Impact of religiosity and branding on SMEs performance: does financial literacy play a role?

Abstract

Purpose This study aims to examine the relationship between religiosity and branding on small- and medium-scale enterprises (SMEs’) performance in Saudi Arabia. It also examines the mediating role of financial literacy on the relationship among Islamic religiosity, branding and SMEs’ performance. Design/methodology/approach This study adopts the purposive sampling technique in three major commercial cities, namely, Riyadh, Jeddah and Al-Qassim to sample 100 SMEs each, resulting in a total sampling of 300 SMEs in Saudi Arabia. Structural equation modeling is used to analyze the hypotheses formulated in this study. The structural equation modeling is aided with the help of Smart-PLS software. Findings This study finds that Islamic branding (on customer, compliance and origin) significantly affect financial attitude, while Islamic religiosity affects financial awareness among the SMEs. Findings reveal that there is a mediating role of financial awareness on the relationship between Islamic branding and Islamic religiosity with the SMEs’ performance. No mediation effect was recorded for financial attitude and financial knowledge. Further investigation reveals that financial attitude, financial awareness, Islamic branding (compliance and origin) and Islamic religiosity were the most significant determinants of SMEs’ performance in the context of Saudi Arabia. Research limitations/implications This study is conducted on SMEs in Saudi Arabia only. Further studies are required to examine SMEs in other Islamic countries and regions to improve the explanatory power of financial literacy on Islamic religiosity and Islamic branding for improved SMEs performance. Originality/value This study establishes that Islamic religiosity and branding could further increase the predictive power of financial literacy on SMEs’ performance. This study concludes that efforts to improve financial literacy should be religion-based as well as culture-based depending on where the SMEs are located so that specific strategies can be implemented, to enable the conducive growth of the SMEs and maximize the contribution of the SMEs to economic growth.

Do Internal Factors of MSMEs Matter in Islamic Bank Financing Decision?

“…This is because currently it is easier to obtain additional business capital from banks, and the government has even created a special business financing program for small entrepreneurs. However, the results of this study support the research by Wasiuzzaman & Nurdin (2019), Aysan, et al, (2016), , Basha, M. B., et al, (2021), Sabiu & Abduh, (2021), Alharbi, et al, (2021 found that the size of the company does not affect the decisions of MSMEs in Malaysia to apply for financing. The results of the regression analysis in table 4, show that religiosity has a sig value of 0.000 (significant at the 1% significance level) with a coefficient value of 0.119, this…”

What Factors Influence Customer Attitudes and Mindsets towards the Use of Services and Products of Islamic Banks in Bangladesh?

“…Dinc et al [30] described the relationship between Islamic financial literacy customer attitudes towards Islamic banking products and services. Alharbi et al [31] explored the relationship between customer attitude and financial literacy from an Islamic perspective. Customer attitude also helps with financial risk management, insurance, and investment planning [32].…”

“…High literacy on Islamic finance can motivate customers' behavioural intention to use Islamic banking products and services [53]. Alharbi et al [31] highlighted that customers' greater knowledge about Islamic financial literacy can influence their behavioural intention to use Islamic banking services. Georgiadou and Nickerson [54] examined customer perception of Islamic banks in the United Arab Emirates and indicated that a higher perception of customer attitudes about ethical confidence and trust in the organisation can increase a customer's behavioural intention to use Islamic banking services.…”

Incorporating Islamic Value in Corporate Social Responsibility (CSR) Practice of Malaysia Small Medium Enterprises (SMEs) Food Operators: Does Manager’s Religiosity Influence CSR Practice?

“…The finding from this study also has proved that managers' religiosity has relationship with CSR practice. Religious orientation has a strong influence on business success (Alharbi et al, 2021;Desiyanti & Kassim, 2020). Firms that incorporate the Islamic ethical values such as truthfulness, tolerance, firmness and fairness are more encouraged to sacrifice, give up and spend their wealth on the needy society and community, while expected reward only from Allah.…”

“…CSR exercise may also be driven by various personal values and interests of individual managers, guided by their religiosity (Iguchi et al, 2021;Mazereeuw et al, 2014). Previous studies had shown that managers' religiosity plays an important role as contributing factor towards SMEs' performance such as in Saudi Arabia (Alharbi et al, 2021) and Indonesia (Desiyanti & Kassim, 2020). Moreover, Ghadas et al (2018) revealed that it is crucial for managers to include the religiosity aspect in their business in terms of CSR so that it can give the highest benefit to the society and increase organizational performance and reputation.…”