THE ROLE OF HUMAN RESOURCES COMPETENCY ON SMEs PERFORMANCE IN TIMOR – LESTE

2021 Small and medium enterprises (SMEs) play a large role in the economic development of each country. This can be seen from their contribution to the Gross Domestic Product (GDP). In addition, the existence of impact on the development of several countries, especially small and developing countries. This study was conducted with the aim of exploring the influence of skills, knowledge and abilities on the performance of SMEs with a quantitative approach. The population in this study was SMEs domiciled in Dili, Timor-Leste and the sampling Method was simple random sampling technique. The data collection was conducted by distributing questionnaires to 250 units of SMEs business owners and managers. The measurement scale Used was a Likert scale. The data were analyzed using SPSS version 23 with multiple regression analysis. The results of the F test (Simultaneous) analysis show that the skills (X1), knowledge (X2) and ability (X3) have positive and significant effects on SMEs’ performance (Y). While t test (Partial) results show skills is positive, but Do not significantly influence SMEs performance while knowledge and abilities show positive and significant effects on SMEs performance.


INTRODUCTION
Small and medium-sized enterprises (SMEs) are business that plays an important role in its ability to ensure economic stability (Anoraga, 1997), Bagwell et al. (1998) and as sources of employment creation (Lowe et al., 2010).The performance of small and medium-sized enterprises (SMEs) has a direct impact on The economic development of developed and developing countries, (Demirbag et al. 2006).Therefore, government support such as capital, access to The capital, infrastructure, information, marketing, licensing, regulation, and the associated training, capacity building program are valuable to improving the performance of SMEs.
Pramashella (2017) stated that in terms of characteristics, small and mediumsized enterprises (SMEs) have a higher survival rate than large enterprises, although most of them are small and medium-sized enterprises that operate without the use of machines and mostly rely only on human resources.As it know, the position of hr in today's organizations is not only a means of production, but also a tool and a determining factor for the development of the activities of the organization because the higher the quality of the resources, the better the performance will be produced by (HR) at work.
The development of human resources skills is one of the factors that affect the performance of smes, because each business unit is determined by how the people involved manage the business (Wahyudiati & Isroah, 2018) but limited human resources are accompanied by limited capital and technology.consideredas one of the main causes of the low competitiveness of sme products compared to large industrial products, (Tambunan, 2004) and these difficulties have an impact on sme owners not being able to manage the business properly and negatively impacting business performance As human resources with a high level of knowledge, skills and abilities, able to support the improvement of employee performance and also contribute to the performance of the company (Robbins & Judge, 2008).The results of the SMEs' performance are visible through the return on investment (ROI) (Kotler, 1997), Balanced Score Card (BSC), (Wibowo and Utami, 2018).In addition, most companies also measure performance by sales volume, earnings over a period of time along with an increase in the number of employees (Munizu, 2010).
The performance of SMEs often faces many obstacles.Some of the causes are problems in human resources, such as knowledge, skills, capacity (Ardiana et al. 2010), product ownership, financing, marketing and other problems that lead SMEs to compete over large companies (Aribawa, 2016).Therefore, improving the quality of human resources is essential and human resource development should be achieved not only for SMEs owners but also for employees (Murtadlo, 2018).
Other serious problems faced by SMEs Might arise from such as low skills, poor market access and development, weak capital structure, weak organization and management, limited business network and cooperation with other economic actors.
