西 南 交 通 大 学 学 报
第 55 卷 第 4 期
2020 年 8 月
JOURNAL OF SOUTHWEST JIAOTONG UNIVERSITY
Vol. 55 No. 4
Aug. 2020
ISSN: 0258-2724 DOI：10.35741/issn.0258-2724.55.4.24
Research articleSocial Science
I
NFORMATION
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ECHNOLOGY
G
OVERNANCE AND
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SLAMIC
B
USINESS
E
THICS AS
F
ACTORS
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NFLUENCING
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NFORMATION
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ECHNOLOGY
A
DOPTION
影响信息技术采用的因素是信息技术治理和伊斯兰商业道德
Hadri Kusuma a, *, Muafi b, Hendy Mustiko Aji b
a Department of Accounting, Faculty of Business and Economics, Universitas Islam Indonesia
Yogyakarta, Indonesia, hkusuma@uii.ac.id
b Department of Management, Faculty of Business and Economics, Universitas Islam Indonesia
Yogyakarta, Indonesia, muafi@uii.ac.id, hm.aji@uii.ac.id
Received: April 4, 2020 ▪ Review: June 11, 2020 ▪ Accepted: July 20, 2020
This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0)
Abstract
This paper is aimed at investigating the factors that affect the intention to adopt information technology in Micro, Small, and Medium Enterprises of Batik in Pekalongan, Central Java, Indonesia. Besides, this paper also examines the moderation impact of Islamic Strategic Management on the intention of adopting information technologies at Batik micro, small, and medium enterprises. Using the purposive sampling method, questionnaires of 152 respondents were obtained and used in this study. The data is analyzed using Structural Equation Modeling. The test results evidence that the intention to adopt information technologies at Batik small and medium enterprises in Pekalongan is affected significantly by information technologies governance and Islamic Strategic Management. However, this study also found that Islamic Business Ethics does not have a significant influence on the intention to adopt information technologies. Besides, this study concludes that Islamic strategic management does not have a significant impact on moderating the intention of adopting information technologies. This study recommends future research to examine the indirect effect of Islamic business ethics, information technologies governance, and intention to adopt information technologies.
Keywords: Information Technology Governance, Islamic Business Ethics, Information Technology Adoption Intention
摘要 本文旨在調查影響印尼中爪哇省北加浪岸的蠟染的微型，小型和中型企業的信息技術採用意 願的因素。此外，本文還探討了伊斯蘭戰略管理的適度影響對蠟染微型，中小型企業採用信息技 術的意圖。使用目的抽樣方法，獲得了 152 位受訪者的問卷並用於本研究。使用結構方程模型分
析數據。測試結果表明，信息技術治理和伊斯蘭戰略管理極大地影響了北加浪岸蠟染中小型企業 採用信息技術的意圖。但是，這項研究還發現，伊斯蘭商業道德對採用信息技術的意圖沒有重大 影響。此外，這項研究得出的結論是，伊斯蘭戰略管理對節制採用信息技術的意圖沒有重大影響 。本研究建議未來的研究，以檢查伊斯蘭商業道德，信息技術治理以及採用信息技術的意圖的間 接影響。 关键词: 信息技術治理，伊斯蘭商業道德，信息技術採用意圖
I. I
NTRODUCTIONIn the context of Industry 4.0, currently, micro, small and medium enterprises (MSMEs) in Indonesia are required to utilize digital technologies. Enhancing the productivity and competitiveness of small and medium enterprises (SMEs) is vitally important for them to be able to penetrate the export market through the e-smart MSMEs program. To face the industry 4.0 revolution, creative economic actors, especially MSMEs entrepreneurs, must be able to think out of the box maximally. The batik industry targeted by the government is expected to wield a heavy influence on increasing the country’s competitiveness.
Some of the empirical evidence and theoretical studies have proven that MSMEs have a very important role in increasing the economic growth of a region [1], [2]. When the economic crisis occurred in 1997, it turns out that MSMEs in Indonesia were reliable as one of the sectors that can sustain the economy [2]. Unfortunately, almost all MSMEs in many regions in Indonesia are still facing very significant obstacles, including Human Resource (HR) competencies, technology, organizational capability, and capital [2], especially information technology (IT). This is due to the use of IT that is still limited, such as the use of websites, emails, phone, and fax [3]. MSMEs in Indonesia still don’t have an IT blueprint platform [4]. This condition is very unfavorable for MSMEs, especially in the digital era nowadays as the invasion of products from abroad is without limits and very intense.
