Community Empowerment Utilizing Open Innovation as a Sustainable Village-Owned Enterprise Strategy in Indonesia: A Systematic Literature Review

Abstract

This study aims to understand community empowerment by utilizing open innovation through Village-Owned Enterprises (VOE) to enhance sustainable public welfare. To achieve both economic and social missions, VOE must develop the ability to engage in open innovation by leveraging external knowledge sources, both inbound and outbound. This research employs a literature review method, analyzing previous studies indexed in the Scopus Database and processed using the VOSviewer software. The findings indicate that open innovation, which utilizes inbound external knowledge sources such as markets, knowledge, open resources, and cooperative networks, has already been adopted. However, the utilization of knowledge has not yet been fully optimized as a foundation for producing goods and services due to limitations in human resources. Similarly, outbound open innovation derived from technology has been implemented, although the utilization of patents remains suboptimal. This study recommends that village-owned business entities evaluate their operations, particularly in the utilization of knowledge and commercialization to ensure sustainability. Furthermore, this research contributes to the discussion on open innovation by emphasizing that leveraging market-driven knowledge, openness, cooperation, and technology should be a major focus for VOE in the context of business activities, where increased public participation plays a crucial role in sustainable economic development.

1. Introduction

Community empowerment through village enterprises is an effort by villages to build and enhance their economic welfare. This approach is not limited to Indonesia but is also observed in countries such as Malaysia, Pakistan, Portugal, Germany, Switzerland, China, and Eastern Ethiopia, where village enterprises have been sustained as part of village development and poverty alleviation strategies. These efforts are particularly crucial in the face of rapid and competitive changes (disruptions) in the modern world ([1,2,3,4,5,6,7,8,9,10]).

The emergence of the community empowerment paradigm stems from past failures in development concepts. The neoclassical economic paradigm, which prioritizes industrialization and spillover effects, has proven inadequate in ensuring fair and equitable welfare distribution [11]. Consequently, the concept of community empowerment emerged as an effort to address the shortcomings of the neoclassical economic model.

Innovation plays a crucial role in the rapid development of organizations in the modern era [12]. Unlike in previous eras, today’s innovation disruptions introduce new platforms, technologies, business models, and competitive landscapes. Business actors and governments must proactively respond to these dynamics to ensure sustainability. Adaptability is the best strategy to overcome the challenges posed by innovation disruptions. Businesses must remain agile and responsive to change to maintain competitiveness and long-term sustainability [13].

Economic prosperity and national welfare are not inherited but created. A country gains a competitive advantage when its companies and industries are competitive. The ability to innovate and improve competencies determines a nation’s competitiveness. Prosperity is not solely dependent on natural resources or geographical advantages; it also relies on the capability to manage resources effectively and create competitive products and services through innovation. Successful nations foster conducive environments that enable businesses to produce competitive goods and services at regional, national, and global levels [14].

Given Indonesia’s vast territorial expanse, the government must ensure that development occurs harmoniously across all regions. Regional development equity is essential for strengthening local capabilities. One of the key strategies to enhance welfare across regions is the enactment of village-related regulations. Villages play a strategic role as frontline institutions in governance and development [15]. One of the significant and tangible changes brought by these regulations is granting villages autonomy, allowing them to organize and manage their own economic activities based on community initiatives [16,17]. Consequently, rural community empowerment has become a fundamental strategy in fostering self-reliance, economic growth, and social progress [18,19]. The government’s strategy for village empowerment includes allowing village administrations to establish VOEs. Additionally, villages are encouraged to build independence by fostering active public participation. Government regulations create opportunities for communities to enhance their local economies through the utilization of village assets, value-added initiatives, and the digital ecosystem. The establishment of VOEs represents an innovative approach to economic development [20,21]. The increasing number of VOEs indicates strong community interest in utilizing local resources to improve welfare and empowerment. However, VOEs must also recognize the challenges posed by business competition in the digital and globalized era.

The main challenges faced by VOEs include limited human resource competencies, narrow business scope, and a lack of knowledge, all of which contribute to low public participation in VOE management in several regions [22]. Although VOEs have started generating better gross revenue, profits remain insignificant and have yet to make a substantial contribution to village income. Moreover, employment absorption from VOE business units remains low, failing to significantly reduce unemployment [23]. Capital limitations and human resource constraints are the primary issues that need to be addressed. Effective strategies for community empowerment and innovation must align with local conditions to enhance economic growth and public welfare in rural areas [24].

Community empowerment involves optimizing all available resources to foster sustainable development. It entails three key aspects: (a) creating an enabling environment for community growth, (b) empowering individuals and communities to develop their potential, and (c) ensuring the sustainability of empowerment initiatives [25]. Ultimately, empowerment is a social and individual process that recognizes personal abilities, creativity, competence, and entrepreneurial freedom [26,27].

Unemployment, poverty, and inequality remain major challenges in rural development [28,29]. There are three critical aspects of empowerment that must be addressed: strengthening institutional capacity, promoting economic participation, and integrating socio-cultural factors into community development [30]. Currently, 91% of VOEs in Indonesia are in the pioneering and developing stages, 7.7% are in the mature stage, and only 1.3% have reached an advanced level. Less than 2% of VOEs operate independently, indicating the need for further support and encouragement to enhance economic contributions and village welfare. Developing VOEs remains a significant challenge in rural communities [31].

Research findings indicate that the implementation of open innovation in business institutions relies on both internal and external knowledge sources. Companies must depend on external knowledge to drive innovation amid increasing business competition. Relying solely on internal knowledge is insufficient [32,33]. Macro, meso, and micro institutions require interconnected mechanisms linking knowledge infrastructure and technology. Such integration is essential for applying open innovation in VOEs [34].

Yunus E.N.’s research [2] examines the innovation practices of service companies in one of the emerging markets that focuses on innovation strategies. He examined the innovation implemented by service companies in Indonesia, especially comparing closed and open innovation strategies. He also investigated the influence of innovation strategies on company innovation and examined the impact of company innovation on company performance. The results showed a significant shift towards open innovation, as indicated by the increasing dependence on external sources of innovation and the extent of external collaboration over the years. Open innovation strategies have been shown to have a positive effect on innovation. Further innovation has a positive impact on performance, while the size of the company also affects the relationship.

A study on service company innovation strategies in emerging markets highlights the shift towards open innovation, demonstrating increasing reliance on external innovation sources and extensive external collaboration. Open innovation strategies have a positive impact on company innovation and overall performance. Additionally, company size influences the relationship between innovation strategy and business outcomes.

This research highlights the challenges and obstacles in implementing open innovation in VOEs to promote community empowerment and achieve sustainable public welfare in villages. Using a place-based perspective, this study provides a holistic understanding of rural community empowerment [32]. It offers two main contributions to the broader discussion on open innovation in community empowerment: first, proposing a participatory and collaborative public empowerment model to strengthen collaboration between villagers and various stakeholders for local economic development; second, contributing valuable insights to research and policymaking related to open innovation in the VOE context.

2. Literature Review

2.1. Community Empowerment

Community empowerment is considered an effort to enhance the capacity of a community, enabling its members to have a voice in planning and decision-making processes. Empowerment is both a consequence and a process of development at the individual or community level, either granted by those in power or gained by those who previously lacked influence [35].

At the individual level, empowerment represents the ability of individuals to gain control over their lives, thereby facilitating shifts in power that improve societal well-being. At the community level, empowerment refers to the process by which a community collectively improves its condition. Community empowerment enables a population to exert greater control over its territory, requiring a structured organizational infrastructure to support this process. Organizations play a crucial role in allowing community members to manage their own lives [36,37].

The policies that serve as guidelines for decision-making and ongoing activities are fundamental to community empowerment. These principles provide a solid foundation for implementing empowerment initiatives. The community empowerment strategy follows three key directions: (a) advocacy and empowerment, (b) fostering community participation as part of decentralized governance, and (c) modernization through structural changes in political, cultural, and socio-economic domains driven by community involvement [25]. Active community participation is essential in achieving improvements in economic and social conditions [38]. This perspective introduces a new format for community empowerment—one centered on people, participation, empowerment, and sustainability [39].

