Halal certification and business performance of halal certified food companies in the Philippines

Abstract

Over the years, halal certification has gained world-wide popularity and has become one of the most desirable systems adopted by many countries, especially Muslim countries. Despite this overwhelming popularity, there is considerable confusion surrounding the role and business value of halal certification and its relation to business performance. Thus, the aim of this study is to gain better understanding on the relationship between halal certification and the business performance of halal certified food companies in the Philippines. Through this empirical study, halal registered and about to be registered organisations will have a wide perspective and realistic view on what to expect from halal certification. Furthermore, this thesis hopes to provide factual evidences that may aid certified food companies to evaluate the implementation of halal certification in their own environment and ascertain whether it is giving them halal assurance. The study was based on a survey and the time horizon was cross-sectional. The survey was carried out using stratified sampling on halal certified food companies operating in the Philippines. Through a self-administered questionnaire, 141 usable responses were acquired from the responding companies. Analysis of data was conducted using descriptive, exploratory and confirmatory factor analysis. After the satisfactory results of confirmatory analysis for all constructs, the structural equation modeling (SEM) was conducted to test the hypothesised relationships among the constructs, as postulated in the model. A total of six hypotheses were designed based on the review of literature, and all the results were supported. The findings of this study revealed that halal certification significantly affect business performance of halal certified food companies in terms of innovative performance, market performance and financial performance. Further, it was revealed that innovative performance fully mediates the relationship between halal certification and market performance. Similarly, the relationship between halal certification and financial performance was also fully mediated by innovative performance. This study concluded that halal certification was found to be related with improved business performance in terms of innovative performance, market performance and financial performance of halal certified food companies in the Philippines.