DOES ISLAMIC SOCIAL CAPITAL ENHANCE SMEs SUSTAINABLE PERFORMANCE?

  • Rizaldi Yusfiarto UIN Sunan Kalijaga Yogyakarta, Indonesia
  • Galuh Tri Pambekti UIN Sunan Kalijaga Yogyakarta, Indonesia
  • Ananda Setiawan Institut Agama Islam Negeri Salatiga, Indonesia
  • Annes Nisrina Khoirunnisa UIN Sunan Kalijaga Yogyakarta, Indonesia
  • Septy Setia Nugraha Diponegoro University, Indonesia
Keywords: Islamic social capital, Firm innovativeness, Sustainable performance, Small and medium-sized enterprises.

Abstract

The study examines the roles of Islamic social capital and firm innovativeness in maintaining sustainable performance of SMEs in Indonesia. Compiling data from 186 respondents and using the partial least squares structural equation modeling approach (SEM-PLS), the study documents the importance of Islamic social capital for many aspects of businesses. The Islamic social capital not only supports business activities but also strengthens business networks, which in turn boosting firms’ innovation its performance.

References

Achilov, D. (2013). Social capital, Islam, and the Arab spring in the Middle East. Journal of Civil Society, 9(3), 268–286.

Acquaah, M. (2007). Managerial social capital, strategic orientation, and organizational performance in an emerging economy. Strategic Management Journal, 28(12), 1235–1255.

Adamu, A. A., Wan, C. Y., & Gorondutse, A. H. (2019). Determinants of sustainable performance of SMEs: A proposed framework. International Journal of Research and Scientific Innovation (IJRSI), 6(6), 182–188.

Adler, P. S., & Kwon, S.-W. (2002). Social capital: Prospects for a new concept. The Academy of Management Review, 27(1), 17-40.

Afsari, A. (2012). Social capital in Islam. Interdisciplinary Quranic Studies, 3(1), 101–118.

Agyapong, F. O., Agyapong, A., & Poku, K. (2017). Nexus between social capital and performance of micro and small firms in an emerging economy: The mediating role of innovation. Cogent Business & Management, 4(1), 1309784.

Alam Choudhury, M. (2002). Microenterprise development using Islamic financing and organizational instruments. International Journal of Social Economics, 29(1/2), 119–134.

Andrews, R. (2010). Organizational social capital, structure and performance. Human Relations, 63(5), 583–608.

Bhatti, S. H., Vorobyev, D., Zakariya, R., & Christofi, M. (2021). Social capital, knowledge sharing, work meaningfulness and creativity: Evidence from the Pakistani pharmaceutical industry. Journal of Intellectual Capital, 22(2), 243–259.

Boateng, H., Visnupriyan, R., Ofori, K. S., & Hinson, R. E. (2020). Examining the link between social capital, knowledge quality, SMEs innovativeness and performance. Business Information Review, 37(4), 167–175.

Boohene, R., Gyimah, R. A., & Osei, M. B. (2019). Social capital and SME performance: The moderating role of emotional intelligence. Journal of Entrepreneurship in Emerging Economies, 12(1), 79–99.

Cameron, A., & Trivedi, P. (2010). Microeconometrics using stata (2nd Edition). College Station USA: Stata Press Corporation.

Carey, S., Lawson, B., & Krause, D. R. (2011). Social capital configuration, legal bonds and performance in buyer-supplier relationships. Journal of Operations Management, 29(4), 277–288.

Ciemleja, G., & Lace, N. (2011). The model of sustainable performance of small and medium-sized enterprise. Engineering Economics, 22(5), 501–509.

Duodu, B., & Rowlinson, S. (2019). The effect of social capital on exploratory and exploitative innovation. European Journal of Innovation Management, 23(4), 649–674.

