SHAPING ENTREPRENEURIAL PERFORMANCE IN SMALL BUSINESS SECTORS: DOES ISLAMIC FINANCIAL INSTITUTIONS’ SUPPORT MATTER?

Rizaldi Yusfiarto, Islam Abdeljawad (), Lailatis Syarifah (), Romzie Rosman (), Ahmad Febriyanto and Muhammad Hanif Ibrahim ()
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Rizaldi Yusfiarto: Faculty of Islamic Economics and Business, Universitas Islam Negeri Sunan Kalijaga, Yogyakarta, Indonesia
Islam Abdeljawad: Faculty of Business and Communication, An-Najah National University, Nablus, Palestine, West Asia
Lailatis Syarifah: Institute of Islamic Banking and Finance, International Islamic University Malaysia, Kuala Lumpur, Malaysia
Romzie Rosman: Institute of Islamic Banking and Finance, International Islamic University Malaysia, Kuala Lumpur, Malaysia
Muhammad Hanif Ibrahim: Faculty of Islamic Economics and Business, Universitas Islam Negeri Sunan Kalijaga, Yogyakarta, Indonesia

Journal of Developmental Entrepreneurship (JDE), 2025, vol. 30, issue 02, 1-29

Abstract: This study explores the role of Islamic financial institutions’ (IFIs) support in the entrepreneurial success of Muslim-owned micro, small and medium-sized enterprises (MSMEs). It also integrates the constructs of Islamic financial literacy, management control systems and the alleviation of financial constraints as key components of business internalization. The study involved 265 Muslim MSME owners, who were analyzed using partial least squares structural equation modeling (PLS-SEM). The empirical results reveal that IFIs play a significant role in enhancing entrepreneurial performance by enabling MSME actors to access both tangible and intangible resources critical to business success. Furthermore, the findings emphasize that IFIs act not only as capital providers but also as entrepreneurial support organizations, facilitating strategic guidance to support economic transformation through a more integrated approach grounded in Islamic values.

Keywords: Islamic financial institution; entrepreneurial support organizations; Islamic financial literacy; alleviation of financial constraints; micro; small and medium-sized enterprises (search for similar items in EconPapers)
JEL-codes: B21 D24 D80 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1142/S1084946725500141

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