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Commitment and trust in achieving financial goals of strategic alliance: Case in Islamic microfinance

Imam Wahyudi (Department of Management, University of Indonesia, Depok, Indonesia)

International Journal of Islamic and Middle Eastern Finance and Management

ISSN: 1753-8394

Article publication date: 11 November 2014

Abstract

Purpose

This paper aims to illustrate theoretically and empirically the decision and result of strategic alliance between baitul maal wa tamwil (BMT) and Islamic banks as a relationship based on trust, mutual-trustworthiness and commitment. This paper also identifies the basic criteria for the resilience of a strategic alliance, the challenges and the barriers in a strategic relationship along with managerial and operational implications.

Design/methodology/approach

In this study, we have chosen to use the confirmatory approach through a structured questionnaire by means of field survey to 131 BMT spread throughout Central Java and Yogyakarta. From the total sample, 89 BMT fulfilled the sampling criteria, that is: has operated for a minimum of two years and does not experience any financial difficulties during those two years; has done a financing contract with an Islamic bank; channels some of its funds to micro, small and medium enterprises; and is in the form of a cooperative, and not a micro financial institute. Data treatment uses the method of listwise deletion. Data analysis uses equation model with the software LISREL version 8.80. To validate the result of data analysis, we have also run a focus group discussion with Directorate of Syariah Banking, Bank of Indonesia, and in-depth interviews with BMT parent cluster (Inkopsyah).

Findings

This research shows that commitment contributes positively in achieving the financial goals of an alliance. Coordination and initial agreement has a positive and significant influence in forming commitment from BMT and trust from Islamic banks. Other than coordination and initial agreement, the trust given by Islamic banks also came from the social capital owned by BMT.

Originality/value

The trust and commitment will assist the building of strategic alliance between Islamic banks and BMT. Apart from financial purposes, the alliance between the two will also encourage natural knowledge-sharing.

Keywords

Acknowledgements

This research is conducted by National Collaborative Research Grant 2013. The author is grateful to anonymous reviewers of this research grant. The author is also obligated to Bambang Hermanto, Zaafry A. Husodo, Rizky Luxianto and Muhammad Budi Prasetyo for valuable discussion. Thanks to the the author's assistants, who are Rizki Nugrahani, Niken I. S. Putri, Rushli Fauzan and Imam Salehudin, for their aims in collecting and tabulating the data. The remaining errors remain the author's responsibility.

Citation

Wahyudi, I. (2014), "Commitment and trust in achieving financial goals of strategic alliance: Case in Islamic microfinance", International Journal of Islamic and Middle Eastern Finance and Management, Vol. 7 No. 4, pp. 421-442. https://doi.org/10.1108/IMEFM-10-2013-0113

Publisher

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Emerald Group Publishing Limited

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