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This study discusses the Regional Innovation System by identifying the policies that benefit the roles of SMEs in counter-measuring poverty in the region as well as the factors that are influencing the change pattern of policies for the roles of SMEs towards poverty alleviation. A qualitative method was used in the research by drawing cases from five different rural areas in East Java Province, Indonesia. The study concludes that Regional Innovation System as a joint regulation is still considered foreign by local governments. However, the study indicates a presence of different actors involved in synergizing the implementation of several MSMEs empowerment programs. Furthermore, four factors that influence the change pattern of policies for the roles of SMEs towards poverty alleviation were identified; however, RIS as a countermeasure for poverty has yet shown to be executed in a consistent, systematic and neat fashion. Recommendations from this study are that the needs for improvement in communication networks and distribution of equal information for each level of government agency are essential and so are the needs for improvement of the policies’ evaluation system.

REGIONAL INNOVATION SYSTEM IN RURAL AREAS AND THE ROLE OF SMES AS COUNTERMEASURE FOR POVERTY: A CASE IN EAST JAVA, INDONESIA