Empirical research shows that the majority of SMEs' owners have a lack of vision and knowledge, making the owners short-term oriented and efforts to improve performance tend to be more conventional due to lack of knowledge of management, which ultimately turns out to be negative affects on business performance (Wahyudiati & Isroah, 2018).Therefore, it is important that SMEs' owners have sufficient skills to minimize these barriers and continually grow and gain a competitive advantage.
Timor Leste is one of the countries that continue to grow and the development of SMEs in the country has occurred quite rapidly in recent years.However, according to the results of a preliminary survey, many SMEs in Timor Leste generally ignore the competence of human resources (HR) such as skills, knowledge and skills.It seems that http://eduvest.greenvest.co.id the main issues affecting the performance and competitiveness of smes as assumed.Furthermore, the quality of human resource competencies, as well as the delivery of products and services, still needs to be improved.Not only that, there is no empirical research on this topic in the context of timorleste, as the main motivation for researchers to conduct this research with the aim of analyzing the effect of human resource competencies such as skills, knowledge and ability on the performance of smes.
Competence is closely related to performance, both individual and organizational (corporate).According to (Armstrong (1994) and Ardiana et al. (2010), a person's success can be seen in his/her knowledge, skills, experience and behavior to complete the task Kaur and Bains (2013) conclude that competence is a set of experience, knowledge, skills and attitudes for effective performance in a task or job.This opinion is supported by Purnomo and Lestari, (2010) who argue that there are several things that can be used as a benchmark for the success of an organization's performance, namely human resource management which is related to human behavior and human resource competencies.
The research finding of Hamzani ( 2014) in (Zhaviery et al. 2018) confirms that the competence of human resources has a significant impact on the performance of SMEs., while Theo (2012) finds that business performance essentially reflects the productivity of company employees.
The results of Adriana's ( 2010) study demonstrate that HR competence is significantly correlated with the performance of SMEs.Based on the results of data analysis, it is also proven that competencies consisting of knowledge, skills and abilities have a significant effect, Unlike the knowledge variable.On the other hand, in this study, the researchers found that the government training program is one of the factors that have not been maximized and really needs extra attention.
While the research by (Elsa et al. 2017) which examined the variables, skills, knowledge and behavior of hostager (Mulyaningsih, 2008) on the company's performance which was shown quantitatively (Financially) and qualitatively (Not financial), Sirupolis (In Mulyaningsih, 2008) found that positive relationship.The results of this study indicate that business managers have a good understanding of the environment when doing business, which in turn can increase the average income of SMEs.Ziana Asyifa et al. (2010) found the same results in their survey, but researchers expect SME operators to pay more attention to service and quality.
In Munizu (2010) research, internal factors such as the competence of human resources (Owners, managers, employees) has a significant and positive influence on the performance of micro and small companies, this means that the role of external and internal parties can have an impact on the performance of smes.And smes that have positive relationships with internal and external parties are likely to achieve these improvements in governance and practical skills well while examined and analyzed the impact of hr competencies (knowledge, skills and abilities) on smes, it was concluded that hr competencies in general have a significant impact on performance, as indicated by the greatest benefit of the company.
Wijaya and Adi Setyawan (2020) explores the role of HR competencies in improving the performance of SMEs using qualitative methods.The results of this study confirm that the role of human resource (HR) competence is a determining factor for an organization or company, and competence is an aspect that determines the success of msmes.This study is again summarized that the high competence of an organization's HR will ultimately determine the quality of the competitiveness of smes themselves The research results of Gemina at el. ( 2019) on SMEs performance based on

