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Incorporating Sustainability into Small Business Innovation

To win the increasingly fierce competition, small and medium micro enterprises (SMEs) are required to consistently innovate. However, when performing innovation, they should not only give priority to profit, but also have awareness to human and the environment. This is appropriate with the triple bottom line principles of sustainable development, i.e. financial, social, and environmental. This research was conducted with purposes to describe how SMEs in Indonesia incorporate sustainability into their business innovation; to recognize internal and external factors which trigger sustainable innovation and also to identify the obstacles faced by SMEs in implementing it. The case study was taken from food processing SMEs in Surabaya as one of the prioritized industries in East Java. The survey method was used to get primary data from 100 respondents through questionnaire. Based on the results it can be recognized internal trigger factors of sustainable innovation among SMEs, i.e product (product remains favored, quality improvement, and product uniqueness), profit, business owner, and competitive advantage; while external trigger factors are consumers, competitors, government, and other parties. Internal obstacles of SMEs in sustainable innovation implementation are lack of human resource, time and money restriction, and the reluctance to perform innovation; whereas external obstacles are lack of information and lack of government support.