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Modelling The Intention To Adopt Halal Transportation Among
Halal Pharmaceutical And Cosmetic Manufacturers In Malaysia
Abdul Hafaz Ngah,a,z Ramayah Thurasamy,b,z
aDepartment of Maritime Business and Management-, Universiti Malaysia Terengganu,
bDepartment of Operation Management, Universiti Sains Malaysia
*Corresponding author Email: hafaz.ngah@umt.edu.my
Received: …..Date……..? Accepted: ……..Date…….?
*Corresponding author Email: ramayah@usm.edu.my
Halal transportation services enable Halal manufacturers to transport their products and
maintain the Halal integrity. However, the adoption of Halal transport services in Malaysia is
relatively low. This study employed the TOE framework to identify the factors that influence the
adoption of Halal transport services by Halal pharmaceutical and cosmetic manufacturers. Data
were gathered from 97 Halal manufacturers across Malaysia and analyzed using the Structural
Equation Modelling approach to test the research model constructs. The findings showed that
perceived benefits, customer and competitive pressure were significant factors in the adoption
decision. Additionally, organizational readiness did not influence the adoption of Halal
transportation.
Keywords: Halal transportation, Halal Pharmaceutical , Halal Cosmetics, TOE Framework
1. Introduction
The Muslim religion is the world’s
fastest growing religion, with an average
annual growth rate of 1.5%. Muslims will
make up 26.4% of the total global
population, 8.3 billion people, in 2030. Of
the 1.8 billion Muslims in the world now,
many are increasingly concerned about the
quality of the goods they use on a daily
basis. With increasing purchasing power,
and also an awareness of their obligation to
use Halal products, Muslim consumers now
seek products that are aligned with Islamic
Shariah law. While their initial concerns
were with Halal foods and beverages,
nowadays consumers expect Halal to apply
to pharmaceuticals and cosmetics.
The term Halal means allowable or
permissible, which is based on fiqh (Islamic
jurisprudence). There is broad recognition
that Halal products are manufactured using
safe processes and composed of good
quality ingredients. According to market
statistics, the global cosmetics market is
worth USD334 Billion, and that Halal
cosmetics will reach USD52 Billion by
2025, with a growth rate of 12.3%.1 In
pharmaceuticals, Halal products stood at
USD75 Billion in 2016, and are predicted to
reach USD132 Billion by 2021.2 To
growing demand for Halal products is
supported by an expanding Halal-certified
3
manufacturing industry. Consumers expect
that products declared as Halal should
remain Halal from the point of origin until
the point of consumption. Proper handling,
based on Islamic requirements, plays a vital
role in protecting the integrity of the Halal
products. Surprisingly, the majority of Halal
manufacturers remain reluctant to adopt
Halal supply chain services in their business
operations, and the adoption of Halal
transportation services is still relatively low
3.
As consumers expect that Halal
products remain Halal until they reach the
point of consumption, it is important to
understand what factors influence
Malaysia’s Halal pharmaceutical and
cosmetic manufacturers’ adoption of Halal
transportation services. By adopting the
Technology, Organization and Environment
(TOE) framework, this study identified the
significant factors that encourage top
managers of manufacturers to adopt Halal
supply chain services.
2. Literature Review and Hypothesis
Development
Technology, Organization and
Environment (TOE) framework developed
by 4, after realizing the weaknesses from
previous models. It included three
dimensions: technology, organization and
environment.
The perceived benefits of a
technological innovation encompass the
expected advantages for the organization
and the extent to which it is perceived as
better than the technology to be substituted 5.
In this research, perceived benefits refers to
the extent managers that recognize the
benefits of Halal transportation services.
Studies found that perceived benefits was
positively related to the technology adoption
decision 6 and positively related to the
adoption of cloud computing 7. Hence, the
current study proposed:
H1. Perceived benefits has a positive
relationship with the intention to adopt
Halal transportation.
The organizational readiness of a firm
to adopt new technology is related to its
characteristics and resources, such as
management structure, organization
structure, and maturity of resources.
Organizational readiness is defined here as
the capability of management to adopt Halal
transportation services, in terms of financial,
human resources, technical support,
expertise, and infrastructure. Studies by 5
and 8 found that organizational readiness
was positively related to technology
adoption. Hence, this study proposed:
H2: Organizational readiness has a
positive relationship with the intention to
adopt Halal transportation services.
Prior studies have recognized the
importance of competitive pressure as an
adoption driver 9. The current study defined
competitive pressure as the potential loss of
competitive advantage to other firms that
have adopted Halal transportation services.
Competitive pressure was found to have a
positive relationship to firms’ adoption of
electronic supply chain management
systems 10 and to their adoption of internet
4
marketing 11. Hence, the current study
proposed:
H3: Competitive pressure has a
positive relationship with the intention to
adopt Halal transportation services.
