Contesting Indonesia’s Single Origin Coffee Market: A Dynamic Capabilities Perspective

Abstract

Coffee is a commodity that has high value and great demand, then it supply chain tends to be monopolized by big actors certainly for single origin coffee bean. However, increasing number of local coffee shops and consumer awareness of consumed goods, and the emergence of more conscious consumer groups of “coffee lovers” or “connoisseur’s consumers”, sparks an intesive competition among market actors in local level that influence such dominance. This study aims to employ the dynamic capabilities theories (DCs) to analyze how the market actors, namelysmall traders, wholesalers, certified companies, and coffee shop owners build a strategy to secure their coffee supply amidst the tight competition.Selecting the coffee markets in Dampit District, East Java, Indonesia, we find the actors fighting for social space to win the competition by building network, dependency, and legitimacy. Actors build capabilities based on the internal potential to identify opportunities, take the opportunities, and utilize them to transform business organizations to survive rapid environmental changes. Not just looking at dominance behaviors as how it is in the case of asset-based approach, DCs provide a more balanced perspective between the entrepreneur's capacity and asset control. Detailed research to see each actor builds long term strategies is needed in the future to describe in more detail their strategy in maintaining their business sustainability in the more competitive busisness environment.