Towards Rural Economic Growth: The Role of Human Resources in Promoting Knowledge Acquisition and Innovation in Village-Owned Enterprises

This research explores the relationship between human resource (HR) practices, knowledge acquisition, and innovation performance in Village-Owned Enterprises (VOEs) in South Buton, Southeast Sulawesi, Indonesia. Using data from 60 active VOE managers, the study highlights the crucial role of HR strategies in shaping an organisation’s ability to absorb knowledge both internally and externally. The findings show that effective HR practices improve VOEs’ product, process, and administrative innovations by enhancing knowledge acquisition. This is evidenced by the coefficient value of .336, indicating significance. This emphasises the mediating role in strengthening the effect of knowledge acquisition on innovation performance. A key challenge identified is the inefficiency of HR in managing acquired knowledge, which hampers the growth and innovation of village-owned businesses. This limitation underscores the need for targeted interventions to improve HR capabilities within VOEs, enabling them to make better use of acquired knowledge. By establishing a strong management model, the government can turn VOEs into catalysts for rural economic growth and unlock the potential of local villages. The study offers valuable insights for policymakers and VOE leaders, stressing the importance of a comprehensive strategy that fosters innovation and sustainable rural economic development by utilising local resources.