This study was conducted in Batik MSMEs in Pekalongan, Central Java, Indonesia. Batik in the Pekalongan region has been very well-known and has become a cultural heritage that was passed down through generations. The field observation proves that the MSMEs have a low adoption of technology. It proves that IT use is limited by business transactions, and they are hardly ever used for correspondence and telephoning. Sending promotions via WhatsApp application is also still limited and used only by certain MSMEs. It is due to various obstacles: it is very expensive; the connection is slow; employees
lack IT skills; legal consequences can occur, old ways are preferred, and employees are too lazy to learn new things. In Pekalongan, the entrepreneur still imitate the design of other regions [5], [6]. Thus, these problems are likely to become the inhibiting factors in facing the demands of Industry 4.0.
This study wants to fill several research gaps, namely:
1. The scarcity of previous studies, since this study is focused on IT governance and Islamic business ethics in increasing IT adoption, especially when moderated by Islamic Strategic Management.
2. Islamic Strategic Management has not been studied much in moderating the relationship between IT governance and Islamic business ethics in increasing IT adoption, especially when applied to MSMEs.
3. The role of Islamic Strategic Management is very important since it becomes a solution to strengthen business practice that can integrate Islamic values in every strategic management process, namely in formulating, implementing, and evaluating performance [7]. This is very essential, especially in Batik MSMEs in Pekalongan, along with the growth of Islamic civilization and batik business.
It shall be noted that the community in Pekalongan is highly religious, and people can live in peace despite their ethnic differences.
It became a trigger and motivation for researchers to further examine this topic in its relation to the moderating role of Islamic Strategic Management. It also caters to the novelty of this research.
II. L
ITERATURER
EVIEWA. Digital Transformation: Opportunities and Challenges
The commitment of the Government of Indonesia to Industry 4.0 makes all industries, especially five key industries, continue to compete for high performance and competitiveness. The wave of digital transformation will provide opportunities as well
as very serious challenges. Currently, the government is also declaring Indonesia as the largest digital economy in 2020 and targets it to be the largest in Southeast Asia. The government is targeting to e-commerce transactions to reach USD 130 billion and to create 1000
technopreneurs with a business value of USD 10
billion in 2020 [8]. This condition requires batik MSMEs to change the conventional business model into the digital business model. However, in general, whenever facing the digital business model, the entrepreneur should face several problems. There are several characteristics and problems mentioned by researchers, namely [8]:
1. Direct business model, which will be faced with problems, namely: e-commerce fraud, security transactions, false information (such as fictitious stores, inappropriate items), transaction security, and personal data security.
2. Business models based on cross-country and real-time information transactions will be faced with: foreign e-commerce acquisitions, immature digital-based start-up ecosystems, no e-commerce databases, and Zone Improvement Plan (ZIP) being not under the regional development.
Digital transformation will affect organizations and several stakeholders that will imply the marketing field, IT, product development, organizational strategy, or HR within a transformational strategic framework [9]. Problems in digital transformation require the readiness of MSMEs, not only on governance and resources competency but also the capability to analyze challenges. In addition, it also requires Islamic strategic management to create a significant impact in increasing the intention to adopt IT moderated by Islamic strategic management.
B. The Influence of Islamic Strategic
Management on the Intention to Adopt IT Framework
The presence of technological innovation, such as cloud computing, artificial intelligence, and the Internet of Things (IoT) requires business actors to manage and mobilize resources efficiently and optimally. The company is required to achieve efficiency, product quality, and excellent services and to increase profit in the long run [10]. If the company has strategic and valuable resources, it can improve its business efficiency and competitive advantages [11]. Valuable, unique, and rare resources can be significant assets and provide a meaningful impact on the capability of the organization to have competitive advantage [3] , [12].
One thing that is also important is human resources as intellectual capital. Intellectual capital can be known by measuring human capital, structural capital (database and organizational structure), and customer capital (customer and supplier relationship) [8], [13]. The results of the study [15] confirmed that HR, technological excellence, and IT suitability for business will influence digital transformation that is strengthened by the leadership role of the leader. This condition has to be supported by organizational and IT governance as well as high leadership ability of the leader [16], [5]. The study [17] evidenced that IT awareness and attitude to IT governance are very important for the organization. The study [18] manifested that a company with effective IT governance can generate its profit by over 20% more than companies with inadequate governance.