Self-empowerment involves optimizing all available resources within society to enable individuals to sustain and thrive independently. Community empowerment can be assessed through several dimensions: (a) creating a conducive environment for development (enabling), (b) enabling individuals and communities to explore their potential (empowering), and (c) protecting all elements involved in the empowerment process (maintaining) [25]. Similarly, Badaruddin (2020) identifies three aspects of empowerment: strengthening institutional capacity, fostering economic participation, and integrating socio-cultural development [30].

The primary achievement of community empowerment is to motivate and mobilize communities that experience disadvantages or lack resources. Such disadvantages may stem from internal or external conditions. Once empowered, communities are expected to achieve prosperity, self-sufficiency, and autonomy in fulfilling their needs. Self-sufficiency extends beyond economic factors to include intellectual, social, and cultural dimensions, as well as political autonomy [40].

According to Hasan (2018), the creative economy is a central concept in economic empowerment [41]. The presence of Village-Owned Enterprises (VOE) has successfully contributed to the creative economic sector. Empowerment initiatives that prioritize creativity in economic activities must be continuously developed and refined through innovation. The creative economy represents a sustainable model for community empowerment, leveraging not only traditional resources but also intellectual capital, ideas, talent, and creativity within individuals and communities. The creative economy thus serves as an optimal approach to strengthening community empowerment [42].

According to Ratna (2016), VOEs have distinct characteristics as community-driven enterprises [43]. The collective nature of village life incorporates several traditional values: (1) mutual respect and non-discrimination across ethnic, racial, and religious lines, forming a social capital foundation; (2) accountability in all aspects of governance and economic management; and (3) the protection and distribution of local economic benefits to provide community services. These three elements form the foundation for establishing and operating VOEs.

The effective implementation of VOEs requires several key conditions: (1) social capital in the form of trust and cooperation, (2) village deliberation as the highest decision-making forum in village economic development, (3) VOEs as enterprises integrating social and economic functions through community and government collaboration, (4) public services and economic activities centralized within VOEs, (5) VOEs as platforms for enhancing managerial competence, entrepreneurship, governance, leadership, and public trust, and (6) the transformation of village resource utilization into structured VOE activities. These aspects highlight the role of local culture and internal organizational structures in VOE formation. However, the small-scale nature of VOEs and their incomplete integration into broader economic ecosystems indicate that they have yet to compete effectively on a global scale.

Ife (2013) emphasizes that public empowerment depends on the availability of community-owned resources, opportunities for change, and the competence, knowledge, and creativity needed to participate in problem-solving and improve living standards [44]. The existence of power imbalances and social inequalities fosters collective public interest in driving social change.

Community empowerment through Village-Owned Enterprises, as viewed by Jim Ife, should leverage six key societal strengths: (1) the ability to make independent personal choices, (2) the capacity to identify and meet individual needs, (3) freedom of expression, (4) institutional capabilities, (5) access to economic resources, and (6) autonomy in production processes. By capitalizing on these strengths, VOEs can serve as effective mechanisms for sustainable community empowerment [44].

2.2. Open Innovation

Open Innovation (OI) is a series of processes conducted by a business organization to acquire and commercialize innovative and creative thinking based on both internal and external sources, as well as customer demands. Open innovation provides significant utility for organizations. For instance, marketing that leverages viral online moments can reduce research and development costs while improving market research accuracy and enhancing business productivity. Henry Chesbrough introduced the concept of open innovation in 2003 as a novel approach that organizations can use to integrate external ideas and sources with internal resources. Additionally, open innovation fosters collaboration with external parties for product commercialization. Internal sources such as employees, and external resources including suppliers, customers, competitors, and technological advancements, all contribute to open innovation activities. Compared to closed innovation, which relies solely on internal knowledge and information in an independent innovative environment, open innovation actively seeks innovative ideas from external sources and integrates external knowledge for organizational growth.

Open innovation consists of two key activities. The first is inbound open innovation, where businesses seek external knowledge sources to supplement and enhance internal research and development efforts. Inbound open innovation includes utilizing technology, engaging customers and markets, fostering external collaborations, outsourcing R&D, and acquiring intellectual property licenses [45].

Mortara et al. (2011) stated that open innovation involves integrating external knowledge based on science, markets, open sources, and cooperative activities with internal resources [46]. Organizations can combine external partnerships with new sources of power, allowing them to maintain focus on existing or newly created markets.

The second activity is outbound open innovation, which involves utilizing technology and commercialization. This includes acquiring and exploring innovative technologies. Outbound open innovation connects through commercialization stages, where businesses outsource certain aspects to external organizations that are better suited for technological utilization and commercialization [47].

The underutilization or complete lack of external knowledge sources is one of the key challenges faced by small and micro enterprises, leading to stagnation and limited innovation capabilities. Organizations that are open to utilizing external knowledge sources can seize innovative ideas and models that enhance technological effectiveness [48]. Organizations that do not embrace external knowledge sources risk experiencing delays and declines in innovative productivity, while competitors continue to advance their innovative capabilities.

To remain competitive, businesses must collaborate with external knowledge sources, as this is a critical factor in increasing innovation levels. Focusing solely on internal knowledge efficiency is insufficient. External knowledge sources enable organizations to complement their internal knowledge base. One effective strategy for leveraging innovative ideas in innovation is to integrate external knowledge sources. Establishing direct relationships with external partners such as customers, suppliers, competitors, research institutions, and universities is a key strategy for acquiring external knowledge [49,50]. Du et al. (2014) categorize external knowledge sources into two types: (1) market-based knowledge sources, including suppliers and customers, and (2) knowledge-based sources derived from research institutions and universities [51].

According to Chesbrough (2006), internal knowledge sources are derived from organizational data and insights [32]. Accessing and analyzing such information allows organizations to evaluate problems, improve company performance, and identify new opportunities. Conducting research and development or analyzing a company’s historical progression can serve as a continuous improvement mechanism. Employee competencies play a crucial role in generating new knowledge. Thus, internal training and education programs are necessary to enhance employee knowledge and expertise.

Business organizations integrate research and development to obtain knowledge that influences open innovation adoption and technological advancements [52]. The utilization of internal technology provides a competitive advantage by leveraging scarce natural resources efficiently. Implementing internal research and development is crucial for open innovation success. The openness framework allows companies to stimulate research investments, fostering synergy in innovation [32].

According to Doloreux (2015), open innovation should complement, rather than replace, research and development activities [53]. Internal knowledge acquisition is essential for strengthening an organization’s knowledge base and preparing for external knowledge integration. An organization’s ability to utilize and selectively adopt new knowledge should be implemented gradually, advancing from one level to the next. Research and development play the most direct role in fostering innovation.

Internal knowledge originates from employees and business owners. Knowledge sharing among employees enables the exchange of experiences and discussions that generate innovative ideas. Motivated employees contribute to higher-quality analysis and the development of innovative ideas, benefiting the organization. Implementing innovative ideas leads to experimentation and innovation trials within companies [54].

2.3. Sustainable

The concept of development has evolved over time into a complex process. The development paradigm of the early 1980s emphasized equitable economic growth to achieve social welfare. However, in practice, prioritizing economic growth alone has led to unforeseen environmental challenges, including ecological crises, agrarian conflicts, and rural sustainability issues [55]. These crises highlight that development focusing solely on economic factors, without considering the environmental and social dimensions, results in negative consequences for both the environment and society.

Despite ongoing national environmental strategies that aim to integrate sustainability principles, public awareness of the relationship between the social and economic dimensions of sustainable development remains low [56]. Key factors influencing paradigm shifts in development include increasing globalization and privatization, which have reduced government intervention. This shift has redefined human roles in development, emphasizing global economic dynamics and private sector interests.

