The Impact of Social Capital and Policy Inducement on Collective Efficiency in Micro, Small and Medium Enterprises (MSMEs) Cluster

Cluster or industrial district has long been acknowledged as firm’s, in particularly micro, small, and medium enterprise (MSME) mechanism to cope their limitation. Two compelling theories explaining this phenomenon are cluster and industrial district. Although, root on common theoretical ground, these theories focus on different unit analysis and emerges in different context. This paper propose the conceptual model in interpreting the dynamics of cluster and how social capital and cluster policy impact on the collective efficiency of cluster. To support the model, literatures explaining the collective efficiency, social capital and cluster policy are critically reviewed. This paper is ended by proposing research method to apply the model in the empirical study.