056_198_4thICBER2013_Proceeding_p0694

694 4TH INTERNATIONAL CONFERENCE ON BUSINESS AND ECONOMIC

RESEARCH (4TH ICBER 2013) PROCEEDING 04 - 05 MARCH 2013. GOLDEN FLOWER HOTEL, BANDUNG, INDONESIA

ISBN: 978-967-5705-10-6. WEBSITE: www.internationalconference.com.my

MEASURING ENTREPRENUERS’ SATISFACTION FROM ISLAMIC PERSPECTIVE:

A STUDY ON SMALL FIRMS IN NORTH SUMATERA, INDONESIA

Ahmad Rafiki

Universiti Sains Islam Malaysia

Kalsom Abdul Wahab

Universiti Sains Islam Malaysia

Abstract

Islam as ad-din (way of life) already outlined value systems established by al-Quran and al-hadith in

every aspect of life. The underlying principle of the Islamic values is the well beings of human life and the

‘alam (environment). This study investigates the Muslim entreprenuers’ (Muslimpreneurs) satisfaction

with their business. Conceptually, values, ethics and belief of Muslim influence their satisfaction.

Satisfaction conceptualized success or performance of human resource. Two main theories namely the

theory of entreprenuerial success and religiosity are used as the underpinning theories in explaining the

satisfaction. Five independent variables delineated from the respective theory are chosen for developing

a multivariate performance model. It includes tenacity, managing risk, honesty, belief of Allah, sholat

(prayer) as independent variables, while the dependent variable is perceptional dimensions of the

Muslimpreneurs satisfaction. The proposed hypotheses are the relationship between entrepreneurial

success and religiosity factors. The sample size (N) is 370 small firms’ owner-managers randomly picked

from four regions in the Province of North Sumatra, Indonesia. The measurement justifications are based

on the Islamic values/perspectives that are in compliance with the Islamic principles. The findings of this

study might add knowledge to the small firm performance literature, probably help policy makers in their

decision making regarding small firm sector, and possibly small firms’ owner-managers who want to

improve their performance.

Keywords: Entreprenuers success, Islamic Religiosity and Entrepreneurs Satisfaction

1. INTRODUCTION

The small firms sector is an important component to economic development in all countries around the

world. It makes contributions in improvement of income distribution, poverty reduction, employment

creation, export growth, industry growth and rural economics development (Tambunan, 2009). In

Indonesia, the small firms had contribution of 43.66% on GDP which also create 91 million

employements’ opportunities to the industry (MCSME, 2010), this would give the picture on the

essentiality of small firm sector for economic growth and well-beings of the society that justifies

continuous government support and encouragement to the sector’s efficiency and effectiveness. This




also applied in regional basis whereby its contributed about 50% of sales/value added to GDP in

Southeast Asia developing countries and (Narain, 2003). However, these small firms have to face many

constraints in their performance specifically the managerial aspect which needs to besolved by the

owner or manager of the firms. They have to find ways on how to manage the risk, get the experience

and skillful employees and other factors that makes the firm’s performance better and satisfy them

because generally, the entreprenuers’ satisfaction is based on the business related matter in his/her

organization. As human being, the owner/manager’s feeling of satisfaction may affect the decision and

the direction of the business.

Islam is a religion with a comprehensive way of life (ad-Din) based on Al-Qur’an and Sunnah that rules

everything, including commercial activities. It governed the business operational and managerial aspects

aimed to achieve better performance and satisfaction as God commanded in which all the process of

business must be observed strictly to the permissible (halal), abstaining from the prohibited (haram)

and shariah compliance (Rosly, 2006). In fact, entreprenuership considered as a mission in Islam

whereby the Prophet Muhammad (PBUH) had tought the actions and become a role model to be

followed by all Muslim. Even the entry of Islam in this region is through trading and business activities

where its learned that Islamic business is far from fraud actions or any unethical transaction which harm

the individual and its institution such as principles of honesty or niyyah of ibadah are believed to be the

performance key success factors (Yousef, 2001). Hence, the Muslim entreprenuers must understand the

concept of Islamic business practices and its implications. This study expected to answer the question to

what extent Islamic belief, practices and behavior explained the influences to entrepreneurs’

satisfaction which encapsulated in entrepreneurial success theory and Islamic religiosity theory?

With regard the Islamic theory on the ideas of satisfaction and dissatisfaction. The Islamic satisfaction

derived from the performance’s achievement through the materialistic gain of business profits and

fulfillment of religiosity obligations would be by performing the Islamic practice and values based on Al-

Qur’am and Hadith. Shortly, it is achieving of higher order needs by seeking the pleasures of Allah,

attaining eternal success in the life after death, experiencing spiritul solace and peace in this world

(Yousef, 2001).

