BARRIERS TO INNOVATION AND COMPETITIVENESS: A CASE STUDY OF RATTAN CRAFT AND FURNITURE SMES IN ACEH

Abstract

Aceh needs to improve industrial growth to secure economic growth by producing innovative products with
added value. Some institutions have already put efforts to encourage innovation and development in some SMEs,
but they have not showed any progresses. Thus, the aim of this research was to understand what were the barriers
that prevent rattan SMEs in Aceh to innovate and become competitive. Previous research looked into barriers to
innovation from SMEs owner’s perspectives, however they did not capture barriers from government and
university perspectives. A case study research was carried out in SMEs, operating in Aceh Besar Region. This
research employed a qualitative study through an explorative interview. The interview data collection used a
purposive sampling technique. The result showed that there were three major barriers that were perceived by SMEs
owners, namely raw material, financial access, and management and marketing skills. From analytical process the
result shows that most of barriers perceived by entrepreneurs interviewed rooted from lack of knowledge transfer
and information between triple helix institution. However, from the triple helix analysis, the real problem was the
lack of information and different cultures between universities and SMEs. The recommendation that should be
best taken by stakeholders in the industry was to transform university to become entrepreneurial university.
Keywords: barrier to innovation, competitiveness, rattan SMEs