The purpose of this paper is to investigate the drivers of the depth of halal standard implementation in the halal-certified food manufacturing small- and medium-sized enterprises (SMEs). The second aim of this paper is to empirically examine the effect of halal standard practices on the SME’s performance.
Of the 143 halal-certified SMEs in Solo Raya, Province of Central Java, Indonesia, 83 were willing to take part in the present research. The survey was carried out by an on-site visit to the targeted respondents. A structured questionnaire was used to gather primary data. Partial least square structural equation model was then used to analyze the collected data.
The results proved that internal motivation and organization commitment positively affect halal standard implementation, while external pressures do not. The external pressures influence the depth of halal standard implementation through internal motivation as a mediating variable. Furthermore, the depth of halal standard implementation leads to the improvement of operational performance. The improvement of operational performance can further encourage the increase of market performance and financial performance.
The first limitation of this research is about the samples in which they are small-sized and restricted to food manufacturing SMEs. Another limitation is the subjectivity of SME’s managers when evaluating performance, which may provide imprecise measures of performance.
The findings suggest the notion that success of halal standard implementation depends on the capabilities of SMEs to convert the external pressures into internal motivation. Moreover, food-manufacturing SMEs should consider halal standard as an innovative tool to be applied in their daily operation and production as the halal standard has a significant role in influencing SME’s performance.
To the best of the authors’ knowledge, this research is the first attempt in integrating drivers, halal standard implementation and performance in the specific context of food manufacturing SMEs in Indonesia.
This research was financially supported by the Directorate of Research and Public Service, Ministry of Research, Technology and Higher Education, the Republic of Indonesia through “Penelitian Kerjasama Perguruan Tinggi (PKPT)” scheme in the fiscal year 2019 (Contract No. 228/SP2H/LT/DRPM/2019 and 004/LPPM-USB/Pekerti/V/2019).
Giyanti, I., Indrasari, A., Sutopo, W. and Liquiddanu, E. (2020), "Halal standard implementation in food manufacturing SMEs: its drivers and impact on performance", Journal of Islamic Marketing, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JIMA-11-2019-0243Download as .RIS
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