Governance of the Creative Economy Development Program for the Craft Subsector in Kota Palopo

Introduction

The creative economy has developed alongside a shift in economic activities from dependence on natural resources toward the utilization of knowledge, ideas, skills, and creativity. Howkins (2002) defines the creative economy as activities that transform ideas into products or services with economic value. Over time, the creative economy has come to be viewed not only as a sphere of production for business actors but also as a field of development that has received increasing government attention. Data from Statistics Indonesia, as reported by the Ministry of Creative Economy, show that the creative economy contributed IDR 1,611.2 trillion, or 7.28 percent, to the national Gross Domestic Product in 2024. In 2025, the sector employed approximately 27.4 million workers (Kementerian Ekonomi Kreatif, 2025). This substantial contribution positions the creative economy not merely as a market activity but also as a policy domain that requires government regulation, development, and support.

One creative economy subsector that is closely associated with local resources, skills, and cultural identity is the craft subsector. This subsector encompasses the creation, production, and distribution of products made through manual skills and possessing both functional and aesthetic value. Craft products also often reflect the cultural and geographical environments in which they are produced (Kementerian Pariwisata dan Ekonomi Kreatif, 2021). These characteristics give crafts both economic value and social and cultural functions. On the one hand, crafts can generate income and employment opportunities. On the other hand, their sustainability depends on the regeneration of craft skills, the availability of raw materials, product innovation, financing, marketing networks, and artisans’ ability to adapt to technological change.

This complexity means that the development of the craft subsector cannot be left entirely to the individual capacities of artisans. Local governments occupy an important position because they have the authority to formulate regional development directions, allocate resources, establish institutions, and implement programs related to improving the capacities of business actors. Fazlagić and Szczepankiewicz (2020) explain that local governments do not merely perform administrative functions in providing public services but also shape an environment that supports the development of creative industries and involves communities in identifying local development needs. Such support can be provided through policies, human resource development, infrastructure provision, financing, promotion, and the strengthening of relationships between creative actors and markets.

The development of the creative economy does not take place solely through the actions of a single government institution. Its implementation involves relationships among local government agencies, financial institutions, artisan organizations, supporting institutions, market actors, and artisans as the target group. Andres and Chapain (2013) show that the incorporation of cultural and creative industries into regional development strategies is determined by mechanisms that connect various institutions and actors at the local level. These relationships determine how the needs of creative actors are identified, how resources are distributed, and how development programs are implemented. Therefore, creative economy governance cannot be understood merely from the presence of government or the number of programs available. It must also be examined in terms of how authority, resources, and relationships among actors are organized to implement those programs.

Such governance takes concrete form through policy implementation. Hill and Hupe (2022) conceptualize implementation as operational governance, namely, the process through which policy objectives are translated, directed, and carried out through the actions of implementing actors. From this perspective, implementers do not simply execute decisions that have already been fully formulated. They also interpret objectives, select instruments, determine priorities, manage resources, and interact with target groups (Hill & Hupe, 2022). Implementation is therefore part of governance rather than an administrative stage separated from it. Governance provides the institutional arrangements and relationships among actors, while implementation reveals how these arrangements operate through programs directly experienced by communities.

The relationship between governance and implementation is particularly important in creative economy development because the idea of the creative economy is not necessarily translated in the same way across regions. Fahmi, McCann, and Koster (2017) found that local governments in Indonesia interpret and respond to the creative economy agenda differently. In several regions, traditional cultural industries were incorporated into the category of the creative economy without adequate changes in learning processes, innovation, and supporting institutions. By contrast, regions with institutional support, community involvement, and spaces for policy experimentation were better able to translate the creative economy into an implementable development framework. These findings demonstrate that the existence of a national creative economy agenda does not automatically produce the same forms of programs and patterns of implementation at the local level.

Studies of the creative economy in Indonesia have thus far provided important explanations of its sectoral contribution. Marsudiarso and Susanto (2022) analyzed the contribution of the craft subsector to employment absorption using panel data. Johan (2023) examined the roles of the craft, culinary, fashion, publishing, and fine arts subsectors in Indonesian exports. Samsul Zaman and Suhartini (2022) investigated the relationship between the craft, fashion, and culinary subsectors and unemployment rates. These studies demonstrate the position of the creative economy within the broader economy, but they place aggregate economic outcomes at the center of their analyses. Consequently, the process through which local governments translate the creative economy agenda into programs implemented for business actors has not received sufficient attention.

Other studies have begun to focus on local governments and institutional capacity. Roziqin, Retnandari, Fajrin, Sihidi, and Kamil (2021), through their study of the Lasem hand-drawn batik industry, identified local government as a regulator, facilitator, and implementer of empowerment programs. The study also identified problems related to the regeneration of artisans and limited mastery of information technology. Meanwhile, Rosyadi, Sabiq, Ahmad, and Nuryanti (2022) show that government capacity in addressing the creative economy sector is influenced by data accuracy, the ability to adapt programs to the needs of creative actors, budgetary support, and relations between the central and local governments. These studies demonstrate the importance of government and institutional arrangements. However, Roziqin et al. (2021) remain focused on classifying government roles, while Rosyadi et al. specifically examine government responses in the context of the pandemic.

