Micro, small, and medium enterprises (MSMEs) is one important part of the economy of a country or region. This important role has encouraged many countries, including Indonesia, to continue working to develop SMEs. This is because MSMEs have contributed more than half of Indonesia's GDP, and MSMEs and the largest employer absorber for Indonesia. MSMEs also have a business unit of 99.9% of the total business units compared to large enterprises. Therefore, why MSMEs have become the backbone of the Indonesian economy, especially in the Food and Beverage industry sector, see the contribution of the food and beverage industry to the total GDP of Indonesia. However, SMEs today are still often getting problems and obstacles in the Indonesian industry. One of them is the lack of knowledge about entrepreneurship that hampers the development of a business and the emergence of innovation. The purpose of this study is to determine the variables that affect innovation to improve the competitiveness of SMEs. This study uses the application of the method of Structural Equation Modeling - Partial Least Squares (SEM-PLS). The type of research used is descriptive research with a time horizon used is cross-sectional for once data collection in micro industries that are part of MSMEs. The results of this study are expected to show what variables can be related to and influence entrepreneurship and trigger the innovation of Indonesian SMEs, whose audiences become the driving force of the national economy.

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Vincent Cahyadi