The growing awareness of the need to balance economic, social, and environmental issues in development continues to rise. Environmental concerns have gained attention, and sustainable development has become a central topic of discussion. The concept emphasizes integrating economic, social, and environmental dimensions into development strategies to achieve a more balanced approach for both the environment and societal well-being. Community-centered development emphasizes empowerment and active participation [57].

The human-centered development framework prioritizes public participation and empowerment in development efforts. However, economic growth remains the dominant factor in development policies. Technological advancements and increasing consumption levels have intensified environmental impacts. Rural areas play a critical role in achieving balanced regional development, necessitating comprehensive evaluations that contribute to sustainable development [58].

Community participation and local policy initiatives play fundamental roles in economic activities and societal welfare. Rural environments offer economic and structural opportunities for entrepreneurs, fostering regional transformation and entrepreneurship. Village-Owned Enterprises (VOEs) exemplify local entrepreneurship by enhancing community livelihoods and village self-sufficiency. Unregulated economic growth poses long-term environmental risks. Environmental degradation threatens vulnerable communities, particularly in rural areas, by reducing agricultural productivity and worsening public health conditions. Therefore, integrating economic, social, and environmental development strategies is essential for mitigating and preventing adverse effects [59].

Sustainable community empowerment is an informal development approach that fosters behavioral change, motivation, awareness, knowledge, skills, and the exchange of information. It is an effective tool for addressing environmental and sustainability challenges. Unlike government-controlled empowerment programs, sustainable community empowerment emphasizes active public participation in problem identification and self-development toward independence [60].

In Indonesia, participatory and independent sustainable community empowerment has not yet become a driving force for development. Government programs that overlook public trust and belief systems have contributed to declining development effectiveness, particularly in rural areas. For sustainable development initiatives to succeed, it is crucial to respect and integrate local wisdom as a driver of innovative ideas across various sectors. Such innovations facilitate government development efforts, making them more efficient and effective.

3. Methods

This study examines various scientific research articles published in international journals that explore rural community empowerment through open innovation as a sustainable Village-Owned Enterprise (VOE) strategy, with an emphasis on expanding other VOEs. Furthermore, this research aims to conceptualize a rural community empowerment model as a strategy to improve societal welfare through VOEs. The issue of community empowerment is analyzed based on a thematic review, a conceptual framework, and research findings indexed in the Scopus database. The selection process for papers in this study follows a two-step review: (1) article discovery and (2) topic mapping.

The literature review is conducted using the Systematic Literature Review (SLR) method. This approach is chosen due to the extensive research on VOEs, and systematic literature reviews are often conducted to examine literature that shares similarities in research questions and problems. This methodological or ontological similarity can be identified through structured analysis [61]. The SLR method is employed to assess, evaluate, and interpret research comprehensively, ensuring its relevance to identified problems, phenomena, and themes [62]. SLR provides a structured methodology for searching filtering, interpreting, and reporting novel findings from relevant publications on the research topic.

This study focuses on community empowerment through open innovation as a sustainable VOE strategy in Indonesia. Given this research theme, the study addresses three key questions:

• What are the main themes in previous research on VOEs?
• What research methods and analytical approaches have been used in past studies?
• What are the key findings from previous research on this phenomenon?

The SLR process is designed to identify relevant journals, followed by the selection and classification of literature that aligns with the research theme, focus, and methods. The research questions formulated in this study serve as a reference framework for analyzing the proposed topic. The selected articles are sourced from the Scopus database, which includes internationally recognized scientific journals.

The search for relevant articles is conducted using the keywords: “Empowerment”, “Open Innovation”, and “Sustainability”. The search criteria include titles, abstracts, and keywords, ensuring relevance to the research theme. The study employs inclusion and exclusion criteria to refine the search and select only the most pertinent studies. These criteria are detailed in

Table 1. Inclusion and exclusion criteria.

Criteria	Inclusion	Exclusion
Population (P)	Community empowerment	Besides community empowerment
Intervention (I)	Innovation, sustainable	In addition to open innovation, Sustainable
Comparator (C)	All countries	There are not any
Outcome (O)	VoE management that improves welfare and society and is sustainable	VoE management that does not improve community welfare and is not sustainable.
Study design	All study designs	There is none
Language	Indonesian English	Besides Indonesian, English
Year	2017 to 2022	Outside of 2017 to 2022

.

In the initial stage, article selection is conducted using the Population, Intervention, Comparison, and Outcome (PICO) framework. Documents meeting the inclusion criteria undergo multiple stages of consideration for data extraction and analysis. Initially, three hundred and twenty-two articles are identified, with a subsequent exclusion process reducing the number to seventy-nine articles. Further screening based on titles and full-text relevance results in a final selection of nine articles (n = 9) aligned with the literature review topics.

The next stage involves analyzing the selected studies using a meta-analysis aggregation method. This approach is employed to elaborate on themes related to the challenges and barriers in sustainable VOE management. It also aids in developing a conceptual framework and synthesizing findings through the summarization of all research outputs. The analytical process is supported by the VOSviewer software version 1.6.17 which visualizes research trends and relationships. The selection process flow for the articles is illustrated in the following Figure 1.

4. Results

The selection process results, processed using VOSviewer, enable thematic mapping based on clustered groups (see

Table 2. Cluster mapping based on VOSviewer.

Cluster	Concept Name	Amount
Cluster 1	Actor, business model innovation, challenge, Change, city, community, community empowerment, Concept, diffusion, food, frugal innovation, Governance, grassroots innovation, implementation, Initiative, open innovation, opportunity, organization, Person, perspective, platform, policy, Power, problem, relation, social innovation, Society, sustainability transition, sustainable innovation, System, transformation, transition, type, way, world	36
Cluster 2	Creativity, data, design methodology approach, employee, hypothesis, industry, innovation performance, innovative behavior, innovative work behavior, knowledge, knowledge sharing, leader, leadership, mediating role, originality value, Pakistan, psychological, empowerment, questionnaire, relationship, success, transformational leadership, woman	23
Cluster 3	Competitive advantage, economic growth, effect, firm, Indonesia, influence, innovation capability, manager, Performance, service, service quality, small business, Sme, Smes, stakeholder, strategy, sustainable leadership, sustainable performance	18
Cluster 4	Digital economy, technological innovation	2

). Figure 2 illustrates various conceptual relationships derived from cluster density appearances. The color distinctions indicate differentiation among clusters, facilitating the identification of distinct research themes. This visual representation also provides researchers with insights into further study development.

From Figure 2, the identified research themes offer valuable insights for refining the study focus. The results demonstrate an optimal thematic relationship, allowing researchers to explore interrelated topics and correlations with the central research theme. The mapping of relevant research clusters is presented in Table 2 below.

Through the search and selection process using PICO, researchers identified and selected nine articles deemed appropriate and relevant for use as reference material in discussing the research topic. The selected research articles are listed in

Table 3. Research articles based on VOSviewer.

