Microenterprise Sustainability Based on Strategic Innovation through Competitive Advantage from an Islamic Humanistic Perspective

Abstract

This study examines the sustainability of microenterprises through strategic innovation, competitive advantage, and an Islamic Humanistic perspective. The topic is important because microenterprises are not only economic units but also sources of family livelihood, social resilience, and local economic empowerment. However, many microenterprises face intense market competition, limited innovation capacity, product similarity, and weak differentiation. This study employs an explanatory sequential mixed-methods design. The quantitative phase involved 100 microenterprise actors in Palopo City and analyzed the effects of Blue Ocean innovation and product diversification on microenterprise sustainability and competitive advantage using Partial Least Squares Structural Equation Modeling with SmartPLS. The qualitative phase was conducted through semi-structured interviews to interpret the quantitative findings from an Islamic Humanistic perspective, emphasizing maslahah, amanah, justice, ihsan, and livelihood protection. The findings show that Blue Ocean innovation significantly affects both microenterprise sustainability and competitive advantage, indicating that value creation and market differentiation are essential for sustaining small businesses. Product diversification significantly supports sustainability but does not significantly strengthen competitive advantage, suggesting that product variety alone is insufficient without quality, distinctiveness, and customer trust. This study contributes to the literature by integrating strategic innovation, competitive advantage, and Islamic Humanistic values into a single framework for understanding microenterprise sustainability. The study extends prior research by showing that sustainability is not merely an economic outcome but also an ethical and social process related to family livelihood, consumer trust, fair transactions, and social benefit. Practically, the findings provide guidance for local governments, business assistance institutions, Islamic financial institutions, and microenterprise actors in designing empowerment strategies that combine innovation, market relevance, ethical business conduct, and social welfare.