Egidio da Costa and Niu Xiongying
The Role of Human Resources Competency on SMEs Performance in Timor -Leste 1206 competence, commitment and motivation, indicate that engagement, competence and business motivation simultaneously have a positive and significant effect on the performance of SMEs.Not only that, research results by Ismail and Abidin (2010) show that employee competence has a significant effect on SMEs'.In addition, capital and characteristics also determine the performance of employees in the service sector.
Sitharam and Hoque (2016) argue that external factors, government factors, factors of macroeconomic conditions, competition, globalization, criminal acts and corrupt practices are the main challenges for smes.This survey was conducted in South Africa and the results of the survey show that there is a significant relationship between MSMEs' performance compared to last year's performance and competition.Therefore, it is concluded that skill has a great influence on performance; the more skill of the entrepreneur will lead to higher business performance.On the other hand, as an entrepreneur with low skill, it will also lead to low performance.Therefore, the skill will have an impact on improving performance to generate business profit (Sedarmayanti, 2011).

RESEARCH METHOD
This study involved a total of 250 small and medium-sized enterprises (SMEs), located in Dili, Timor-Leste.The sampling method is random sampling.The types of data in this study are divided into two: Primary data and secondary data.Primary data obtained directly from respondents and secondary data obtained from the literature search, including literature or reviews.The data sources for this study are the respondents, namely the owners of small and medium-sized enterprises (SMEs).This study uses a questionnaire with a Likert cale of 1 to 5 points.
The data analysis method used in this study uses multiple linear regression analysis with spss 23, the variable in this study is composed of independent variables such as skills (X1), knowledge (X2) and ability (x3) while the dependent variable the performance of smes (Y).The hypothesis test in this study used simultaneous and partial methods.The simultaneous test (F Test) is used to determine if all independent variables have the same effect on the dependent variable and while the partial test (T test) is the test used to test the significance of the partial regression/coefficient.this partial test is used to determine the partial effect between the independent variable and the dependent variable, by looking at the t value at a significance level of 5%.Furthermore, this study also used the determinant (R2) which is basically used to measure how well the model can explain the variability of the dependent variable.

RESULT AND DISCUSSION
Performance is the result of work done by an individual or a group of people in an organization in accordance with the authority and responsibility of each employee in achieving organizational goals.This idea is reinforced by the conclusion.Aribawa (2016) that the performance of smes is the result of work done by a person in the company and within a certain time frame, and will be associated with a measure of the value or standard of the company where the individual works.Another opinion was expressed by (Theo, 2012) stating that the company's performance refers to the achievement of the necessary actions and execution of work.According to (Nugrahayu and Retnani, 2015), company performance is the overall success of the company in achieving the strategic goals that have been set through selected strategic initiatives.Therefore the performance of a business or company is basically the productivity of individuals in the business.http://eduvest.greenvest.co.id from the different interpretations found by different researchers, it is understood that the performance of smes requires a measure to determine the level of success or achievement of the company's performance.If the individual's performance is good, surely the performance of the company, the organization will perform better.And to analyze and measure the performance of the company and find out how the company achieves its strategies and employees can be seen from a wide range of indicators Gitosudarmo (2001) revealed several indicators used to measure the performance of a business unit, including the amount of revenue earned, growth rate, competitive advantage, company independence, corporate image.Munizu (2010) also suggests several indicators to determine the performance of an sme, these indicators include: capital sales growth, labor force growth, market growth, profit growth while Zaenal In Rusdi (2016) further stated that several indicators that can be used to measure the performance of an SME ,namely: profit growth, number of customers growth, sales growth, and assets growth.
A similar idea has also been added by Soleh (2008) that the growth rate of firms is measured by examining the increase in income, labor force and consumers using their products.Hadjimanolis (2000) also mentions a number of indicators to see and measure the growth rate of a business, especially small businesses, such increase of employees, profit and ratio return on assets.From the number of indicators above showing performance, it can also be seen that there are a number of factors that can affect the performance of small and medium enterprises.
According to Minuzu (2010) there are two types of factors that affect the performance of SMEs, namely internal factors and external factors.Internal factors consist of aspects related to human resources, financial aspects, production aspects or operational techniques and marketing aspects.External factors also consist of government policies, socio-cultural and economic aspects as well as the role of relevant agencies.Anggadwita and Mustafid (2014) found that there are also several factors that affect the performance of small and medium enterprises, namely entrepreneurship, human resource competence, innovation and sustainability