No	Researcher, Year	Title	Method	Results
1	Ref. [63]	Open-Innovation Practices: Diversity in Portuguese SMEs	A quantitative study was conducted considering a sample of 187 Portuguese Small Businesses.	Outside-in practices tend to be the most privileged in the context of small businesses in Portugal. In this model, innovation competencies are sought through integration with external knowledge (e.g., clients, suppliers, universities). Most seek innovative solutions to opportunities in the company, in particular by bringing technology and knowledge from outside into the company. lack of resources and difficulties in integrating knowledge generated from open innovation practices Open innovation requires organizations to employ individuals with the skills to integrate internal and external knowledge
2	Ref. [64]	Framework Proposal for Open Innovation Implementation in SMEs of Regional Innovation Systems (RIS)	Constructivist methods were used in developing a framework that represents the open innovation implementation process.	There are 5 framework indicators that represent the implementation of open innovation for micro businesses: 1. Leadership indicators 2. Internal capacity for innovation indicators 3. Network and relationship indicators 4. Strategy indicator 5. Culture indicators.
3	Ref. [65]	Empowerment Model for Sustainable Tourism Village in an Emerging Country.	This study applies qualitative methods. Data collection was conducted through interviews, observations, and focus group discussions in Central Java.	Collaboration and support between stakeholders are essential for the sustainability of rural tourism. This collaboration and support will be an effective strategy for tourism development by implementing several approaches, namely the following: 1. Sectoral Approach 2. Institutional and Human Resources Approach 3. Information Technology Development Approach
4	Ref. [66]	Community Empowerment and Sustainable Tourism Development (STD: The Mediating Role of Community Support for Tourism.	Using partial least squares (PLS) analysis, an empirical survey study was conducted, and data were collected from 353 local residents in the northern region of Pakistan.	The results of the data analysis showed that there was an influence between community empowerment and STD initiatives, and community support for tourism was proven to partially mediate the relationship between the two variables. Community empowerment has been identified as a key driver in developing sustainable tourism for the long-term economic, social, and cultural life of community members. Community empowerment gives power to local residents to make decisions in implementing STD plans and policies, thereby improving community welfare.
5	Ref. [67]	Young farmer empowerment model based on freshwater fishery business in Southeast Sulawesi Province, Indonesia.	Data collection was carried out through survey. Information was analyzed using the Exponential Comparison Method	- The government plays a big role and has responsibility in determining the sustainability of fisheries development. Young farmers’ agribusiness activities can be improved by strengthening external support from the government, family, community, and market. The most prioritized system is the development of a marketing network system through social media and the business world
6	Ref. [68]	Empowerment and Tech Adoption: Introducing the Treadle Pump Triggers Farmers’ Innovation in Eastern Ethiopia	This study applies the qualitative method	- Designing pilot projects based on farmer needs, building farmer capacity to maintain or modify the technology, and farmers’ ability to experiment independently with the technology are important factors in the adoption and diffusion of new technologies. The new technology has spread rapidly to over a hundred households for three reasons. First, farmers’ innovative modifications to the original digging technique addressed these issues. Second, local ownership of the new technology made the modified technology affordable and accessible to the majority of households. Third, the innovation spread organically without external support and ensured its sustainability.
7	Ref. [69]	Power and empowerment of grassroots innovations for sustainability transitions: A Review.	This study uses a systematic literature review of 88 studies on grassroots innovation for sustainability transitions using the lens of power and empowerment.	Grassroots innovation for sustainability transitions is determined to consist of the following: 1. Capacity and ability of actors. 2. Impact of power implementation on socio-technical innovation for sustainability. 3. Historical constitution and power relations. 4. Empowerment and empowerment of actors.
8	Ref. [70]	Society Empowerment Through Indigenous Agriculture Record Potential: Sustainability of food Self-Sufficiency Goals.	This study uses a survey method. The methodology uses three analysis tools: Location Quotient, Growth Ratio Model, and a combined LQ and Growth Ratio Model.	Sustainable agriculture must be pursued in Pasuruan Regency. Sustainable agriculture methods are based on three principles of sustainability, namely the following: long-term survival of commercial companies (profit), long-term human social survival (people), and long-term sustainability of natural ecosystems (planet).
9	Ref. [5]	SME Engagement with Open Innovation: Commitments and Challenges towards Collaborative Innovation.	This study used cross-sectional data from a survey of 376 Malaysian small businesses. The simple random sampling technique was used, and PLS-SEM regression was used to test the related hypotheses variables.	Collaboration across industries is more desirable, and will force organizations to seek different approaches to respond to customer needs. Open innovation will encourage organizations to adopt models and experience the positive impacts of external collaboration. Internal collaboration is needed to identify, adapt, and develop its absorptive potential. Policy makers should design policies to shape collaborative practices that include higher education and research institutions. Policy makers need to identify and improve the limited financial resources of small businesses through the necessary support to coordinate with external partners.

.

Based on the selected articles that meet specific criteria, this study identifies open innovation as a sustainable model for business development and community empowerment. Effective community empowerment requires proper management and implementation through seven key principles: restoring community potential, full societal participation, collaboration with the community, a culture of cooperation, partnership, education-based community engagement, and decentralization.

In the process of developing products or services, VOEs must rely on external research and development due to their limited internal R&D facilities. This limitation prevents VOEs from competing effectively in local and global markets with high-quality goods and services. Therefore, understanding the concept of open innovation is crucial for ensuring its successful implementation. Establishing external collaborations and fostering employee enthusiasm for innovation requires a structured evaluation of open innovation, particularly among VOEs. Key organizational challenges include employee readiness and operational concerns. While open innovation studies often focus on technology-oriented companies, research has demonstrated that open innovation is equally important for small enterprises such as VOEs. Many studies confirm the benefits of open innovation, particularly through collaboration between VOEs and larger companies to produce semi-finished goods.

VOEs must integrate with external industry partners to enhance their innovative performance. One of the most critical challenges companies face in establishing and maintaining collaborations is securing intellectual resources, ensuring external connectivity, and accessing relevant networks. Due to their limited capacity to source knowledge, VOEs are encouraged to adopt new methods to overcome market-driven challenges and adapt to shifting economic forces. Many small companies have significantly benefited from open innovation activities.

Open innovation is defined as the process of acquiring and utilizing external knowledge and technology to advance innovation in production and market positioning. It represents a paradigm shift where organizations increasingly rely on external knowledge sources to remain competitive. The traditional closed innovation model is no longer viable for developing new products and services, as the innovation landscape has drastically evolved. Therefore, businesses must adopt alternative innovative approaches, exploring both internal and external strategies to develop new tools and obtain knowledge from external sources. The strategic acquisition of technological knowledge allows organizations to leverage advanced capabilities beyond their internal boundaries. This approach, known as breakthrough technology, facilitates external knowledge acquisition to drive technological development. Open innovation enables VOEs to operate at full capacity, enhancing their technological expertise and competitiveness in both domestic and international markets. To attract greater foreign investment and stimulate economic growth, VOEs must commit to adopting open innovation strategies. However, VOEs currently exhibit insufficient creativity, motivation, and learning capabilities to fully embrace open innovation.

4.1. The Role of Human Resource Competence in Open Innovation

Human resource competence is essential for VOEs. Competence encompasses expertise, values, skills, attitudes, understanding, behaviors, motivations, resource management, and situational awareness, applicable to individuals, networks, organizations, or models that support sustainable development [71]. The human factor plays a crucial role in determining an individual’s maturity level in contributing to organizational goals. Human resource development, including training, experience, and education, is necessary to build qualified individuals capable of demonstrating their full potential. Employees have a responsibility to manage organizations effectively, making them integral to organizational success. Capacity-building efforts must align with skill enhancement initiatives to improve performance, fulfill primary duties and functions, and ensure sustainable competence development.

Currently, various industries, including the food and beverage sector, technology, and pharmaceuticals, have adopted open innovation strategies. The use of external knowledge sources to implement open innovation presents challenges in enhancing its effectiveness [47]. Studies indicate that open innovation positively impacts small businesses, enabling them to achieve performance levels comparable to larger companies [72].

External knowledge sources derive from market-driven inputs such as suppliers, customers, and competitors, as well as open-source information [73]. These sources significantly influence innovation, reinforcing prior research by Fukugawa (2006) [74], Lefebvre et al. (2015) [75], and Chen et al. (2016) [76]. Establishing collaborative relationships with external knowledge providers enhances a company’s innovation capabilities and facilitates the introduction of innovative ideas. The utilization of external knowledge can be achieved through partnerships with public research institutions and universities, which play a vital role in technological and scientific advancements. These institutions contribute to developing and disseminating innovative knowledge, offering valuable insights that improve corporate innovation capabilities.

Najib and Kiminami (2011) concluded that small- and medium-sized enterprises exhibit unique innovation characteristics, where the relationship between innovation outputs and performance is closely interlinked [77]. From these observations, it can be inferred that the open innovation process in VOEs is necessary to achieve sustainable community empowerment.