The small firm generally has several definitions, among others are as a companies with a limited number

of employees (Hong and Jeong, 2006), whose headcount or turnover falls below a certain limit (Chu,

2004), business directions, manner and orientation which differs from larger organisations (Burns, 2001)

such as family orientation, traditional management and inappropriate method of production (Sandee et

al., 2002). However, in Indonesia, according to the Ministry of Cooperative and SMEs (MCSME) and the

two government agencies of Department of Industry (MoI) and Central Statistical Agency (BPS), it is

defined as a firm (retail, service, manufacturing and agriculture) that employs fewer than 20 employees

with total initial assets of up to US$20,000, not including land and buildings, or with an annual value of

sales of a maximum of US$100,000.

This study is concerned with assessing entrepreneurs' satisfaction with their businesses. The overall

satisfaction is clearly a fundamental measure of success for the individual entrepreneur. Cooper and

Artz (1995) did studied on the entreprenuers’ satisfaction measures based on goal orientation of




economic performance in their ventures which may relates to their own personal frames of reference

and backgrounds. He admitted that it is difficult to find such study of satisfaction from entrepreneurs’

perspective especially with the inclusion of Islamic elements. Many studies had developed the

assessment instruments to measure business satisfaction and generally used single instruments, but

they are not focusing on the position of entreprenuers’ satisfaction as the owner or manager particularly

integrating with multiple statement of Islamic belief and practices. This may have limited the degree to

which satisfaction could be accurately assessed. Thus, study employed a combination of accepted

measurement tools to accurately assess the entreprenuers’satisfaction and it expected to give

information for the entreprenuers on the reasons of dissatisfaction despite achieving their

business’goals due to the absent of Islamic components and definetely, this also to provide significant

contribution for future research of enterpreneurs’ satisfaction.

1.1 Conceptual Framework

This study specifically focuses upon the determinants of Muslimentrepreneur’ satisfaction. It expected

that the satisfaction of individual entrepreneurs would be highly correlated with the economic

performance of their ventures. Thus, those who do better in their business performance, they should

feel better or satisfy. However, theory suggests that satisfaction may be related to other factors as well.

This study specifically investigates three of those possible determinants: the entrepreneur's success, the

Islamic religiosity factors of the entrepreneur that may bear indirectly upon satisfaction. These factors

are considered from theories by Ali (1988) on Islamic work ethics, Wilde and Joseph (1997) on Islamic

religiosity, Zimmerer and Scarborough (1998) and Dollinger (1999) on entreprenuers’ success factors

and Yousef (2001), Ahmad (2006) on Islamic satisfaction and Weiss et al.(1967) on job satisfaction.

Below is the proposed theoretical framework in this study:

Theoretical Framework of the Research

ENTREPRENUERS’

SATISFACTION

Entrepreneurial Success

Theory

• Managing Risk

• Tenacity

• Niyyah/Intention

Islamic Religiosity Theory

• Belief in Allah

• Prayer/Sholat




2.0 LITERATURE REVIEW AND HYPOTHESES

2.1 Religion and Work Values in Organization

Religion is one of the most universal and influential social institutions that significantly influence on

people’s attitudes, values and behaviors at the individual and societal levels (Khraim, 2010). Anderson

(1988) quoted from Adam Smith’s Wealth of Nations that religious activity affect economic performance

at the level of individual, group, country due to reputational signal among the employers, lenders and

customers which could convey a reduction in risk associated with the particular individual, and it could

establish trust and sanctioning miscreants in intragroup transactions, reducing uncertainty and

improving efficiency. This asserted by Weber (1930) that the rise of capitalism through its impact on

belief systems and by Lynn et al. (2010) in their study on Christian workers in United States (N = 374)

found that work-faith integration was positively associated with faith maturity, church attendance, age

and denominational strictness.

There are researches had examined both relationship of religion and work attitudes which showed

strong evidence on the linkage at individual level such as creativity, honesty and trust, personal

fulfillment, commitment, motivation and job satisfaction and organizational commitment (Pargament et

al. (2005); Regnerus and Smith (2005) or at firm level could give positive outcome such develop

emotional and spiritual competence, encourage holistic ways of working, develop community at work,

empowered the workforce and human society (Hilary and Hui, 2009; Mickel and Dallimore, 2009; Vitell,

2009).

Parboteeah et al. (2009) in his study of 39 countries (N=44,030) on the world’s four major religions of

Buddhism, Christianity, Hinduism and Islam found that all four religions show a positive relationship with

intrinsic work values, however, only Christianity show a positive relationship with extrinsic work values.

However, Yousef (2001) argued that Muslim is oblige to engage in work and economic activities or

extrinsic values, in fact, Islam tought a fair and distributable economic systems which encourages

materials’ prosperity through the appropriate use of resources given by God in providing the basic

survival and physical needs as well as accumulation of wealth (Kriger and Seng, 2005).

In regard to Islamic values, Weber (1982) posited that Muslim societies could not develop their

economy. He argued that Islam could not produce values such as Protestant Work Ethics (PWE) such as

honesty, frugality, productivity and emphasize on disciplined pursuit of gain, the attitude appropriate to

growth and encouraged its adherents to value of their social and economic environment which makes

many Protestant countries were successful. However, Yousef (2001) rejected this Weber’s opinion

because faith in Islam includes work as an integral component of the human life and both (work and

faith) regarded as a root to a tree; one is interdependent on the other Abeng (1997). Moreover, Arslan

(2000; 2001) have provided empirical support to refute Weber’s thesis and posited that the Turkish

managers scored higher points in all characteristics in PWE than British managers. This Aslan’s findings

mirrored the findings of an earlier research by Ali (1988), who found Arab managers to be more

productive than the Western managers.




