The Distribution Levels and Factors Influencing Successful Development of VOE in Trenggalek Regency-Indonesia Ulul Hidayah 1* , Suci Rahmawati Prima 2 1 Department of Urban and Regional Planning, Faculty of Science and Technology, Universitas Terbuka, Tangerang Selatan Banten 15437, Indonesia 2 Department of Development Economics, Faculty of Economic, Universitas Terbuka, Tangerang Selatan Banten 15437, Indonesia Corresponding Author Email: ulul-hidayah@ecampus.ut.ac.id https://doi.org/10.18280/ijsdp.180118 ABSTRACT Received: 27 August 2022 Accepted: 15 November 2022 This research aims to identify the pattern of Village Owned Enterprise (VOE) in the Trenggalek Regency and analyze the factors affecting its success. The regency was selected as the model for other regions because it has East Java's most advanced VOE development. A quantitative approach was adopted using primary data consisting of VOE age, number of business units, number of workers, capital, turnover, profit, and VOE contribution to Village Own-source Revenue. The data was collected through questionnaires and interviews with the village government and VOE administrators. The pattern on the VOE development level was analyzed using Moran Index, while the influencing factors were determined through Geographical Weight Regression. The findings showed that the villages were grouped based on the VOE development level. The developed VOE was generally affected by age, number of business units, number of workers, turnover, profit, and contribution to Village Own-source Revenue. It was also discovered that business capital has a negative effect on the VOE success level, and a similar trend was recorded for labor in some areas. This study implies the importance of strengthening through supporting factors for the success of VOE and the formation of cooperation between villages to achieve developed VOE. Keywords: development level, success factors, VOE 1. INTRODUCTION Village Owned Enterprises (VOE) are business entities managed by the village as one of the strategies to build the economy. The aim is to improve community welfare and serve as a source of Village Own-source Revenue. It is important to note that the program's main objective is to ensure economic growth and development, but it also has a non-economic role in rural development. The economic aspect is due to its ability to provide capital for small-scale home industries (MSMEs) in rural areas to enhance village entrepreneurship and improve the community's economy through productive activities [1]. Meanwhile, the non-economic sector focuses on reducing the number of people moving from villages to cities [2]. It is possible because good management has several social and economic benefits for rural communities, from providing new jobs, sources of funds to finance village development, and social assistance for the concerned community. The VOE was established to strengthen the rural economy long before the Village Law No. 6 of 2014. It was initiated through Law No. 22 of 1999 Article 108, which allows villages to have business entities following statutory regulations. The success of the VOE can be theoretically assessed using four basic indicators: turnover, number of employees, contributions to Village Own-source Revenue, and social assistance provided to the community [3]. The program is also believed to be successful when it has resolved obstacles associated with two main aspects of performance and finances [4, 5]. Those related to performance include the lack of public knowledge of professional business activities, especially in preparing financial reports and business results. Those associated with the finances include the potential for VOE abuse, such as the misappropriation of funds from businesses or acts of corruption. According to Agunggunanto et al. [6], the constraints of starting a VOE business include the lack of venture capital, which subsequently leads to the inability to diversify, the lack of adequate management resources, and a low level of public awareness and knowledge of VOE. It normally leads to non-optimal performance. The 2021 VOE data for Trenggalek Regency was obtained from the East Java DPMD (Department of Community and Village Empowerment), which was dominated at the developed level. The Trenggalek Regency has the highest percentage of developed and developing VOE in East Java. It is indicated by a total of 152 villages, out of which 84 (55%) have developing VOE while 68 (45%) are at a developed level. It is above the average level of VOE development in East Java. It simply shows that the development of VOE in the regency is quite successful. The data from the East Java Village and Community Empowerment Service shows that all the villages in Trenggalek Regency already have VOE. It is associated with implementing an initial policy designated as VOE in all the villages in 2001 due to the consistent activities of moneylenders in rural economies. It led the Trenggalek Regency Government to sensitize the people about the International Journal of Sustainable Development and Planning Vol. 18, No. 1, January, 2023, pp. 171-179 Journal homepage: http://iieta.org/journals/ijsdp 171