Determinant factors towards the intention to adopt halal logistics services

Abstract

Halal logistics is a notion that supports the wholesomeness of halal supply chain. This new area of study is still scarcely researched, particularly studies that provide empirical evidence on adoption of Halal logistics. Thus, this study aims to understand the internal and external factors that influence the intention of Malaysian small medium enterprises (SME) to adopt halal logistics services (HLS). This research employed a quantitative research design using survey research method. Three objectives were established. Firstly, to investigate the current state of halal logistics adoption among SMEs that was achieved through literature reviews and preliminary study. There were 13 factors found with four internal and seven external factors which were reduced to seven after pilot study and reliability test were conducted. The hypotheses derived were based on seven factors acquired: the presence of familiarity with innovation, status characteristics and position in social network as internal factors; and benefits, geographical setting, societal culture and political condition as external factors. The second objective is to determine the significant factors that influence SMEs intention to adopt HLS. Online questionnaires made available to 1642 enterprise decision makers of halal SMEs listed in Halal Industry Development Corporation (HDC) Halal Directory and 176 valid responses were received. Correlation coefficient was used to test the hypotheses. Four of seven hypotheses were supported. Finally, the final objective was achieved by the proposal of an adoption intention model which Structural Equation Modeling was used to evaluate the fitness of the model. The proposed model showed that both internal and external factors have strong predictive power on the adoption intention of HLS among Malaysian SMEs. Therefore, this study has succeeded in stipulating evidence to show that being in the same social group HLS players and being familiar on HLS will significantly influence SMEs to adopt HLS. Being positioned in the same group of HLS actors will result in higher accessibility to information on HLS. Understanding of HLS benefits versus cost and with good support from the government are the necessary enablers of adoption of HLS among Malaysian SMEs. This study has also made major contribution to future research in service innovation adoption by providing an instrument to measure intention adoption service innovation model.