The Relationship between Halal Food Management System Critical Constructs Implementation, Operational Performance and Product Quality

Given the limited studies on Halal food management system, this study seeks to assess the relationship between the implementation of Halal food management system critical constructs, operational performance and product quality. A total of 163 samples collected from Halal certified SMEs manufacturers in Malaysia were used for data analysis. Data were initially subjected to exploratory factor analysis (EFA) to identify the underlying constructs. Partial least squares (PLS) was then used to examine the extent to which implementation of halal food management system critical constructs influence operational performance and product quality. The results showed that not all critical constructs were directly and positively associated with organisational performance and product quality. The lack of significant relationships between critical constructs and performance constructs are intriguing and should be an impetus for further investigations into potential contingencies and indirect associations of Halal food management system critical constructs on performance constructs. In addition, rather than a piecemeal approach, companies may need to holistically and systemically implement all the Halal food management system critical constructs. Keyword: Halal Food, Food Manufacturer, Halal Food Certification, SMEs Introduction Companies often implement a management system to gain a competitive advantage over others, win customer loyalty, gain business resources, or obtain massive funding (Douglas & Judge, 2001). According to Kafetzopoulos and Gotzamani (2014), the ultimate aim for quality and food safety management system implementation is to improve the overall business performance. In fact, few studies have reported that after the implementation of food safety management system, companies International Journal of Academic Research in Business and Social Sciences Vol. 1 0 , No. 3, March, 2020, E-ISSN: 2222-6990 © 2020 HRMARS 838 have experienced both internal and external benefits such as improvement in term of product traceability, food safety awareness of employees, customers satisfaction, and decreased in the wastage cost and customer complaints (Carmen & Santos-Vijande, 2014; Chen et al., 2015). The ultimate objective of Halal food management system, on the other hand is to ensure the Halal and Toyyib status of the products. However, multiple authors argued that industry could also use Halal food management system as a mechanism to improve their performance, in term of logistics, overall management, market entry, market share, market expansion, sales, revenue, market or industry growth, customer retention, consumer confidence and satisfaction (Talib, Abdul Hamid, et al., 2016). Most authors, however, provided only anecdotal evidence that relate Halal management system with performance, except for few studies. Some of the exceptions is a study by Razalli et al. (2013) who assessed the direct relation between 12 Halal management system constructs (Halal documentation, management responsibility, raw material, location, exterior area, premise, facility, tools and equipment, staff characteristic, staff policy, pest control, and waste management) and hotel performance. They found that only facilities and staff policy had positive and significant influence on the overall hotel performance. In another study, Othman et al. (2017) assessed the direct influence of three Halal-related constructs (knowledge, attitude, sensitivity toward government Halal policies) on organizational performance. The authors found that all the constructs had positive and significant relationships. In contrast to previous two studies, Talib, Ai Chin and Fischer (2017) conceptualized Halal food management system (human resource, infrastructure and equipment, production process, marketing function, and logistics and distribution) as a single construct. Talib, Ai Chin and Fischer (2017) found the positive linkage between Halal constructs, operational and financial performance constructs. Talib et al. (2017) however operationalized Halal food management system as a single construct. Compared to single construct approach, the multi-dimensional approach allows a deeper insight of value and role of each Halal food management system critical constructs (Samson & Terziovski, 1999). Therefore, a multi-dimensional operationalization of Halal food management system critical construct and organisational performance is considered in this study. In brief, this study aims to assess the direct relationship between Halal food management system critical constructs, operational performance and product quality. Literature Review Compared to Halal food and food safety management system, the relationships between effective management practices and performance have been more extensively studied in quality management literature. In general, the previous studies have provided different sets of quality management