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The purpose of this paper is to guide commercial and policy action to improve smallholder Indonesian cattle systems.

A survey (n = 304) of smallholder cattle farms in six villages in two districts of Nusa Tenggara Barat, Indonesia. Principal component analysis (PCA) and cluster analysis (CA) were employed to classify cattle farms into business models according to observed innovation. Differences between business models were identified using a one-way-analysis-of-variance (ANOVA).

Four business models were identified, representing profiles of innovation adoption and elements of business models, socio-economic characteristics, farming system and performance variables including revenue, cost and profit. The business models display a range of orientation to buyer requirements and a range of approaches to production, indicating a need to promote in a variety of ways the change from supply-push to demand-pull in the cattle value chain.

This study offers guidance on how business models might be strengthened over time, by using simple indicators of performance and the models' linkage to innovation in the context of each business model. The business models developed here, and refinements to them based on localised conditions, offer a targeted and accelerated pathway to improved performance in smallholder systems.

This study proposed a novel approach to the recognition of business models based on innovation.