For good governance, companies shall focus their attention on 4 areas: business ethics, decision making, transparency, and accounting/final accounts [19]. IT governance and Islamic business ethics will strongly affect the intention of MSMEs to use IT [20]. Whether we realize it or not, the critical issue of IT adoption in MSMEs is the strategic value of IT investment that can be achieved when users, as in the MSMEs owners and managers, accept a new system and use it appropriately to achieve organizational goals. If IT can have great benefits in carrying out business activities, IT value will increase, so that the intention to adopt IT will increase proportionally [21], [22]. Besides, IT adoption can also be used to predict business growth [23], improve relationships with suppliers, customers, competitors, and the organization itself [24], [25].
In running a business, strategic management knowledge is required [7]. In Islam, all aspects of human life already have guidance in the Quran and Sunnah, including commerce (business). For Muslims, Islam is not only limited to the religion specified on the identity card. Islam is the way of life [26], [27], [28], [29]. Therefore, secularism is not in line with the aims and values of the religion itself. Thus, Islam cannot be separated from human life [7]. It has made many Muslim researchers develop business models, both related to financial, marketing, human resource, operations, and strategic management based on Islamic values. The aim is not to promote Islam as a religion, but to map how a Muslim (both consumer and producer) behaves and analyses whether Muslim consumers and producers have behaved according to Islamic teachings [29], [30].
In today’s era of technological development, an entrepreneur shall be able to count for any opportunities, challenges, and restrictions so that business goals would be achieved properly and ethically. Leadership based on Islamic values and ethics is very important. It is due to the transformation towards the digitalization of technology. Although it can create high-efficiency levels in operational terms, it is positively related to fraudulent practices and immoral business behavior. The concept of Islamic strategic management can be a solution to strengthen business practices due to several factors [7], [26]:
1. Islamic strategic management puts forward cooperation rather than competition. Especially in this disruptive era, sharing economy (cooperation) has become the main discussion in various literature and conferences.
2. The main motivation is intrinsic value instead of extrinsic value, such as money.
3. The perspective used is very visionary, namely one of the afterlife.
4. A good driver in Islamic strategic management is a driver who drives safely, not just fast.
III. M
ETHODS/M
ATERIALSThis study is a survey with respondents who are company owners and managers, including owners and managers of Batik MSMEs in Pekalongan.
The questionnaires were distributed among the respondents, and several owners and managers of Batik MSMEs were interviewed.
The respondents are chosen purposively and limited to those who are Muslim. This study uses four variables, namely: governance, Islamic business ethics, intention to adopt IT, and Islamic strategic management with the scale from 1 (strongly disagree) to 5 (strongly agree).
The variable of Islamic Strategic Management is measured using 4 items adopted from [7], namely: (a) One of the objectives of doing business is to be able to prosper employees in the company; (b) Getting a greater profit from competitors is suggested by the Islamic sharia business for the business can continue to survive; (c) the Islamic sharia suggests to identify the obstacles that can harm the business; and (d) Developing a business strategy so that business process can get better. Intention to adopt is measured using items adapted from [31], namely: (a) I intend to use information technology and communication for Batik businesses purpose in the future, and (b) I intend to routinely use information technology and communication for
batik businesses purpose in the future. Islamic business ethics (ET) is measured using three items, namely: (a) I work to fulfill the responsibility to God Almighty; (b) I manifest faith in God Almighty in all aspects of life; and (c) I am a result-oriented person, not just in the world, but also in the hereafter. Furthermore, governance (TK) is measured using two items, namely: (a) There needs to be a certain party within the company that specializes in handling information technology and communication issues, and (b) The leader of the company is responsible for determining the scale of business/the use of information technology and communication.
The data is analyzed using Structural Equation Modeling (SEM) approach with AMOS as the analysis tool. The validity and reliability of the data must be examined before analyzed further. The validity test is done using a dimension reduction technique or factor analysis. In this test, the items scoring below 0.50 and not fitting the right factor shall be eliminated from the model [32]. Furthermore, Cronbach Alpha is used to assess the item reliability. According to [33], the minimal score of Cronbach Alpha for an item to be reliable is 0.40.
