Halal standard implementation in food manufacturing SMEs: its drivers and impact on performance

Abstract

Purpose 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. Design/methodology/approach 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. Findings 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. Research limitations/implications 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. Practical implications 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. Originality/value 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.

Halal MSME quality management and adaptive strategy under uncertainty post Covid-19

“…The results of this study support the results of previous studies on quality management in general (Hassan et al, 2012;Raja et al, 2011;Witjaksono, 2012;Yunis et al, 2013), as well as halal quality management (Ab Talib et al, 2017;Giyanti et al, 2021;Salindal, 2019). Halal food products and services are related not only to the use of halal materials and production processes, but also to build trust, halal supply chains, halal packaging and storage, understanding customer needs (Ab Talib et al, 2017;Giyanti et al, 2021;Salindal, 2019). Halal industrial products have potentials in the new normal era due to the increasing consumer demand for products that are processed, stored, distributed with hygienic and halal standards.…”

“…The results of the study found that the practice of halal quality management had a significant effect on the competitive advantage of Halal MSMEs (ρ<1%). The results of this study support the results of previous studies on quality management in general (Hassan et al, 2012;Raja et al, 2011;Witjaksono, 2012;Yunis et al, 2013), as well as halal quality management (Ab Talib et al, 2017;Giyanti et al, 2021;Salindal, 2019). Halal food products and services are related not only to the use of halal materials and production processes, but also to build trust, halal supply chains, halal packaging and storage, understanding customer needs (Ab Talib et al, 2017;Giyanti et al, 2021;Salindal, 2019).…”

“…Halal quality management is a management practice to manage resources in producing process and quality products, and also halal services. The measurement of halal quality management was developed from previous research (Ab Talib et al, 2017;Giyanti et al, 2021;Salindal, 2019) measured from indicators: halal raw materials, halal production processes, halal supply chains, halal storage and distribution. Halal quality management is measured qualitatively from interviews with owners-managers of halal MSMEs on a 6-point scale from 1 to 6 with "1" representing strongly disagree and "6" representing strongly agree.…”

“…The effect of quality management practices and halal products quality on performance has been explained by previous researches (Ab Talib et al, 2017;Giyanti et al, 2021;Raja et al, 2011;Salindal, 2019) as well as strategic management on the conditions of uncertainty (Jabnoun et al, 2003;Parnell et al, 2012). However, the literature on adaptive strategies related to halal quality management is still limited, and it becomes the motivation for this research.…”

“…These high value products are reflected in quality halal products. Empirical studies of the influence of quality management on performance have been proven by previous researches (Raja et al, 2011), while studies of the effect of halal quality management on performance have been carried out (Ab Talib et al, 2017;Giyanti et al, 2021;Salindal, 2019). Giyanti et al (2020) in a study of 143 halal MSMEs in Solo, Central Java, Indonesia found that the implementation of halal standards had an effect on operating performance, market performance and financial performance.…”