K-Means Cluster Analysis for Grouping Small and Medium Enterprises (SMEs) in Pesisir Selatan Regency

Abstract

Small and Medium Industries (SMEs) play an important role in national economic growth through job creation, improving regional economies, and triggering entrepreneurial spirit. Although most SMEs operate on a limited scale with simple technology, this sector has great potential to grow if it receives sustainable support. However, SMEs in Pesisir Selatan Regency face various challenges, such as limited human resources, difficulty in accessing capital, and low utilization of technology. This study aims to analyze the grouping of SMEs in Pesisir Selatan Regency using the clustering method. Using secondary data on six types of SMEs in 15 sub-districts in 2023, this study applies the K-Means algorithm to group SMEs based on the characteristics of the dominant sector. The clustering results produce three main groups: first, sub-districts with high SME activity in the textile and food sectors; second, sub-districts with low SME activity in almost all sectors; and third, sub-districts with balanced SME activity in various sectors, such as apparel, beverages, furniture, and non-metallic minerals. These findings are expected to provide insight for local governments in formulating more targeted policies for the development of SMEs and equitable distribution of economic growth in Pesisir Selatan Regency.