Malaysian Halal Certification: A Study of Compliance Behavior of Muslim Entrepreneurs

Abstract

The halal industry in Malaysia plays a very significant role in its economic growth. It contributed about 8.1% to Malaysia’s GDP in 2020. Notwithstanding that, the applications of and compliance with halal certification among Muslim entrepreneurs remains significantly low. Ironically, Muslim entrepreneurs stand to suffer losses of up to 60% due to the absence of the halal logo on their products resulting from their low halal compliance behavior. This study proposes to identify factors affecting the compliance behavior among Muslim entrepreneurs in relation to the Malaysian halal certification. Data were collected through personally administered questionnaires that were distributed to 400 selected Muslim entrepreneurs in Malaysia. Research samples were chosen using random sampling techniques from the list provided by Small and Medium Enterprise Corporation Malaysia (SME Corp). This study used the structural equation model (PLS-SEM) analysis to process the effects of independent and mediator variables on the compliance behavior of the Muslim entrepreneurs. Result shows that there is a positive and significant effect of attitude, social influence, and awareness on the behavioral intention to comply with the Malaysian halal certification. Mediating factors of attitude and awareness show positive and significant relationships between social influences and the intention to comply with halal certification. Finally, intention also has a significant and positive effect on the compliance behavior of Malaysian Muslim entrepreneurs on halal certification. Research outcomes highlight the importance of local authorities and policymakers enhancing their strategies to ensure more Muslim entrepreneurs comply with the Malaysian halal certification. This study hopes to contribute to existing scholarship particularly on the compliance behavior of halal certification among Muslim entrepreneurs.