Abstract
The previous research on the relationship between corporate social responsibility (CSR) and business performance produced mixed findings. Scholars exerted the mixed findings are largely influenced by several factors and contexts where different markets, type of companies, industries, and countries would show different results. On that basis, this study examines how the dimensions of objective environment influence the relationship between CSR dimensions and the business performance of Takaful agencies in Malaysia. Malaysia was chosen as the country because it is among the largest Takaful contributors in the world. Stakeholder and contingency theory are used to analyze the hypothetical relationship between the variables. Questionnaires were distributed to Takaful agency managers who operate their businesses in Kuala Lumpur, Putrajaya, and Selangor state. About 211 of them participated in this study. The empirical findings suggest that economic and ethical activities have a direct influence on Takaful agencies’ business performance. Further results imply that while environmental dynamism influences business performance directly, environmental complexity significantly moderates the relationship between legal, philanthropy, and business performance. This research considered only the direct effect of CSR activities and the moderating effect of environmental dimensions on business performance with only the agency managers’ perspective studied. It adds new insights to the CSR and Takaful literature by revealing the relationship between the dimensions of CSR and business performance in the Takaful context, and sheds light on how governing authorities and Takaful operators should implement the CSR strategy and activities to make the industry successful in Malaysia and around the world, as Takaful businesses are heading towards becoming a global industry.
Highlights
Takaful or Islamic insurance is becoming popular in the Muslim world
The majority of Takaful agencies have more than 10 agents which accounted for 64.9%, 24.2% have six–10 agents, and only 10.9% have less than five agents
The results reveal that the dimensions corporate social responsibility (CSR) economic (β = 0.251, t = 2.502) and CSR ethics (β = 0.186, t = 2.610) have a positive relationship with Business Performance (BP), supporting hypotheses Hypothesis 1 (H1) and Hypothesis 2 (H2)
Summary
Takaful or Islamic insurance is becoming popular in the Muslim world. The formal Takaful operation system relies heavily on Shariah principles such as mutual responsibility, cooperation, and mutual protection [3]. Takaful institutions began in Sudan in 1979 followed by other countries around the world. Malaysia and the Gulf Cooperation Council (GCC) countries are considered as the leading key players in the global Takaful market [4]. Global gross Takaful contribution has seen double-digit growth since 2010. The Takaful market in Malaysia is showing steady growth in spite of the Covid-19 pandemic, which has hit hard many industries including global financial and insurance sectors [6]. From the Islamic point of view, there is a similarity between the Takaful concept and social responsibility [7]
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