These developments in the literature reveal two general tendencies. Studies of the creative economy generally assess its contribution to income, exports, employment opportunities, and economic growth. Meanwhile, governance studies tend to explain the importance of local governments, actor configurations, or institutional capacity in supporting creative industries. These two tendencies have not sufficiently explained how creative economy governance is manifested through the day-to-day implementation of programs at the subsector level. The literature has explained why local governments are necessary and what forms of support should be provided, but it has paid less attention to how training, financing, market facilitation, mentoring, and technological development are actually implemented and to the constraints that arise when these programs encounter the conditions of local business actors. Thus, the relationship between governance and implementation has more often been assumed than examined through the actual process of program implementation.

This issue is relevant to the case of Kota Palopo. As one of the centers of economic activity in the Greater Luwu region, Kota Palopo has a number of craft products derived from local skills and culture, including Rongkong weaving, bamboo and rattan crafts, wood carving, and silver and copper crafts. Data from the Dinas Koperasi dan UKM serta Dinas Pariwisata dan Ekonomi Kreatif Kota Palopo show that the number of craft artisans increased from 215 in 2021 to 280 in 2025.

Source: Compiled by the author.

The increase in the number of artisans indicates the existence of a base of actors that can be further developed. The Kota Palopo Government has also expressed its commitment to making the creative economy part of local economic development. The forms of support that have been announced include training, business licensing, product certification, digital promotion, exhibitions, and facilitation of access to capital (Kata Satu, 2025). Through the Dinas Pariwisata dan Ekonomi Kreatif, Dinas Koperasi, Usaha Kecil dan Menengah, and Dewan Kerajinan Nasional Daerah, the Kota Palopo Government has implemented various activities related to craft development.

The existence of these programs does not in itself explain how they are implemented. Preliminary observations indicate that program implementation continues to face several problems. Some training activities have focused primarily on production skills that artisans already possess, while their needs related to business management, pricing, digital marketing, and the development of promotional materials have not been fully addressed. Artisans also face difficulties in accessing formal financing because of requirements related to business legality, financial statements, bank accounts, and collateral. In terms of marketing, participation in exhibitions has facilitated connections with buyers, but some artisans remain dependent on intermediaries and have not yet developed direct marketing networks. The use of technology also varies among artisans, while the issue of artisan regeneration has not yet been addressed through programs specifically designed to attract younger generations.

These conditions indicate that the problem of craft development in Kota Palopo does not lie in the absence of government action. Programs have been implemented, but each area reveals different forms of implementation and different constraints. Therefore, this study does not seek to reassess the economic contribution of the craft subsector or merely inventory the roles of government. Instead, it conceptualizes program implementation as a governance practice that reveals how institutional support is translated into capacity-building activities, financing facilitation, market development, innovation, and the use of technology.

Based on this gap, this study asks: How is the creative economy development program for the craft subsector implemented in Kota Palopo? To answer this question, the study focuses on the forms of programs implemented, the actors involved, the experiences of artisans as program recipients, and the constraints that emerge during implementation. Through this focus, the study seeks to extend creative economy scholarship beyond discussions of economic contributions and the normative role of government toward an explanation of how creative economy policies are implemented in the practice of local governance.

Theory Framework

This study employs the multiple governance framework developed by Hill and Hupe (2022) to analyze the implementation of the creative economy development program for the craft subsector. Hill and Hupe conceptualize policy implementation as operational governance, referring to the process through which policy objectives and decisions are translated into action through relationships among rules, implementing organizations, and target groups. Implementation, therefore, is not merely an administrative stage that takes place after a policy has been adopted, because implementing organizations continue to interpret objectives, determine priorities, select forms of activities, allocate responsibilities, and adjust implementation to conditions in the field. This process means that the form of policy ultimately experienced by target groups may differ from its original formulation (Matland, 1995). To explain this process, Hill and Hupe distinguish three levels of governance action: constitutive governance, directive governance, and operational governance. These are not stages that necessarily occur sequentially, but rather interrelated levels of action that collectively shape policy implementation.

Constitutive governance concerns the fundamental rules, authority, and institutional arrangements that establish the framework within which policy implementation takes place. At this level, decisions are made regarding who holds authority, which institutions are responsible, which rules provide the basis for action, and how responsibilities are distributed among the organizations involved (Mazmanian & Sabatier, 1983). Such an institutional framework can provide certainty for implementing actors, but it can also constrain implementation when the policy basis, mandates, or division of authority remain unclear. Analysis at the constitutive level does not merely examine whether regulations exist, but also explains how rules and institutional arrangements provide a foundation for program continuity. Thus, constitutive governance is used to identify the institutional conditions that enable, direct, or constrain policy implementation before policy is translated into concrete activities (Hill & Hupe, 2022).

Directive governance concerns organizational actions in translating general policy rules and objectives into priorities, programs, instruments, and divisions of responsibility. At this level, implementing organizations determine which activities will be undertaken, which groups will be targeted, what forms of support will be provided, and what working relationships will be established with other organizations. The directive level serves as a link between the institutional framework and implementation in the field because organizational decisions determine the form of programs subsequently experienced by target groups. When a policy involves more than one institution, the division of roles and coordination become important components of directive governance (Hjern & Porter, 1981; O'Toole, 2000). Differences in interpretation, priorities, and working practices among institutions may result in programs that reinforce one another, operate independently, or even overlap. Therefore, analysis at this level focuses on how policy is translated into programs and how interinstitutional relationships shape the direction of implementation (Hill & Hupe, 2022).

