The Role of Sharia Economic Principles in Achieving Competitive Advantage: Perspectives and Applications

Abstract

This study aims to develop a competitive advantage model for small and medium enterprises (SMEs) in the craft industry from an Islamic economics perspective. The primary focus of this research is to explore the application of Islamic economics principles—namely justice, transparency, social responsibility, and risk management—in creating a business model that enhances competitiveness and sustainability for SMEs. The methodology employed is a qualitative approach with case studies, involving in-depth interviews, observations, and document analysis of several craft SMEs that have implemented Islamic principles. The research findings indicate that applying these principles can strengthen competitive advantage through improved customer satisfaction, operational transparency, social responsibility, and prudent risk management. The proposed model not only provides competitive benefits but also supports sustainability and long-term growth. This study makes a significant contribution to understanding how Islamic principles can be applied in business practices to create sustainable value in the craft-based SME sector.