HALAL PRODUCT DEVELOPMENT AND ADOPTION OF HALAL CERTIFICATION AMONG UNDERPRIVILEGED MSMES IN INDONESIA: A TECHNOLOGY-ORGANISATION-ENVIRONMENT FRAMEWORK ANALYSIS

Abstract

This study explores the factors influencing the adoption of halal certification among economically underprivileged micro, small, and medium enterprises (MSMEs) in Indonesia, employing a modified Technology-Organisation-Environment (TOE) framework. Data were collected from a broad spectrum of MSMEs, encompassing both formal and informal entities, utilising a stratified random sampling method. A 36-item instrument, tailored for low-resource business contexts, was used to operationalise the three TOE dimensions. This instrument was validated through Exploratory Factor Analysis (EFA), employing Principal Component Analysis (PCA) with Varimax rotation. The analysis yielded a two-factor structure for Technological elements (explaining 68% of the variance), a six-factor structure for Organisational elements (explaining 75.3% of the variance), and a four-factor structure for Environmental elements (explaining 72.4% of the variance). Cronbach’s alpha values ranged from 0.72 to 0.85 across the identified constructs, signifying acceptable to excellent levels of internal consistency. The empirical results indicate that, within the technological dimension, compatibility with existing business operations holds greater significance than perceived benefits, underscoring the operational limitations experienced by underprivileged MSMEs. Halal integrity and stakeholder awareness surfaced as key motivators, while organisational preparedness emerged as a substantial barrier. This study underscores the multifaceted challenges encountered by economically marginalised enterprises in pursuing halal certification. The findings contribute to a more inclusive understanding of halal policy implementation and offer practical insights for policymakers and certification bodies aiming to support vulnerable business sectors in achieving halal compliance.