4.2. The Creative Economy as a Model for Sustainable Empowerment

According to Hasan (2018), the creative economy is a central framework for economic empowerment. VOEs have demonstrated success in fostering creative economic sectors, benefiting both individuals and organizations [41]. Societal empowerment initiatives that prioritize creativity in economic activities must be continuously developed and refined through innovation. The creative economy represents a sustainable model for community empowerment, emphasizing the utilization of creativity-based economic principles. This approach leverages not only innovative resources but also a broader spectrum of intellectual capital, including ideas, talents, and community-based creativity. As noted by Purnomo (2016), the creative economy serves as an optimal mechanism for enhancing community empowerment [65].

4.3. Measuring the Success of Community Empowerment

Sumodiningrat (1999) proposed five key indicators to measure the success of community empowerment initiatives [78]:

• A reduction in the number of individuals living in poverty.
• Continuous utilization of existing resources for income generation and development.
• Increased community commitment to improving the welfare of impoverished families within their localities.
• Strengthened synergy and utility among community groups, demonstrated by greater independence in productivity, financial capital, administrative systems, and expanded social interactions.
• Enhanced fulfillment of basic social and economic needs for underprivileged populations, contributing to income equality.

By incorporating these indicators, organizations and policymakers can effectively assess the impact of community empowerment programs and ensure sustainable economic and social development. Open innovation, coupled with strategic human resource development and creative economic initiatives, offers a promising pathway for VOEs to enhance their contributions to rural communities and drive sustainable growth.

Indonesia has adopted the Sustainable Development Goals (SDGs) as an extension of the Millennium Development Goals (MDGs), aiming to eradicate poverty while encompassing five key dimensions: people, planet, peace, partnership, and prosperity [79].

5. Discussion

5.1. Community Empowerment

From the literature review in the previous chapter, the researchers will try to formulate a development of a community empowerment model in VOE that utilizes the foundation of open innovation. As previously stated, the community empowerment model in the form of a company in the village has been used to improve community welfare and improve the economy, which can reduce poverty. Rural areas are areas that have the potential to drive a country’s economy. Empowerment itself is considered a participatory development process through forgotten or oppressed individuals and groups who gain power over their lives and environment. In addition, empowerment is also necessary in order to obtain valuable resources for basic needs and to work towards important goals of the community. This is in accordance with what was conveyed by Jim Ife (2013) [44] and Luttre, Quiroz, and Bird (2009) [35].

The purpose of community empowerment through the formation of VOE is to strengthen the economy and improve the welfare of the village community. VOE is a village business institution managed by the village community together with the village government. VOE is formed based on the potential owned by the village and in accordance with the needs of the community in solving its problems. The management of a VOE requires an effort to empower the community, carried out by individuals in the community and in the central, provincial, and regional governments as well as in the private sector and university research institutions. This is an element that must be accomplished as stated by Adi (2012) as a process and with the direct active contribution of all those involved [38]. The active role of the community is a manifestation of efforts to improve the economic and social conditions of the community. The flow of developing a community empowerment model in a concise and comprehensive manner can be seen in Figure 3.

The process of developing a community empowerment model through the formation of the VOE above is created by utilizing the “ässet” owned by the village. The definition of “ässet” according to Fitriawan (2020) [80] is a resource owned by the village which can be material or non-material. Assets in the form of material can be potential natural resources, topographic elements of the area, or the physical condition of the area’s location. Non-material elements can be in the values that exist in the society, such as solidarity, mutual cooperation, concern, intellectual intelligence, honesty, and creativity. All of these are assets used by the community in an empowerment action program.

The utilization of the potential of local assets is used and developed to confront and solve problems faced by the village. By utilizing these local assets, the resolution of problems is in accordance with the needs of the community where the empowerment location is implemented (Fithriyana, 2020 [81]). By utilizing the potential of these assets, the community is given the freedom to overcome the problems they face. This opportunity will create trust and independence for the empowered community (Alhamuddin, Aziz, Inten, & Mulyani, 2020 [82]).

Village community empowerment is for a group that has the potential to face problems in their village and can meet needs that are in accordance with the character of their area, including improving the economic level, not for a group that has no potential. In fact, village communities that are not yet empowered often struggle with limited access and are not optimal in maximizing resources that can be utilized.

Community empowerment in the village requires empowerment actors, in this case “actors”, who have a role as drivers to invent the resources and potentials owned by the Wangi Sagara village community. In addition, actors are liaisons between resources and potential in the community (assets) with empowerment models that are in accordance with the local wisdom conditions of their area. In addition, actors also act as liaisons who function to collaborate with partners, both with the village, the regional, and the central governments. These relationships with various partners are necessary in order to develop and increase the existing potential into a wider and more sustainable network (Rahman, 2018 [83]).

Community empowerment begins with identifying the problems faced and trying to create the solutions or action steps that are needed for village residents. There is a sense of awareness that arises to overcome the problems faced. This awareness is one of the important non-material assets owned by the community to make changes to overcome the actual situations and conditions faced. Without a sense of awareness, this empowerment does not create the desire to try to overcome the problem. The empowerment carried out begins with the preparation stage. In this stage, the problems faced are identified, and the use of existing assets is determined, such as through the analysis of natural resource potential, analysis of financial potential and human resource capacity, analysis of potential regional mapping or typology, and fulfillment of administrative requirements. After all elements of the preparation stage have been fulfilled, a deliberation process is proposed which is attended by all elements of society. The next step taken in the deliberation meeting is a discussion of what program is right to overcome the problem in accordance with the needs of the village community. Through several discussions, it is finally decided to form a Village-Owned Enterprise. The empowerment above is empowerment that utilizes the basic potential assets that are owned by village residents. By utilizing potential through collaboration, cooperation, solidarity, and mutual cooperation, intelligence emerges which produces ideas for product innovation and new service victories (Suardi, Mallongi, & Baharuddin, 2019 [84]).

The West Java Provincial Government has implemented an empowerment strategy aimed at creating a harmonious society through innovation and the development of competitive and sustainable Village-Owned Enterprises (VOEs). The Community and Village Empowerment Service under the West Java Regional Government facilitates activities that empower communities. One notable innovation is the Village Gate program, part of the Village Development Movement, which includes twelve priority programs. These priority programs are as follows: (1) One Village One Company, (2) Village Patriot, (3) Chief Executive Officer (CEO) VOE, (4) One Village One VOE, (5) Digital Village, (6) Tourism Village, (7) Village Advocacy, (8) Village Infrastructure, (9) Champion Village School, (10) Sapa Warga, (11) Posyandu Champion, and (12) Champion Village Standby Car.

The VOE CEO program serves as a role model that can be replicated to accelerate VOE growth and development on a national scale. The VOE CEO acts as a village companion, driving change management and developing VOEs in accordance with village characteristics. This program focuses on identifying local potential, addressing community needs, and scaling businesses to generate a broader economic impact at the village level.

Village and VOE empowerment programs not only support the achievement of the Village Development Index (VDI) in West Java Province but also contribute to reducing the number of underdeveloped villages while fostering independent villages. The progress of the West Java Province VDI from 2018 to 2023 is presented in

Table 4. Village Development Index (VDI), 2018 to 2023, in West Java Province.

Indicator	2018	2019	2020	2021	2022	2023
Independent Village	37	98	270	586	1.130	1828
Advanced Village	695	1.232	1631	2.102	2511	2553
Developing Village	3.603	3.656	3.290	2606	1671	930
Underdeveloped Village	929	326	121	18	0	0
Very Underdeveloped Village	48	0	0	0	0	0

Source: West Java Community and Village Empowerment Service (DPMD) 2023.

.

Many VOEs have yet to achieve optimal functionality. They require continuous support and guidance rather than being left to operate independently. The development of VOEs is significantly influenced by external (macro), institutional, and individual (human resource) factors [55]. Although VOEs generate economic benefits, their impact extends beyond financial outcomes to broader social benefits that enhance public welfare.

