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Abstract. This study aims to examine the role of social innovation in accelerating community economic development through a participatory approach based on local potential. Social innovation is seen as an effective new solution to address various social and economic problems, particularly at the community level, by involving communities as key actors of change. This study highlights the importance of collaboration between communities, government, academia, the private sector, and non-governmental organizations in creating an inclusive and sustainable development ecosystem. The results indicate that social innovation can strengthen community economic independence, create alternative economic models such as digital cooperatives and community-based economies, and encourage broad participation in the development process. However, various obstacles remain, such as low digital literacy, limited access to funding, and weak policy support. Therefore, systemic interventions and more progressive policy support are needed to expand the impact of social innovation on sustainable community economic development.

The development of Micro, Small and Medium Enterprises (MSMEs) has a strategic role in improving community welfare, especially in rural areas. This research aims to analyze the strengths, weaknesses, opportunities and threats (SWOT) faced by coconut processing MSMEs in Gesikharjo Village, Palang District. Data was collected through in-depth interviews with MSME actors, field observations, and document analysis. The research results show that the main strengths of these MSMEs are the availability of local raw materials and community support. However, weaknesses such as technological and management limitations are still challenges. Opportunities such as increasing demand for processed coconut products in local and national markets provide bright prospects, although threats such as price competition and global market fluctuations still need to be watched out for. Research recommendations include strengthening the managerial capacity of MSME players, product innovation, and collaboration with the government and private sector to create a sustainable business ecosystem.