IV. R
ESULTSA. Description of Respondents
Researchers did not find any difficulties when collecting the data since almost 90 percent of respondents are Muslims. Questionnaires are distributed in Pekalongan City and its surroundings, and 170 questionnaires were collected. After the questionnaires had been thoroughly checked, 152 questionnaires were successfully processed. Table 1 shows a summary of the respondents’ characteristics ranging from gender, position, age, education, length of MSMEs operations, and participation in the batik community. By gender, most respondents (101, or 66.4%) are male, and 51 respondents (33.6%) are female. Most of the respondents are direct owners of the batik MSMEs (63 respondents or 41.4%), while 12 respondents (7.9%) are managers, and 27 respondents (17.8%) are owners and managers of MSMEs. The data shows that 50 respondents are neither owners nor managers. Most likely, these respondents are employees of the MSMEs.
Table 1.
Description of respondents
Demography variable N %
Demography variable N % Male 101 66.4 Female 51 33.6 Position Owner 63 41.4 Manager 12 7.9
Owner and manager 27 17.8
Others 50 32.9 Age <20 years old 39 25.7 20-30 years old 27 17.8 31-40 years old 43 28.3 > 40 years old 43 28.3 Education Elementary School 31 20.4
Junior High School 61 40.1
Senior High School 50 32.9
Bachelor 6 3.9
Master/Doctor 4 2.6
Length of MSMEs’ Operation
5-10 years 67 44.1
11-20 years 57 37.5
21-30 years 24 15.8
>31 years 4 2.6
Participation in the Batik Community
Yes 66 43.4
No 86 56.6
Based on their age, most respondents (86, or 56.6%) are aged over 31 years old. It shows that the respondents in this study are adults. In terms
of education, 61 respondents (40.1%) have a junior high school education, and 50 respondents (32.9%) have senior high school education. Only a total of 10 respondents (6.4%) are highly educated. It means that people who are educated relatively do not want to work as batik entrepreneurs. Moreover, based on the length of MSMEs operations, 67 respondents (44.1%) claimed to have owned a business that had been operating for 5-10 years, 57 respondents (37.5%) claimed that their business had been running for 11-20 years, and only 4 respondents (2.6%) have had their business running for over 31 years. It implies that the respondents in this study are batik entrepreneurs having more than enough experience in the industry.
B. Model Testing
Table 2 shows the validity test results expressed by the loading factor score and reliability test results expressed by Cronbach’s Alpha. The results of the factor analysis show that all measurement items have a loading factor score above 0.50, and they have been grouped based on their respective factors. All variables have a Cronbach’s Alpha score above 0.40. These results indicate that the data is valid and reliable, and therefore it can be further analyzed.
Table 2.
Analysis factor and Cronbach’s alpha
Code Statement Factors 2.1 Alpha
1 2 3 4
TK1 There needs to be a certain party within the
company that specializes in handling information technology and communication issues.
.785
0.544
TK2 The leader of the company is responsible for
determining the scale of business/the use of
information technology and communication. .653
MS1 One of the objectives of doing business is the
ability to make company employees
prosperous or well-to-do people. .793
0.672
MS2 Getting a greater profit from competitors is
suggested by the Islamic sharia business for
the business can continue to survive. .612
MS3 Islamic sharia suggests identifying the
obstacles that can harm the business. .677
MS4 Business strategy development aimed at
business process improvement, as suggested
by God. .551
INT1 I intend to use information technology and
communication for Batik business purposes
INT2 I intend to routinely use information technology and communication for batik
businesses purpose in the future. .704
ET1 I work to fulfill the responsibility to God
Almighty. .780
0.671
ET2 I manifest faith in God Almighty in all
aspects of life. .680
ET3 I am a result-oriented person, not just in the
world, but also in the hereafter. .718
Table 3.
Relationship score
Relationship Score Conclusion
Islamic Business Ethics
->Governance 0.532* Significant
Governance ->Intention
to Adopt 0.507* Significant
Islamic Business Ethics
->Intention to Adopt 0.131 Non-significant
Islamic Strategic Management ->Intention to Adopt 1.004* Significant Islamic Strategic Management -> Governance ->Intention to Adopt -0.018 Non-significant Islamic Strategic Management -> Islamic Business Ethics ->Intention to Adopt -0.094 Non-significant
Note: *p-value < 0.01, ns = p-value > 0.05
The results thus obtained show that MSMEs' IT governance is strongly influenced by Islamic business ethics adhered to by batik entrepreneurs (β = 0.532, p-value < 0.01). The results also prove that the intention to adopt IT by batik entrepreneurs in Pekalongan is strongly influenced by a good IT governance (β = 0.507, p-value < 0.01), and Islamic management practices (β = 1.004, p-value < 0.01). Islamic business ethics does not significantly influence the intention to adopt IT (β = 0.131, p-value > 0.05). Regarding its relation to moderating the role of Islamic strategic management, the test results show that Islamic strategic management has not proven to moderate the relationship between governance on intention to adopt (β = -0.018, p-value > 0.05) and Islamic business ethics on intention to adopt (β = -0.094, p-value > 0.05). The summary of the test result can be seen in Table 3.
