Investigation of Business Capital and Product Innovation in Culinary Business Development: Evidence from a Densely Populated City

Micro-enterprises have a great position and contribution to the Indonesian economy. The phenomenon in the research area is that micro-businesses in the culinary sector prefer using owner's capital even though micro-businesses lack funds. Complicated requirements and procedures for bank sources of funds make them reluctant to seek additional sources of funds from banks. As a result, the innovations that occur do not run smoothly, and they tend to clone each other, especially in terms of taste, packaging, price, and service. This study investigates the role of business capital, product innovation, and its relationship with the culinary sector business development in a densely populated small town, Cimahi City, Indonesia. An explanatory survey method was used in the study in order to provide explanations and phenomena. The data was taken using the G-form and social media, a sample of 260 respondents. Data analysis used mean tests and regression tests. This study found that business capital and innovation positively impact business development. The partial test also showed that each variable positively affected micro-enterprise development in the culinary sector. The research results are helpful for business actors in terms of venture capital and product innovation use. The innovation cloning is required when funds and knowledge are limited. Future research must be developed and implemented using the same concept on SMEs at various levels and sectors. To help micro-enterprises, the government can play a significant role through real policies favouring SMEs.