THE IMPACT OF ISLAMIC FINANCE TOWARDS HALAL PRODUCT DEVELOPMENT AND PATRONISING HALAL SMES IN NIGERIA
Abstract
The study assesses the level of Islamic finance on halal awareness, products, certification, and brands through the behavioural intention to patronise Islamic SMEs products for better Halal production, as most of the SME's products neglect Halal certification in their daily production. Design/Methodology/Approach: The study used the Confirmatory Factor Analysis under Structural Equation modelling using a qualitative data collection technique through convenience sampling. The cluster sampling of selecting the SMEs with their consumer. The validity and reliability were also tested for data justification. This paper designed and collected data from the three categories of stakeholders, Consumers and others in Northern Nigeria, considering the vast population of the states in the Northern part of the country. The result shows that the priority issues that enhanced social awareness, halal products, certification and halal brands have a positive relationship with market patronage. Further, describes the weak factors hindering halal certification through a cluster model based on the categories of the responses proposed by the halal integrity network. The practical implication addressed and developed an alternative way of managing factors that hamper the concerned Halal certification towards Halal industries and their ingredients and logistics for Muslim markets patronage. Originality/Value: It is challenging to find a paper that discusses factors that hamper Halal certification in Northern Nigeria and with a new method introduced of using CFA under SEM for model development industries in Northern Nigeria.
JEL Classification Codes: D21, G19, M31.
References
Agmeka, F., Wathoni, R. N., & Santoso, A. S. (2019). The influence of discount framing towards brand reputation and brand image on purchase intention and actual behaviour in e-commerce. Procedia Computer Science, 161(1), 851-858.
Ahmad, N., & Haron, S. (2002). Perceptions of Malaysian corporate customers towards Islamic banking products & services. International journal of Islamic financial services, 3(4), 1-16.
Aisyah, M., Suzanawaty, L., & Said, M. (2019). The demand for halal certified restaurants in Indonesia. International Journal of Supply Chain Management, 8(5), 86-98.
Aji, H.M., & Muslichah, I. (2022). Is halal universal? The impact of self-expressive value on halal brand personality, brand tribalism, and loyalty: case of Islamic hospitals. Journal of Islamic Marketing, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JIMA-10-2021-0327
Ajzen, I. (2020). The theory of planned behavior: Frequently asked questions. Human Behavior and Emerging Technologies, 2(4), 314-324.
Akbar, S., Zulfiqar Ali Shah, S., & Kalmadi, S. (2012). An investigation of user perceptions of Islamic banking practices in the United Kingdom. International Journal of Islamic and Middle Eastern Finance and Management, 5(4), 353- 370. https://doi.org/10.1108/17538391211282845
Al Balushi, Y., Locke, S. & Boulanouar, Z. (2019). Omani SME perceptions towards Islamic financing systems. Qualitative Research in Financial Markets, 11(4), 369-386. https://doi.org/10.1108/QRFM-06-2018-0078
Ali, A., Sherwani, M., Ali, A., Ali, Z., & Sherwani, S. (2020). The moderating role of individualism/collectivism and materialism: An application of the theory of planned behavior (TPB) in halal food purchasing. Journal of Food Products Marketing, 26(9), 581-599.
Ali, M.H., Iranmanesh, M., Tan, K.H., Zailani, S. and Omar, N.A. (2022). Impact of supply chain integration on halal food supply chain integrity and food quality performance. Journal of Islamic Marketing, 13(7), 1515-1534. https://doi.org/10.1108/JIMA-08-2020-0250
Ambali, A. R., & Bakar, A. N. (2014). People's awareness on halal foods and products: potential issues for policy-makers. Procedia-Social and Behavioral Sciences, 121(1), 3-25.
Aziz, Y. A., & Chok, N. V. (2013). The role of Halal awareness, Halal certification, and marketing components in determining Halal purchase intention among non-Muslims in Malaysia: A structural equation modeling approach. Journal of International Food & Agribusiness Marketing, 25(1), 1-23.
Belal, A. R., Mazumder, M. M. M., & Ali, M. (2019). Intellectual capital reporting practices in an Islamic bank: A case study. Business Ethics: A European Review, 28(2), 206-220.
Bilal, M., Fatima, S., Ishtiaq, M., & Azeem, H. M. (2020). Factors affecting the choice of Islamic banking by SMEs in Pakistan: Implications for Islamic banks' corporate governance. Pakistan Journal of Commerce and Social Sciences (PJCSS), 14(1), 255-272.
Bonett, D. G. (2002). Sample size requirements for estimating intraclass correlations with desired precision. Statistics in medicine, 21(9), 1331-1335.
Briliana, V., & Mursito, N. (2017). Exploring antecedents and consequences of Indonesian Muslim youths' attitude towards halal cosmetic products: A case study in Jakarta. Asia Pacific Management Review, 22(4), 176-184.