Operational governance concerns the concrete implementation of programs through direct interactions between implementing organizations and target groups. At this level, the analysis focuses on how information is communicated, how target groups gain access to programs, the forms of activities they receive, their participation, the extent to which programs correspond to their needs, and the constraints that arise during implementation. Programs designed at the organizational level may undergo adjustments when they encounter social conditions, the capacities of recipients, and practical problems in the field (Lipsky, 2010). Therefore, the existence of a program does not necessarily indicate that it is accessible to and can be utilized by all target groups. Recipients’ experiences are important for understanding the concrete form of policy because the operational level reveals whether the activities provided correspond to their needs, how recipients respond to them, and what factors constrain their utilization. Thus, operational governance explains how policy actually works in practice, rather than merely how programs are planned by government (Hill & Hupe, 2022).

These three levels of governance are used to examine the implementation of the creative economy development program for the craft subsector in Kota Palopo. Constitutive governance is used to analyze the policy basis, the presence or absence of specific regulations, and the institutional positions of Disparekraf, Dinas Koperasi dan UKM, and Dekranasda in the development of the craft subsector. Directive governance is used to explain how the direction of creative economy development is translated into training, design assistance, product standardization, exhibition facilitation, financial assistance, marketing, and technological development, including the division of roles among implementing institutions. Meanwhile, operational governance is used to analyze artisans’ experiences in obtaining information, participating in training, accessing financing, taking part in exhibitions, expanding their markets, and adopting technology. Through these three levels, this study traces the relationship between the institutional foundations, program direction, and implementation practices in order to explain how the creative economy development program for the craft subsector is implemented in Kota Palopo.

Methods

This study employs a qualitative approach with a single-case study design. The case study design was selected because the research seeks to develop an in-depth understanding of the implementation of the creative economy development program for the craft subsector within a specific institutional and social context (Creswell & Poth, 2023). Kota Palopo serves as both the research site and the boundary of the case, while the unit of analysis is the process of implementing the creative economy development program for the craft subsector. This process encompasses the institutional foundations supporting the program, the translation of policy directions into activities, the division of roles among implementing institutions, and the delivery of programs to artisans.

The research data were collected through in-depth interviews, direct observation, and documentation conducted in Kota Palopo. The author purposively selected 11 informants based on their involvement in either the implementation or receipt of the programs. The informants consisted of one head of department, one head of the creative economy division, one chairperson of Dekranasda, three stakeholders involved in craft development, and five artisans. The interviews focused on institutional foundations, program formulation, the division of roles, and artisans’ experiences in accessing the programs. Observation was used to document business conditions, production processes, marketing practices, and the use of technology among artisans. These data were supplemented by data on the number of artisans from Dinas Koperasi dan UKM and Disparekraf Kota Palopo, as well as government publications, regulations, and other documents related to creative economy development.

The data were analyzed thematically using Hill and Hupe’s (2022) three levels of governance as analytical categories. Data concerning policy foundations, authority, regulations, and institutional positions were categorized under constitutive governance. Data concerning program choices, the division of roles, and the translation of policy directions into training, mentoring, exhibitions, financing facilitation, marketing, and technological development were categorized under directive governance. Meanwhile, data concerning the dissemination of information, artisans’ participation, the alignment of activities with their needs, access to financing, program utilization, and implementation constraints were categorized under operational governance. Information obtained from different informants was then compared and cross-checked against observational findings and secondary data to identify consistencies, differences, and relationships among the three levels of governance. The results of this analysis were subsequently used to explain how the creative economy development program for the craft subsector is implemented in Kota Palopo.

Results and Discussion

This section addresses the question of how the creative economy development program for the craft subsector is implemented in Kota Palopo by applying the multiple governance framework developed by Hill and Hupe (2022). The discussion begins with constitutive governance to explain the institutional foundations and positions of the actors involved, followed by directive governance to examine how mandates are translated into programs, and operational governance to analyze artisans’ experiences in accessing and utilizing these programs. These three levels are then examined relationally to understand the connections between institutional arrangements, program forms, and variations in informants’ experiences.

Institutional Setting for Craft Development in Kota Palopo

The implementation of craft development programs in Kota Palopo takes place within an institutional setting shaped by local regulations and the division of governmental responsibilities among implementing organizations. From the perspective of constitutive governance, these rules need to be examined to identify which actors are granted authority, the institutional position of each actor, and the boundaries of responsibility that provide the basis for their actions (Hill & Hupe, 2022). A review of relevant documents shows that the implementation of craft development programs is not carried out without an institutional basis. This basis can be found in regulations concerning the establishment of local government agencies as well as regulations governing the position, organizational structure, duties, and functions of each agency.

At the level of local government organization, Peraturan Daerah Kota Palopo Nomor 8 Tahun 2016 tentang Pembentukan dan Susunan Perangkat Daerah established the Dinas Pariwisata dan Ekonomi Kreatif Tipe B to administer governmental affairs in tourism and the creative economy. The same regulation also established the Dinas Koperasi, Usaha Kecil, dan Menengah Tipe B to administer governmental affairs related to cooperatives, small enterprises, and medium enterprises. The regulation therefore provides the institutional basis for the establishment of both local government agencies while distinguishing the areas of responsibility assigned to each. At the constitutive level, this arrangement indicates that creative economy affairs and business empowerment are not placed within a single organization but are distributed among local government agencies according to their respective areas of responsibility.

