilities affect company
performance and alignment between technology and
skills and human resource capabilities can improve

H1a
the productivity and flexibility of the company
(Ellitan, 2003, 2005). Ownership of process and
technology equipment will further improve
performance if resources are available with high
quality and capability.
H3: The effect of ownership of process and
equipment on company performance is moderated
by the quality and capability of human resources
owned by business organization.
2.3. Research Framework
This study focuses on manufacturing strategies that
are defined as capabilities and resources and their
relationship to organizational performance. There are
three factors or types of resources and capabilities
developed in the production function that are difficult
to replicate and transfer (Schroeder, et.al., (2002) ie
proprietary process and equipment, internal learning,
and external learning Manufacturing practices are
adopted by imitating world class manufactures that
can contribute to a competitive balance but not for
competitive advantage.The model also emphasizes
that the role of learning and knowledge development
within the company is to produce processes and
equipment created through the process of "path
dependent problem Solving "that mediates between
the learning process and the company's
performance.The research model is illustrated in
Figure 1
.
Figure 1. Research Model
Source: Schroeder, Bates, dan Junttila, 2002 (Modified Framework)
RESEARCH METHODS
3.1. Research Design
This research is an empirical study that aims to
examine the relationship between several independent
variables with some independent variables. The
independent variables of this research include internal
and external organizational learning levels, while the
dependent variable is the company's operational
performance relative to its competitors and growth.
The level of ownership of production equipment is the
intermediate variable in this research and the
manufacturing strategy as a moderator variable
affecting the relationship of ownership of production
equipment and performance. The relationship between
the variables of this research was tested by using
simple regression model, multiple regression, and
multilevel regression.
3.2. Population dan Sample
The purpose of this research is to analyze how the
Internal
Learning

examines the role of HR moderation in the
relationship between process ownership and
population is a manufacturing company registered by
the Manufacturing Companies Directory published by
the Central Bureau of Statistics, 2010. The sample is
with criteria that have large scale. The classification
of small, medium and large enterprises for this study
is based on the number of permanent workers: (1)
Small companies: 10-99 employees. (2) Company is:
100-499 employees. (3) Large companies: 500 or
more. The company-scale classification based on the
number of permanent employees has been done by
former researchers Ko, Kinkade, and Brown, (2000)
and also Cagliano and Spina (2000). Based on these
criteria then taken as sample is a manufacturing
company that has a permanent workforce of more
than 500 people. In addition, the size of the company
classification is also based on assets owned by the
company. Since asset ownership data is confidential
and often companies do not want to fill in the data, the
asset ownership data is only used as a complement
and will be listed on the respondent's profile in the
measurement instrument, and for the company-scale
classification in this research focused on the number
of firms.
3.3. Data Collection Technique
The data used in this research include primary data
and secondary data. Primary data were obtained
through mailed questionnaires and direct survey (to
anticipate low response rates if data were only
obtained via mail survey) in manufacturing firms,
with company leaders as subject targets, tailored to
the conditions of manufacturing firms in Indonesia.
The distribution of questionnaires was conducted for
one month with a six-week return limit. To improve
the rate of return of the questionnaires, the researcher
tried to follow the suggestions proposed by Issac and
Michael (1990) with the system of free postage
stamps and sending letters to the respondents (quoted
from Thesis Ellitan, 1998). Secondary data is related
to data collection of manufacturing companies in
Indonesia. The population comprises all
manufacturing firms in operation, while the sample is
taken by a manufacturing company listed in the
Manufacturing Companies Directory published by the
Central Bureau of Statistics, 2013.
3.4. Operational Definition and Instrument Testing
Internal Learning
The concept of learning within a company is
developed based on a resource-based view that
focuses on causal knowledge, ambiguity, and complex
social factors. Internal learning includes
multifunctional training for workers and empowering
workers in production processes and development, so
it is hoped that the practice will bring organizations to
be more adaptive (in Schroeder, et.al., 2002). Internal
learning includes 8 items of questions with Cronbach
Alpha value of 0.920.
