Prediction of the performance of halal food industry using a system dynamics simulation model

Abstract

Purpose This study aims to develop a system dynamics (SD) simulation model to forecast the performance of the Indonesian halal industry to verify whether decision-making has been properly executed to increase the contribution of the success factors. Design/methodology/approach This study establishes a SD-based model using three subsystems, namely, the halal assurance and certification process, the government and the export–import subsystem. Findings The best scenario is the third scenario or the combined scenario of providing facilities to accelerate the micro-, small- and medium-sized enterprises (MSMEs), carrying out halal certification, reducing the time for the certification process, increasing the number of the halal auditor and increasing the awareness from enterprises (both MSMEs and large enterprises) to carry out halal certification because of the internal and external motivations. Research limitations/implications First, the demand for certification of the type of food product is acquired using the number of SMEs and large companies. Second, the model does not include the government budget as a constraint. Practical implications This study provides essential insights into implementing the best policies that can increase the performance of the halal industry. Social implications This study revealed that relevant policy scenarios could be built after simulating and analyzing each scenario’s effect on the halal industry’s performance. Originality/value This study will enrich the scientific insight related to institutional theory and resource-based view, as those theories identify success factors associated with the performance of the halal food industry. This study will also enrich the scientific insight related to system dynamic methodology, as it is used to model the performance of the halal industry.