The institutional position of Disparekraf is further specified in Peraturan Wali Kota Palopo Nomor 43 Tahun 2024. Article 2 designates Disparekraf as an implementing agency that assists the mayor in administering governmental affairs in tourism and the creative economy and is accountable to the mayor through the regional secretary. Within its organizational structure, Article 3 specifically places the Bidang Ekonomi Kreatif as one of the divisions within Disparekraf. The mandate of this division is further elaborated in Article 10, which includes policy formulation, development, capacity building, data collection on creative economy actors, and support for creative economy stakeholders. Crafts are explicitly identified as one of the subsectors falling within the responsibilities of the Bidang Ekonomi Kreatif. The position of Disparekraf in craft development, therefore, is not inferred merely from the name of the organization but is grounded in provisions that explicitly include crafts within the mandate of the Bidang Ekonomi Kreatif.

The institutional position of the Dinas Koperasi, Usaha Kecil, dan Menengah is regulated through Peraturan Wali Kota Palopo Nomor 11 Tahun 2024. Article 2 designates the agency as an implementing body responsible for governmental affairs related to cooperatives, small enterprises, and medium enterprises, while Article 3 places the Bidang Pemberdayaan Usaha Mikro within its organizational structure. Under Article 10, this division is responsible for policy formulation and the implementation of facilitation, development, strengthening, and protection of microenterprises, as well as improving the quality of entrepreneurship. Its responsibilities also include the provision of business information, licensing facilitation, and the development of microenterprises into small enterprises. Unlike Peraturan Wali Kota Palopo Nomor 43 Tahun 2024, this regulation does not specifically identify crafts as a particular subsector. Its relevance to craft development emerges when artisans conduct economic activities that fall within the category of microenterprises.

This division of responsibilities places craft artisans at the intersection of two governmental domains. In terms of the characteristics of their products and creative activities, crafts fall within the creative economy domain administered by Disparekraf. In terms of business management and development, artisans operating microenterprises fall within the empowerment domain of the Dinas Koperasi, Usaha Kecil, dan Menengah. Normatively, Disparekraf holds a mandate related to the development and capacity building of the craft subsector, while the Dinas Koperasi dan UKM holds a mandate related to strengthening the capacity of microenterprises. This division indicates the existence of two institutional pathways through which artisans may be reached, each addressing a different dimension of their activities.

In addition to these two local government agencies, the research data indicate the involvement of Dekranasda in craft development activities. Statements from the Chairperson of Dekranasda indicate the institution’s involvement in supporting promotion and artisans’ participation in exhibitions. However, the documents used in this study do not provide a sufficient basis for positioning Dekranasda as a local government agency or as a holder of governmental authority equivalent to Disparekraf and the Dinas Koperasi dan UKM. Therefore, within the limits of the available data, Dekranasda is positioned as a supporting actor involved in program activities rather than as a local government organization possessing its own governmental authority. This distinction is necessary to avoid inferring an actor’s formal institutional status solely from its involvement in particular activities.

An institutional arrangement involving more than one actor cannot, by itself, be characterized as institutional fragmentation. Peraturan Wali Kota Palopo Nomor 43 Tahun 2024 and Peraturan Wali Kota Palopo Nomor 11 Tahun 2024 both contain provisions concerning coordination and consultation with governmental and non-governmental institutions. These provisions indicate that relationships with other organizations are formally accommodated within the working arrangements of each agency. However, the existence of coordination provisions does not demonstrate how such coordination is carried out in practice. Likewise, the involvement of multiple actors does not in itself demonstrate overlap or coordination failure. A conclusion regarding fragmentation can only be drawn when evidence is found of unclear responsibilities, duplication of activities, differences in target-group data, or the absence of interorganizational coordination.

The finding at the level of constitutive governance is that craft development in Kota Palopo already has an institutional foundation, but it is structured as a cross-sectoral governmental responsibility. Disparekraf is the local government agency explicitly responsible for crafts as part of the creative economy, the Dinas Koperasi dan UKM addresses the microenterprise empowerment dimension that may include artisans’ businesses, while Dekranasda functions as a supporting actor based on the activities identified in the research data. This configuration establishes a formal institutional space for program implementation but does not yet explain how the mandates of each actor are translated into activities and distributed in practice. This issue is examined further at the level of directive governance.

Program Direction and Division of Roles in Craft Development

The institutional foundations described in the previous section take concrete form when the mandates of each organization are translated into craft development programs. At the level of directive governance, attention is directed to the selection of activities, program targets, forms of support, and the division of roles among implementing organizations (Hill & Hupe, 2022). The findings show that Pemerintah Kota Palopo employs several instruments to develop the craft subsector, including skills training, design assistance, product standardization support, exhibition facilitation, capital assistance, facilitation of access to financing, and product marketing support. These activities demonstrate that the mandate for creative economy development is translated into programs that address artisans’ production capacities, product quality, business management, and market access. In this section, these programs are examined as forms of intervention selected by implementing organizations rather than as measures of success in improving artisans’ welfare.

