Perception Of Malaysian Entrepreneurs On Islamic Values Implementation Towards Organizational Sustainability

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DOI: 10.15405/epms.2022.10.6
ICONSPADU 2021
International Conference of Sustainable Practices, Development and Urbanisation
PERCEPTION OF MALAYSIAN ENTREPRENEURS ON ISLAMIC
VALUES IMPLEMENTATION TOWARDS ORGANIZATIONAL
SUSTAINABILITY
Reeny Karlina Abdul Rauf (a)*, Norhasdalina Hasim (b), Aznita Ahmad (c), Erni Tanius (d),
Hairin Nisa Meor Nordin (e)
*Corresponding author
(a) Faculty of Business and Accountancy, Universiti Selangor, Shah Alam, Malaysia, reenyrauf@unisel.edu.my
(b) Faculty of Business and Accountancy, Universiti Selangor, Shah Alam, Malaysia, hasdalina@unisel.edu.my
(c) Faculty of Business and Accountancy, Universiti Selangor, Shah Alam, Malaysia, aznita@unisel.edu.my
(d) Faculty of Business and Accountancy, Universiti Selangor, Shah Alam, Malaysia, ernitanius@unisel.edu.my
(e) Faculty of Business and Accountancy, Universiti Selangor, Shah Alam, Malaysia, hairinnisa@unisel.edu.my
Abstract
This study probed the impact of Islamic values implementation (success, charity, justice, and leadership)
on Malaysian entrepreneurs' sustainability. Hence, this paper aims to identify the relationship between
Islamic values implementation and organizational sustainability in Malaysia. Besides, it is to identify if
entrepreneurs in Malaysia have different perceptions of Islamic values on organizational sustainability.
The data were randomly gathered from 94 entrepreneurs in Malaysia. Meanwhile, the quantitative data
were collected using a questionnaire based on the current and related literature review. The study's
findings revealed that Islamic values (success, charity, justice, and leadership) significantly correlate with
organizational sustainability. However, the entrepreneurs in Malaysia have a different opinion on the
roles of Islamic values towards organizational sustainability. Therefore, the consequences of this study
enhance the understanding of the Islamic concept, particularly success, charity, justice, and leadership in
sustaining organizations in Malaysia. As such, it is recommended that the government of Malaysia
formulate and adopt policies that promote the concept of Islamic values among entrepreneurs, which may
boost sustainability performance and increase the trust and understanding of business industries toward
Islamic values.
2421-826X © 2022 Published by European Publisher.
Keywords: Entrepreneurship, islamic values, Malaysia, organizational sustainability

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1. Introduction
Islam is a complete and comprehensive (Quran, 5:3) way of life that Muslims is highly encouraged
to develop of agriculture, industry, trade, and commerce (Ubaid, 1975) it is because; the resources able to
mobilize and increase, and fulfilling the needs of people through business (Ariff, 1991). Rehan et al.
(2019) demonstrate that Islamic values are mainly attributable to practices that shape entrepreneurship
attitudes, which, in turn, drive entrepreneurship intentions.
Sustainable growth refers to a business model that generates value while preserving and improving
financial, environmental, and social capital through time. Colbert and Kurucz (2007) define sustainability
as being to "keep the business going," Meanwhile, Boudreau and Ramstad (2005) refer to "achieving
success today without compromising the needs of the future." Finally, Wales (2013) remarked that it is to
sustain a business model that creates value for long-term preservation and is able to enhance the financial,
environmental, and social capital in businesses.
Entrepreneurship is the creation of a new enterprise (Low & Macmillan, 1988). It creates and
manages a new organization designed to pursue a unique, innovative opportunity and achieve rapid,
profitable growth (Drucker, 1985). Gawel (2012) confirms that there can be a positive relationship
between entrepreneurial orientation and sustainability. Hence, this paper will study the perception of
entrepreneurs on the relationship of Islamic values, namely success (al-falah), charity (sadaqah), justice
(al-adil), and leadership (khalifah) towards the sustainability of the entrepreneurs. It is expected the result
will be able to reduce the gap towards sustainability by linking it with the four elements of Islamic values.
1.1. Organizational Sustainability
Haldar (2019) said there is a tripartite connection between innovation, entrepreneurship, and
sustainable development. Vuorio et al. (2018), suggested a connection between altruism, attitude toward
sustainability, and sustainability-oriented entrepreneurial intentions. As there is positively associated
between attitude and sustainability of the organization. Additionally, there is a connection between
extrinsic reward, perceived entrepreneurial desirability, and sustainability-oriented entrepreneurial
intentions. Finally, Afshar Jahanshahi et al. (2017) established that there is a strong relationship between
the entrepreneurs' characteristics (values, beliefs, and orientation) and their firms' level strategic behavior
(sustainability-oriented actions).
1.2. Islamic Values in Entrepreneurship
This paper reviews Islamic values in entrepreneurship by examining the elements of success (al-
falah), charity (sadaqah), justice (al-adil), and leadership (khalifah). Then, it will study the relationship of
these elements towards organizational sustainability under the entrepreneurship context. These four
determinants will be discussed sequentially next.

