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Innovation for Scaling Up Micro and Small Enterprises (MSEs)

Author

Listed:
  • Chaikal Nuryakin
  • Izyan Pijar Bungabangsa Satyagraha
  • Ratu Silfa Addiba Nursahla

    (Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia (LPEM FEB UI))

Abstract

Micro, small, and medium enterprises (MSMEs) hold significant economic potential, for a potential contribution of over 55% to GDP, and employ more than 90% of the workforce (WTO, 2016). Recognizing their role in economic growth, poverty reduction, export, and job creation, the Indonesian government has prioritized MSMEs in its National Development Plan. However, a disproportionate number of MSMEs remain micro and small, hindering broader economic benefits. Innovation is proposed as a critical driver for the growth and scaling up of Micro and Small Enterprises (MSEs). This paper explores the relationship between innovation and business growth, identifies significant challenges and drivers of innovation, and draws on international best practices. We delve into several vital obstacles, such as financial constraints, inadequate copyright protection, and limited access to skilled talent that impede MSEs’ innovation and R&D capabilities. Also, we reviewed some strategies to overcome these challenges, including fostering research collaborations, implementing innovation programs, supportive government policies, and providing intellectual property rights (IPR) to MSEs.

Suggested Citation

  • Chaikal Nuryakin & Izyan Pijar Bungabangsa Satyagraha & Ratu Silfa Addiba Nursahla, 2024. "Innovation for Scaling Up Micro and Small Enterprises (MSEs)," LPEM FEBUI Working Papers 202479, LPEM, Faculty of Economics and Business, University of Indonesia, revised 2024.
    • Handle: RePEc:lpe:wpaper:202479
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    File URL: https://lpem.org/repec/lpe/papers/WP202479.pdf
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    More about this item

    Keywords

    MSMEs — innovation — scale-up;

    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid
    • H81 - Public Economics - - Miscellaneous Issues - - - Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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