Disparekraf implements activities that are largely related to the development of technical skills and product quality. These activities include craft skills training, design assistance involving local designers, product standardization support, and facilitation of artisans’ participation in exhibitions at the local, provincial, and national levels. The technical training provided includes weaving and natural dyeing techniques, wood carving, bamboo processing, the development of contemporary motifs based on local traditions, and the application of quality standards for craft products. Such training generally lasts between two and five days and is held at the Disparekraf training center or craft production centers. This range of activities indicates that strengthening production skills and improving product quality constitute one of the prominent directions of the craft development program.

The emphasis on technical skills is also evident in the experience of a woodcarving artisan who had participated in a training program. The informant stated:

“I attended a training session once, but the content was just the same things I already knew, such as carving techniques that I had already mastered. What I actually need is training on how to sell products online, how to take good product photographs, and how to calculate the right selling price. I already have the technical carving skills, but I am weak in the business side, and there has been no training that specifically focuses on that.”

This statement indicates that the training received by the informant focused primarily on production skills that the artisan had already mastered. The needs perceived by the informant instead concerned digital marketing, product photography, and pricing. The experience of a single informant cannot be used to represent all training programs organized by the government. Nevertheless, the statement remains important because it reveals a possible mismatch between the content selected by implementing organizations and the capacities needed by program recipients. From the perspective of directive governance, this issue concerns the process of determining training content, identifying participants’ existing capacities, and translating artisans’ needs into training design.

Design assistance, product standardization, and exhibition facilitation indicate another program direction related to product development and market expansion. Design assistance is intended to adjust products to changing market preferences, while standardization concerns the quality requirements that products must meet in order to access broader markets. This study has not obtained detailed information regarding participant selection mechanisms, standardization content, the duration of assistance, or follow-up after the activities have been completed. Exhibition facilitation is documented more extensively, particularly through the statement of the Chairperson of Dekranasda regarding the institution’s involvement in bringing artisans and craft products to various exhibitions:

“We actively bring artisans to various exhibitions, not only in Palopo but also to Makassar, Sulsel Craft, and several times to Jakarta and Bali. Through these exhibitions, many have obtained regular buyers from outside the region. Several weaving artisans now export to buyers in Singapore and Malaysia, although still on a small scale. This proves that the quality of our products is able to compete in international markets.”

At the directive level, this statement indicates that exhibitions are selected as an instrument to introduce products, connect artisans with buyers, and expand market networks. The involvement of Dekranasda in these activities reinforces its position as a supporting actor in promotion and marketing. The information regarding regular buyers and exports is treated as an informant’s account because this study does not use sales data or transaction documents to verify these claims independently. The quotation is used to explain the form of activity and the direction of Dekranasda’s support, rather than as a comprehensive measure of the success of exhibition programs.

Dinas Koperasi dan UKM is associated with the business development dimension of artisans’ activities, particularly capital assistance, business legality, and access to financing. One bamboo craft artisan described the experience of receiving assistance through the agency:

“Thankfully, I received IDR 10 million in capital assistance from Dinas Koperasi last year. I used the money to buy new production equipment and increase my stock of bamboo raw materials. As a result, my production almost doubled within three months. I was better able to fulfill orders, and my income also increased significantly.”

This statement documents the experience of an informant who received capital assistance from Dinas Koperasi dan UKM and used the assistance to purchase equipment and raw materials. This study has not obtained information regarding the name of the program, the number of recipients, the selection mechanism, the source of the budget, or the continuity of the assistance. The informant’s experience indicates that capital assistance is one form of intervention that has been received by artisans. The Head of Dinas Koperasi dan UKM also explained that access to KUR is associated with having an active bank account, financial statements, and business legality. Financing support therefore intersects with the administrative organization of business activities. Within the overall structure of craft development programs, Dinas Koperasi dan UKM focuses on strengthening the business dimension, while Disparekraf is more closely associated with skills development, product development, and promotion.

The experiences of artisans in developing bamboo craft products and using digital applications to create silver craft designs indicate the presence of innovation and technology adoption in production activities. However, the interviews have not identified any government program specifically designed to provide technology, train artisans in the use of design applications, or assist them in the process of adopting such technology. These experiences therefore cannot yet be identified as outcomes of government program instruments. They are more appropriately discussed in the operational governance section to explain artisans’ capacity to utilize the knowledge, technology, and experience available to them. At the directive level, support for innovation can be identified more clearly through design assistance, training, product standardization, and exhibitions.

This division of activities shows that the implementation of craft development programs involves several organizations with different areas of intervention. Disparekraf handles activities related to technical skills, product quality and design, and promotional facilitation. Dinas Koperasi dan UKM focuses on business empowerment, capital assistance, business legality, and access to financing. Dekranasda supports product promotion and artisans’ participation in exhibitions. This study has not obtained information regarding joint program formulation, coordination meetings, budget allocation, the integration of target-group data, or mechanisms for allocating participants across institutions. Therefore, the quality of coordination and program integration cannot yet be assessed. The absence of information on these processes does not demonstrate that interorganizational coordination does not occur.