External Learning
Schroeder, et.al., (2002) suggests that external
learning in the context of manufacturing enterprises is
an interorganizational learning process through
problem solving that arises in the interaction with
consumers and suppliers that create tacit knowledge
that is not easily imitated . External learning includes
14 questions on interorganizational relationships such
as three dimensions that include: trust in business
partners, commitment to business partners, and
shared-vision among business partners.
Ownership of Production and Equipment
Processes
The ownership variables of the production process
and equipment include 14 questions about patent-
protected equipment and undisclosed equipment, state
of the art equipment and processes developed
exclusively by the company.
Human Resources. Human resources represent staff
and workforce within the company that includes
managerial staff, administrative staff, technicians,
specialists, and parts of production. Human resource
variables are viewed from two perspectives. The first
perspective is seen from the level of skill and
capability (low and high). The second perspective is
seen from the scarcity-abundance of human resources.
The five-point semantic differential scale type is used
to measure the skill or capability and availability of
human resources. Used instruments were developed
by Badri et al. (2000).
Operation Performance
Company performance measurement is used index
measurement of some performance variable that is

cost representing percentage of sale, appropriate
quality, timely delivery percentage of time cycle from
acceptance of raw material to acceptance to consumer,
and length of time or schedule of production. The
company's performance variable consists of four
performance measurement dimensions that include
quality (2 questions), delivery (3 questions),
flexibility (3 questions), and boarding (3 questions).
The five-point Likert scale is used to measure the
level of approval or disapproval or the level of good
or bad (on the measure of company performance) on
the statement or statement submitted statement items
in the questionnaire.
3.5. Data Analysis Technique
Data analysis procedure to be used is
A. Test validity and reliability. A good measuring
instrument or measurement instrument if it meets the
criteria of validity and reliability. To find out how
well the instrument used, in this case the
questionnaire, is needed validity and reliability test.
Validity test is done to find out how far the difference
obtained through measuring instrument used, the
actual wave of difference with the respondents
studied.test validity in this study used Test Item Item
Analysis (CFA) items on the questionnaire items. Test
reliability is done to estimate the extent to which
measurement instruments used free of random or
unstable errors, said in this reliability testing to
determine the results of measurement consistency of
respondents' responses. Internal consistency of
question items in the questionnaire will be by
Cronbach Alpha method. The value of the rule of
thumb to be used for the Crobach Alpha value must
be greater than 0.7 otherwise 0.6 is also acceptable
(Hair, et al., 1998).
B. The classic assumption of violation test
includes normality test, homoscedasticity,
multicollinearity, and autocorrelation test. The
heteroscedasticity assumption test aims to test
whether in the regression model there is a variance
inequality of the residual one observation to another
observation. Multicollinearity test aims to test
whether the regression model found a correlation
between independent variables using VIF (Variance
Inflation Factor) value and the correlation between
free variables must be weak. The normality test aims
to test whether in the regression model the intruder or
residual variable has a normal distribution. In this
study the normality test by looking at the histogram
graph that compares the observation data with the
distribution approaching the normal distribution. The
autocorrelation test aims to test whether in the linear
regression model there is an autocorrelation between
the confounding error in period t with the intruder
error in period t-1 (previous). Autocorrelation test in
this research using Durbin-Watson test (DW test).
C. Hypothesis testing is conducted to examine the
effect of internal and external learning on peroses
ownership and the effect of process ownership on
company performance. The result of model test using
Hierarchycal Regression Analysis method.
This research is done by using research setting at
manufacturing company in East Java, with sample of
research is big scale manufacturing company, to prove
whether the developed model is still relevant if
applied in different research setting. The managerial
issues that will be discussed in this research are
related to how the company integrates resources and
capabilities possessed and developed through the
process of learning and ownership of processes and
equipment, to achieve distinctive manufacturing
competence and then applied to improve business
performance. Through the explanation of the role
framework of the manufacturing process, this research
contributes to the manufacturing strategy literature
that will be useful for the development of upcoming
theories, providing perspective on how internal and
external learning can create valuable resources for the
company as a basis for achieving competitive
advantage.