A. Human Recourses Competence
Competency is defined as the ability to perform tasks in the workplace, including the application of skills supported by knowledge (Cognitive) and ability in accordance with the required conditions.Thus, standards of competence can be seen as formulating skills and talents that human resources (HR) must possess to perform a function in accordance with the requirements that are defined/agreed upon.That competence is part of a deep personality and is associated with a person with predictable behavior in various jobs and tasks.Meanwhile, according to Utami at el (2017), the concept of competence is the main determinant for a person to achieve outstanding performance.Dessler (2009) also found that competence is an individual trait that can be considered, including knowledge, skills and behaviors that can lead to performance and success.The same statement was also put forward by Mondi (2008) which states that competence is a set of technical knowledge, quality and behavior related to human skills or understanding of company policies.Sutrisno (2009) adds that competence is an ability based on skills and knowledge that is supported by work attitudes and their application in carrying out tasks and working in certain workplaces.The indicators of hr competence in this study were obtained based on research by Ardiana et al. (2010), namely skills, knowledge and abilities.Furthermore, the components of competence can be understood from various aspects, including skills, knowledge and behavior (Dessler, 2009) To increase the success of a company, it must be accompanied by good and balanced competency such as knowledge, skills, ability and behavior.Micro, small and medium-sized enterprises MSMEs are a group of enterprises that able to advance economy.However, this company still seems to be underperforming due to the lack of knowledge, skills and empowerment opportunities in the business.There is no denying that HR competency is one of the determinants of the company's success, especially SMEs.Having the right skills Mean possessing the peak performance for small and medium businesses.Len (2017) in her research found that there was a positive influence of skills on the performance of small and medium enterprises, Amelia and Hendra (2016) also found the same results as previous studies that skills had a significant effect and has a significant effect on the performance of smes.The same study was conducted by Megantoro (2015) and stated that there was a positive effect of skills on the performance of small and medium enterprises.However, Viviani et al. (2020) found that the skill variable had no positive and no significant effect on the performance of SMEs.This insignificant result means that skills affect performance but the effect is small and does not have much impact on performance.Hence it is assumed that; H1: The Labour Skill is Positively Affected on Sme's Performance.Competence is needed to help the organization, create a high work culture of organizational performance (Wibowo, 2012), who argue that entrepreneurial knowledge has a positive but not significant effect on the performance of smes (Echdar, 2016).Research of Trihudiyatmanto and Purwanto (2018) showed the same result, that knowledge had a negative and insignificant effect on the performance of smes.However Rahman et al. (2015) in their study found that there was a positive influence between knowledge and performance of small and medium enterprises, small and medium enterprises (SMEs).Hence it is assumed that; H2: The Labour Knowledge is Positively Affected on SME's Performance.The performance of SMEs is determined by the performance of their human resources and its result Mostly lies in the production scale.Putri Andam at, el (2015) in their research found that the ability factor has a significant influence on the performance of small and medium enterprises.Ardiana at el (2010) in their research also found that there is an effect variable of ability on performance.Hence it is assumed that:

H3: The Labour Ability is Positively Affect on SME's Performance
Every entrepreneur aims to maximize the business (Idris, 2015) Which is indicated by sales growth, company asset growth and profit growth (Lee & Tsang, 2001), HR competence is closely related to knowledge, skills, abilities and personality characteristics that directly affect smes performance (Mangkunegara, 2012).Previous research by Primadanti and RAHARDJA (2017) also shows that simultaneously and partially competence have a positive and significant effect on the performance of smes relevant research also found by (Viviani et al., 2020) where the result support and accept the hypothesis, that HR skills, knowledge and ability have a positive effect on SMEs performance.Therefore it can be hypothesized that: H4: Skill and Knowledge, Ability Are Simultaneously positive and significant Affected on SMEs Performance A. Dependent variable: smes performance(y) Source: Data processing result of SPSS 23, the t test using hr competency (skills, knowledge, ability) as independent variable and smes performance as dependent variable, primary data, 2021.
Referring to the result of the regression in table 1, it shows that the significance value of skills is 0.814 > 0.05.It can be concluded that there is no significant effect, but there is a positive effect of skills on the performance of the smes and the significance value of knowledge is 0.000 <0.05 meaning there is positive and significant effect of knowledge on sme performance while the significance value of abilty is 0.000 < 0.05.Thus there is a positive and significant effect of capacity on SME's performance.Source: Data processing result of SPSS 23, the f test using hr competency (skills, knowledge, ability) as independent variable and smes performance as dependent variable, primary data, and 2021.Based on the above output, the significance value for the effect of skills (X1), knowledge (X2), ability (X3) on smes performance (y) simultaneously is known to be 0.000, therefore it can be concluded that H4 is accepted.Based on the output model summary table above, it is known that the value of the coefficient of determination or r 2 is 0.463.The value of r squared (0.463) is derived from the square of the value of the correlation coefficient r, which is 0.680* 0.680 = 0.463.The level of the coefficient of determination (R 2 ) is 0.643 or equal to 64.3%.This number means that the variables x1, x2, x3 affect y.By 64.3% while the rest (100% -64.3% = 35.7%) is influenced by other variables outside the regression or variables that are not examined.