It concluded that the religion has relationship with work attititudes, values and ethics as been tought in

Islam through shariah rules and akhlaq Islamiyyah (ethics) in order to seek Allah’s favor (rida). The

impact toward the aspects of organization behavior has made the religion as one of the important factor

to be considered by the entrepreneur in their leadership and managerial tasks. Thus, this study crucial to

see the Islamic religions’ influences on the satisfaction of entrepreneurs in small firms.

2.2 Islamic Practices and Firm Performance

Islam integrates religious practices of business activities and personal worship. Doing all of these

practices in good intention is called an ibadah. In small firms’ behavioural theory, the owner-manager

(entrepreneurs) and the firms are regarded as synonymous (Hall, 1995). The variables of Islamic

practices proposed in this study originally derived from Storey’s model of small firm performance

measures. These includes the Islamic finance, Halal production, Islamic education or training and Islamic

networking (Jemaah). All of these practices had cited in Al-Qur’an and Hadith and had been discussed

separately by author include its relationship and effect to the firm performance and hence the

entreprenuers’ satisfaction.

The Islamic practices included in this study are categorize into actions of fardhu a’in (individual

compulsory obligation) and kifayah (individual optional obligation). Fardhu a’in refers to practices must

do by any Muslim, if they ignore it, they will punish and get the sins. These include the Islamic pillars of

the belief in Allah One Creator – Sustainer God and Prophet Muhammah (PBUH) as the messanger of

God, prayer five times a day, fasting in Ramadhan month, paying Zakat, perform Hajj to Mecca, and

other Ibadah of obeying Allah by doing everything that He has ordered and avoiding everything that He

has forbidden. While, fardhu kifayah are the practices that if any Muslim has done those practices, so,

other Muslim not required to do so such as learning certain knowledge of financing or marketing.

The adoption of Islamic practices in business and management aim to achieve the falah (success in this

world and the hereafter). This includes ethics and social responsibility, organizational behavior,

leadership, motivation, human resource, organizational communication, quality management, mutual

consultation and trust, advice, conflict resolution, work satisfaction, merit system in recruitment and

promotion, the use of control and authority, self-management, managing people, business transactions,

managing time, planning, collectivism, competition, conflicts and strategic management (Aghazadeh,

2003; Ali, 2005; Ahmad, 2006; Beekun, 2006).

2.3 Entrepreneurs’ Satisfaction of Firm Performance

This topic of job satisfaction is a broad concept and has been the most frequently investigated variable

in organizational behavior (Spector, 1997), which consist of measuring the employees or

owner/manager satisfaction. Judge (2000) found based on a database (PsycINFO) that 7,856 studies

were conducted on job satisfaction between 1973 and 2000. Job satisfaction is considered as the

fulfillment of a need or want towards job or work. It refers to the attituted and feelings people have

about their work. It can be positive and favorable attitudes or negative and unfavorable attitudes of job

dissatisfaction (Armstrong, 2006). Many of researchers agreed on the meaning that a satisfied worker

likes his/her work, feels a sense of commitment to his/her work and is pleased with work and/or work-

related factors (Ayranci, 2011). Spector (1997) lists three important features of job satisfaction such as:




(i) organizations should be guided by human values which oriented towards treating workers fairly and

with respect; (ii) the behaviour of workers depending on their level of job satisfaction will affect the

functioning and activities of the organization's business; (iii) job satisfaction may serve as indicators of

organizational activities. Through job satisfaction evaluation, different levels of satisfaction in different

organizational units can be defined, but in turn can serve as a good indication regarding in which

organizational unit changes that would boost performance should be made.

There are many theories related to job satisfaction and had been discussed by scholars. In management

and organization behavior perspective, there are 4 (four) popular theories used to measure job

satisfaction such as: (i) the fulfillment theory explains the reaching of the thing needed (Vroom, 1964);

(ii) the discrepancy theory describes the difference, contradiction and conflict theory (Locke, 1968); (iii)

the equity theory is about equality (Adam, 1965); (iv) the two-factor theory of Herzberg (1976) explains

the driven of motivation and hygiene factors toward satisfaction and dissatisfaction. This concludes that

entrepreneurs may adopt any of these theories to measure satisfaction. Each of theories explained that

an individual could get his/her satisfaction over fulfilling their expectation which equatably perceived as

what their input and outcome through many factors.