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1.2.1. Success (al-falah)
Al-falaḥ is defined as far-reaching success that encompasses a more holistic dimension through
endeavors that aim to achieve everlasting prosperity and blessings (Aminuddin et al., 2016). In the
Islamic perspective, business success is stated as traits of Islamic entrepreneurship with a proxy for
honesty, willingness to work hard, maintain promises, orderly administration, always praying, paying
zakat and alms together (Machmud & Hidayat, 2020). In addition, Amruloh (2016) noted that success in
Islam is associated with the words fahala, aplaha, and faza fauzan. As Islam focuses on the basic values
and philosophy of Islamic ideals contained in the Holy book of Al-Quran and Hadith (Sarif et al., 2016).
1.2.2. Charity (sadaqah)
The concept of charity (sadaqa-e-jariah) assists somebody in establishing himself in trade, giving
someone a good education. It is assisting and helping someone to improve from some sickness, illness,
and disease by financial assistance or giving fiscal and monetary. Allah SWT said, "God deprives usury
of all blessing, but will give increase for deeds of charity (Qur’an, 2:276). Rasulullah SAW, who said:
Not including from my ummah (people) those who were sleeping while his neighbor sleeps in hunger
(Kusumaningtyas & Putranto, 2020). Companies in Islamic economies can pay Zakat to carry out a CSR
program, which helps the firm achieves its objectives and increase its market value (Al-Malkawi &
Javaid, 2018; Lestari, 2018).
1.2.3. Justice (al-adil)
The concept of justice (al-a'dil) has evolved in organizations to enhance work performance. It has
been identified as a critical value in the development of organizational sustainability. Akram et al. (2016),
said organizational justice is associated with employees' perceptions of justice in the organization.
Furthermore, it indicates the fairness of decisions made by organizational managers based on employees’
understanding the procedures for making these decisions and the degree of fairness interaction among
employees (Folger & Cropanzano, 1998; Leventhal, 1976; Stamenkovic et al., 2018).
1.2.4. Leadership (khalifah)
In the construction of Islamic society, leader has the highest position. It is the ability to direct a
group of individuals toward a common purpose in Allah SWT's favor. Leadership (Khalifah) refers to
somebody responsible for generating prosperity and understanding that doing business is a part of ibadah
or a good deed (Ramadani et al., 2016). It can also be considered as an agent of trust in Allah. The
caliph's mission is to achieve happiness and prosperity in life, including the construction, management,
and maintenance of the earth to facilitate Allah SWT's worship. (QS. [11]: 61) (Aravik & Zamzam,
2020).

