Investigating Sustainability-oriented Practices in Malaysian Oil Palm Cooperatives: A Construct Validation Method Using Confirmatory Composite Analysis

Abstract

Sustainability-oriented Practices (SOP) is a novel theme in the developing countries, particularly in the context of oil palm cooperatives. However, limited knowledge is observed about the achievements of sustainability agenda in oil palm cooperatives. Oil palm cooperatives are democratically controlled and voluntarily member-owned business to assist smallholders in managing their oil palm farms. This study concentrates on oil palm cooperatives because of the numerous sustainability conundrums, such as deforestation, and biodiversity endangerment, associated with this sector, and the dearth of the holistic SOP that applies to the smallholders to mitigate these issues. Consequently, the hierarchical component model of SOP is not properly proven, and this warrants the crucial need for a comprehensive method and homogenous classification of measures. This study aims to estimate and validate the SOP of oil palm cooperatives by confirming SOP as a higher-order component in the context of the Malaysian palm oil sector. Data was obtained from 185 board members of the oil palm cooperatives. Consequently, this data was analysed using confirmatory composite analysis (CCA) following a visible trend in applying partial least squares structural equation modelling (PLS-SEM). Substantial results were drawn from the CCA, therefore justifying the higher-order component of SOP. The first and second level reliability and validity assessment revealed that oil palm cooperatives implemented SOP, with varying levels of consideration to social, economic, and environmental dimensions. Environmental dimension emerged as the least critical, while the social dimension is the most prioritised. This study contributes to the sustainability, cooperative, and palm oil sector literature by presenting the earliest studies of its kind that focus on sustainability of oil palm cooperatives using a hierarchical component model. This study shed new light on the phenomena of sustainability orientation that portrays SOP as pertinent to enhance the resilience of the oil palm cooperatives.