Referring to the types of business activities commonly undertaken by VOEs in Indonesia, their operations include banking, trading, renting, service provision, brokerage, and contracting. The specific business classifications are outlined in the following

Table 5. Types of VOE Niagara businesses.

No	Type of Business	Information
1	Renting	Kiosk and street vendor stall rental business
2	Banking	Savings fund for business borrowing (DSP)
3	Brokerage	Installment service of business consumer goods
4	Serving	Management of business trash, internet services
5	Trading	Sales of business products, garbage, and bottled water
6	Contracting	Partnership business pattern

Source: VOE Niagara 2023.

.

Profit is one of the main indicators that must be achieved to maintain business continuity and continuity for consumers, namely in fulfilling the needs of products or services by obtaining satisfaction. The financial condition for the last 3 years has shown very good performance. This can be seen in

Table 6. VOE performance from year 2021 until 2023 (in rupiah).

No.	Indicator	Year 2021	Year 2022	Year 2023
1	Gross sales	4,414,354,673	4,634,504,299	4,740,449,075
2	Net profit	2,846,737,126	3,184,375,555	3,250,973,948
3	Assets	18,213,380,882	20,162,099,726	21,272,115,051
4	Capital	7,104,968,766	8,039,504,514	9,115,026,737
5	Contribution to village revenue	1,476,101,190	1,502,619,275	1,434,397,965

Source: VOE Niagara process writer 2024.

below.

One of the key strategies for overcoming poverty and underdevelopment while enhancing the dignity of lower-income communities is through community empowerment. The goal of empowerment is to equip individuals with the capacity to uplift their communities. This process must involve strengthening institutions rather than focusing solely on individual members [38]. Public participation and initiative play a crucial role in fostering economic and social progress as outcomes of the broader development process. Every individual within the community should be regarded as an integral contributor to society rather than merely a recipient of assistance [85].

VOEs face unique challenges due to their dual mission of fulfilling both social and financial objectives while developing innovative solutions. Innovation must be driven by individuals within VOEs [69], as individual creativity contributes to an innovation process that generates competitive products and services beneficial not only to VOEs but also to the broader village community. In response to these challenges, VOEs must assess their capabilities in conducting innovation processes that integrate both inbound and outbound external knowledge sources to create innovative products and services. Conceptually, Chesbrough’s open innovation framework [32] provides a useful model for VOEs to adopt open innovation strategies.

5.2. VOE Innovation with Utilization of Sources of External, Inbound Knowledge

VOEs often rely on external research and development (R&D) due to their limited internal R&D capabilities. This limitation prevents them from competing effectively in local and global markets. Therefore, understanding the concept of open innovation is crucial for ensuring successful implementation. Establishing external collaborations, fostering employee enthusiasm, and managing operational success require comprehensive evaluations of open innovation within VOEs. Key factors include organizational challenges, employee readiness, and operational efficiency concerns.

The implementation of open innovation in VOEs involves acquiring ideas, technology, and knowledge from external sources. These sources include customers, suppliers, universities, research institutions, and other organizations. One of the primary objectives of VOEs in adopting open innovation is to introduce new perspectives and ideas while leveraging the expertise and resources of external partners to address business challenges and enhance competitiveness.

Utilizing internal knowledge for product innovation in VOEs has demonstrated the value of incorporating external knowledge sources in developing innovative products and services. These findings confirm that external-to-internal knowledge integration is crucial for VOEs, as it contributes significantly to product and service development. External knowledge sources provide valuable insights that serve as evaluation elements for problem-solving, performance improvement, and market opportunity identification.

According to Elche-Hotelano [86] and Indarti [87], external knowledge can be obtained through employees or business owners. This knowledge plays a vital role in helping VOEs enhance their innovation capacity and achieve long-term sustainability.

5.2.1. Utilization of Sources of External Science-Based Market

The utilization of market-based knowledge sources can significantly contribute to product and service innovation. By leveraging external knowledge from customers, suppliers, competitors, public research institutions, and universities, VOEs can develop innovative products and services. The strategic acquisition of external knowledge allows VOEs to minimize competitive risks through cooperative partnerships [49,50]. VOEs can also use competitor-based knowledge as a source of information or as part of an exchange mechanism to strengthen market positioning [88]. According to Musadar [67], the most prioritized system for external knowledge utilization is the development of marketing networks through social media and business platforms.

Market-based external knowledge can also be employed by VOEs as a cost-reduction strategy. This aligns with the goals and performance indicators of VOEs and small businesses in Indonesia. Given the abundance of external knowledge sources in today’s open markets, the West Java Provincial Government has provided various facilities and incentives for VOEs and small businesses within its jurisdiction.

VOEs can acquire market-driven knowledge either independently or with government assistance at the regional or provincial level. Market knowledge is crucial for product and service development in VOEs and small businesses. Suppliers play a key role by utilizing customer knowledge to identify market demands and preferences. This aligns with research findings [89] that indicate customer- and supplier-driven knowledge as key determinants in corporate innovation decisions. Companies with strong customer and supplier insights gain a competitive advantage by rapidly developing innovations while minimizing the associated costs and risks. The more market-oriented a company becomes, the greater its ability to enhance innovation capacity.

The utilization of external knowledge sources, such as clients, suppliers, and universities, represents an essential aspect of open innovation. This approach is widely adopted by small and medium enterprises (SMEs) in Portugal, where businesses seek innovative solutions by integrating external knowledge sources [63].

5.2.2. Utilization of Sources of External Science-Based Knowledge

Despite its potential, scientific knowledge has not yet been optimally utilized in product innovation among VOEs and small businesses. The adoption of science-based external knowledge remains limited due to the inflated costs associated with acquiring and implementing scientific research findings. This factor restricts its application to large companies or enterprises with the financial capacity to patent innovations or raise public funds for R&D activities.

External knowledge derived from scientific sources is often challenging for VOEs and SMEs due to financial constraints and limitations in human resource capacity. This aligns with previous research by Lefebvre et al. [75] and Baregheh et al., [90] which found that science-based external knowledge is less frequently used for product and service innovation by SMEs.

Almeida [63] noted that SMEs in Portugal recognize two key challenges in implementing open innovation: (1) resource constraints and (2) difficulties in integrating scientific knowledge into business operations. Open innovation requires organizations to employ individuals with the skills to integrate internal and external knowledge. While many innovations originate from structured R&D programs, a huge portion emerges from collaborative innovation processes involving external stakeholders.

The utilization of science-based external knowledge by VOEs remains an ongoing challenge. Currently, VOEs primarily apply existing scientific products and services rather than engaging in direct knowledge creation or development. This challenge is not unique to VOEs in Indonesia but is also faced by SMEs in Europe, including Portugal.

5.2.3. Utilization of Sources of External Science-Based Open Source

Open-source knowledge utilization in VOEs contributes to product and service innovation, although its direct impact has not yet been fully realized. Open-source knowledge refers to freely available external knowledge that can be accessed through trade exhibitions, business conferences, academic journals, scientific discussions, successful entrepreneurs, investors, industry associations, and other open-access platforms.

The rapid advancement of digital technology has made it easier for businesses, including VOEs and SMEs, to access external knowledge through online platforms. Business actors can leverage digital media to generate creative ideas for developing innovative products and services [91,92]. However, research findings vary in assessing the effectiveness of open-source knowledge in innovation. For example, Singapurwoko and Hartono [73] found that external knowledge derived from industry associations can drive product and service innovation. Meanwhile, Musadar [67] emphasized the role of government and financial institutions in facilitating open-source knowledge utilization by providing funding support for youth entrepreneurship.

5.2.4. Utilization of Sources of Knowledge Based on Collaborative Activities

Collaboration plays a crucial role in product and service innovation within VOEs. Collaborative partnerships enable businesses to enhance innovation capabilities by leveraging external expertise. Collaboration involves coordinated efforts to address challenges, making it a fundamental component of innovation-driven strategies. VOEs and SMEs can collaborate with customers, suppliers, universities, research institutions, consultants, investors, and government agencies to develop competitive products and services.

