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The mediating role of financial governance on the relationship between financial management, Islamic work ethic and accountability in Islamic social enterprise (ISE)

Muhammad Iqmal Hisham Kamaruddin (Faculty of Economics and Muamalat, Universiti Sains Islam Malaysia, Nilai, Malaysia)
Sofiah Md Auzair (Faculty of Economics and Management, Universiti Kebangsaan Malaysia, Bangi, Malaysia)
Mohd Mohid Rahmat (Faculty of Economics and Management, Universiti Kebangsaan Malaysia, Bangi, Malaysia)
Nurul Aini Muhamed (Faculty of Economics and Muamalat, Universiti Sains Islam Malaysia, Nilai, Malaysia)

Social Enterprise Journal

ISSN: 1750-8614

Article publication date: 12 July 2021

Issue publication date: 9 August 2021

513

Abstract

Purpose

The purpose of this study is to examine the role of financial governance practices in influencing both financial management and Islamic work ethic practices to affect Islamic social enterprises (ISEs) accountability.

Design/methodology/approach

Questionnaires were administered to financial officers of 102 Malaysian ISEs. Data was analysed using Smart-PLS to examine the relationships between financial management, Islamic work ethic, financial governance and accountability.

Findings

Results of this study indicate direct relationship only exist between Islamic work ethic and accountability. The relationship between financial management and accountability are indirect through financial governance. Hence, the data proves that financial governance has a mediating role on both the relationships between financial management and Islamic work ethic with the accountability of the ISEs.

Research limitations/implications

The study has highlighted the greater role of financial management, Islamic work ethic and financial governance practices over accountability to achieve public trust, especially for Malaysian ISEs.

Practical implications

ISEs need to have good financial governance practices besides financial management and Islamic work ethic practices to achieve good accountability.

Originality/value

The study contributes to the field of management and social accounting by providing empirical evidence on the ISEs practices specifically on financial management, Islamic work ethic, financial governance and accountability. This framework thus presents amongst the first attempts in studying accountability issues in ISEs.

Keywords

Acknowledgements

This research was funded by the Universiti Kebangsaan Malaysia under the research grant scheme entitled: Menjejaki Amalan Mampan dan Perkongsian Nilai Perusahaan Sosial Islam (Islamic Social Enterprise) (EP-2019–056).

Citation

Kamaruddin, M.I.H., Auzair, S.M., Rahmat, M.M. and Muhamed, N.A. (2021), "The mediating role of financial governance on the relationship between financial management, Islamic work ethic and accountability in Islamic social enterprise (ISE)", Social Enterprise Journal, Vol. 17 No. 3, pp. 427-449. https://doi.org/10.1108/SEJ-11-2020-0113

Publisher

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Emerald Publishing Limited

Copyright © 2021, Emerald Publishing Limited

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