ISLAMIC WORK ETHICS AND ENTREPRENEURIAL ORIENTATION TO MICRO BUSINESS' FINANCIAL PERFORMANCE IN MICRO BUSINESS OF MUSLIM FAMILY

Abstract

This study focuses on the effect of Islamic Work Ethics (IWE) and Entrepreneurial Orientation (EO) on the Financial Performance (FP) of Muslim-family-owned-micro businesses in Indonesia. The sample was obtained from micro-enterprises registered with OK-OCE (social institutions that function as entrepreneurship centers in various districts). The purposive sampling method is used with the criteria of Muslim family-owned businesses and home industries that produce food and beverages, restaurants, and cafes. Using a SmartPLS software (PLS-SEM method), 246 micro-business data samples were processed and analyzed. The result shows that IWE has a significantly positive influence on EO; secondly, EO has a significantly positive influence on FP; while last, IWE has no significant impact on FP. However, the IWE indirectly positively affects financial performance through EO as the mediating variable. This empirical evidence contributes a novelty in Islamic Work Ethics and entrepreneurship literature, especially in Indonesia. For further research, there are several suggestions, such as using objective financial performance data; using other sectors or industries as the sample, such as the apparel industry; and including a moderating variable such as business regulation, etc.