Integrating iTCB and DOI: A Conceptual Framework for Islamic Financing Adoption among Indonesian Micro and Small Enterprises

Purpose - This paper aims to conceptualise the factors influencing the willingness of micro and small enterprises (MSEs) in Indonesia willingness to apply Islamic financing, particularly in religiously dense regions such as Greater Malang. Despite the growth of Islamic financial institutions, MSE participation remains low. The study explores both rational and spiritual determinants of financing choices. Design/methodology/approach - Using a conceptual approach, this study integrates the Islamic Theory of Consumer Behaviour (iTCB) and the Diffusion of Innovation (DOI) framework. It proposes an integrative model comprising five key constructs, namely Education, Justice, Welfare, Relative Advantage and Religious Satisfaction, with Willingness to Apply Islamic Financing as the dependent variable. Religious Satisfaction is introduced as a moderating factor, reflecting deeper spiritual motivations within economic behavior. Findings - The proposed model suggests that Education, Justice, and Welfare, have a direct impact on the willingness to apply Islamic financing. Meanwhile, relative advantage was found to be insignificant. Religious Satisfaction, as a moderating variable, strengthens or weakens these effects depending on an entrepreneur's spiritual fulfillment. This model bridges rational adoption factors with Islamic value-driven behavior, offering a balanced view of financial decision-making in Muslim MSEs. Originality/value - This study contributes a novel integrative framework that advances both iTCB and DOI within an Islamic marketing context. It addresses a research gap by incorporating spiritual values as core components of consumer financial behavior, particularly relevant for Islamic financial institutions seeking to design culturally embedded and faith-sensitive inclusion strategies.