Abstract
This study explores the impact of sustainable development and frugal innovation on small and medium-sized enterprises (SMEs) in Rizal Province, Philippines. Focusing on manufacturing businesses, the research examines how frugal innovation—through substantial cost reduction, concentration on core functionalities, and optimized performance—enhances competitiveness and sustainability. Findings indicate that while businesses generally perceive frugal innovation positively, challenges such as scalability, regulatory compliance, and balancing cost with quality persist. Significant differences in cost reduction were observed based on years of existence and ownership structure, whereas other factors like business type and capital source showed no notable influence. The study highlights the role of SMEs in economic development, particularly in rural areas where they drive employment and innovation. However, issues such as limited infrastructure, funding constraints, and cultural resistance hinder the widespread adoption of frugal solutions. Recommendations include establishing knowledge-sharing platforms, improving regulatory support, and developing funding mechanisms to enhance frugal innovation adoption. By addressing these barriers, SMEs in Rizal can better leverage sustainable practices to strengthen market positioning and resilience in a post-pandemic economy. Ultimately, this research contributes to the discourse on sustainable business models by providing empirical insights into frugal innovation’s applicability in emerging economies. The findings underscore the need for targeted interventions to support SMEs in overcoming implementation challenges while maximizing the economic and social benefits of sustainable development.