Bujang, M. A., Omar, E. D., & Baharum, N. A. (2018). A review on sample size determination for Cronbach’s alpha test: a simple guide for researchers. The Malaysian journal of medical sciences: MJMS, 25(6), 85.
Butt, M.M., Rose, S., Wilkins, S. & Ul Haq, J. (2017). MNCs and religious influences in global markets: Drivers of consumer-based halal brand equity. International Marketing Review, 34(6), 885-908. https://doi.org/10.1108/IMR-12-2015-0277
Byrne, B. M. (2013). Structural equation modeling with LISREL, PRELIS, and SIMPLIS: Basic concepts, applications, and programming. Hove, UK: Psychology Press.
Byrne, B. M. (2016). Structural equation modeling with AMOS: Basic concepts, applications, and programming (3rd ed.). New York, NY: Routledge.
Cheah, J.-H., Sarstedt, M., Ringle, C.M., Ramayah, T. & Ting, H. (2018), "Convergent validity assessment of formatively measured constructs in PLS-SEM: On using single-item versus multi-item measures in redundancy analyses", International Journal of Contemporary Hospitality Management, 30(11), 3192-3210. https://doi.org/10.1108/IJCHM-10-2017-0649
Cheng, P. L. K., & Low, K. (2008). The brand marketing of halal products: The way forward. The Icfai University Journal of Brand Management, 5(4), 37-50.
Danjuma, I. (2021). An increasing demand for Halal products and services: A call for the enactment of an international convention on Halal industries. In Contemporary Issues in Islamic Social Finance, 1st Edition, 260-272. Routledge.
Dawes, J. (2008). Do data characteristics change according to the number of scale points used? An experiment using 5-point, 7-point and 10-point scales. International journal of market research, 50(1), 61-104.
Dodds, W. B., Monroe, K. B., & Grewal, D. (1991). Effects of price, brand, and store information on buyers’ product evaluations. Journal of marketing research, 28(3), 307-319.
Farhan, F., & Andriansyah, Y. (2016). Factors affecting Muslim students awareness ofhalal products in Yogyakarta, Indonesia. International Review of Management and Marketing, 6(4), 27-31.
Fida, B. A., Ahmed, U., Al-Balushi, Y., & Singh, D. (2020). Impact of service quality on customer loyalty and customer satisfaction in Islamic banks in the Sultanate of Oman. Sage Open, 10(2), 2158244020919517.
Firdaus, F.S., Ikhsan, R.B., & Fernando, Y. (2022). Predicting purchase behaviour of Indonesian and French Muslim consumers: insights from a multi-group analysis., Journal of Islamic Marketing, ahead-of-print No. ahead-of- print. https://doi.org/10.1108/JIMA-05-2021-0169
Fornell, C., & Larcker, D. F. (1981). Evaluating structural equation models with unobservable variables and measurement error. Journal of Marketing Research, 18(1), 39–50.
Gait, A., & Worthington, A. (2008). An empirical survey of individual consumer, business firm and financial institution attitudes towards Islamic methods of finance. International Journal of Social Economics, 35(11), 783-808. https://doi.org/10.1108/03068290810905423
Garg, P., & Joshi, R. (2018). Purchase intention of “Halal” brands in India: the mediating effect of attitude. Journal of Islamic Marketing, 9(3), 683-694. https://doi.org/10.1108/JIMA-11-2017-0125
Golnaz, R., Zainalabidin, M., Mad Nasir, S., & Eddie Chiew, F. C. (2010). Non-Muslims’ awareness of Halal principles and related food products in Malaysia. International food research journal, 17(3), 667-674.
Hair, J. F., Anderson, R. E., Babin, B. J., & Black, W. C. (2010). Multivariate data analysis: A global perspective. Upper Saddle River, NJ: Pearson
Halimi, F.F., Gabarre, S., Rahi, S., Al-Gasawneh, J.A., & Ngah, A.H. (2021). Modelling Muslims’ revisit intention of non-halal certified restaurants in Malaysia. Journal of Islamic Marketing, ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JIMA-01-2021-0014
Han, C. M. (1989). Country image: halo or summary construct?. Journal of marketing research, 26(2), 222-229.
Hanafiah, M. H., & Hamdan, N. A. A. (2020). Determinants of Muslim travellers Halal food consumption attitude and behavioural intentions. Journal of Islamic Marketing, 12(6), 1197-1218.
Hasan, R., Ahmad, A.U.F., & Parveen, T. (2019). Sukuk risks – a structured review of theoretical research. Journal of Islamic Accounting and Business Research, 10(1), 35-49. https://doi.org/10.1108/JIABR-06-2015-0026
Hassan, H., & Bojei, J. (2019). Halal values and attitude among Muslim worldwide: does it affect the adaptation of marketing program strategy?. Voice of Academia (VOA), 15(1), 73-89.