The findings at the level of directive governance show that the mandate for craft development has been translated into a range of programs addressing production, product development, business strengthening, and market expansion. The clearest orientation lies in improving technical skills and expanding markets through exhibitions. Design assistance and standardization reinforce the orientation toward product quality, while capital assistance and access to financing are directed toward strengthening artisans’ business capacities. This arrangement constitutes a multi-actor pattern of intervention in which functions are divided according to the respective areas of responsibility of the organizations involved.

Experiences in Accessing and Utilizing Craft Development

Program implementation at the artisan level reveals the actual form of interaction between implementing organizations and target groups. From the perspective of operational governance, the existence of programs alone is insufficient to explain how policy works because artisans must still obtain information, meet requirements, participate in activities, and apply the support they receive to their business activities (Hill & Hupe, 2022). The interviews reveal different experiences among informants in their interactions with government programs. These differences can be seen in how they obtain information, the relevance of training materials, access to financing, relationships with markets, and their ability to develop products and use technology. The findings in this section are limited to the experiences of the informants interviewed and are not intended to represent all artisans in Kota Palopo.

Artisans’ engagement with government programs begins with the availability of information about activities in which they can participate. A Rongkong weaving artisan explained that information about training and assistance was obtained through active involvement in an association and frequent interaction with government agencies:

“I know there are many programs, but I know about them because I am active in the association and often visit the Dinas. Other artisans who are not active do not really know about the training or assistance available. Information does not automatically reach us where we are. We have to go and look for it ourselves.”

This statement indicates that, in the informant’s experience, the association and direct contact with the Dinas served as channels for obtaining program information. The statement that other artisans were unaware of the programs reflects the informant’s observation and cannot be used to determine the overall reach of information dissemination. The quotation also does not provide evidence of institutional fragmentation because it does not explain the relationships among Disparekraf, Dinas Koperasi dan UKM, and Dekranasda. What can be inferred from the statement is that the informant’s access to information was related to active participation in networks and a willingness to seek information directly. This condition highlights the importance of information dissemination in determining who becomes aware of and subsequently participates in government programs.

Once information has been obtained, artisans’ experiences are also shaped by the extent to which program activities correspond to their business needs. A woodcarving artisan who had participated in training considered the material provided to be repetitive because it focused on technical skills that had already been mastered, whereas the artisan’s perceived needs concerned business management and marketing capabilities. The technical material did not address needs related to digital marketing, product photography, and pricing. This finding indicates that the implementation of training cannot be understood solely in terms of whether an activity has been conducted. Participants’ existing skills and the problems they face also shape the benefits they are able to obtain. The same program may be experienced differently by participants who are just beginning production activities and by artisans who have already mastered technical skills. At the operational level, the alignment between program content and recipients’ needs is therefore important in explaining how a program works.

Access to capital reveals another problem faced by artisans when attempting to utilize available support. A woodcarving artisan described an experience of applying for a loan to purchase equipment and raw materials:

“I tried applying to a bank for an IDR 15 million loan to buy more modern carving equipment and additional raw materials. But they asked for a land certificate as collateral. I do not have one because the land where we live belongs to the family and has not been certified. In the end, I decided not to proceed and continued using the equipment I already had. As a result, my production remains limited.”

This experience shows that the informant’s need for capital could not be met through a bank loan because of collateral requirements. The obstacle experienced by this informant cannot be generalized to all artisans or all financial institutions. The quotation nevertheless demonstrates that the availability of formal financing does not necessarily mean that every artisan can access it. Ownership of assets that can be used as collateral becomes a condition that influences artisans’ relationships with financing institutions.

Administrative requirements also emerged in the statement of the Head of Dinas Koperasi dan UKM regarding artisans’ access to Kredit Usaha Rakyat:

“KUR is available and the interest rate is relatively low, but the problem is that many of our artisans do not have active bank accounts, financial statements, or even formal business licenses. Of the 280 registered craft MSMEs, perhaps only 30–40 percent already have official business permits. Without these, access to KUR remains limited.”

This statement indicates that bank accounts, financial records, and business legality are regarded by the informant as part of the administrative preparedness required to access KUR. The figure of 280 craft MSMEs and the estimate that 30–40 percent possess business permits were provided by the Head of Dinas Koperasi dan UKM during the interview. These figures are not treated as official statistics because this study did not obtain documents that could be used to verify them. Nevertheless, the statement provides an indication that access to financing is related to artisans’ ability to meet administrative requirements. At the operational level, business legality and financial record-keeping function as a link between the availability of financing schemes and artisans’ ability to utilize them.

Program utilization is also related to artisans’ ability to reach markets. The manager of a local craft product gallery explained that some artisans continue to sell their products through intermediaries because they need immediate payment and lack direct access to buyers:

“Many artisans sell their products to intermediaries at very low prices because they need money quickly and do not know how to reach buyers directly. The intermediaries then sell the products to souvenir shops with a large margin. Artisans may receive only 20–30 percent of the final price. If they could sell directly, their income could be twice as high or even more. But selling directly requires a gallery, negotiation skills, and access to buyer networks, and most artisans do not yet have these.”

This statement reflects the gallery manager’s assessment of the relationship among artisans, intermediaries, and final buyers. The estimate that artisans receive 20–30 percent of the final price and that their income could potentially double is not supported by verifiable transaction records. The statement is used to illustrate the problems perceived by the informant in marketing practices, particularly the need for immediate cash, limited negotiation skills, the absence of sales outlets, and weak buyer networks. This experience demonstrates that improvements in product quality do not automatically create access to final consumers when marketing capacity and sales networks remain limited.

