Halal certification compliance and its effects on companies’ innovative and market performance

Purpose The purpose of this study is to identify the effect of halal certification on innovative and market business performance of halal -certified food companies in the Philippines. Through this empirical study, halal -registered and about-to-register companies would have a wider perspective and a realistic view on what to expect from halal certification. The study also hopes to enrich halal certification literature and contribute further to the better understanding of the relationship between halal certification and the business performance. Design/methodology/approach This empirical study primarily uses a quantitative approach in analyzing the relationship between halal certification and the business performance in terms of innovative and market performance. The primary data are gathered through a survey involving 211 food companies (141 halal -certified and 70 non- halal -certified). The results are analyzed using confirmatory factor analysis, structural equation modeling and independent sample t -test. Findings First, the analysis highlights that halal certification significantly affects innovative performance of halal -certified food companies. Second, the improvements in innovative performance lead to market performance improvements. Third, innovative performance fully mediates the relationship between halal certification and market performance. Finally, halal -certified food companies and non- halal -certified food companies have significant difference in terms of innovative performance and market performance. Research limitations/implications First, the population of this study consisted of only food companies in the Philippines listed in the Bureau of Product and Standard. Second, only the respective quality management representatives of the responding companies were the main respondent. Third, the samples used are from Philippines only. Therefore, the ability to generalize the reported results to all types of industry is restricted. To generalize the results of this study, additional research is desired to test the suggested model in various countries where Muslims are minority. Practical implications Understanding the impact of halal certification and its business value through empirical study should provide “about to be registered organizations” a wider perspective and a realistic view on what to expect after halal certification. It will provide factual evidences that may aid halal -certified companies in decision-making with respect to halal certification and whether it complicates or compliments their organizations’ business. Originality/value To the best of the author’s knowledge, no research has yet been conducted to investigate the impact of halal certification on business performance in the Philippines. This study, therefore, fills the gap in the research area. Through this empirical study, halal -registered and about-to-register organizations would have a wider perspective and a realistic view on what to expect from halal certification.