The Barriers of Innovation: Empirical research at MSMEs in the Special Region of Yogyakarta

Abstract

This study aims to identify the implementation and innovation barriers faced by micro, small and
medium enterprises (MSMEs). This research involves owners and employees to find out the innovation
process that has been done. The population used in this study were all of MSMEs owners and employees in
the Special Region of Yogyakarta. The sample consisted of 74 MSMEs involving 148 respondents. Samples
were taken using a purposive sampling method. The collected data were analyzed using descriptive
statistical analysis techniques. The results showed that the majority of MSMEs have innovation in the last
five years. The owner is proven to have an objective perspective on innovation activities. The innovation
made by most MSMEs is product innovation. The main barriers for MSMEs in innovation process are
financial limitations, lack of knowledge, and employees' limited ability in the company.