V. D
ISCUSSIONBased on the test results summarized in the model in Table 3, it is seen that Islamic business ethics has a significant impact on IT governance in Batik MSMEs in Pekalongan. It could occur because the practice of good IT governance in
business requires transparency and decision making. It means that if the decision making is neither good nor transparent, it will result in poor business IT management, especially of batik MSMEs in Pekalongan. It is in line with the study conducted in [19]. Thus, one of the ways to amend governance for MSMEs is to improve the entrepreneurs’ business ethics under Islamic values.
The test results also show that good IT governance from MSMEs can encourage batik entrepreneurs to advance in adopting information technologies. With proper IT governance, their performance will be more efficient, and unnecessary costs will be eliminated. It will increase the intention of batik entrepreneurs to further adapt information technology to be applied to their businesses. The authors of [18] claim that the businesses that have adopted IT could increase their profit by 20%. It also has been stipulated in [20] that the intention to adopt IT in MSMEs is influenced by IT governance.
There are some noteworthy findings obtained as to the relationship between Islamic business ethics and intention to adopt IT. The results show that the relationship between these two variables is not statistically supported. It can be caused by the indirect influence between the variables. In this case, Islamic business ethics can have a significant influence on intention to adopt IT when the IT governance in MSMEs have been perceived to be good. However, this statement requires further testing. Therefore, this paper suggests future researchers identify the indirect influence between Islamic business ethics, IT governance, and intention to adopt IT on Batik MSMEs. This result is not consistent with the studies [7], [26] that claim that Islamic strategic management could strengthen the practice of business ethics. Thus, it can be concluded that the quality of the relationship (the relationship between variables have good or bad quality) between IT governance and the intention to adopt IT by MSMEs, and Islamic business ethics with the intention to adopt IT by MSMEs does not depend on whether the practice of Islamic strategic management is carried out by the Batik
MSMEs in Pekalongan is good or bad. However, Table 3 shows that intention to adopt IT is directly influenced by Islamic strategic management.
VI. C
ONCLUSIONThis study aims to investigate the factors that can affect the intention to adopt IT on Batik MSMEs in Pekalongan, Central Java, Indonesia. Furthermore, this study also examines the moderation from Islamic strategic management towards the model. Based on the analysis, it can be concluded that the intention to adopt IT on Batik MSMEs in Pekalongan is strongly influenced by IT governance and Islamic strategic management. Islamic business ethics is not proven to have a significant influence on the intention to adopt IT. Islamic strategic management that was initially predicted to strengthen the intention to adopt IT on Batik MSMEs was not proven significantly. Therefore, this study recommends future research to re-investigate it by considering indirect testing between Islamic business ethics, IT governance, and intention to adopt IT.
VII. M
ANAGERIALI
MPLICATION Islamic business ethics should be more attention to by owners or managers of Batik MSMEs by implementing them in business practices and daily life. This is important considering that Pekalongan has been known as a city of students and the people are very open both to religious tolerance and business. It is essential because when customers or the people have a good and positive impression to conduct business transactions transparently and honestly, customers or the people are likely to have re-transaction. Likewise, the government’s participation is needed to strengthen MSMEs so that IT governance is managed properly and professionally so that the intention to adopt IT is also getting stronger. This is important to further facilitate business transactions in the future, especially in the era of Industry 4.0.The implementation of strengthening Islamic Strategic Management is also needed in the future by understanding the three main activities in strategic management, namely: process, implementation, and evaluation of strategies that are integrated with Islamic values. All of which, if applied properly, will improve business performance in the long run.
A
CKNOWLEDGMENTThis research is fully funded by The Ministry of Research, Technology and Higher Education (Kemenristekdikti), The Republic of Indonesia under the Basic Research Grant scheme for 2019/2020