Gao, L., Waechter, K. A., & Bai, X. (2015). Understanding consumers’ continuance intention towards mobile purchase: A theoretical framework and empirical study – A case of China. Computers in Human Behavior, 53, 249–262. https://doi.org/10.1016/j.chb.2015.07.014

Gunday, G., Ulusoy, G., Kilic, K., & Alpkan, L. (2011). Effects of innovation types on firm performance. International Journal of Production Economics, 133(2), 662–676.

Hair, J. F., Hult, G. T. M., Ringle, C. M., & Sarstedt, M. (2017). A primer on partial least squares structural equation modeling (PLS-SEM). Thousand Oaks: Sage Publications.

Hair, J. F., Sarstedt, M., Ringle, C. M., & Gudergan, S. (2018). Advanced issues in partial least squares structural equation modelling. Thousand Oaks, CA: Sage Publications.

Hair, J. F., Black, W. C., Babin, B. J., & Anderson, R. E. (2010). Multivariate data analysis (7th Edition). New Jersey, NJ: Prentice Hall.

Hansen, E. (2014). Innovativeness in the face of decline: Performance implications. International Journal of Innovation Management, 18(05), 1450039.

Hansen, E., Juslin, H., & Knowles, C. (2007). Innovativeness in the global forest products industry: Exploring new insights. Canadian Journal of Forest Research, 37(8), 1324–1335.

Hassan Farooqi, A. (2006). Islamic social capital and networking. Humanomics, 22(2), 113–125.

Hurley, R. F., & Hult, G. T. M. (1998). Innovation, market orientation, and organizational learning: An integration and empirical examination. Journal of Marketing, 62(3), 42–54.

Jansen, J. J. P., Vera, D., & Crossan, M. (2009). Strategic leadership for exploration and exploitation: The moderating role of environmental dynamism. The Leadership Quarterly, 20(1), 5–18.

Kaasa, A. (2009). Effects of different dimensions of social capital on innovative activity: Evidence from Europe at the regional level. Technovation, 29(3), 218–233.

Kamath, P. R., Pai, Y. P., & Prabhu, N. K. P. (2019). Building customer loyalty in retail banking: A serial-mediation approach. International Journal of Bank Marketing, 38(2), 456–484.

Knowles, C., Hansen, E., & Dibrell, C. (2015). Measuring firm innovativeness: Development and refinement of a new scale. Journal of Forest Products Business Research, 5(5), 1–24.

Kuhl, M. R., Da Cunha, J. C., Macaneiro, M. B., & Cunha, S. K. (2016). Relationship between innovation and sustainable performance. International Journal of Innovation Management, 20(06), 1650047.

Mamun, A. Al, Nawi, N. B. C., Permarupan, P. Y., & Muniady, R. (2018). Sources of competitive advantage for Malaysian micro-enterprises. Journal of Entrepreneurship in Emerging Economies, 10(2), 191–216.

Maurer, I., Bartsch, V., & Ebers, M. (2011). The Value of intra-organizational social capital: How it fosters knowledge transfer, innovation performance, and growth. Organization Studies, 32(2), 157–185.

Molina-Morales, F. X., & Martínez-Fernández, M. T. (2010). Social networks: Effects of social capital on firm innovation. Journal of Small Business Management, 48(2), 258–279.

Muniady, R. A., Mamun, A. Al, Mohamad, M. R., Permarupan, P. Y., & Zainol, N. R. B. (2015). The effect of cognitive and relational social capital on structural social capital and micro-enterprise performance. SAGE Open, 5(4), 1-9.

Park, S. H., & Luo, Y. (2001). Guanxi and organizational dynamics: Organizational networking in Chinese firms. Strategic Management Journal, 22(5), 455–477.

Podsakoff, P. M., MacKenzie, S. B., Lee, J. Y., & Podsakoff, N. P. (2003). Common method biases in behavioral research: A critical review of the literature and recommended remedies. Journal of Applied Psychology, 88(5), 879–903.