Exhibition facilitation is one mechanism used to connect artisans with buyers and networks outside Kota Palopo. The Chairperson of Dekranasda provided an assessment of the experiences of artisans who regularly participated in national exhibitions:

“Based on our calculations, artisans whom we regularly take to national exhibitions experience an average income increase of at least 30 percent within two years. It is not because they become successful after attending one exhibition, but because the exhibitions give them buyer contacts, designer references, and an understanding of the quality standards required by the national market. It is a long-term investment whose value far exceeds the cost of the program.”

The Chairperson of Dekranasda also described the scope of exhibitions and the market relationships that, according to the informant, developed through these activities. The reported 30 percent increase in income, the existence of regular buyers, and sales abroad represent the Chairperson’s assessment. This study did not obtain sales data, buyer lists, or export documents to verify these statements. Nevertheless, both quotations remain relevant for explaining how the Chairperson of Dekranasda understands the function of exhibitions. Exhibitions are viewed as spaces for obtaining buyer contacts, design references, knowledge of quality standards, and market networks. At the operational level, the benefits of exhibitions are therefore associated not only with transactions conducted during the events but also with the relationships and knowledge that artisans bring back from them.

The function of exhibitions as spaces for learning can be seen in the experience of a bamboo craft artisan. The informant developed a product idea after observing the work of another artisan and subsequently adapted it using existing techniques and motifs:

“I got the idea for the bamboo bag when I saw one at an exhibition. There was an artisan from Lombok making bamboo bags, and they sold very well. I thought my bamboo motifs were just as good. So I tried making a different type of bag by combining our traditional weaving techniques with a more modern design. It did not work immediately. I failed several times before finding the right model. But now this bamboo woven bag has become my main product, and its profit margin is much higher than that of conventional woven products.”

This experience shows that the artisan did not receive innovation in the form of a ready-to-use product. The informant observed another product, assessed the possibility of adapting it, conducted several trials, and combined a new design with existing weaving techniques. The statement regarding a higher profit margin reflects the informant’s experience and was not verified through cost and sales data. The quotation demonstrates that the ability to benefit from exhibitions depends on artisans’ capacity to transform acquired knowledge into product changes. The same exhibition may therefore generate different benefits because artisans differ in their capabilities, resources, and willingness to experiment.

Differences in capability are also evident in the use of technology in production activities. A senior silver artisan explained how design applications were used without eliminating the manual processes considered essential to the uniqueness of the product:

“I use technology for several things. For the initial design, I now use an application on a tablet, which reduces the design process from several hours to just a few minutes. But for the actual execution, forging, engraving, and assembling are still done manually. That is what makes my products unique. So I use technology where it is appropriate, rather than rejecting it entirely or using it for everything.”

This statement demonstrates a selective form of technology adoption. Technology is used during the initial design stage, while physical production remains manual. The informant independently determines which parts of the production process can be assisted by technology and which should retain manual craftsmanship. This experience does not represent the level of technology adoption among all artisans. When considered alongside observational findings concerning the continued use of traditional equipment in several craft businesses, the quotation illustrates differences in both capacity and choice regarding technology use. At the operational level, technology adoption is influenced by skills, capital, product type, and artisans’ assessments of which aspects of production contribute to the distinctiveness of their crafts.

Taken together, these experiences show that the existence of programs does not produce uniform experiences among informants. Artisans who are active in associations have more open channels of information, while other informants encounter mismatches in training content, collateral requirements, business legality requirements, and limited market networks. Capital assistance can strengthen production for informants who are able to obtain it. Exhibitions can function as spaces for both marketing and learning for artisans who are capable of building networks and translating new knowledge into product innovation. The use of technology also varies according to the capacities and considerations of individual artisans. The finding at the level of operational governance is that access to and utilization of programs are related to information channels, participation in networks, administrative preparedness, the alignment of activities with recipients’ needs, access to capital and markets, and the capacity to apply knowledge and technology. These findings explain the experiences of the research informants and are not intended to represent the entire population of craft artisans in Kota Palopo.

From Institutional Foundations to Artisans Experiences

The three levels of governance used in this study do not operate independently. Rules and organizational arrangements at the constitutive level create the space within which government can act, while decisions at the directive level determine the forms of programs used to carry out these mandates. These programs then encounter artisans’ conditions at the operational level, ranging from access to information to their ability to utilize the support they receive. This relationship indicates that policy implementation does not occur as a direct transfer from rules to outcomes. Each level creates possibilities for the next without fully determining how programs will be received and utilized by target groups (Hill & Hupe, 2022).

At the constitutive level, craft development in Kota Palopo is supported by an institutional foundation established through the formation of local government agencies and the regulation of their respective responsibilities. Disparekraf holds the mandate to administer creative economy affairs, including the development and capacity building of the craft subsector. Dinas Koperasi dan UKM holds a mandate for the empowerment and development of microenterprises, which may include businesses operated by artisans. Dekranasda functions as a supporting actor through its involvement in the promotion and exhibition of craft products. This arrangement places craft development at the intersection of creative economy affairs and microenterprise empowerment. The division indicates the existence of several institutional pathways through which artisans can be reached according to the specific aspects of their activities addressed by each actor.

