The impact of opportunity and challenge to open innovative strategy that can influence business performance in smes

SMEs entrepreneurs have been given challenges and opportunities to compete in the international markets. The implication of ‘open innovation’ by SMEs will be further studied by focusing on the information regarding SMEs owners’ adaptation on their businesses agenda and its effects towards their business performance. The empirical investigation is based on a sample selection of Indonesian SMEs. In the present, the opportunities and challenges components were investigated within the Indonesian SMEs Practices. The findings in this paper suggested that the challenge relationship to open innovation strategy is insignificant. Instead, the ‘challenge’ is positively related to ‘opportunity’. It is an understanding that the entrepreneur has the lower expectation to ‘challenge’ since the challenge naturally created the opportunity function over the business utility function. On the other hand, the ‘open Innovation’ is less positively at 90% confident interval related to ‘business performance’. In the situation, the entrepreneur’ decision is determined by whether their open Innovation strategies can spur their performances. The findings were the important factors that contribute to developing the “Open New Market and Customer Capability”, “Export Performance of SMEs” and “Possibility of Market Expansion Domestically” on Indonesia SMEs. This paper will use PLS to analyze the model and is limited to Indonesian SMEs.