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The purpose of this paper is to design a research model and analyze the relationship between open innovation and cleaner production. The paper maps and characterizes the conditions of open innovation against cleaner production in Indonesian batik small and medium enterprise (SME), particularly in Java and Madura. The mapping process is executed by classifying the batik SME into four quadrants. The diagram is a quadrant in which there are four parts to distinguish each of the ability of batik SMEs in understanding and achieving cleaner production through open innovation. This research will obtain a new method or model that can be applied by organizations to achieve cleaner production through an open innovation. The data is obtained from 182 batik SMEs located in Laweyan, Madura and Lasem (in Java Island, Indonesia).

One of the problems in batik SME is the waste management from the dyeing and wax removal process. In the first stages of this research, a number of initial models were elaborated as a reference, then the results of the elaboration became a new research model. The research model that has been produced is then tested using data from respondents. Based on the test results, the model can be stated valid or not. In this study, the model is valid after testing data from 182 respondents, because all outer loading for all indicators is above 0.7. The composite reliability and AVE values of all constructs were above 0.7 and 0.5. Based on the validated research model, the data is statistically processed by using the Structural Equation Modeling (SEM). By using the SEM method and statistical software SMART PLS 3.0this research can be supported to achieve the research objectives.

Based on data testing and processing, open innovation climate could predict a sustained relationship to open innovation with an accuracy rate of 0.466 and influence rate of 0.427, whereas open innovation could predict a sustained relationship to cleaner production with an accuracy rate of 0.183 and influence rate of 0.324. The relationships between open innovation climate and open innovation; including open innovation toward cleaner production, are statistically significant because all prediction values and accuracy in the model have met the criteria for measurement parameters based on the value of R², p value and T-statistics to be stated as a significant relationship.

This research provides an overview of the influence and importance of open innovation in creating an environmentally friendly production process in the context of cleaner production. Cleaner production on batik SMEs can be achieved through open innovation, both for inbound open innovation and outbound open innovation. Open innovation comprehensively provides support for batik SMEs in achieving cleaner production. Open innovation can be run well and optimally if it gets support from a conducive climate open innovation. Furthermore, the implementation of cleaner production could be a guideline for the owner to minimize the waste from batik SME production, both for natural and synthetic dyes. Some limitations in these study include the absence of influence from the existing stakeholders on batik SMEs on the implementation process of open innovation; the use of the cross-sectional approach that results in the unavailability of further analysis regarding the dynamics or improvements that occur in attaining cleaner production through open innovation; and finally providing no analysis of the differences in characteristics at each location of batik SMEs.

The implementation of cleaner production model is considered as one of the new methods and references in conjunction with reducing the negative impact of waste toward the environment, particularly in the traditional textile industry which is limited in waste management capability.