VOE collaborations are typically motivated by mutual interests and shared benefits among stakeholders. These partnerships facilitate access to external resources such as supplier support, customer insights, university research, consulting services, business investments, and government funding. Najib and Kiminami [77] found that external collaboration has a strong correlation with innovation, while Lasagni [93] highlighted the significant role of partnerships with research institutions and universities in driving product and service innovation.

Managers of VOEs and SMEs who establish strong external partnerships significantly improve their organization’s innovative performance. Through external connections, businesses can acquire, adapt, and transform knowledge to enhance their competitive advantage. Effective leadership enables companies to refine processes and implement innovative solutions through strategic collaborations. Managers also play a key role in fostering technological expertise and enhancing operational efficiency. Therefore, VOE and SME managers are encouraged to cultivate relationships with financial institutions, industry players, government bodies, universities, and research centers to facilitate open innovation.

Strategic partnerships between VOEs and external organizations provide mutual benefits for all parties involved. First, partnerships with large, well-established VOEs can serve as an effective resource mobilization strategy. Second, larger VOEs recognize that forming partnerships with smaller enterprises contributes to corporate social responsibility (CSR) efforts and addresses broader societal challenges. In response to increasing stakeholder pressure on social and environmental issues, VOEs are expected to strengthen their community-oriented initiatives.

In addition to collaborating with large enterprises, VOEs can also partner with SMEs. SMEs are known for their creativity and agility in innovation. The public sector also serves as a key VOE partner. Government partnerships provide financial stability and create opportunities for VOEs to participate in public programs aligned with their business objectives. Regional and national governments, as well as private sector entities, can become valuable partners in supporting VOE initiatives.

The success of open innovation is further enhanced by adopting the best practices from leading organizations. Companies are encouraged to implement systematic communication and relationship management strategies with external partners. By strengthening external business networks, VOEs and SMEs can expand their innovation capabilities and maximize potential benefits from partnerships [64].

Given these insights, VOEs should fully leverage strategic partnerships with both private and public organizations. Collaboration and stakeholder support play a crucial role in business development and economic growth, particularly in rural areas. Industry-wide collaboration fosters innovative approaches to meeting customer needs while reinforcing market positioning. Open innovation education enables organizations to adopt new business models and experience the positive impact of external collaboration.

To facilitate effective collaboration, internal stakeholders must develop their knowledge absorption capacity. Policymakers should design regulatory frameworks that promote collaboration between businesses and higher education institutions. Initially, collaborative efforts should focus on organizations that have yet to engage in partnerships, making this a priority area. Additionally, policymakers must address financial constraints through advisory services that support businesses in coordinating with external partners [65].

The future success of open innovation in VOEs, SMEs, and private enterprises will depend on their ability to establish strategic partnerships. While many businesses already leverage external knowledge sources, expanding collaboration efforts will unlock new opportunities and strengthen market competitiveness. This approach aligns with the growing trend of organizational networking, where businesses continuously seek new collaboration models to drive sustainable growth.

5.3. VOE Innovation with Utilization of Sources of External Science-Outbound

The utilization of open innovation from internal to external sources involves the application of technology and the commercialization of ideas through licensing, sales, or external partnerships. This approach enables companies to patent their intellectual assets and gain recognition for their intellectual property, which can be transformed into branded products or services. Open innovation from internal to external sources also allows managers to focus on core competencies while leveraging external expertise to introduce new products and services to the market.

5.3.1. Utilization of Sources of External Science-Based Technology

In the current business environment, the role of technology in supporting innovation, particularly for small businesses, cannot be overstated. VOEs and large companies are considered dynamic and essential components for enhancing long-term competitive advantages. This aligns with the findings of Zahra et.al (2012) [94] which suggest that technology is not only limited to physical tools and machinery but also encompasses new theoretical and practical knowledge that businesses can use to develop new products and improve sales performance. Technology plays a critical role in open innovation for small and medium enterprises (SMEs). By adopting technology, businesses can meet customer needs and expectations while optimizing financial performance.

In West Java Province, VOEs have actively utilized external technology to enhance the competitiveness of their products and services. According to Simarmata [95], technology is essential in business operations as it allows companies to improve their products and services through resource optimization. The effective use of technology ensures that businesses can develop innovative solutions that benefit consumers and drive overall business efficiency.

If business actors, including VOEs and SMEs, can master technology, they gain the capability to create, refine processes, and design new products. Technology empowers individuals by enhancing their skills and knowledge, leading to improved business performance and increased competitive advantage. Hasan [41] further emphasizes the strong correlation between technological capacity and open innovation in SMEs. This relationship highlights the dynamic capabilities of businesses that leverage technology to enhance competitiveness.

The utilization of technology as a core innovation tool has a significant impact on VOEs, particularly in expanding product and service marketing. Social media platforms such as Facebook, Instagram, and Twitter have become essential tools for business promotion. These platforms allow VOEs to communicate directly with customers, receive feedback on their products and services, and enhance consumer engagement.

Additionally, VOEs can leverage digital marketing tools such as search engine optimization (SEO) to increase online visibility and attract more customers. Digital payment systems, including QRIS, e-wallets, and other online payment methods, provide convenience for both businesses and consumers. The adoption of electronic payment systems helps VOEs minimize financial losses, prevent cash mismanagement, and maintain accurate transaction records.

Open innovation and community empowerment through technology-based knowledge sources have also been successfully implemented by farmers in Eastern Ethiopia. Trained farmers have independently experimented with innovative agricultural tools, leading to sustainable and locally adapted solutions. New technological methods introduced in Haramaya Woreda, Eastern Ethiopia, have replaced traditional approaches, reducing costs, labor efforts, and land requirements while improving overall agricultural efficiency [68].

Similarly, VOEs in Ponggok Village, Central Java, have adopted external technology to enhance tourism development. The Ponggok Village Government and VOEs actively utilize digital marketing strategies to promote tourism. Information and communication technology (ICT) is widely used for tourism management, database administration, and enhancing visitor satisfaction by enabling seamless communication between travelers and their networks [65].

5.3.2. Utilization of Sources of External Science-Based Commercialization

The final component of open innovation is the commercialization and implementation of innovative ideas or technologies. Commercialization involves bringing innovations to market, launching new products or services, and creating brand recognition among customers. Businesses must carefully plan commercialization strategies to improve performance through marketing, distribution, intellectual property protection, and value creation.

Intellectual property rights (IPR) are a crucial aspect of open innovation commercialization. Securing IPR ensures ownership and control over collaborative intellectual property outputs. However, external collaborations involving suppliers, customers, and competitors introduce complex legal considerations that require careful management. Business actors must clearly define intellectual property ownership and usage rights through formal agreements with all parties involved.

SMEs in Portugal also leverage commercialization-based knowledge sources. Internally developed intellectual assets that remain unused can be commercialized or licensed. However, the low maturity level of innovation processes in Portuguese SMEs hinders full commercialization potential. Consequently, small businesses primarily use commercialization as a means of product recognition rather than as a strategy for developing new intellectual assets. The limited ability of human resources to integrate external commercialization results further restricts the effective utilization of these resources [63].

The existence of VOEs plays a vital role in addressing rural economic challenges and promoting community participation in achieving sustainable welfare. VOEs provide access to economic opportunities, encourage workforce participation, and contribute to rural economic growth. Tomich, Kilby, and Johnston (2018) emphasize that VOEs serve as catalysts for economic transformation by facilitating employment, entrepreneurship, and local business development [96].

Through strategic partnerships and technology-driven innovation, VOEs can strengthen their competitive position and contribute to long-term economic sustainability. By adopting open innovation strategies, VOEs can effectively integrate external knowledge, commercialize innovative ideas, and enhance their role in rural economic empowerment.

