The Performance Comparison of DBSCAN and K-Means Clustering for MSMEs Grouping based on Asset Value and Turnover

Abstract

Background: This study focuses on the latest knowledge regarding Micro, Small and Medium Enterprises (MSMEs) as a current central issue. These enterprises have shown their significance in providing employment opportunities and contributing to the country’s economy. However, MSMEs face various challenges that must be addressed to optimize their outcomes. Understanding the characteristics of this group was crucial in formulating effective strategies. Objective: This study proposed to cluster or combine micro, small, and medium enterprises (MSMEs) data in a particular area based on asset value and turnover. As a result, this study aimed to gain insights into the MSME landscape in the area and provided valuable information for decision-makers and stakeholders. Methods: This study utilized two methods, namely the DBSCAN (Density-Based Spatial Clustering of Applications with Noise) method and the K-Means method. These methods were chosen for their distinct capabilities. DBSCAN was selected for its ability to handle noisy data and identify clusters with diverse forms, while K-Means was chosen for its popularity and ability to group data based on proximity. The study used a dataset containing MSME information, including asset values and turnover, collected from various sources. Results: The outcomes encompassed identifying clusters of MSMEs based on their closeness in the feature space within a specific region. Optimizing the clustering outcomes involved modifying algorithm parameters like epsilon and minimum points for DBSCAN and the number of clusters for K-Means. Furthermore, this study attained a deeper understanding of the arrangement and characteristics of MSME clusters in the region through a comparative analysis of the two methodologies. Conclusion: This study offered perspectives on clustering MSMEs based on asset value and turnover in a specific region. Employing DBSCAN and K-Means methodologies allowed researchers to depict the MSME landscape and grasp the business attributes of these enterprises. These results could aid in decision-making and strategic planning concerning the advancement of the MSME sector in the mentioned area. Future study may investigate supplementary factors and variables to deepen comprehension of MSME clusters and promote regional growth and sustainability.