2.4 Studies on Entreprenuer Satisfaction

The entrepreneurs’ satisfaction is based on his/her feeling toward their jobs and performances based on

the expected goal achieved. The entrepreneur’s satisfaction may bear upon decision about whether to

continue or close down theie ventures, as well as whether to invest more time and money or cut back

with the expectation toward the success of the business (Michalos, 1986). He posited that

entrepreneuers satisfaction assessed by the expected economical or financial goal they achieve. This

asserted by Cooper and Artz (1995) and Ayranci (2011) that employees and business managers’

satisfaction has different measurement and factors, for example, and such as business’ image, current

work conditions, social interactions, collaboration with employees and contentment with financial

benefits provided by the business.

Fuchs-Schundeln (2009) in his study on measuring owner’s satisfaction found that an individual who

operate their own businesses have greater job satisfaction than in who work for someone else. He

reveals that people who tend to act more freely has greater job satisfaction from working at their own

establishment compare the individuals who are used to hierarchical relationships. Other studies

indicated that people who run their own businesses are satisfied with their positions and significantly

have higher level of job satisfaction than it is for employees (Benz and Frey, 2003; Taylor, 2004;

Andersson, 2008). This similarly as found by Katz (1993) on differences of satisfaction between self-

employed and employees who receive wages or salaries whereby the self-employed have reported

higher satisfaction.

There are owner’s satisfaction measurement used by authors. Akar and Yildirim (2008) in their study use

a single factor instrument with nine statements developed by Hackman and Oldham (1974). While, the

studies by Donuk (2009); Chandraiah et al. (2003); Barrows and Wesson (2009); Gustainiene and

Endriulaitiene (2009) in Turkey used several instrument like Minnesota Satisfaction Questionnaire




(Weiss et al.,1967) and satisfaction scale developed by Balci (1985). All of their studies found that

managers’ satisfaction affected by work behavior, environment and initiative.

Furthermore, Naktiyok (2002) in his study on managers in Erzurum city emphasized on social aspects

and solidarity factors to influence their satisfaction. He stated that although managers were satisfied

with social aspects and solidarity, they were dissatisfied with salary and promotions. Meanwhile, Joseph

and Deshpande (1996) and Viswesvaran et al., (1998) found that the managers’ attitude is another

factor to be considered. This asserted by Koh and Boo (2001) and Lambert and Hogan (2009) on their

studies in Singapore and United States respectively found that work ethic had the largest impact on job

satisfaction. However, Elkins (2007) argued that there was a weak correlation between work ethic and

job satisfaction in a Japanese manufacturing company.

With regard to the personality traits, it has direct or indirect effect on organizational outcomes of

success and satisfaction with accomplishing goals such as a high sense of self-efficacy, an internal locus

of control and a high need for achievement (Bradley and Roberts, 2004; George and Jones, 2003). Thus,

it concluded, despite the differences of satisfaction measures between employees and the

owner/manager satisfaction, it could be seen that each of studies in several countries and sectors used

similar method of this perceptional survey. This also indicates that the owner/manager measures is

correlated with the economic performance of their ventures (Cooper and Artz, 1995) whereby it would

be assessed during the third year of their ownership (Cook, 1986).

Entreprenuer Satisfaction in Islamic Perspective

Ahmad (2006) in his studies explained on Islamic management perspective of satisfaction is differ from

other theories. He relates the satisfaction with the thrusworthy (amanah) of Muslim on earth regardless

he/she is an owner or manager of the firms. Muslim oblige to search industrially for the bounty Allah

who has provided the sustenance, either in the form of natural resources or new processes of available

resources; to work as a form of virtuous deed (amal salih), which is the key to the attainment of true

success in this world and the well-being in the Hereafter (falah); work as a form of ibadah servitude to

God with conformity of the Divine norms and values.

Sharfuddin (1995) posited that an individual has differrent perspective when dealing with salary in

Islamic organization. For example, the employees or managers may receive a smaller salary for their

work compared to similar work in a conventional organization, but they tend to experience a higher

satisfaction with their work. In other hand, there are some Muslims with high salary positions in

conventional insitutions whereby they do not perform their Islamic duties during work hours such as

prayer, these may occur dissatisfaction with their work environment and feelings of guilty for not being

able to discharge their religious obligation. This explanation is relate to good deeds or Ibadah. All the

deeds will turn into good deeds if they have been done with faith and good will. Even ordinary worldly

activities including making money and doing business are considered as praying, as long as they are

done in religiously allowed ways or halal (Bikun, 2004).

Muslimprenuers regarded a work as a source of independence and a means of promoting personal

growth, self-respect, satisfaction and self-fulfillment, Muslim should not left the Islamic religiosity

implementation behind because they likely be more committed to their organizations and have more




satisfied with their jobs (Yousef, 2001). This been guaranteed by Allah that Muslim who do good deeds

or having good intention, He will guide them into the success of business and life (Al-Qur’an, 47:7).

Hence, it is important to develop such a model of Muslimprenuers’ satisfaction as a reference of an ideal

Muslim.

