Bisnis & Birokrasi: Jurnal Ilmu Administrasi dan Organisasi International Journal of Administrative Science & Organization, May 2018 Volume 25, Number 2 INTRODUCTION The development of SMEs is one of the important issues of every country around the world. In some countries such as Thailand, Malaysia, and also some European countries focus on developing partnerships between MSMEs and multinational companies or large industries that already have enough resources to compete globally. Various coop- erative initiatives to improve the performance of SMEs were conducted by each government of ASEAN (Yunita et., al, 2015). However, academics and practitioners have no agreement on the determinants of increasing competi- tiveness of SMEs in Indonesia and other countries. The generally accepted understanding of competitive- ness can be related to a concept of competitive advantage. A competitive advantage is what makes an entity's goods or services superior to all of a customer's other choices (Porter, 1985). To create a competitive advantage (Amadeo, 2018) states frm should be clear about beneft, target market and competition as determinantsBeneft. What is the real beneft the product provides? It must be something that customers truly need and that offers real value. That means being constantly aware of new trends that affect the product, especially new technology. 1) Target market. Who are the customers? What are their needs? It is important to know exactly who the buyrers, and how to better their life. 2) Competition. Have to identify real competitors? It is more than just similar companies or products. It includes anything else the customer could do to meet the need The abovementioned determinants are in-need of company’s strategic resources. Meanwhile, the strategic resources or factors in achieving above-average returns for the frm according to Barney (1986) is not perfect due to the dynamics of the business environment. Firms will either overestimate or underestimate the future value generated by strategic resources in implementing a strat- egy. Therefore, a frm that has a more accurate prediction over the future value generated by its strategic resources will be able to gain above-average returns either because of its more superior ability in estimating the future value of a strategy or due to its good fortune resulting from the incorrect estimation of the future value of pursuing a particular business strategy on the part of its competitors (Barney, 1986). Different macro environments are important consid- erations for companies to improve performance through Strategic Model in Increasing the SMEs Competitive Advantage in South Sulawesi Mursalim Nohong 1 , Abdullah Sanusi 2 , Insany Fitri Nurqamar 3 , Suriadi Harun 4 Faculty of Economic and Business, Hasanuddin University, Indonesia 1,2,3 Sulawesi Technology University, Indonesia 4 mursalimnohong@fe.unhas.ac.id 1 ; a.sanusi@unhas.ac.id 2 ; insanyftri@gmail.com 3 ; suryadi_harun@yahoo.co.id 4 Abstract. The study of SMEs development has become an interesting issue in the feld of education including because of its great contribution to society and nation. The research objectives are to describe 1) the effect of government intervention toward the increase of Small and Medium Enterprises (SMEs) innovation capabilities and competitive advantage in South Sulawesi; 2) the effect of non-market capabilities toward non market strategies and competitive advantage of SMEs in South Sulawesi; 3) the effect of non-market capabilities toward government intervention. The data used is the primary data which was obtained from interviews with 40 respondents in Makassar, Parepare, Sidenreng Rappang and Bantaeng. The sample from which data collection done is selected using purposive sampling method. Results are presented in descriptive and inferential statistics. The research results show that innovation, government intervention, nonmarket strategies and capabilities are prerequisite to improve SMEs competitiveness. In addition, the small businesss competitiveness will signifcantly change when the innovations undertaken are infuenced by government intervention. Keywords: strategic model, competitive advantage, small and medium enterprises (SMEs) Abstrak. Studi tentang pengembangan UKM telah menjadi isu menarik di bidang pendidikan termasuk karena kontribusinya yang besar bagi masyarakat dan bangsa. Penelitian ini bertujuan untuk menjelaskan 1) pengaruh keterlibatan pemerintah terhadap kemampuan inovasi dan daya saing Usaha Kecil dan Menengah (UKM) di Sulawesi Selatan. 2) pengaruh kapabilitas non market terhadap strategi non market dan daya saing UKM di Sulawesi Selatan, 3) pengaruh kapabilitas non-pasar terhadap intervensi pemerintah. Data yang digunakan adalah data primer yang diperoleh dari wawancara dengan 40 responden di Makassar, Parepare, Sidenreng Rappang dan Bantaeng. Sampel dari mana pengumpulan data dilakukan dengan menggunakan metode purposive sampling. Hasilnya disajikan dalam statistik deskriptif dan inferensial. Hasil penelitian menunjukkan bahwa inovasi, intervensi pemerintah, strategi dan kemampuan non-pasar merupakan prasyarat untuk meningkatkan daya saing UKM. Selain itu, daya saing usaha kecil akan dipengaruhi oleh intervensi pemerintah. Kata kunci: model strategik, daya saing, usaha kecil dan menengah (UKM)