Halal Food Certification and Business Performance in Malaysia

Halal food certification plays a pivotal role in both consumers food purchase and consumption, and food manufacturers business conducts. The growing trends of Halal food have encouraged firms to implement Halal food certification. Numerous studies have recognized the importance of Halal food certification to consumers rather than Halal food manufacturers. However, Halal food certificate motivations, implementation, and the impact on firm performance, particularly the Malaysia Standard on Halal Food (MS1500:2009) are hardly examined. Therefore, this study aims to investigate the motivations behind Halal food certification and its impact on food manufacturers operational, marketing, and financial performances. Resource-based view and institutional theory underpin the proposed conceptual framework of the study. Five hypotheses were proposed to determine the relationships between certification motivations and firm performances. A quantitative methodology was adopted and data were collected using self-administered questionnaires. A total of 210 Halal-certified food manufacturing companies in Peninsular Malaysia participated in the survey. A partial least square structural equation modeling was conducted for data analysis. A key finding is that both the external and internal motivations positively influence Halal food certificate implementation. Moreover, it was also found that implementing Halal food certification has a positive relationship with firm performance. Further findings indicated that government intervention, consumer demand, industry competition, employee commitment, operation improvement, and marketing return are significant motivators for Halal food certificate implementation. Results also revealed that Halal food certification has a significant impact on the respondents operation, marketing, and financial performances. Theoretically, this study offers insights to the significance of consumer pressure as a normative isomorphism in the institutional theory. Additionally, this study reinforces the understanding of Halal food certification as a significant and relevant strategic tool to remain competitive within the profoundly homogenous and saturated food industry. Practically, the information gained from this research could potentially be beneficial to encourage non-certified firms to become Halal-certified. Future research are encouraged to study the motives and impact of Halal food certification from various countries, as well as apply this research across other industries like pharmaceutical, tourism, or cosmetic.