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1.3. Implementation of Values towards Organizational Sustainability
Mihaela (2012), said the nations with more innovative SMEs connected with entrepreneurship
score at the top of the rankings for sustainable development, whereas countries with minor creative
entrepreneurship have lower ratings for sustainable development. According to Ullah et al. (2021),
business success influences organizational sustainability. Furthermore, Zakat has significantly affected
the company’s financial performance, which eventually increases the company’s profitability in the long
run (Auliyah & Basuki, 2021). Karkoulian et al. (2016), said the improvements in organizational justice
have a direc’ and beneficial impact on the firm's performance. meanwhile, th’ procedural and
interactional justice has a favorable and substantial relationship with business sustainability. Finally,
Nwachukwu and Vu (2020) concluded that strategic leadership is critical to building a’d improving
organizational sustainability.
2. Problem Statement
World Bank (2020) suggested Malaysia needs to innovate and move up the value chain to compete
in an advanced economy. Therefore, ongoing programs to raise awareness and understand the importance
of sustainability concepts are required if SMEs remain competitive in the global market. Ahmad et al.
(2020) concluded that Malaysian SMEs entrepreneurs understand the importance of sustainability
concepts in their business performance.
Although Islam provides clear and precise guidelines for the development and operation of
businesses, however, many Muslims ignore or pay little heed to these guidelines. They also lack of
guidelines on entrepreneurial development from an Islamic perspective. Previously, Chowdhury (2008)
devised a model on entrepreneurship development by selecting Islamic-oriented entrepreneurs as inputs.
However, this model do not dissect the good traits of the Islamic entrepreneurs that could contribute to
fulfilling the needs and desires of all stakeholders. Furthermore, the studies on how Islamic values in
entrepreneurship correlate with organizational sustainability remains limited. Hence, this paper looks at
how Islamic values impact the long-term viability of a business from the perspective of Malaysian
entrepreneurs.
3. Research Questions
The research questions of the study are as per below:
i. Are there any significant differences in Malaysian entrepreneurs’ perception of Islamic values
implementation based on their demographic profile and organizational sustainability?
ii. Are there any significant effect of Malaysian entrepreneurs’ perception of Islamic values and
organizational sustainability in Malaysia?

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4. Purpose of the Study
The objectives of the study as the following:
i. To identify the significant differences in Malaysian entrepreneurs’ perception of Islamic values
implementation based on their demographic profile and organizational sustainability.
ii. To determine the significant effect of Malaysian entrepreneurs’ perception of Islamic values and
organizational sustainability in Malaysia.
5. Research Methods
5.1. Research Design
This study employs a cross-sectional quantitative research design to examine the implementation
of Islamic values among Malaysian entrepreneurs. The data was collected at one particular time across
the selected respondents (Cooper & Schindler, 2008). According to Creswell (2005), the use of such
methods may gather accurate, less biased, and high-quality data. A quantitative approach data used in this
study its could be replicated for verification purposes in future studies as replication of results is vital for
theory testing (Flew, 1979).
5.2. Sample Study
The sample of this study focuses on entrepreneurs in Malaysian. Two hundred questionnaires were
sent, and 89 responses were received. A questionnaire was developed in six sections, including Part F
(demography of respondents) and all five sections (tested variables). In section A-E, respondents are
required to indicate their responses based on a five-point Likert scale (strongly disagree – 1, disagree – 2,
not sure- 3, agree – 4, and strongly agree-5. The Structural Equation Modelling using a Partial Least
Squares (PLS) approach is used to analyze the data. The use of the SmartPLS 3.0 software is to analyze
the data by using a bootstrapping technique to identify the significance levels for loadings and path
coefficients (Ramayah et al., 2013). Following the recommended two-stage analytical procedures by
Anderson and Gerbing (1988). The first validity and goodness of the measurement model were first
tested. Its is followed by an examination of the relationships outlined in the structural model.
5.3. Data Collection Method
The variables adopted from previous and related studies. Collis and Hussey (2013) said its may
produce more honest responses. This study uses Smart-PLS SEM to analyze the data in order to reach the
objective of the study due to the sample size being small (n=94).
5.4. Reliability Test
The pilot test is conducted to identify the reliability of the variables in the questionnaire.
Meanwhile, Cronbach’s coefficient alpha value was utilized to determine the consistency of the
instrument items.

