Frugal innovation framework for micro-entrepreneurs’ sustainable performance: From design thinking approach

Frugal Innovation (FI) offers cost-effective, value-creating solutions that are especially relevant for Micro, Small, and Medium Enterprises (MSMEs) operating under significant resource constraints. Despite the growing interest in FI, micro-entrepreneurs (micropreneurs) often lack a clear, actionable framework to guide their implementation. While prior studies have explored various enablers of FI, there is limited focus on how MSMEs can practically navigate the innovation process under financial, managerial, and operational limitations. This study addresses this gap by designing a FI framework tailored for micropreneurs in the fashion industry. Utilizing an Action Design Research (ADR) methodology integrated with the Design Thinking (DT) approach, this research has five stages: empathy, define, ideation, prototype, and test. The first two stages involve semi-structured interviews with 12 Indonesian fashion micropreneurs, analyzed using NVivo 14 to construct user personas and identify core problems. The final stage is conducted through a collaborative DT workshop with 30 fashion micropreneurs. The findings reveal that micropreneurs can co-create a practical FI guideline aligned with contextual realities. This research contributes to the field of open innovation by offering a participatory, user-centered framework that supports sustainable and competitive innovation in a resource-limited environment. This study also provides insights for policymakers and practitioners seeking to strengthen innovation ecosystems for MSMEs in emerging economies.