Designing A Business Innovation Strategy to Improve the Business Performance of Chocolate SMEs in East Java, Indonesia

Abstract

This study explored the obstacles facing for chocolate products from East Java SMEs entering the domestic market. This research also contributed a design strategy for business innovation that might be done by small and medium chocolate enterprises in East Java to improve their business performance. This study used a mixed method framework. Study literature, field observation, and a semi-structured interview were delivered to gain accurate data. The qualitative data then being processed through a descriptive-interpretive analysis. The study findings were used to construct the content of Analytical Hierarchy Process (AHP) as the quantitative tool to select an innovation strategy. The findings were for passing the market entry obstacles needs an improvement of collaboration among Indonesian government, East Java government, and the chocolate SMEs. A product with distinctive flavor is the most preferred best practice by respondents as a business innovation strategy. This study was only focus on the government and chocolate SME as the stakeholders. As practical implications, chocolate SMEs in East Java might apply the product diversification by creating a product with a distinctive flavor as an innovative strategy for their business.