Does cooperative participant strengthen small and medium enterprises competitiveness in East Java

Since 2008, the numbers of cooperatives in East Java have almost doubled, which expected to increase small and medium enterprise (SME) competitiveness through easier access to financial aid. Likewise, the number of SME in East Java is also increased. However, its growth rate is still lower than that of cooperatives. Therefore, this research aims to learn whether cooperatives in East Java can improve SME competitiveness by understanding the impact of cooperative participation towards SME revenues. Here, treatment effect is conducted not only to estimate the magnitude of that impact, but also to identify the factors determining SME perceptions of entering cooperative. This research uses primary data, collected from 75 cooperative participant SMEs and 75 of non-cooperative participant SMEs. The result shows that SME revenues for cooperative participant are higher than that of non-cooperative participant, indicating the cooperative significantly contributes to increase SME revenues. Moreover, supported by SME perception for joining cooperative, the interest of SMEs participates in cooperative mainly due to its capability in widen market shares and providing resources for SMEs production in competitive ways. From SME perspectives, cooperative should be able to strengthen SME networks in both input and output markets; thus, SME competitiveness may be increased.