DATA ANALYSIS
This chapter presents the results of data analysis.
First, this chapter describes the profile of the
companies participating in the study covering the
length of operation (age of company, business field,
number of permanent employees, ownership and
cooperation Secondly, this chapter presents the
analysis of independent variables including goodness
of measures, using Test of validity and reliability
Third, this chapter presents the results of hypothesis
testing and ends with analysis and discussion of the
findings.

4.1. Data Overview
4.1.1 Response Level
This research is done by survey By mail (mail-
questionare) is a way to test the responses of
respondents through the delivery of questionnaires via
mail. The advantages of mail-questionare are cost-
effective, time-saving, respondents can choose the
right time for them to fill in the questionnaire, there is
greater anonymity, uniformity, no interviewer bias,
and many respondents Can be achieved (compared
with sending the interviewer to many places). While
the drawbacks are inflexible, there is a tendency for
low responses, only recorded verbal behavior, no
control over the environment (noisy, disturbed), no
control over the sequence of questions, can lead to
unanswered questions, Can record answers
spontaneously, difficult to distinguish between non-
response and wrong address, no control over return
time, cannot use complex format, and can get biased
samples.
Table 1 presents a summary of the response rates of
this study. Twenty-four questionnaires were
resubmitted because the company was declared closed
or moved to another unknown address. Two
companies refused to participate on the grounds of not
being able to answer or provide an assessment of the
questions raised in the research questionnaire.
Furthermore, five companies provide incomplete
answers that can not be included in data analysis.
Finally, thirty six questionnaires were used for the
purposes of this study. Response rate of 11.20% is
reasonable considering the respondents in this study
are CEOs or top managers within the company and
the deadline of data collection is relatively short.
Level of response that can be processed by 9.83%
Besides, researchers also did not send follow up
letters due to budget constraints and research time
within six months.
Table 1: Distribution of Questionnaires
The questionnaire is distributed. 400
Unsent / Close / Move Address 24
Refused to participate 2
Return and could be processed. 36
Return and could not be processed. 5
Not return. 366
Response Rate 11.20%
Level of Respond could be processed. 9.83%
4.1.2. Characteristics of Respondents
Profile of respondents of this study are categorized
based on company age, business field, cooperation,
and number of permanent employees. The data on the
profiles or characteristics of the respondents can be
seen in Table 2. The majority of respondents have a
permanent workforce of 100-500 workers, and 13
respondents who have a fixed workforce of greater
than 500 people. More than 80% have been in
operation for more than 5 years and there are 6
relatively new companies of the total respondents,
33.33% represents textile, garment and leather
industries, and 33.3% operate in handicrafts, rattan,
bamboo and furniture. The rest represents the oil and
rubber coal industries. More than 85% of respondents
do not yet have cooperation with foreign /
international entities.

Table 2 General Characteristics of Respondents
Dimensions Category Number of
respondents
Percentage
Company Age Less than five years 6 16.60
5-10 year 9 25.00
>10-20 year 9 25.00
>20-30 year 11 30.55
Business fields Textiles, clothing, leather 12 33.33
Wood, bamboo, rattan, handicrafts,
furniture
12 33.33
Coal, chemical, oil, rubber, plastics
industries
6 16.66
Minerals and metal materials 6 16.66
Cooperation There is no cooperation with foreign
entities
32 88.88
Exist 4 11.12
Labour 100-500 23 36.8
Test Validity Item is a statistical test used to
determine how valid an item question measures the
variables studied. Test Reliability item is a statistical
test used to determine the reliability of a series of
question items in reliability measure a variable.
According to Hair, et al. (1998) the quality of data
generated from the use of research instruments can be
assessed through reliability and validity test. Test each
of them to know the consistency and accuracy of data
collected from the use of the instrument. This study
uses internal consistency test using Cronbach alpha
coefficient. Test the homogeneity of data by using
correlational test between the score of each item with
the total score.
As noted earlier, the reliability of the data can be seen
by calculating the Cronbach's alpha coefficients.