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6. Findings
The discussion on the finding began with a profile of the respondents, followed by a data
reliability test, correlation analysis, and regression analysis.
6.1. Respondents’ Profile
A cross-sectional study (Sekaran, 2003) was done on 94 Malaysian entrepreneurs and the
respondent’s profiles. Mainly of the respondents were female, with 73.4% (N= 69). Mostly came from the
Malay race (79.8%, N= 75). About 94.7% (N=89) of the respondents were under the age of 41 years old.
Its indicates that Gen Y is more dominant in this study compared to other generations. Most of the
respondents’ education level is a Bachelor’s Degree and above with a percentage of 78.7% (N= 74).
Besides, 57.4% (N= 44) of the respondents have work experience of more than 6 years.
6.2. The Difference between Malaysian Entrepreneurs’ Perception of Islamic values
implementation and Demographic Profile and Organizational Sustainability
The result will be based on the following hypothesis:
H1: There is a significant difference in Malaysian entrepreneurs’ perception of Islamic values
implementation based on their demographic profile and organizational sustainability.
Results in Table 1 shows that only race has a significant difference in mean with F(3, 90) = 5.293, p=
0.02.
Table 1. Summary of ANOVA
Dependent
Variable
Demographic
Factors
Source of
Variance
Sum of
Square
df
Mean of
Square
F-Test
P-
Value
Organizational
Sustainability
Gender
Between Groups
0.413
1
0.413
0.625 0.431
Within Groups
60.877
92
0.662
Age
Between Groups
1.189
3
0.396
0.593 0.621
Within Groups
60.102
90
0.668
Race
Between Groups
9.192 3 3.064 5.293 0.002
Within Groups
52.099 90 0.579
Nationality
Between Groups
0.906 1 0.906 1.381 0.243
Within Groups
60.385 92 0.656
Education
Level
Between Groups
4.413 4 1.103 1.726 0.151
Within Groups
56.878 89 0.639
Table 2 shows the effect size for significant results in Table 1. Its shows that the strength of the
relationship between race and organizational sustainability, as assessed by η2= 0.150, was strong, with
race factor accounting for 15% of the variance of organizational sustainability. Thus, the ANOVA results
allowed to reject the null hypothesis H0 and support the conclusion that there are statistically significant
differences in a mean between the background of the respondents and Islamic values and organizational
sustainability among entrepreneurs.

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Table 2. Test of Between-Subjects Effects Dependent Variable: Organizational Sustainability
Source
Type III Sum of
Squares
df Mean Square F Sig.
Partial Eta
Squared
Corrected Model
9.192a
3
3.064
5.293
.002
.150
Intercept
470.754
1
470.754
813.215
.000
.900
@3.Race
9.192
3
3.064
5.293
.002
.150
Error
52.099
90
.579
Total
1666.494
94
Corrected Total
61.291
93
a. R Squared = .150 (Adjusted R Squared = .122)
6.3. The Significant Effect of Malaysian Entrepreneurs’ Perception of Islamic Values and
Organizational Sustainability
The next part of the discussion will be based on the second objective of the research and stated
below:
H1: There is a significant effect of Malaysian entrepreneurs’ perception of Islamic values and
organizational sustainability in Malaysia.
Table 3 shows the scores obtained from the analysis of the measurement model. Based on Table 3,
its can be seen that all loadings were higher than 0.70, which is the threshold suggested by Hair et al.
(2017). Furthermore, the average variance extracted (AVE) of all constructs exceeded 0.5 (Bagozzi & Yi,
1988) if the composite reliability scores (CR) were higher than 0.7 (Hair et al., 2013). Therefore, the
study can conclude that convergent validity is achieved. The measurement model estimation is presented
in Table 3.
Table 3. Measurement Model
Variables Items Loading
Average Variance
Extracted
Composite
Reliability Score
Organizational
Sustainability
OS1
0.828
0.734 0.961
OS2
0.873
OS3
0.885
OS4
0.866
OS5
0.881
OS6
0.866
0S7
0.742
0S8
0.889
0S9
0.884
Leader
L2
0.785
0.658 0.931
L4
0.807
L5
0.798
L6
0.847
L7
0.779
L8
0.884
L9
0.773