constructs considered as essential to the success of quality management implementation. Common quality management constructs include leadership, training, employee management, information and analysis, supplier management, process management, customer focus, and continuous improvement (Sadikoglu & Zehir, 2010; Sila, 2007). Different ways have been proposed to measure organisational performance such as through financial performance, non-financial performance, operational performance, innovation performance, quality performance, as well as product/service quality (Brah, Tee, & Rao, 2002; Garvin, 1987; Psomas, Pantouvakis, & Kafetzopoulos, 2013; Samson & Terziovski, 1999; Sousa & Voss, 2002). While some studies have found evidence pointing towards mixed association between quality management implementation and performance (Brah, Li Wong, & Madhu Rao, 2000; Kaynak, 2003; International Journal of Academic Research in Business and Social Sciences Vol. 1 0 , No. 3, March, 2020, E-ISSN: 2222-6990 © 2020 HRMARS 839 Prajogo & Sohal, 2003; Psomas & Jaca, 2016), in general, previous researchers have highlighted the positive relationships between quality management implementation constructs and organisational performance (Anderson et al., 1994; Choi & Eboch, 1998; Das et al., 2000; Douglas & Judge, 2001; Flynn et al., 1995; Ho et al., 2001; Kaynak, 2003; Shah & Ward, 2007). Previous studies have demonstrated that companies who have effectively implemented their quality and food safety management systems have experienced positive and significant improvement in term of product quality (Aggelogiannopoulos, Drosinos, & Athanasopoulos, 2007; Khatri & Collins, 2007; Liao, Enke, & Wiebe, 2004; Scott, Wilcock, & Kanetkar, 2009; Semos & Kontogeorgos, 2007; Trienekens & Zuurbier, 2008) and operational performance (Feng, Terziovski, & Samson, 2008; Jang & Lin, 2008; Koc, 2007; Magd, 2006). As there is no detailed analysis of the relationship between each Halal food management system implementation constructs and performance in the prior literature, this study relies on the argument that proposes positive and direct relationship between management system critical constructs and organisational performance. Additionally, given that the present study is an exploratory in nature whereby qualitative approach (Ahmad, Abdul Rahman, Othman, & Ungku Zainal Abidin, 2017) is initially taken to develop instrument, hypotheses for each Halal food management system critical constructs are not pre-specified prior to EFA (Annear et al., 2015; Dow, Samson, & Ford, 1999; Harrington, 2009; Psomas & Jaca, 2016). Thus, the main research hypotheses are formulated as the following: H1: Each of the Halal food management system critical construct is positively related to operational performance H2: Each of the Halal food management system critical construct is positively related to product quality. Materials and Methods Survey Design Questionnaire encompassing two sections was developed as the instrument for this study. Section 1 contains statements about implementation of critical factors in halal food management system (n=57 items), operational performance (n=10 items) and product quality (n=4 items). Questions about critical factors in halal food management system were developed from findings from semi-structured interviews that were previously conducted (Ahmad et al., 2017). Ten critical Halal food management constructs identified in semi-structured interviews are consumer focus; employee management and characteristics; teamwork; Halal personnel empowerment; information capacity; adequate support; top management commitment; training; policy and procedure; supplier management. Constructs of operational performance and product quality were adapted from Kafetzopoulos and Gotzamani (2014) who studied the impact of effective food safety and quality management system implementation on organisational performance. Some of the independent constructs (e.g. organisational attributes, employee attributes and system requirements) in study by Kafetzopoulos and Gotzamani (2014) were also similar with the construct identified in the semi-structured interviews. Subjective measures were used to assess organisational performance (operational performance and product quality). Despite some drawbacks (susceptibility to common source bias and social desirability) (Bedi, 2016), previous studies have revealed that the subjective measure is a good proxy of real organizational performance due to strong correlations between subjective and International Journal of Academic Research in Business and Social Sciences Vol. 1 0 , No. 3, March, 2020, E-ISSN: 2222-6990 © 2020 HRMARS 840 objective performance data. The respondents’ perception on their companies performance was also often consistent with the actual performance of the organisation (Bedi, 2016; Dess & Robinson Jr, 1984; Wall et al., 2004). Likert scale ranging from 1 (strongly disagree) to 7 (strongly agree) were used for this section. In the second section, questions on respondent’s demogr