Multi-item measurements are considered reliable if
Cronbach's alpha is higher than 0.7 (Nunnaly, 1978).
Measurement validity is also done by conducting
homogeneity test data that is using correlation test
between score of each item with total score. The
higher the homogeneity coefficient the more valid and
reliable the measurement. Summary of reliability and
validity test can be seen in Table 3. The results of this
study show that all measurements have reliability
(more than 0.7) and high validity.
Table 3. Test Validity and Reliability
Research variable Number of
Questionnaires
Reliability Homogeneity item
Internal Learning 11 .9177 .625-.904
External Learning 11 .8766 .531-.839
Ownership of tools and
technology
4 .5443 .559-.700
Availability and Quality of
Human Resources
12 .8713 .741-.873
Operating performance 10 .8844 .589-.799
4.1.4. Descriptive statistics
Table 4 shows the internal level of learning, the level
of external learning, technology capability,
manufacturing strategy, human resource competencies
of small and medium manufacturing enterprises in
Indonesia. In general, the level of internal learning is
still at a low level (below moderate 2.5). External
learning is at a moderate level and technological
capabilities are also at a moderate level.

International Journal of Trend in Scientific Research and Development (IJTSRD) ISSN: 2456
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Table 4: Tingkat Pembelajaran Internal, Pembe
Variable
Internal Learning
External Learning
Ownership of tools and technology
4.2. Internal and External Learning Influence on
the Level of Ownership of Equipment and
Technology
The following tables 5 and 6 provide a summary of
the results of multiple regression and simple
regression to see the Influence of Internal and
External Learning on the level of equipment and
technology ownership and see the effect of equipment
and technology ownership levels on performance.
Important points to be said about the influence of
Table 5: Internal and External Learning Influence on Equipment and Technology Ownership Level
Dep
Var
Para
meter
B
KPA intercept 1.960
IL .128
EL .348
Table 6 below presents a summary of simple
regression results to see equipment and technology
ownership levels on performance. Some important
points to be said about this are: First, overall, multiple
regression results show that simultaneously
independent variables of equipment and technology
ownership explain 31.6% variant of company's
Table 6: Influence of Equipment Ownership and Technology Performance Level
Dep
Var
Para
meter
B
Kin intercept 1.147
Kap .881
4.3.4. Influence of Moderation of Human
Resources
Looking at the linkage of technology with all aspects
of life, it can be concluded that the most interacting
with technology is human resources. As a technology
user it is human beings who control the development
of technology. Humans who control the usage and use
of technology. Humans will not be separated from
International Journal of Trend in Scientific Research and Development (IJTSRD) ISSN: 2456
@ IJTSRD | Available Online @ www.ijtsrd.com | Volume – 2 | Issue – 1 | Nov-Dec 2017
Table 4: Tingkat Pembelajaran Internal, Pembelajaran Eksternal dan Kepemilikan Teknologi
Variable Mean Standard deviation
Internal Learning 2.3486 .88234
External Learning 3.3282 .57774
Ownership of tools and technology 3.6572 .43949
4.2. Internal and External Learning Influence on
f Ownership of Equipment and
The following tables 5 and 6 provide a summary of
the results of multiple regression and simple
regression to see the Influence of Internal and
External Learning on the level of equipment and
d see the effect of equipment
and technology ownership levels on performance.
Important points to be said about the influence of
internal and external learning on the level of
equipment and technology ownership: First, overall,
multiple regression results show that simultaneously
independent variables of internal learning and external
learning explain 25.9% variants of equipment and
technology ownership. Second, internal learning and
external learning have a positive effect on equipment
and technology ownership. This indicates that
ownership of equipment and technology is influenced
by the high level of internal and external learning of
the organization. From these findings indicates that
the first hypothesis of this study is accepted.
nd External Learning Influence on Equipment and Technology Ownership Level
SE T Sig F Sig
.202 9.723 .000 34.476 .000
.046 2.788 .006
.068 5.089 .000
a summary of simple
regression results to see equipment and technology
ownership levels on performance. Some important
points to be said about this are: First, overall, multiple
regression results show that simultaneously
t and technology
ownership explain 31.6% variant of company's
operational performance. Second, ownership of
equipment and technology have a positive effect on
operating performance. This indicates that ownership
of equipment and technology affect the good
performance of operations that can be achieved by the
organization. These findings indicate that the second
hypothesis of this study is accepted.
