IOSR Journal of Business and Management (IOSR-JBM) e-ISSN: 2278-487X, p-ISSN: 2319-7668. Volume 21, Issue 1. Ver. I (January. 2019), PP 09-14 www.iosrjournals.org DOI: 10.9790/487X-2101010914 www.iosrjournals.org 9 | Page Strategy for Increasing Competitive Advantages Based on Human Resources Competence and Organizational Culture in Umkm Islamic Food in East Java M. Naely Azhad, Seno Sumowo, Anwar, Nurul Qomariah Universitas Muhammadiyah Jember Corresponding Author: M. Naely Azhad Abstract: Improving the quality of food produced by MSMEs in East Java is urgently needed. Improving food quality is closely related to the competitive advantage of MSMEs. If the quality of food produced by MSMEs is good, the competitive advantage of MSMEs will increase. Competitive advantage is one of the factors that influence the sustainability of an organization. MSMEs are one organization that has a very high level of competition because this food sector is a sector that has many interested parties. The research objective in the first year was to find out to develop a competitive advantage model based on HR competency and the application of a good organizational culture. The research population is all MSME leaders in East Java, covering 6 districts. The districts that were the object of the study were Jember Regency, Bondowoso, Situbondo, Banyuwangi and Lumajang Regency. Sampling was carried out using the Stratified Random Sampling method for each district. The research sample was determined using the Slovin formula and obtained as many as 133 MSMEs who became respondents. This study was analyzed using SEM analysis. The results showed that HR competencies had a significant influence on the competitive advantage of Food MSMEs in East Java and organizational culture had a significant influence on the competitive advantage of Food MSMEs in East Java. Key Words: competetive advantage, human resources competence, organizational culture, UMKM, performance -------------------------------------------------------------------------------------------------------------------------------------- Date of Submission: 22-12-2018 Date of acceptance: 07-01-2019 ------------------------------------------------------------------------------------------------------------------------------------- I. Introduction MSMEs are a mainstay for the government in increasing national economic growth. When the economic crisis hit Indonesia in 1997, it turned out that MSMEs were able to survive and become the foundation of the Indonesian economy. This crisis turned out to motivate the growth of the small business sector which increasingly absorbed workers and increasingly strengthened innovation in small business development innovations. This can be seen through the development of MSMEs throughout 2011 proven to be able to contribute to the formation of GDP of 57.60%. The details are as follows, as many as 32.02% by Micro Enterprises, a number of 10.99% by Small Businesses, and a total of 14.59% by Medium Enterprises. The average value of GDP formation by MSMEs is Rp. 24.8 million per business unit. MSMEs are able to recruit a new workforce of 2.32 million people, equivalent to 97.8% of new employment created by MSMEs and large businesses in 2011. The absorption of new labor is mostly done by Micro Enterprises, the number of which is 1.94 million people , including hiring himself. Small businesses are able to absorb 292,000 new workers (Biarto and Ardianti, 2013). The Micro, Small and Medium Enterprises (MSME) sector is the key to economic growth in East Java. This is evidenced by the contribution of MSMEs to Gross Regional Domestic Product (GRDP) reaching 54.98% or Rp. 1.1689.88 trillion. That number is around 50 percent more than the number of MSMEs based on a survey until 2006 which was also conducted by BPS East Java, which reached 4.2 million MSMEs. This fact was raised in a seminar on the results of the 2012 East Java Province MSME survey held at the Regional Development Planning Agency (Bappeda) office in East Java in 2013. Until the end of 2012 the number of MSMEs in East Java reached 6,825,931 businesses. (Bappeda Jatim, 2013). The composition of MSMEs, among others, engaged in the agricultural sector by 60.25 percent with a total business unit of 4,112,443 businesses, and the non-agricultural sector by 39.75 percent with a total business unit of 2,713,488 businesses. Based on the number of MSMEs in each district and city, the largest number is in Jember regency, which is 424,151 businesses. After Jember, the highest number of MSMEs will be in Malang Regency and Banyuwangi Regency. Each contributed 6.07 percent and 4.35 percent to the total number of MSMEs. The problems faced by food MSMEs in East Java are from around 6 million MSMEs in East Java, which have only about 15% halal certification. This condition occurs because the cost of halal