B. The Impact of Skills on SMEs' Perfromance (H1)
The results of the study do not support the first hypothesis that competence is positively and significantly on the performance of smes.This is illustrated by the significant probability value of 0.814, which indicates a value greater than the predetermined significant value of 0.05 (0.814 > 0.05), indicating that skills are positive but not significant on the performance of smes.The results of this study are inconsistent with research conducted by (Zhaviery et al., 2018) stated that human resource competence such as skills, knowledge and ability are able to improve the performance of their smes at some point.

C. The Impact of Knowledge on SMEs' Performance(H2)
Based on the results of data processing, it can be seen that knowledge has positive and significant affects on the performance of smes.This is due to employees who have knowledge of roles and responsibilities in carrying out their duties and are able to see existing business opportunities as to increase the company's capital.However, the results of this study are not in line with research conducted by (Fahmi, Hadiyati, & Ahmad, 2020)which found that the knowledge variable shows an insignificant and positive effect on performance while other variables have a significant and positive effect on the performance of smes.Furthermore, (Sulistyandari, Widiastuti, & Martini, 2017)in their research also found that skills have a significant effect on the performance of smes.However, knowledge and ability do not affect the performance of smes.

D. The Impact of Ability on SMEs' Performance (H3)
Based on the results of this hypothesis, it was determined that the ability has a positive significant effect on the company's performance.The results are also reinforced by the research conducted by (Ardiana et al., 2010)the relevant analysis results show that the hr competency is closely linked to the performance of smes.The results of the analysis also showed that the influence of the knowledge variables is negative and insignificant, but the other two variables such skills and abilities have significant effects on the performance of small and medium-sized enterprises.This research result was also supported by Ekaningtyas Widiastuti Sri Martini (2016), who found that ability had no effect on company performance and it was very difficult to meet various indicators such as the ability to manage business, decisions take, lead, control, innovation and change management business environment E. The Impact of HR Competency (Skill, Knowledge, Ability) on SME's Performance (H4) Judging from the results of the fourth hypothesis, human resource competencies consisting of skills, knowledge and skills are which simultaneously affect on the performance of smes with indicators of customer satisfaction, increased sales volume and workforce.The results of this study are in line with The research of Ardiana (2010) who confirms that the competence of human resources of small and medium entrepreneurs is significantly affected by business performance partially and simultaneously means that an increase in human resource competence will improve performance of business.
This study develops and empirically validates the hypothesized model of skills, knowledge, ability and performance of SMEsand conclusions can be drawn from the http://eduvest.greenvest.co.id findings and rejections above.First, the skill variable has insignificant but positive effect on the performance of SMEs, The second variable of knowledge has positive and significant effect of on SMEs, The third variable ability has a positive and significant impact on the performance of SMEs.Fourth, when the independent variables simultaneously tested on the dependent variable, they a positive and significant effect, This means that if the level of skills, knowledge and ability of SMEs owner's increases, the performance of smes will increase significantly and vice versa.

CONCLUSION
Based on the conclusions from the results of the research above, Companies must actively provide training programs and employee development in the production process to improve the performance of SMEs, Further research can examine the use of variables other than those studied in this study to obtain more varied results and enrich the existing theory and different research objects and fields will produce different research results.Therefore further research should broaden the focus of the study or explore other smes, with larger population areas and larger samples to obtain more specific results.

Figure 1
Figure 1 Conceptual model showing the hypothesized relationship between human resourses competency and SMEs performance.