Turning constraints into competitive advantage: co-creation and strategic adaptation in a Brazilian sneaker startup

Purpose This article examines how leaders of small firms in emerging markets can transform resource constraints into sources of competitive advantage. Using the case of a Brazilian sneaker customization startup, the study explores how co-creation, adaptive leadership and process discipline enable strategic innovation under conditions of limited capital, low technological infrastructure and supply chain instability. Design/methodology/approach The study adopts an in-depth qualitative case approach supported by process mapping, interviews with entrepreneurs and analysis of customer interaction practices. The case was examined through a strategic lens to identify leadership decisions, adaptive mechanisms and organizational practices that enable innovation and differentiation under persistent constraints. Findings The findings show that co-creation operates as a strategic capability rather than a marketing tool. Specifically, leadership decisions to maintain open-ended customer involvement, selectively constrain product platforms, and introduce minimum viable process discipline enabled the firm to align customer expectations with operational capacity. These actions reduced rework and reputational risk while sustaining differentiation under severe resource constraints. Research limitations/implications Based on a single case, the findings are context-specific and invite future comparative research across industries and emerging economies to further examine leadership-driven innovation under constraint. Practical implications The study offers actionable insights for leaders of small firms facing uncertainty, showing how co-creation, relational leadership and basic process discipline can enhance innovation, customer loyalty and strategic positioning without major investments. Originality/value The article contributes to strategy and leadership research by demonstrating how innovation in emerging markets is shaped by leadership choices that reframe constraints as strategic assets. It provides a rare, practice-oriented account of how co-creation and operational discipline jointly support competitive advantage in small firms operating under severe resource limitations.