The traditional manufacturing industry has suffered from changing global demands and rapid technology upgrades. It is critical to incorporate innovation into contemporary manufacturing for sustainable development. A comprehensive interpretation of the determinants and directions of technical change is greatly needed. Therefore, this study aims to explore innovative applications that can enhance the value of manufacturing and examine the key factors associated with these innovations. In this paper, three traditional manufacturing industries are analyzed using the research methodologies analytic hierarchy processing (AHP) and Decision Making Trial and Evaluation Laboratory (DEMATEL), resulting in a set of six key criteria for innovative manufacturing. The causal relationships considering the six criteria in three industries are analyzed. The main contribution of this study is to establish a new framework for the sustainable development of traditional manufacturing industries. This could help to support conceptual innovation in these industries and establish a pragmatic approach to increase sustainable development. From the research results, the following suggestions can be made. The traditional manufacturing industries in Taiwan should focus on design and innovation. This can enhance the value-added and international competitiveness of industrial chains, enterprises, and products. Ultimately, it can lead to the sustainable development of Taiwan’s traditional industries.