The Factors Affecting Business Innovation to Improve the MSME Competitiveness in Medan City

Abstract

The development of Micro, Small, and Medium Enterprises (MSMEs) in Medan is still unstable. This condition is related to limited working capital, low-quality human resources in accessing information and managing capital, weaknesses in obtaining market opportunities and increasing market share, and limited product marketing. The latest innovations are needed to increase the MSMEs' competitiveness. This study aims to analyze the performance of MSMEs to increase competitiveness and determine the effect of innovation on MSMEs in Medan. The study included 20 business actors from Medan Johor, Medan Sunggal, Medan Denai, and Medan Marelan. This study uses a quantitative descriptive method with purposive sampling. The respondents were based on agribusiness in culinary and processed derivative products. Data were analyzed using a Likert scale and binary logistic regression. The results showed that business actors' performance by analyzing opportunities to increase competitiveness resulted in a very good category. The highest results were on certification indicator, while the lowest were on service indicator. Meanwhile, the factors influencing MSME innovation were level of education and information technology. The results recommend that government should train Medan City MSMEs in online sales applications to increase their market share. Furthermore, to support a more accessible certification and licensing process, BPOM should socialize more with business actors.

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“…UMKM dapat meningkatkan daya saingnya dengan memperkuat karakter wirausahawan, menciptakan lingkungan bisnis eksternal yang kondusif, dan memperkuat kegiatan operasional dan pemasaran (Chinitra et al, 2019). Inovasi-inovasi terbaru diperlukan untuk meningkatkan daya saing UMKM (Sibuea et al, 2022). Teknologi juga merupakan faktor pendukung utama dalam membangun daya saing UMKM, dan fokus pada inovasi secara keseluruhan dapat membantu UMKM menjadi lebih kompetitif, efisien, dan inovatif melalui bantuan keuangan (Fachrunnisa et al, 2020;.…”