Open Innovation Implementation to Sustain Indonesian SMEs

Small and Medium Enterprise (SME) in Indonesia plays an important role in social and economic growth, due to great number of industry, GDP contribution, and total employment. SMEs’ characteristic more agile and adaptable that capable to survive and raise their performance during economical crisis than larger firm. But the increasing of business competition, in particular against large and modern competitor, put SMEs in a vulnerable position. The development of sustainable SMEs becomes important step to strengthen and sustain Indonesian economy. According to previous studies, factors affecting success among Indonesian SMEs are marketing, technology, capital access and human resources quality. Unfortunately, all of these factors still becoming problem in Indonesian SMEs. Open innovation is a proposed methodology to overcome Indonesian SMEs’ problem, because several Indonesian SMEs’ characteristics match with open innovation implementation. The innovation value chain framework is used to explain how open innovation could help to succeed and sustain Indonesian SMEs.