2.5 Entrepreneurial Success and Entreprenuer’s Satisfaction

In the small firm behavioral theory, the business success regarded as entrepreneur’s success (Hall,

1995). Paige and Littrell (2002) defined the entreprenuers’ success with intrinsic criteria such as freedom

and independence, controlling a person’s own future, and being one’s own boss; and, extrinsic

outcomes are, among others, increased financial returns, personal income, and wealth. Meanwhile,

Masuo et al. (2001) described the business success in terms of economic or financial measures includes

return on assets, sales, profits; and non-monetary measures, such as customer satisfaction, personal

development and achievement.

Many studies measured entreprenuers’ success with 2 (two) categories of internal such as advancement

drive, achievement oriented, committment, decision making, tenacity, networking, optimism, managing

risk, size and years in business, management and planning, experience and skills; while examples of

external factors are capital strength, strategic location, partners, family business background,

cooperation from others, sales tax rates, infrastructure expenditure, university research, corporate debt,

credit market condition, business opportunity, availability of resources, economic conditions,

competition and government regulation (Zimmerer and Scarborough, 1998; Dollinger, 1999; Rogoff et

al., 2004; Masuo et al., 2001; Wijewardena and Tibbits, 1999; Coy et al., 2007; Benzing et al., 2009;

Lussier and Pfeifer, 2001; Chen et al., 2005; Hatala, 2005; Kozan et al., 2006).

However, those identified determinants considered as the factors in the 3 (three) approaches of trait,

social psychological and behavioral approach of entreprenuers’ success measures that have been

discussed in a number of emperical studies (Abdullah et al., 2009). They described that the trait-based

approach has predominated and continued to be applied where it focused on the personality of the

individual entrepreneurs such as: need for independence and leadership, internal locus of control, need

for achievement, need for autonomy, conformity, aggression, risk-taking, endurance, self-esteem,

innovativeness, perseverance or persistence and flexibility (Ndubisi and Richardson, 2002); the social

psychological approach defines as external factors that act as potential stimulant to entrepreneurial

activity and places entrepreneurship within the wider social environment; and the behavioral approach

focuses on understanding attitudes, behaviors, management skills and know-how and past experience.

Meanwhile, various authors found a theoretical shift from trait-based approaches towards a behavioral

approach (Aldrich and Martinez, 2001). They argued that a focus on entrepreneurial characteristics will

not fully explain the reasons for entrepreneurial success. Further, researchers have also criticized the

trait approach as it has generated disconfirming or non-significant results (Mitchell et al., 2002), while,

Tipu and Arain (2011) not include the social pscychological approach in their study of Pakistan’s food

industry as it is considered as external factors but then, focused on the behavioral approach which

emperically doesn’t have strong reliability of data due to few sample size.




Furthermore, entrepreneurial success requires moral imagination and have a greater emphasis on

ethical behavior such as fairness and procedural justice besides an effective handling of the strategic

dimensions of starting a new venture (Dunham et al., 2008). However, such a focus on ethics and

fairness may bring its own risks, however, the fact that entrepreneurs tend to over-trust and more

vulnerable to others' opportunism (Karri and Goel, 2008; Sarasvathy and Dew, 2008). Based on the

literatures, this study focuses on the success’ measures of trait and behavioral approaches or which

classified as internal factors such as achievement oriented, tenacity, managing risk, learning and

networking which then, include the ethical determinants of honesty and good intention to measure the

entrepreneurs’ satisfaction. With this regard, the author will discuss on Islamic work ethics in the

following part below.

Islamic Work Ethics (IWE)

Islamic work ethics may defined as the set of moral principles that differentiate what is right from what

is wrong (Beekun, 1997). It is an orientation towards work and approaches work as a virtue in human’s

lives (Rizk, 2008) which originally based on the Qur’an and the teachings of the Prophet Muhammad

(PBUH) (Ali, 2005). These includes any of business applications and behaviours where every Muslim

considered as the servant of God should observe and engage in good deeds (Beekun & Badawi, 2004)

such as hard work, justice, generosity, commitment, dedication to work, work creativity, avoidance of

unethical method of wealth accumulation, cooperation and competitiveness at the work place (Yousef,

2001).

Ali (2005) posited the 4 (four) primary concepts of Islamic work ethics such as effort, competition,

transparency, and morally responsible conduct such as mode of transactions that adherence of

contracts, accurate measurements and weights, interests and unlawful trade, fair recruitment practices

and treatment of employees and protection of environment. This shows that Islamic work ethics are

important to be applied in managerial, business operation and economic activities. Ali and Al- Owaihan

(2008) suggested that IWE contributed to higher performance, widespread prosperity and societal

welfare. Other, based on findings by authors in their respective countries such as United Arab Emirate,

Malaysia and Kuwait, it concludes that IWE is directly affected and has strong relatiohship on

organizational change, commitment, job satisfaction (Yousef, 2000; 2001; Rahman et al., 2006; Khalil

and Abu-Saad, 2009), loyalty (Ali and Al-Kazemi, 2007), innovation capabilities (Kumar and Rose, 2010).

These studies explained the significant correlation and consistency of IWE using individual scales

developed by Ali (1988) in his study of 150 Arab students in major universities in the United States.