These institutional mandates are translated at the directive level into skills training, design assistance, product standardization support, exhibition facilitation, capital assistance, business legalization, and the facilitation of access to financing and markets. Disparekraf primarily implements activities related to technical skills, product quality and design, and promotion. Dinas Koperasi dan UKM focuses on business strengthening, business legality, capital assistance, and access to financing. Dekranasda supports artisans’ participation in exhibitions and the expansion of marketing networks. The most clearly identified program orientations in this study are the improvement of technical skills and market expansion through exhibitions. Support for innovation is evident in design assistance, standardization, and artisans’ exposure to products from other regions. Technology adoption, however, cannot yet be identified as a specifically structured government program because the available information primarily concerns artisans’ own initiatives and experiences in using technology.

These programs take different forms when they reach artisans. One weaving artisan obtained information because of active participation in an association and frequent interaction with government agencies, indicating that network participation was one condition that helped the artisan become aware of available programs. A woodcarving artisan who participated in training considered the technical content to be poorly aligned with business needs related to digital marketing, product photography, and pricing. In terms of financing access, one artisan was unable to obtain a bank loan because of the absence of a land certificate that could be used as collateral. The Head of Dinas Koperasi dan UKM also estimated that only some craft MSMEs had the business permits, active bank accounts, and financial records required to access KUR. These experiences demonstrate that the availability of programs does not automatically result in access because each instrument involves information channels, content, and requirements that recipients must navigate.

The relationship between the directive and operational levels does not consist entirely of mismatches. A bamboo craft artisan who received capital assistance from Dinas Koperasi dan UKM was able to use the assistance to purchase equipment and increase the supply of raw materials. Another artisan developed the idea for a bamboo bag after attending an exhibition and observing products from another region, and then adapted the idea using existing weaving techniques. A silver artisan used an application on a tablet to accelerate the initial design process while maintaining manual craftsmanship during production. These experiences demonstrate relationships among program instruments, sources of knowledge, and artisans’ capacities to use them. The reported benefits remain individual experiences because this study does not have data that would allow them to be generalized to all program recipients.

Misalignment becomes more apparent when the form of an activity or program requirements do not correspond to the needs and capacities of informants. Technical training provides limited benefits to artisans who have already mastered production skills and instead need marketing knowledge. Financing schemes are difficult to use for artisans who lack collateral, business legality, active bank accounts, or financial records. Program information is more easily obtained by artisans who are active in associations and have relationships with government agencies. Exhibitions can open networks and provide new product ideas, but their utilization depends on artisans’ ability to establish relationships with buyers and transform acquired knowledge into products. In this study, misalignment refers to the gap between program forms and recipients’ conditions rather than to formal conflict among implementing institutions.

The relationships across governance levels also do not provide sufficient grounds to conclude that institutional fragmentation exists. Existing regulations divide responsibilities and provide space for coordination among implementing organizations. This study did not obtain information regarding joint program formulation, coordination meetings, budget allocation, the use of a shared target-group database, or duplication of activities among institutions. Therefore, the quality of coordination among Disparekraf, Dinas Koperasi dan UKM, and Dekranasda cannot yet be assessed. The presence of multiple actors only indicates that craft development is implemented through a multi-actor arrangement. Any conclusion regarding fragmentation would require evidence of unclear responsibilities, program overlap, differences in target groups, or the absence of coordination.

The main finding of this study is that the implementation of the creative economy development program for the craft subsector in Kota Palopo is supported by an institutional foundation and translated through a range of program instruments. At the artisan level, implementation is conditional because access to and utilization of programs are associated with access to information, participation in networks, administrative preparedness, the alignment of activities with business needs, access to capital and markets, and the capacity to apply knowledge and technology. Institutionalization creates space for program implementation, while the existence of programs creates opportunities for artisans to receive support. These opportunities, however, are not received and utilized in the same way by the informants interviewed. The analytical contribution of this study lies in distinguishing between the existence of institutional arrangements, the translation of mandates into programs, and program experiences at the target-group level. Variations across these levels demonstrate that policy implementation cannot be adequately understood solely from the existence of rules or the number of activities because the actual form of policy is also shaped by the relationship between programs and recipients’ conditions.

Conclusion

The creative economy development program for the craft subsector in Kota Palopo is implemented through a division of roles among Disparekraf, Dinas Koperasi dan UKM, and Dekranasda as a supporting actor. These institutional mandates are translated into training, design assistance, product standardization, exhibition facilitation, capital assistance, and the facilitation of market access. At the artisan level, access to and utilization of programs vary according to information channels, participation in networks, administrative preparedness, the alignment of activities with business needs, and the capacity to apply the support received. Technology adoption has emerged largely through artisans’ own initiatives and has not yet been identified as a specific government program. These findings indicate that the existence of institutional arrangements and programs does not automatically produce uniform reach and utilization among the artisans interviewed.

Conflict of Interest

The authors declare that there are no conflicts of interest in this study, whether related to personal, professional, financial, or institutional interests.

Declaration of Generative AI and AI-Assisted Technologies

The authors declare that AI technologies were used in the preparation and completion of this study as tools to improve the narrative and assist with the translation of the article.

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