Urgency of Halal Certification on the Performance of MSMEs

Abstract

This research aims to explain the effect of halal certification on the financial performance of MSMEs, which is mediated by innovation performance. Halal certification is required for MSME food products along the supply chain, starting from providing ingredients, processing, storage, packaging, distribution, sales, and presentation of products. Currently, the awareness of MSME owners in Malang Regency regarding the importance of halal certification for the products produced is increasing, aiming to improve MSMEs' performance. This is also supported by a government program that provides assistance facilities for MSMEs in managing halal certification. This research uses quantitative methods accompanied by hypothesis testing. The research sample was 153 MSME food products registered with the Cooperative Service, which had received halal certification from LPPOM MUI. Questionnaires were distributed to MSMEs in five sub-districts in the Malang Regency area to obtain a representative sample. The sampling technique used was purposive sampling with primary data collection was carried out by field surveys of food product MSMEs using questionnaires and Likert scale measurement. The analysis technique used in this research is Structural Equation Modelling Partial Least Square (SEM-PLS) analysis to find out how halal certification affects the financial performance of MSMEs. The research results show that halal certification does not affect the financial performance of MSMEs in Malang Regency; on the contrary, halal certification has a positive and significant effect on innovative performance in MSMEs. This research also found that innovative performance positively affects financial performance. Apart from that, another finding from this research is that halal certification indirectly affects financial performance, which is mediated by innovative performance in MSMEs in Malang Regency.