However, in his in-depth interviews with 32 business people in Turkish SMEs, Uygur (2009) found that

IWE was not a significant factor for their attitudes

All the practices discussed by Ali (1987) and other authors are important, however, this study focus on 2

(two) items of IWE which are honesty and intention as Yousef (2001) posited that Islam emphasizes on

intentions (niyyah) on good deeds than on results and honesty in every actions. Beside as stated in Al-

Quran on the essential and crucial role of both items, Prophet Muhammad (PBUH) stated specifically as

follows:

1. No blessing on his/her business and commercial contracts by Allah except you did lie (Narrated

by Al-Bukhari).




2. No one’s perfect faith if you don’t honest and sincere, and No one’s perfect religion if you break

the promises (Narrated by Ahmad and Ibnu Hibban).

3. Lying is base of sins (Narrated by Tirmidzi)

4. “Actions are only by intention, and every man has only that which he intended. Whoever’s

ermigration is for Allah and His Messenger then his emigration is for Allah and His Messenger.

Whoever’s emigration is for some wordly gain which he can acquire or a woman he will marry

then his emigration is for that for which he emigrated” (Narrated by Al-Bukhari and Muslim)

Thus, the propose hypothesis is:

H1a: The entrepreneurs’ success is related to entreprenuers’satisfaction.

2.6 Islamic Religiosity and Entreprenuers’ Satisfaction

Religiosity defined as beliefs, attitudes, behavior, values and practices relating to an organized religious

affiliation or a specified divine power (Pargament (1997). In simple term, religiosity may be referred to

as the state of one’s belief in God, characterized by his piety and religious zeal (Salleh, 2012). The studies

on religiosity had been done many years ago and found various definitions of the terms and dimensions

whereby each of religion has their own approaches and influences, thus, this subject is difficult construct

to measure. Obviously, the Islamic religious belief and components are different with other religions in

terms of application in daily life.

With regard the relationship of Islamic religiosity and other variables in an organization, Wilde and

Joseph (1997) does attempt a measurement through a Muslim Attitudes Towards Religion Scale (MARS).

Their study been validated with a sample of 50 British university Muslims students. This scale includes

14 items and three factors of: (i) the personal help; (ii) Muslim worldview; (iii) the Muslims’ practices.

Despite of any limitations of this measure such as a small sample size, Ghorbani et al. (2000) in their

study of a sample of 178 Iranian university students found that the three factors of the scale were

internally consistent, and were positively correlated with the extrinsic and intrinsic religious’

orientations. This indicated that the MARS was a reliable measure of Iranian religiousness. However,

Salleh (2012) argued that it emphasizes more on attitudes and the experiential dimension.

Historically, there are other measurements of Islamic religiosity which discussed deeply and throughly

on each items of the dimensions. For example, Nizar al Ta’i (1985) and Ibrahim al Sani’ (1993) come up

an individual’s overall religiosity; belief and conduct dimensions with 60 items which both are

interrelated and has been done by Abdullah H.M. Al-Khalifah (1994). Meanwhile, Tiliouine and

Belgoumidi (2009) made an attempt for a more comprehensive measurement of Islamic religiosity and

propose another two dimensions, namely religious altruism and religious enrichment and called their

dimensions as Comprehensive Measure of Islamic Religiosity (CMIR). Moreover, Krauss et al. (2006)

developed the religiosity measurement model which composed of two constructs of Islamic worldview

which relates to Islamic Faith and religious personality of Islamic Pillars. Lastly, Hassan (2007) identifies

the five dimensions of Muslim piety model explicitly draws on the work of Christian religiosity developed

by Stark and Glock (1968) which then, Al-Marri et al. (2009) proposed another religious belief with six

measures called a Short Muslim Practice and Belief Scale. Based on this studies, Salleh (2012) proposed




new form of religiosity development consist of five characteristics of the Divinistic, dogmatic, holistic

integration, transitory, and instrumentalistic characteristics. This could be termed as Divinistic

worldview (Islamic tasawwur). However, he stated that its empirical proof has yet to be observed.

With regard the relationship of religiosity and entreprenuers’ satisfaction, Koenig and Larson (2001)

conducted a meta-analysis of 100 studies examining both relationship and found that religious beliefs

and practices were related to greater life satisfaction, happiness, positive affect and higher morale in 79

(nearly 80%) of the studies. Moreover, Khraim (2010) developed three religious dimensions namely

religious education, sensitive products and current issues, and found religiosity has an effect to

customers’ behavior and hence, their satisfaction. Further discuss that employers are searching for

approaches to facilitate meaningfulness in the workplace through religion, to have more employees

committed to the organization especially when the percentage of people who are satisfied with their job

has dropped by approximately 8% (Bobic and Davis, 2003; Lama and Cutler, 2003).

The religious belief is empirically relates to country-specific economic success (McCleary and Barro,

2006b). This indicates that countries with a higher percentage of religious individuals generally

outperform those countries with a smaller religious percentage or it notes that economic growth

responds positively to the extent of religious belief. Similarly, Guiso et al. (2003) found that religious

beliefs are associated with good economic attitudes, where good is defined as conducive to higher per

capita income and growth. In this study, the author use instruments of Muslim Attitudes Towards

Religion Scale (MARS) which shows a simplicity and relevancy of the attitudes’ and experimentals’

dimension to measure the entrepreneurs’ satisfaction. Thus, the proposed hypothesis is:

H1b: The Islamic religiosity is related to entreprenuers’satisfaction.