SE T Sig F Sig
.323 3.554 .000 91.309 .000
.092 9.556 .000
4.3.4. Influence of Moderation of Human
h technology is human resources. As a technology
technology. Technology existed since civilization
emerged, and technology has also been used since
civilization and evolved in line with human
civilization.
Table 7 presents moderated regression results that
analyze the moderating effect of HR to the ownership
relationship of production equipment and technolo
with operating performance. The value of R2 change
Dec 2017 Page: 126
lajaran Eksternal dan Kepemilikan Teknologi
Standard deviation
.88234
.57774
.43949
internal and external learning on the level of
equipment and technology ownership: First, overall,
show that simultaneously
independent variables of internal learning and external
learning explain 25.9% variants of equipment and
technology ownership. Second, internal learning and
external learning have a positive effect on equipment
rship. This indicates that
ownership of equipment and technology is influenced
by the high level of internal and external learning of
the organization. From these findings indicates that
the first hypothesis of this study is accepted.
nd External Learning Influence on Equipment and Technology Ownership Level
Sig R2
.000 .259
operational performance. Second, ownership of
equipment and technology have a positive effect on
operating performance. This indicates that ownership
of equipment and technology affect the good
performance of operations that can be achieved by the
organization. These findings indicate that the second
hypothesis of this study is accepted.
Sig R2
.000 .316
ged, and technology has also been used since
Table 7 presents moderated regression results that
analyze the moderating effect of HR to the ownership
relationship of production equipment and technology
with operating performance. The value of R2 change

and the F-change from stage 1 to 2 and from stage 2
to 3 are significant, indicating that human resources
influence the relationship of ownership of production
equipment with performance performance. This is
further demonstrated by the fact that the interaction
term in the model has a significant standardized beta
value. This can be explained by the concept of
intangible resources and some of the issues put
forward by Hall (1993), it can be concluded that
human resources (skills, knowledge, talents, etc.) are
intangible resources. Human resource capabilities and
skills are important to the company. The issues that
now arise are related to the acquisition. Human
resources can join in a company that has high
compensation, career development programs and the
like (Ellitan, 2002). According to Hall (1993), human
resources can bear functional and cultural capabilities
due to experience, ability, values, integration in the
company and other factors. Human resource skills and
capabilities affect company performance and
alignment between technology and skills and human
resource capabilities can improve the productivity and
flexibility of the company (Ellitan, 2017). Ownership
of process and technology equipment will further
improve performance if resources are available with
high quality and capability.
Table 7: Effects of Human Resources Moderation
Variabel Step 1 Step 2 Step 3
Standardized Beta
KPA .562*** .510*** .977***
FLEKS .415* .675
KPA x FLEKS .822*
R2
.316 .341 .352
R2
change .316 .024 .011
F change 91.309 .197 .196
Sig. F change .000 .025 .066
*** : significant at 0.01 ** : significant at 0.05 * : significant at 0.1
CONCLUSIONS AND RECOMMENDATIONS
5.1.Conclusion
From the results of hypothesis testing then some of
the main findings are presented in this section. First,
internal learning has a positive effect on performance,
indicating that ownership of tools and technology is
encouraged or enhanced by improving the internal
learning process consisting of: (1). Train employees to
be able to fill other parts out of their responsibilities
where necessary, (2) . Receive useful suggestions in
the company, (3). Implementing suggestions for
serious improvement of products and processes, (4).
Provide training to employees to be able to do more
than one task, (5). Recruiting skilled workers,
possessing qualified natural resources and applying
management practices simultaneously and integrated,
(6). Always update equipment maintenance process
accordingly / better than industry standard, (7). High
commitment to create a conducive working
environment through the guarantee of work safety and
employee benefits, (8). Implement programs to
improve employee knowledge (such as employee
empowerment and establishment of autonomuos
teams), (9). Improving manufacturing capacity
through purchasing new machinery, recruiting new
employees, developing production facilities, (10).