Hossain, M. S., Zhou, X., & Rahman, M. F. (2018). Examining the impact of QR codes on purchase intention and customer satisfaction on the basis of perceived flow. International Journal of Engineering Business Management, 10, 1847979018812323.
Iqbal, M., Nisha, N. & Rashid, M. (2018). Bank selection criteria and satisfaction of retail customers of Islamic banks in Bangladesh. International Journal of Bank Marketing, 36(5), 931-946. https://doi.org/10.1108/IJBM-01-2017-0007
Iranmanesh, M., Mirzaei, M., Parvin Hosseini, S.M. & Zailani, S. (2020), "Muslims’willingness to pay for certified halal food: an extension of the theory of planned behaviour", Journal of Islamic Marketing, 11(1), 14-30. https://doi.org/10.1108/JIMA-03-2018-0049
Isa, S.M., Chin, P.N., & Mohammad, N.U. (2018). Muslim tourist perceived value: a study on Malaysia Halal tourism. Journal of Islamic Marketing, 9(2) 402-420. https://doi.org/10.1108/JIMA-11-2016-0083
Jaffar, M. A., & Musa, R. (2014). Determinants of attitude towards Islamic financing among halal-certified micro and SMEs: A preliminary investigation. Procedia-Social and Behavioral Sciences, 130(1), 135-144.
Jamal, A., & Sharifuddin, J. (2015). Perceived value and perceived usefulness of halal labeling: The role of religion and culture. Journal of Business research, 68(5), 933-941.
Jensen, R. S. (2017). Pilot judgment and crew resource management. Routledge.
Johan, Z. J., & Putit, L. (2016). Conceptualizing the influences of knowledge and religiosity on Islamic credit card compliance. Procedia Economics and Finance, 37(1), 480-487.
Kanimozhi, S., & Selvarani, A. (2019). Application of the decomposed theory of planned behaviour in technology adoption: A review. International Journal of Research and Analytical Reviews, 6(2), 735-739.
Karbhari, Y., Alam, M.K., & Rahman, M.M. (2020), "Relevance of the application of institutional theory in Shariah governance of Islamic banks", PSU Research Review, 5(1), 1-15. https://doi.org/10.1108/PRR-05-2020-0015
Kenny, D. A., & Betsy, M. D. (2003). Effect of the number of variables on measures of fit in structural equation modeling. Structural Equation Modeling, 10(3), 333–351.
Khan, M. I., Haleem, A., & Khan, S. (2018). Defining halal supply chain management. In Supply Chain Forum: An International Journal, 19(2), 122-131. Taylor & Francis.
Khan, N., Sarwar, A., & Tan, B.C. (2021). Determinants of purchase intention of halal cosmetic products among Generation Y consumers. Journal of Islamic Marketing, 12(8), 1461-1476. https://doi.org/10.1108/JIMA-11- 2019-0248
Kline, R. B. (2015). Principles and practice of structural equation modeling. New York, NY: Guilford Publications
Komijani, A., & Taghizadeh-Hesary, F. (2018). An overview of Islamic banking and finance in Asia. Routledge Handbook of Banking and Finance in Asia, 505-518.
Kurniawati, D.A. and Savitri, H. (2020). Awareness level analysis of Indonesian consumers toward halal products. Journal of Islamic Marketing, 11(2), 522-546. https://doi.org/10.1108/JIMA-10-2017-0104
Lada, S., Harvey Tanakinjal, G., & Amin, H. (2009). Predicting intention to choose halal products using theory of reasoned action. International Journal of Islamic and Middle Eastern Finance and Management, 2(1), 66-76. https://doi.org/10.1108/17538390910946276
Manosuthi, N., Lee, J. S., & Han, H. (2020). Predicting the revisit intention of volunteer tourists using the merged model between the theory of planned behavior and norm activation model. Journal of Travel & Tourism Marketing, 37(4), 510-532.
Mashitoh, A. S., Rafida, A. N., & Alina, A. R. (2013). Perception towards halal awareness and its correlation with halal certification among Muslims. Middle-East Journal of Scientific Research, 13(1), 1-4.