Customer feedback and expectations
are a major driver of business decisions in
in highly competitive industries 12 .Firms
must be sensitive to customers’ needs and
demands 13, and many studies have
indicated a positive relationship between
customer pressure and intention to adopt
new technologies 14- 15. Hence the
following hypothesis was proposed:
H4: Customer pressure has a positive
relationship with the intention to adopt
Halal transportation.
3. Methodology and Data Collection
Process
Study respondents were managers from
Halal pharmaceutical or cosmetic
manufacturers who involved in the
Malaysian International Halal Showcase
(MIHAS) and Halal Festival (Halfest)
during 2013. Out of 110 questionnaires, 102
responses were gathered. After sorting, 97
questionnaire sets were used for data
analysis purposes. The study fulfilled the
minimum sample size to test the research
model based on the requirements set by 16.
Items for perceived benefits, readiness, top
management attitude, and customer pressure
were adapted from 10, meanwhile
competitive pressure from 17 and intention
to adopt Halal transportation from 18.
4. Data Analysis and Results
Data analysis was conducted in two
steps19: (1) confirming measurement
validity, and (2) hypothesis testing.
Construct validity has been assessed by
measuring the loadings, CR and AVE. All
the values are above the minimum value set
by the literature, which indicates that the
measurement model is not an issue for this
study.
The next step is to confirm
discriminant validity. 20 proposed to
evaluate the discriminant validity using the
HTMT ratio, where a value greater than
0.85 indicated of serious issue in
discriminant validity. The discriminant
validity was established, with all HTMT
values lower than the most conservative
value set by 20
To assess the structural model,
standard beta, t-values via a bootstrapping
procedure with a resample of 5000, were
examined as suggested by 19. The results
revealed that perceived benefits,
competitive pressures and customer
pressure have a significant relationship with
the intention to adopt Halal transportation
(perceived benefits β = 0.240, t = 2.477: LL
= 0.061, UL = 0.438, p < 0.01; competitive
pressure β = 0.210, t = 2.275: LL = 0.045,
UL 0.401, p < 0.05; and customer pressure β
= 0.349, t = 2.391: LL = 0.052, UL 0.619, p
< 0.01). Thus, H1, H3 and H4 were
supported; however, organization readiness
was not supported.
5.0 Discussion
5
The purpose of this study was to
identify the determinant factors in the
adoption of Halal transportation among
Halal pharmaceutical and cosmetic
manufacturers in Malaysia. The findings
showed that perceived benefits was
positively related to the intention to adopt
Halal transport services. This finding was
aligned with past studies from various
industries6, 7. When perceived benefits was
high, the intention to adopt Halal
transportation was also high. This message
could help non-adopters realize the benefits
of adopting Halal transport services.
Competitive pressure was also found to
have a positive relationship with the
adoption of Halal transportation. This
finding confirmed the views of other
researchers, such as 10 and 11. It shows that
when competitive pressures are high, there
is a stronger intention to adopt Halal
transport services. Because the nature of
business is to make profit, organizations
must equal or perform better than
competitors to gain competitive advantage.
Likewise, customer pressure was found
to be a significant variable in the adoption
of Halal warehousing. This outcome
supported the findings of 14 and 15.
Increasingly, informed customers now
request not only Halal products, but also
Halal supply chain processes 24, which,
according to 25, were critical in ensuring
integrity of Halal products.
The only hypothesis not supported was
organizational readiness and the intention to
adopt Halal transportation. It shows that
Halal manufacturers in Malaysia were not
ready to adopt Halal transportation.
According to 26, even though Halal
manufacturers in Malaysia understand the
Halal concept they were not ready to
commitment to transport.
The study also found that top
management attitude moderated the positive
relationship between competitive pressure
and intention to adopt Halal transportation.
The intention to adopt was stronger when
top management attitude was lower. One
explanation for this was that the majority of
the Halal manufacturing companies are
owned by non-Muslims, who lack a deep
understanding of the Halal concept. 27
argued that the Halal industry cannot
understand why they should adopt Halal
supply chain services, which consists of
Halal transport and warehousing services.
The findings of the study could help
the industry. If the government wanted to
grow the number of Halal manufacturers
who adopted Halal supply chain, targeted
campaigns could enhance players
understanding of the benefits. The
government could also use incentives to
encourage industry players to take up Halal
supply chain. If Halal pharmaceutical and
cosmetics leaders adopt Halal transportation
services, this pressures other manufacturers
to follow, and could drive Halal
manufacturers to adopt Halal supply chain
services.
References and Notes
6
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https://www.pressreader.com/malaysia/new-
straits times/20170403/282514363378012.
Retrieved on July31, 2017
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