Policy-Driven Capability Building and MSME Competitiveness: Evidence from a Local Government Business Support Program in Indonesia

Authors

  • Adhitya Maulana Sahputra Department of Economics, Faculty of Economics and Business, Universitas Negeri Malang
  • Arif Dwi Hartanto Economics Development Department, Faculty of Economics and Business, Universitas Merdeka Malang

DOI:

https://doi.org/10.26905/jrei.v7i1.16918

Keywords:

Business clinic program, Government intervention, Local economic development, MSME competitiveness, SME development

Abstract

Micro, Small, and Medium Enterprises (MSMEs) play a critical role in local economic development, yet many face structural constraints related to managerial capacity, innovation, and market access. This study examines the effectiveness of the Business Clinic Program initiated by the Malang City Government in strengthening MSME competitiveness. Using a mixed-methods approach, data were collected from 60 MSME participants across five districts in Malang, Indonesia. Quantitative analysis was conducted using multiple linear regression, complemented by qualitative insights from interviews and program documentation. The findings indicate that the program significantly contributes to improving MSME competitiveness, particularly through enhanced entrepreneurial management and production innovation. However, limited program coverage, low digital literacy, and restricted access to formal financing remain key challenges. This study proposes an integrated intervention framework linking input resources, capability development, and market expansion as a policy model to support MSME competitiveness. The findings highlight the importance of sustained institutional support and targeted capacity-building initiatives in local economic development.

Downloads

Download data is not yet available.

References

Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120.

Beck, T., Demirgüç-Kunt, A., & Maksimovic, V. (2008). Financing patterns around the world: Are small firms different? Journal of Financial Economics, 89(3), 467–487.

Drucker, P. F. (1985). Innovation and entrepreneurship: Practice and principles. Harper & Row.

Ghozali, I. (2018). Aplikasi analisis multivariate dengan program IBM SPSS 25 (9th ed.). Badan Penerbit Universitas Diponegoro.

Hasibuan, I. M., & Marliyah. (2024). Obstacles of accessibility of financing for micro, small, and medium enterprises (MSMEs) from financial institutions. Aksioma: Jurnal Manajemen, 3(1), 15–24.

Kotler, P., & Keller, K. L. (2016). Marketing management (15th ed.). Pearson.

Kristianus, A. (2024). Teten: Pelaku UMKM masih terhambat akses permodalan dari perbankan. Investor.id.

Meilantika, F. R., Sihotang, L., & Rachma, F. V. (2024). UMKM memiliki peran penting dalam perekonomian Indonesia., 2, 188–193.

Porter, M. E. (1985). Competitive advantage: Creating and sustaining superior performance. Free Press.

Porter, M. E. (2001). The competitive advantage of nations. Harvard Business Review, 68(2), 73–93.

Saptantinah, D., Astuti, P., & Mardayanti, L. (2025). Peningkatan literasi digital pelaku usaha mikro kecil dan menengah melalui pelatihan dan pendampingan pada UMKM home industry di Desa Genengan Karanganyar., 7(2), 274–282.

Schumpeter, J. A. (1934). The theory of economic development: An inquiry into profits, capital, credit, interest, and the business cycle. Harvard University Press.

Suryana, Y., & Bayu, K. (2012). Kewirausahaan: Pendekatan karakteristik wirausahawan sukses (2nd ed.). Kencana Prenada Media.

Syahputra, A., Harahap, I., Kaswinata, & Nawawi, Z. M. (2023). The significance of small and medium enterprises (SMEs) in economic development in the city of Medan from an Islamic perspective., 6, 718–728.

Teece, D. J., Pisano, G., & Shuen, A. (1997). Dynamic capabilities and strategic management. Strategic Management Journal, 18(7), 509–533.

Tambunan, T. (2009). UMKM di Indonesia. Ghalia Indonesia.

Downloads

Published

2026-02-27

Issue

Vol. 7 No. 1 (2026): February 2026

Section

Articles

License

License

Creative Commons License JREI: Journal of Regional Economics Indonesia, University of Merdeka Malang is licensed under Creative Commons Attribution Attribution-NonCommercial-NoDerivatives 4.0 International License.

Copyright

Authors who publish with this journal agree to the following terms:

  • Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution Attribution-NonCommercial-NoDerivatives 4.0 International License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
  • Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial publication in this journal.
  • Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) before and during the submission process, as it can lead to productive exchanges and earlier and greater citation of published work (See The Effect of Open Access).