Mohammad Mosadeghrad, A. (2013). Healthcare service quality: towards a broad definition. International Journal of Health Care Quality Assurance, 26(3), 203- 219. https://doi.org/10.1108/09526861311311409
Mohd Suki, N., & Abang Salleh, A.S. (2016). Does Halal image strengthen consumer intention to patronize Halal stores? Some insights from Malaysia. Journal of Islamic Marketing, 7(1), 120-132. https://doi.org/10.1108/JIMA-12-2014-0079
Mohd Suki, N., & Abang Salleh, A.S. (2018). Mediating effect of Halal image on Muslim consumers’ intention to patronize retail stores: Some insights from Malaysia. Journal of Islamic Marketing, 9(2), 338-355. https://doi.org/10.1108/JIMA-02-2017-0014
Mohd Yusof, Y.L., Wan Jusoh, W.J., & Maulan, S. (2021). Perceived quality association as determinant to re-patronise Shariah-compliant brand restaurants. Journal of Islamic Marketing, 12(2), 302-315. https://doi.org/10.1108/JIMA-10-2018-0190
Mohsin Butt, M., & Aftab, M. (2013). Incorporating attitude towards Halal banking in an integrated service quality, satisfaction, trust and loyalty model in online Islamic banking context. International Journal of Bank Marketing, 31(1), 6-23. https://doi.org/10.1108/02652321311292029
Mohsin, A., Ramli, N., & Alkhulayfi, B. A. (2016). Halal tourism: Emerging opportunities. Tourism Management Perspectives, 19(1), 137-143.
Moore, G. C., & Benbasat, I. (1991). Development of an instrument to measure the perceptions of adopting an information technology innovation. Information systems research, 2(3), 192-222.
Moshin, A., Brochado, A., & Rodrigues, H. (2020). Halal tourism is traveling fast: Community perceptions and implications. Journal of Destination Marketing &Management, 18(1), 100503.
Mueller, R. O., & Hancock, G. R. (2018). Structural equation modeling. In The reviewer’s guide to quantitative methods in the social sciences, 445-456. Routledge.
Mulaik, S. A. (1989). Quantitative methods in psychology evaluation of goodnessof-fit indices for structural equation models. Psychological Bulletin, 105(3), 430–445.
Muneeza, A., & Mustapha, Z. (2021). Halal certification process for fisheries products in Maldives. Journal of Islamic Marketing, 12(2), 451-466. https://doi.org/10.1108/JIMA-02-2019-0035
Nasirun, N., Noor, S. M., Sultan, A. A., & Haniffiza, W. M. H. W. M. (2019). Role of marketing mix and halal certificate towards purchase intention of agro based products. International Journal, 2(7), 37-46.
Nguyen, Q. K. (2022). Determinants of bank risk governance structure: A cross- country analysis. Research in International Business and Finance, 60(1), 101575.
Oke, A. O., Kamolshotiros, P., Popoola, O. Y., Ajagbe, M. A., & Olujobi, O. J. (2016). Consumer behavior towards decision making and loyalty to particular brands. International Review of Management and Marketing, 6(4), 43-52.
Osman, A. A., Abdullah, A., & Ulum, Z. K. A. B. (2020). The Accomplishment of Knowledge Delivery Towards Islamic Banking Employees. In International Conference on Business and Technology, 1615-1638. Springer, Cham.
Park, H. H., Jeon, J. O., & Sullivan, P. (2015). How does visual merchandising in fashion retail stores affect consumers’ brand attitude and purchase intention?. The International Review of Retail, Distribution and Consumer Research, 25(1), 87-104.
Ping, I. L. L., & Osman, K. (2019). Laboratory-modified argument driven inquiry (lab-madi) module: content validity process. Jurnal Pendidikan IPA Indonesia, 8(1), 129-140.
Prabowo, S., Abd Rahman, A., Ab Rahman, S. & Samah, A.A. (2015). Revealing factors hindering halal certification in East Kalimantan Indonesia. Journal of Islamic Marketing, 6(2), 268-291. https://doi.org/10.1108/JIMA-05-2014-0040
Sekaran, U., & Bougie, R. (2016). Research methods for business: A skill building approach. john wiley & sons.
Sudari, S., Tarofder, A., Khatibi, A., & Tham, J. (2019). Measuring the critical effect of marketing mix on customer loyalty through customer satisfaction in food and beverage products. Management Science Letters, 9(9), 1385-1396.
Suhartanto, D., Dean, D., Sarah, I.S., Hapsari, R., Amalia, F.A. and Suhaeni, T. (2021). Does religiosity matter for customer loyalty? Evidence from halal cosmetics. Journal of Islamic Marketing, 12(8), 1521- 1534.https://doi.org/10.1108/JIMA-03-2020-0069
Vanany, I., Soon, J.M., Maryani, A., & Wibawa, B.M. (2020). Determinants of halal-food consumption in Indonesia. Journal of Islamic Marketing, 11(2), 507-521. https://doi.org/10.1108/JIMA-09-2018-0177
Zainudin, M.I., Haji Hasan, F., & Othman, A.K. (2020). Halal brand personality and brand loyalty among millennial modest fashion consumers in Malaysia. Journal of Islamic Marketing, 11(6), 1277-1293. https://doi.org/10.1108/JIMA-10-2018-0187
Copyright (c) 2022 Tijjani Muhammad, Musa Umar Yakasai
This work is licensed under a Creative Commons Attribution 4.0 International License.