3.0 METHODOLOGY

3.1 Sample and Data Collection

The population chosen for the study is the owner-managers of 10,757 small firms registered in Ministry

of Cooperative and SMEs and as the Chamber of Commerce Association members which located in the 4

(four) most strategic and potential regions in North Sumatera Province. Refer to the table of

determining random sample size by Sekaran (2003), the sample size of 10,757 population is 370

respondents. However, in this stage, there are 200 (two hundreds) respondents which draw randomly

from sample size. The research used a cross-sectional self-administered survey method on the

owner/manager of small firms. The data were analysed using SPSS software package to test the

relationship between variables.

3.2 Instrument

The measurement of the variables is based on the conceptual and theoretical framework

operationalized in the studies. Fourteen independent variables delineated from the respective theory

are chosen for developing a multivariate performance model. It includes achievement oriented,

tenacity, managing risk, learning, networking, honesty, niyyah (intention), belief of Allah, belief of Allah’s

Messanger, reading al-Qur’an, do’a, sholat (prayer), fasting and jamaah as independent variables, while

the dependent variable is perceptional dimensions of the Muslimpreneurs satisfaction. There are 3




(three) sections; entreprenuerial success, Islamic religiosity and entreprenuers’ satsifaction and it has 33

(thirty three) instruments in the questionnaire. The enterpreneurial success instrument use a five point

Likert scale adapted from several authors in previous studies include the Islamic ethics component (see

theories undepinning at Table 2.1). While, the Islamic religiosity instrument adopted from Wilde and

Joseph (1997) of Muslim Attitudes Towards Religion Scale (MARS) and the 5 statements of

entrepreneurs’ satisfaction are adapted from Minnesota satisfaction questionnaire (Weiss et al.,1967)

with a combination of the Islamic elements.

3.3. Result

A total of 200 questionnaires were received in this study from the total 370 of sample saize. Of the 200

respondents, 110 (55.0%) were male and 90 (45.0%) were female. The responses were largely males due

to the fact that, majority of the owner.manager of small firms was predominance by male. Almost half

of the respondents were 32 to 42 years old (52.0%) and 89 (44.5%) were the firm in the services sector

category. Additionally, 98 (49.0%) were have 6 to 8 of total employees in every firms. The survey

questionnaires contained 33 statements were obtained from several job satisfaction scales and the two

theories from the dimensions disccused above. Upon conducted exploratory factor analysis, there are 5

statements are dropped due to the loading factors below 0.50 of Cronbach’s alpha value and then, the

remaining of 26 statements which factorize into 5 variables met the reliability standards of total 0.927

Alpha values . This explained the accuracy of questionnaire and the closer the Alpha value to 1.00 the

greater the internal consistency of the items. Table 3.1 shows the results of the reliability of data and

the correlation of each variable.

Table 3.1. Result of the exploratory factor analysis of the entrepreneuers’ satisfaction statements and

reliability scores of the resulting factors

Factors

(Named by the author)

Number of items

included in the

factor

Cronbach’s Alpha

score for the items

in the factor

Calculated Variance

(%)

Niyyah/Intention 5 0.839 40.610

Managing Risk 4 0.850 15.079

Belief in Allah 10 0.921 5.103

Prayer/Sholat 3 0.726 4.944

Tenacity 4 0.718 4.238

Total number of items 26

Total calculated variance 69.972

Cronbach’s Alpha (for all statements) 0.927

KMO Test 0.824

Bartlett's Test of Sphericity X²: 4176.495; Sig: 0.001




Multiple Regressions Results

In this study, the multiple regression analysis was used to examine the relationship between each the

variables of entrepreneurial success and Islamic religiosity such as managing risk, tencity, honesty, belief

in Allah and prayer/sholat with entreprenuers’ satisfaction. Table 3.2. shows the multiple regression

result for the Hypothesis 1 and 2.

Table 3.2. Multiple Regression analysis of Islamic success factors

and entreprenuers’ satisfaction.

Unstandardized

Coefficients

Standardized

Coefficients

Model 1 Β Std. Error Beta

t Sig.

(Constant) 3.995 1.627 2.456 0.15

Honesty 0.217 0.63 0.278 3.428 0.01

Managing Risk 0.146 0.70 0.178 2.086 0.038

Belief in Allah 0.21 0.41 -0.29 0.518 0.605

Prayer/Sholat -0.44 0.113 0.238 -3.888 0.699

Tenacity 0.314 0.102 0.357 3.083 0.02

R Square = .607 Adjusted R Square = .368 F = 22.595 Sig (F) = .000a

H1a: The entrepreneurs’ success is related to entreprenuers’satisfaction.

H1b: The Islamic religiosity is related to entreprenuers’satisfaction.