Reorganize the company through the implementation
of e-business and / or e-commerce, (11). Implement
production process automation program and
implement information and communication
technology. The main findings of both studies indicate
that external learning will encourage companies to
increase their ownership of equipment and
technology. The external learning in question includes
several factors as follows: (1). Adopted ERP
(Enterprise Resource Planning) software (2).
Maintaining long-term relationships with suppliers,
(3). Maintaining close communications with suppliers
about quality considerations and design changes, (4).
Provide feedback on delivery quality and performance
(5). Actively involves employees and leaders in the
product design process (6). Restructure the company's
strategy and manage the portfolio associated with
suppliers. (7). Focusing on core activities and
outsourcing to support operations processes and
activities (machine and equipment maintenance,
material handling). (8). Restructuring the

manufacturing process and setting the engine layout
to support the production process. (9). Implement
continuous quality improvement programs (such as
integrated quality management, six sigma) (10).
Implementing equipment productivity improvement
program (such as TPM / Total Productive
Maintenance program) (11). Implement programs to
improve and speed up the process of developing new
products.
Third, the findings of this study show that equipment
and technology ownership affects operational
performance. Ownership of equipment and
technology referred to in this research are: (1).
Companies have equipment protected by company
patents, (2) companies have equipment and
technology help to achieve competitive advantage (3).
Adopt process technology and have production
equipment at a higher level than competitors in the
same industry.
with technology is human resources. As a technology
emerged, and technology has also been used since
civilization. Human resources affect the ownership
relationship of production equipment with
performance performance. This is further
demonstrated by the fact that the interaction term in
the model has a significant standardized beta value.
This can be explained by the concept of intangible
resources and some of the issues put forward by Hall
(1993), it can be concluded that human resources
(skills, knowledge, talents, etc.) are intangible
resources. Human resource capabilities and skills are
important to the company. The issues that now arise
are related to the acquisition. Human resources can
join in a company that has high compensation, career
development programs and the like (Ellitan, 2002).
5.3. Implication of Research Results
This study has both theoretical and managerial
implications. Theoretically this study supports the
resources-based theory used as the theoretical basis of
technological relations and performance. Ownership
of production equipment and technology proves to be
resources and capabilities that can be used to achieve
competitive advantage. The study's findings add a
body of literature on the importance of internal and
external learning in developing the capabilities of
manufacturing firms, especially in developing
countries. This study is the first step to undertake the
development of empirical studies by considering
further factors that determine success in resource
management and technology primarily through
organizational learning. Furthermore, the findings of
this study also indicate the factors of operating
strategy that moderate ownership of tools and
technology companies to performance.
5.4. Limitations and Suggestions
However, the authors acknowledge that this study still
has many limitations. The results of this study can not
be generalized considering that this study is only done
at a certain point in Indonesia and the data used is
only the CEO's perception. Therefore, the researcher
suggests the need for longitudinal study. Involving
muliple-respondents in one company will increase the
accuracy of the results (eg taking into account the
perception of the operational / manufacturing field).
In addition, studies of equipment and technology
ownership in manufacturing companies are
recognized to be biased if perceptions of equipment
and technology ownership levels, manufacturing
strategies and operating performance vary.
The data were collected based on the respondent's
perception, self-rating, and multi-choice
questionnaire. This approach is sufficient to obtain
much information in a relatively short period of time.
It should be considered to treat longitudinal studies,
but unfortunately this can not be done in the scope of
this study. Finally, the researcher gives some
suggestions for future research that can be done to
deepen the study of firm's resources: (1). This study
can be done also in other developing countries that
have similar culture. (2). The same instrument can
also be used to examine technology adoption in small
and medium enterprises. (3). Conducting a study of
organizational learning taking into account the
variables of the business environment, organizational
context and culture as a moderator in influencing
organizational learning and performance
relationships, will enrich the knowledge and insight of
the management of the company's resources.

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