OPTIMIZATION OF VILLAGE-OWNED ENTERPRISES IN SUSTAINABLE VILLAGE ECONOMIC DEVELOPMENT IN BERAU REGENCY, INDONESIA

Abstract This study explores local resources, infrastructure, and social innovation in the sustainable development of rural Berau District in Indonesia, with local economic development as the mediating variable and the role of village-owned enterprises as the moderating variable. The present study has a quantitative approach, with a sample size of 100 Village Heads for whom data was collected by using a structured questionnaire and analysed by SEM-PLS. Results show that local resources and social innovation contribute much to local economic development and sustainable rural development, focusing on agriculture, fisheries, tourism, creative industries, and initiatives such as the Digital Village Program. The contribution of infrastructure is negligible and represents a barrier due to issues in connectivity and planning processes. Local economic development plays a crucial mediating role, reinforcing the importance of optimization of resources and innovative practices. It also points to the barriers to these factors: limited leadership capacity and environmental degradation. It enumerates some actionable insights for policymakers in their pursuit of inclusive and sustainable rural development through targeted intervention.