Prendergast, C. (2005). Social capital. In G. Ritzer (Ed.), Encyclopedia of social theory (Vol. 2). London: Sage Publications Inc.

Pujiono, A., Setyawati, R., & Idris, I. (2018). Strategi pengembangan umkm halal di jawa tengah dalam menghadapi persaingan global. Indonesia Journal of Halal, 1(1), 1-7.

Putnam, R. D. (2007). E pluribus unum: Diversity and community in the twenty-first century the 2006 johan skytte prize lecture. Scandinavian Political Studies, 30(2), 137–174.

Rashid, N., Jabar, J., Yahya, S., & Samer, S. (2015). State of the art of sustainable development: An empirical evidence from firm’s resource and capabilities of Malaysian automotive industry. Procedia - Social and Behavioral Sciences, 195(July 2015), 463–472.

Sarstedt, M., Ringle, C. M., Cheah, J.-H., Ting, H., Moisescu, O. I., & Radomir, L. (2020). Structural model robustness checks in PLS-SEM. Tourism Economics, 26(4), 531–554.

Shan, P., Song, M., & Ju, X. (2016). Entrepreneurial orientation and performance: Is innovation speed a missing link? Journal of Business Research, 69(2), 683–690.

Shmueli, G., Sarstedt, M., Hair, J. F., Cheah, J.-H., Ting, H., Vaithilingam, S., & Ringle, C. M. (2019). Predictive model assessment in PLS-SEM: Guidelines for using PLSpredict. European Journal of Marketing, 53(11), 2322–2347.

Srisathan, W. A., Ketkaew, C., & Naruetharadhol, P. (2020). The intervention of organizational sustainability in the effect of organizational culture on open innovation performance: A case of thai and chinese SMEs. Cogent Business & Management, 7(1), 1717408.

Swan, J., Newell, S., Scarbrough, H., & Hislop, D. (1999). Knowledge management and innovation: Networks and networking. Journal of Knowledge Management, 3(4), 262–275.

Tolsma, L. (2008). An “Islamised Australian way of life”: Developing an Islamic social capital framework. Re-Imagining Sociology, the Annual Conference of the Australian Sociological Association (TASA 2008), 1–18.

Tsai, W., & Ghoshal, S. (1998). Social capital and value creation: The role of intrafirm networks. Academy of Management Journal, 41(4), 464–476.

Venkatraman, S., & Nayak, R. R. (2015). Corporate sustainability: An IS approach for integrating triple bottom line elements. Social Responsibility Journal, 11(3), 482–501.

Vu Hoang, N. (2014). The roles of human and social capital in the development of manufacturing SMEs in Vietnam. Journal of Economics and Development, 16(1), 5–22.

Yli-Renko, H., Autio, E., & Sapienza, H. J. (2001). Social capital, knowledge acquisition, and knowledge exploitation in young technology-based firms. Strategic Management Journal, 22(6–7), 587–613.

Yokakul, N., & Zawdie, G. (2011). The knowledge sphere, social capital and growth of indigenous knowledge-based SMEs in the Thai dessert industry. Science and Public Policy, 38(1), 19–29.

Zaenuddin, D. (2020). Religion and social capital of citizenship: Bogor Islamic community in a globalizing world development. International Journal of Interreligious and Intercultural Studies, 3(2), 86–100.

Zhang, X., Zhang, H., & Song, M. (2019). Does social capital increase innovation speed? empirical evidence from China. Sustainability, 11(22), 6432. https://doi.org/10.3390/su11226432

Published
2022-02-28
How to Cite
Yusfiarto, R., Pambekti, G. T., Setiawan, A., Khoirunnisa, A. N., & Nugraha, S. S. (2022). DOES ISLAMIC SOCIAL CAPITAL ENHANCE SMEs SUSTAINABLE PERFORMANCE?. Journal of Islamic Monetary Economics and Finance, 8(1), 113 - 132. https://doi.org/10.21098/jimf.v8i1.1398
Section
Articles