As illustrated in Table 3.2, the F value of 22.595 is significant at the 0.01 level. Three of the variables;

niyyah, managing risk and tenacity are utilized in this study have significant relationship with

entreprenuers’ satisfaction. However, 60.7% of the variance in entrepreneurs’ satisfaction explained by

entrepreneurial success and Islamic religiosity. Therefore, the hypothesis 1a was supported and

hypothesis 1b was unsupported.

4.0 CONCLUSION AND LIMITATIONS

This aim of this study is to investigat the relationship between 5 (five) independent variables derived

from the entrepreneurial success and Islamic religiosity theories and one dependent variable

(entreprenuers’ satisfaction). It concluded that 3 (three) of the variables; niyyah, tenacity and managing

risk are positively related to the entreprenuers’ satisfaction. It is consistent with the previous research

findings by Abdullah et al., 2009), Ali (1987), Zimmerer and Scarborough (1998), Dollinger (1999), Rogoff

et al. (2004), Benzing et al. (2009) which used those variables as the measure of entreprenuers’

satisfaction. The highest contribution to the entrepreneurs’ satisfaction is tenacity variable (β=0.314).

With regard the insignifacant variables; belief in Allah and prayer/sholat is of Islamic religiosity, probably

the relationship is not linear or may be other factors need to be explored due to the complexity and has

multidimensional and multifaceted measures. This scale used by Ghorbani et al. (2000) was a reliable

measure of Iranian religiousness althought it has limitation as posited by Salleh (2012) that it emphasize

more on attitudes and the experiential dimension rather than on the actual beliefs and practices of

Muslims. Thus, it need to consider to use other dimension and instruments of Islamic religiosity in the




future as found by other authors such as Puente (1999), Nizar al Ta’i (1985) and Ibrahim al Sani’ (1993),

Abdullah H.M. Al-Khalifah (1994), Tiliouine & Belgoumidi (2009), Krauss et al. (2006), AlMarri et al. (2009), Hassan (2007) and Salleh (2012). However, many of them use the single factor measure which differ from the proposed construct in this study with a combination of

entrepreneurial success construct.

This study has implications for the Muslimpreneurs in small firms, stakeholders and researchers. For the

Muslimpreneurs, they need to understand that the happiness and satisfaction is not merely due to the

business success with economic goal orientation as guided in Islam but also has to include the Islamic

ethics such as honesty and good intention in their actions. Secondly, it is needed to consider toward

Islamic religiosity to seek happiness in the world of hereafter althought it is not proven in this study. It

also suggest the need to provide the additional empirical evidence and analysis of entrepreneurs’

satisfaction in a single dimensional framework or a multidimensional with more exploration of other

Islamic factors to reflect actual conditions on researching sample, and further, it should be implemented

with the support of more comprehensive and coherent theoretical background and potentially

important form of satisfaction that should be considered for future studies.

This research has limitations. The limitation of this study may occur due to difficulties face by the

respondents in understanding and aware about the instruments with relates to Islamic items since most

of them are not having well education and used to get such task to fill up such items in questionnaires

but this result may not generalize the population. The data should be further collected to increase the

sample size as determined of 370 respondents

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APPENDIX 1 - VARIABLES AND INSTRUMENTS OF ENTREPRENEUER’S SATISFACTION

Entrepreneurs’ Success Theory Religiosity Theory

No Variables No Instruments No Variables No Instruments

1 Work is a source of self-respect and fulfillment. 1 I like to learn about Allah very much.

2 Optimistic generates achievement 2 I believe that Allah helps people.

3 Devotion to honesty in my business is a virtue. 3 Prophet Mohammad (peace be upon him) provides a good model of conduct for me.

4 The value of work derived by intention, rather than its results.

4 I find it inspiring to read the Qur'an.

1 Honesty

5 Good intention is a virtue 5 I think the Qur'an is relevant and applicable to modern day.

6 Dedication in business is a virtue. 6 Al-qur’an helps me to lead a better life

7 One should carry out business operations to the best of his ability

7 The supplication (doa) helps me. 2

Tenacity

8 Sincerity of intention (ikhlas) makes me satisfy 8 I believe that Allah listens to prayers.

9 Creative work is a source of happiness and accomplishment

9 Saying my prayers helps me a lot.

10 I feel obliged to engage in Islamic financing

1 Belief of Allah

10 The five prayers help me a lot.

11 Having Halal certificate makes me feel divine 11 I pray five times a day.

12 Having an Islamic education is a must 12 I fast the whole month of Ramadan.

3 Managing risk

13 Being jemaah in an Islamic Chamber of Commerce is beneficial

2 Prayer/Sholat

13 I observe my daily prayers in the Mosque.

C. Entrepreneur’s Satisfaction

No Instruments

1 Striving for righteousness is achieving self actualization

2 Doing an ibadah in my business makes me feel a sense of accomplishment

3 Reliance on Allah (Tawakkal) makes me satisfy

4 Devoting my efforts to my business is satisfying

5 My business is worthwhile in my life

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