PRODUCT INNOVATION AND BUSINESS SURVIVAL AMONG ZAKAT ENTREPRENEURS: A QUALITATIVE COST-BENEFIT ANALYSIS

Abstract

Product innovation is an important strategy for microentrepreneurs operating with limited resources, but its value depends on whether the benefits generated outweigh the costs incurred. In the context of zakat entrepreneurs, innovation is often practical, low-cost, and survival-oriented rather than technology-intensive. Therefore, this study aims to analyse the costs and benefits of product innovation among zakat entrepreneurs and examine its implications for business survival. This study employed a qualitative multiple-case study approach involving eight zakat entrepreneurs who received entrepreneurial assistance under the i-TEKAD under Lembaga Zakat Negeri Kedah (LZNK) programme. Data were collected through semi-structured in-depth interviews and analysed using thematic and narrative analysis. The analysis is based on qualitative cost–benefit analysis and frugal innovation perspectives. The findings show that frugal product innovation among zakat entrepreneurs can be grouped into three types namely as simple and affordable new products, improvement or adaptation of existing products, and product diversification based on existing resources. These innovations generated clear economic benefits, including new sales opportunities, increased product value, faster cash flow, repeat purchases, multiple income streams, and stronger business continuity. However, they were also accompanied by significant costs, such as higher raw material and equipment expenses, labour and time burdens, operational risk, product wastage, delayed capital recovery, and more complex management responsibilities. The cost–benefit analysis indicates that the benefits were more evident in terms of cash flow stability, customer loyalty, income diversification, and business continuity than in large profit increases. Thus, product innovation functions more strongly as a resilience and survival mechanism than as a short-term profit maximisation strategy. The study implies that support programmes should strengthen costing skills, product development, marketing capability, operational management, and risk-reduction mechanisms to ensure sustainable innovation benefits.