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Justice
J1
0.785
0.705 0.95
J2
0.837
J3
0.851
J4
0.83
J6
0.808
J7
0.871
J9
0.856
J10
0.875
Charity
C1
0.792
0.698 0.958
C2
0.829
C3
0.79
C4
0.8
C5
0.871
C6
0.886
C7
0.859
C8
0.861
C9
0.822
C10
0.84
Success
S1
0.792
0.766 0.958
S2
0.877
S3
0.871
S4
0.877
S5
0.922
S6
0.919
S7
0.864
Table 4 shows the results for the discriminant validity test. As recommended by Fornell and Cha
(1994) and Fornell and Larcker (1981), the AVE of each construct must be higher than the correlation
between its and any other constructs of the model. Its indicated that all constructs meet this criterion, and
its has discriminant validity. In addition, Hair et al. (2013) suggest that to ensure sufficient discriminant
validity, the loadings of measured variables (i.e., items) must be higher than the cross-loadings by at least
0.1.
Table 4. Discriminant Validity
Charity
Justice
Leader
OS
Success
Charity
0.835
Justice
0.664
0.854
Leader
0.671
0.786
0.811
OS
0.802
0.736
0.718
0.857
Success
0.608
0.84
0.768
0.7
0.875

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6.4. Structural Model Estimation
In order to estimate the structural model, a bootstrapping procedure with 500 resamples was run to
generate the t-values. Table 5 presents the structural model, while Table 6 presents the results of the
hypothesis testing. Justice was also positively related (β = 0.281, p< 0.01). Besides Charity which shows
a positive relationship (β = 0.392, p< 0.01) with OS with 39.2% coefficient. Success also shows a positive
relationship (β = 0.239, p< 0.01) with OS. However, there is a positive relationship (β = 0.21, p< 0.01)
between Leader and Organizational Sustainability with the lowest coefficient percentage of 21%. The R2
= 0.731 explained that 73.1% of variations in organizational sustainability are explained by the Islamic
value variables such as leader, justice, charity, and success.
Table 5. Results for Structural Model
Relationship
St. Beta
Std Error
T-Statistics
P-Value
R-Square
Significance Relationship between
OS and Leader β1=0.21 0.032 6.535 0.00
0.731
Significance Relationship between
OS and Justice β2=0.281 0.042 6.587 0.00
Significance Relationship between
OS and Charity β3=0.392 0.05 7.757 0.00
Significance Relationship between
OS and Success β4=0.239 0.049 4.833 0.00
Table 6 shows the results of the construct’s correlation matrix, indicating that all constructs have a
significant relationship.
Table 6. Correlation Matrix of the Variables
Variables
Organizational
Sustainability Leader Justice Charity Success
Organizational Sustainability
1
Leader
.706**
1
Justice
.743**
.749**
1
Charity
.797**
.669**
.663**
1
Success
.753**
.724**
.838**
.665**
1
**. Correlation is significant at the 0.01 level (2-tailed).
7. Conclusion
This part contains the conclusion of this research. Its recaptures the research objectives, questions,
and contributions of the study. Its also discusses the implication of the findings and suggestions for future
research.
7.1. Discussion of findings
The Islamic management model is flexible enough to adapt according to the circumstances for the
maximum outcome of the organization. There is a positive management perception of Islamic values