5.4. Sustainable Community Empowerment

Open innovation serves as a key driver for the success of community empowerment within Village-Owned Enterprises (VOEs) by promoting sustainability. This transformation enables underdeveloped villages to become independent and progressive. The effectiveness of open innovation in VOEs can be analyzed through several principles:

• Defining Community Needs. This principle emphasizes that individuals within a community should be engaged in dialogue to better understand their actual needs, rather than relying on externally imposed priorities. Community development approaches should be based on the needs identified by the community itself, as highlighted by Glen in Adi [38]. Ensuring alignment between development initiatives and community needs fosters stronger connections between stakeholders and residents.
• Valuing Local Knowledge. Knowledge and expertise are critical components of community empowerment. Local knowledge should be recognized and utilized alongside external knowledge and expertise. VOEs should prioritize selecting administrators and practitioners with a deep understanding of local conditions. Community members contribute by sharing their experiences, strengths, and challenges, ensuring that decisions reflect the lived realities of the local population

Community empowerment programs within VOEs must be designed through participatory dialogue. These programs should begin with discussions at the village level involving local governments, village councils, and community leaders (a bottom-up approach). Once a VOE is formally established, it can then receive funding from the Village Fund, which is allocated through national, provincial, and district budgets. This process highlights the integration of both bottom-up and top-down approaches in VOE development.

The utilization of these principles aligns with governmental directives, which state that national, provincial, and district governments should empower communities by the following:

• Utilizing advancements in science and technology to drive economic and agricultural progress in villages.
• Enhancing the quality of village governance and community capacity through education, training, and counseling.
• Recognizing and strengthening existing institutions within society [66].

Sustainability is a crucial factor in ensuring long-term human and environmental well-being. This principle is embedded within the United Nations Sustainable Development Goals (SDGs), which aim to end poverty, protect the planet, and promote peace and prosperity by 2030. Sustainability, in a broad sense, entails meeting present needs without compromising the ability of future generations to meet their own needs. Given its fundamental role in human continuity, sustainability is equally important for organizations of all types and sizes across various sectors [97].

Sustainable business practices integrate economic, environmental, and social dimensions, commonly referred to as the triple bottom line [70]. Achieving sustainability requires innovation that incorporates economic, social, and environmental considerations into product development, business processes, and organizational structures. Sustainability-oriented innovation integrates ecological and social objectives into development strategies [98,99,100,101].

Despite its importance, the triple bottom line framework has faced criticism [102]. One major challenge is the lack of standardized metrics for evaluating social and environmental performance. Industry practitioners have also criticized the framework for increasing business complexity, as not all innovations can simultaneously generate positive outcomes across economic, social, and environmental dimensions [103].

VOEs, as part of the broader business ecosystem, encounter knowledge-to-practice gaps in implementing sustainable innovation. This discrepancy, known as the “knowledge-doing gap” or “performance-intention gap” [104,105], presents significant challenges to sustainability efforts [106]. Therefore, VOEs must adopt open innovation strategies in community empowerment while ensuring alignment with sustainability principles [107].

To assess the implementation of sustainability principles, VOEs should measure their capabilities, evaluate their progress, and analyze performance outcomes. Beyond the traditional triple bottom line dimensions, VOEs should also incorporate partnership and prosperity as additional measures for a more holistic assessment of sustainable innovation.

Sustainable community empowerment within VOEs requires active participation from society and collaboration with the government. This effort involves creating a supportive ecosystem through an enable, empowerment, and protection approach. Key aspects include economic development, socio-cultural enhancement, environmental sustainability, strategic partnerships, and community prosperity. These factors contribute to the transformation of underdeveloped villages into independent and self-sufficient communities.

In line with its founding mandate, a VOE’s purpose extends beyond profit generation to include social objectives. VOEs create opportunities for community members to participate as administrators or employees, fostering local economic engagement. This dual focus on economic and social sustainability aligns with research by Ihsan, Ahmad, et al. [108] which suggests that VOEs should prioritize skill development and provide meaningful opportunities for community involvement.

Economic sustainability is integral to VOE success. VOEs must focus on responsible and sustainable economic growth by balancing business development with efficiency, innovation, and quality of life improvements. Economic sustainability ensures that VOEs contribute to long-term rural development and align with broader sustainable development goals.

To enhance sustainability, VOEs must establish strategic partnerships both within the village and beyond. Internal partnerships foster solidarity and cooperation among community members, strengthening collective efforts in local economic empowerment. External partnerships create opportunities for collaboration with surrounding communities, businesses, and institutions. These networks facilitate access to resources, knowledge, and support systems that drive sustainable development [7].

VOEs must continuously innovate to fulfill their social missions while navigating internal and external constraints. Innovation is essential for utilizing limited resources efficiently and addressing the diverse needs of stakeholders. Unlike commercial enterprises, which focus on creating unique products and services, VOEs often emphasize process innovation and the reconfiguration of existing products and services.

Community empowerment models that adopt a local development approach should incorporate design thinking methodologies to encourage active public participation. The community should not be passive beneficiaries (objects) but rather active contributors (subjects). When communities are actively engaged in decision-making and development efforts, they develop a sense of ownership and responsibility. This sense of belonging fosters long-term sustainability and reduces dependency on external interventions.

Sustainable community development efforts should focus on fostering self-reliance and equipping communities with the tools to address their challenges independently. VOEs play a crucial role in this process by integrating open innovation strategies, strengthening local economies, and ensuring long-term rural sustainability.

6. Conclusions and Implications

Community empowerment through the utilization of open innovation as a sustainable Village-Owned Enterprise (VOE) strategy is categorized into four research clusters. These clusters were identified through an analysis of articles obtained from the Scopus database using VOSviewer. The four clusters are as follows:

• Cluster 1: Related to community, community empowerment, governance, policy, power dynamics, social relations, and social innovation.
• Cluster 2: Associated with innovation performance, innovative behavior, knowledge management, leadership, mediating roles, and originality value.
• Cluster 3: Focused on competitive advantages, economic growth, strategic planning, sustainable leadership, and sustainable performance.
• Cluster 4: Encompasses digital economy and technological innovation as key components in community empowerment, governance, and rural development.

Researchers have categorized these themes into major areas, including empowerment programs, VOE governance, village economic growth, and community participation. Community participation drives VOE growth, requiring optimized collaboration from village governments. Challenges remain in knowledge management and commercialization. Enhancing human resources is crucial for sustainability. VOEs, although not fully realized, empower communities and foster economic impact. Strengthening collaboration and government intervention can accelerate growth, helping VOEs become central economic hubs in rural Indonesia.

Open innovation is a key supporting factor not only for economic welfare but also for social sustainability. The elevated level of interest in rural community empowerment studies necessitates effective management, incorporating open innovation as a crucial component. However, a gap remains in the literature concerning the application of open innovation within village-owned business entities.

To address this gap, the authors applied topic modeling techniques to extract research articles on village-owned business entities from the Scopus repository. The insights gained from this study contribute to the identification of community empowerment initiatives related to sustainable open innovation. Several significant studies have provided valuable contributions to literature, offering new perspectives and future insights on how open innovation can be leveraged as a sustainable VOE strategy.

Despite ongoing efforts to examine open innovation within the context of VOEs, the current systematic theoretical review acknowledges certain limitations in tracking long-term studies on this topic. Future research should focus on extending the analysis to provide a more comprehensive understanding of the role of open innovation in sustaining VOEs.

The open innovation development model implemented by VOEs in Bandung Regency, West Java, serves as a potential framework for replication across different business sectors and locations. Empirical evidence suggests that local communities have become more empowered, experiencing numerous benefits and improvements in overall welfare.

The socio-economic impact of VOEs extends beyond individual prosperity. Business actors within these communities have observed positive economic growth, while the broader society benefits from enhanced development opportunities. The continued success of VOEs fosters economic progress, strengthens social activities, and contributes to sustainable rural transformation.