Micro Small and Medium Enterprises (MSMEs) have been known for their contribution in developing economies, such as Indonesia. Their large number of population and ability to increase the employment rate have made them become the backbone of the country’s economy. With regard to this, the Indonesian Government launched many programs to empower MSMEs. One of the programs, called the Technology for Region Program ((Iptekda), has been implemented since 1998. However, the program has not been successful, indicated by the low productivity and competitiveness of MSMEs. The aim of the study is to examine the barriers of MSMEs’ competitiveness from the technology diffusion policy in Indonesia. The research will address two questions: (1) what are the challenges faced by MSMEs in applying technology for their business? and (2) what are strategies to improve technology diffusion for MSMEs to be successful? To answer such questions, the paper will apply the case study of six MSMEs in West Java. The research will apply a qualitative approach using in-depth interviews with six owners of MSMEs in the research context. The findings of the research indicate that the challenges of the program are closely intertwined with the interest and responsiveness of the change agent and the owners of MSMEs. The study recommends a bottom up approach of technology diffusion for MSMEs and provides a model of MSMEs empowerment through diffusion of technology mechanism.

Keywords: Technology Diffusion, Micro Small and Medium Enterprises, Developing Country, Technology for Region Program (Iptekda), a bottom up of technology diffusion approach.