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(leader, justice, charity, and success) with organizational sustainability, as indicated in this study.
Literature shows that increasing numbers of entrepreneurs and management believe that practicing
Islamic values, leadership, justice, charity, and success in daily work or practice can sustain the
organization. Its is in line with the study by Waghid and Oliver (2017), who found that justice is driven,
social entrepreneurs. Its is similar to Rupp et al. (2015) claimed that organizational justice by
management perception toward their employees influences its success. In the meantime, Wang et al.
(2017) said the justice orientation is critical to generate employee fairness perceptions towards transparent
procedures and firm performance. Finally, Kim and Park (2017) claimed that factors that contribute to
organizational sustainability are organizational procedural justice, employee knowledge sharing,
employee innovative work behavior, and procedural justice.
The result also indicates that all factors in Islamic value that all constructs (leader, justice, charity,
and success) have a significant correlation with organizational sustainability. Sulaiman et al. (2014) found
out by practicing Islamic management, and the organization can experience an increase specifically in
employees’ performance and generally in the organizational performance. Moreover, studies in Small
Business Enterprise (SME) on Islamic business values discovered that Islamic personal values of
entrepreneurs would affect the entrepreneurial capabilities and thus boost their business performance
(Sajilan et al., 2015; Sarwoko et al., 2013; Tomczyk et al., 2013). Furthermore, Dewi and Dhewanto
(2012) said that Islamic values such as truthfulness, donation, benevolence, and positive thinking about
conflicts as suggested by the Qur’an and Sunnah as the formula to achieve the family business success.
Finally, Najim et al. (2014) confirmed that Islamic values could increase the employees’ and the
customers’ satisfaction, which will eventually increase the firm performance in the long run.
Last but not least, the study also shows a different opinion on the roles of Islamic values towards
organizational sustainability; however, there is a similar perception of gender, age, and nationality
respondents towards Islamic values and organizational sustainability.
7.2. Practical Implications
The findings of this study have many significant implications. The first is that they provide some
insight into how entrepreneurs and managers implement Islamic beliefs. In addition, its focuses on the
organization’s long-term viability by incorporating Islamic principles, such as leadership, justice, charity,
and prosperity, as mentioned in the Al’quran and Sunnah.
The second conclusion is that the current study focuses on Islamic values and how they can
contribute to maintaining organizational success in the long run. Moreover, the values are universally
accepted, meaning that managers and entrepreneurs of all faiths and religions are able to implement them.
Third, this research raises awareness among firms and management about the capacity of Islamic
principles to improve organizational sustainability. As a result, they become initiatives for company
success and competitive advantage.
On the other hand, the government must play a vital and central role in the expansion of Islamic
entrepreneurial values in order to develop necessary essential policies at all levels of entrepreneurship
growth. Furthermore, every Muslim should have the motivation and mindset to develop the characteristics
of an entrepreneur from an Islamic perspective, assuring salvation both in this world and in the next.

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Therefore, these are not only qualities of entrepreneurs produced in this study but also a model built from
an Islamic perspective. Hence, this study will contribute significantly to raising awareness about
entrepreneurship development from an Islamic perspective among the existing entrepreneurs, potential
entrepreneurs, government, and Islamic scholars, thereby assisting in the acceleration of the
entrepreneurship development process to reduce poverty and ensure the country’s overall welfare (Hoque
et al., 2014).
7.3. Future Research
However, there is some limitation of this study, such as the relatively small number of
respondents. Furthermore, the use of a self-administered questionnaire to gather data may impact the
accuracy of the findings. Furthermore, this study focuses only on Malaysian entrepreneurs, and it does not
represent the views or practices of all managers and entrepreneurs. As a result, more research is
recommended. Further study is recommended to improve the response rate and generalizability. This
study represents a quantitative study; therefore, more research is needed to conduct interviews with
entrepreneurs to learn more about their Islamic values and practices in their businesses. Researchers can
gain better ideas from the interview on adopting Islamic principles among entrepreneurs and to help speed
up the entrepreneurship development process to alleviate poverty and secure the country's general well-
being.
Acknowledgments
The researchers would like to express our gratitude to Universiti Selangor (UNISEL) Malaysia for
funding this research under the Bestari Grant, Grant No: B00078-R&D-GPB/02-UNISEL18/SS-031.
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