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Personnel Review

The relationship between Islamic work ethic and workplace outcome: A partial
least squares approach
Jihad Mohammad, Farzana Quoquab, Fazli Idris, Mohammed Al-Jabari, Nazimah Hussin, Raed
Wishah,
Article information:
To cite this document:
Jihad Mohammad, Farzana Quoquab, Fazli Idris, Mohammed Al-Jabari, Nazimah Hussin, Raed
Wishah, (2018) "The relationship between Islamic work ethic and workplace outcome: A partial least
squares approach", Personnel Review, https://doi.org/10.1108/PR-05-2017-0138
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IWE and
The relationship between workplace
Islamic work ethic and outcome

workplace outcome
A partial least squares approach
Jihad Mohammad and Farzana Quoquab Received 1 May 2017
Revised 31 December 2017
International Business School, University of Technology, Malaysia, 22 January 2018
Kuala Lumpur, Malaysia 7 February 2018
Accepted 4 March 2018
Fazli Idris
UKM Graduate School of Business, National University of Malaysia,
Bangi, Malaysia
Mohammed Al-Jabari
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City University College of Ajman, Ajman, United Arab Emirates


Nazimah Hussin
University of Technology, Malaysia, Kuala Lumpur, Malaysia, and
Raed Wishah
Princess Sumaya University for Technology, Amman, Jordan

Abstract
Purpose – The purpose of this paper is to examine the relationship between Islamic work ethic (IWE) and
employees’ attitude and behaviour in term of perceived organisational justice, psychological ownership (PSY),
and employees’ performance in the Islamic financial institutions in Malaysia.
Design/methodology/approach – This study used a sample of 301 employees of Islamic financial institutions
and employed structural equation modelling-partial least square technique in order to analyse the data.
Findings – The findings demonstrated that IWE has both direct and indirect effects on attitudinal as well as
behavioural outcomes.
Practical implications – Managers who want to enhance their employees’ attitude and behaviour are
strongly advised to give proper attention to the concept work ethic. Moreover, they need to conduct training
programs to instil these values and to emphasise its crucial role in enhancing the effectiveness and efficiency
of the organisation.
Originality/value – This study contributes to the body of knowledge on IWE by: testing its ability to predict
employees’ performance, their perception of organisational justice, and their feeling of PSY, and examining the
mediating effect of perceived organisational justice and PSY between IWE and employees’ performance.
Keywords Quantitative, Advanced statistical, Islamic work ethic, Psychological ownership,
Employees performance, Perceived organizational justice
Paper type Research paper

1. Introduction
Ethical employees with constructive, optimistic and positive work behaviours are crucial
assets for any organisation to prosper and sustain. Attracting and retaining such employees
can enhance and advance organisational image in the eyes of their customers. In contrast,
employees’ unethical behaviours can tarnish the reputation of organisation and lead to poor
working environment for others to work in. Work ethic refers to a dispositional variable that
varies among individuals and is formed in the early stage of human life, which also has a
profound influence on employees’ attitudes and behaviour at work (Saks et al., 1996). Personnel Review
It contributes positively to job performance and productivity (Noe et al., 2000), reduces © Emerald Publishing Limited
0048-3486
absenteeism, counterproductive behaviours and employee turnover (Sheehy, 1990). DOI 10.1108/PR-05-2017-0138
PR Hence, the work ethic construct was given significant research attention and research in this
field is still growing (see Chang, 2017; Khan et al., 2013; Tipu and Ryan, 2016). Nevertheless,
the bulk of the research were focused primarily on the concept of Protestant work ethic
(PWE) and less attention was given to assess the notion of Islamic work ethic (IWE)
(Mohammad et al., 2016).
Both IWE and PWE concepts differentiates between good and bad and right and wrong,
both of them encourage and advocate ethical behaviours in the workplace, such as honesty,
commitment, loyalty, cooperation, integrity, fidelity, persistence, diligence, etc. (Ali, 1992,
2010). Moreover, IWE and PWE consider work as a religious duty and perceive it as right
way to develop oneself and advance the social welfare (Mohammad and Quoquab,
2016). Nevertheless, IWE emphasise more on intentions of behaviour rather than
its outcome when compared to PWE (Khan et al., 2013). Moreover, the notion of IWE has its
foundation in the Quran and the Sunnah (Ali, 2005), whereas PWE originated from
Protestant thoughts and philosophy. Furthermore, when compared to PWE, IWE strictly
adheres to the principles of Islam in terms of halal (Permissible) and haram (prohibited) in
every aspect related to human being’s life and living, such as consumption pattern, work,
family and social life (Mohammad and Quoquab, 2016).
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Understanding business ethics from an Islamic perspective is crucial because the


number of Muslims around the word exceed 1.57 billion, which make up over 23 per cent of
the world’s population (Pew Research, 2011). Additionally, the outcome of globalisation led
to a high level of diversity at the workplace (different culture, race and religion), which make
it vital to understand the workplace on a religious basis (Murtaza et al., 2014; Uddin, 2003).
Most importantly, Islamic philosophies, principles and teachings are characterised by
universality, comprehensiveness and completeness. Therefore, it can provide objective and
realistic solutions to human beings’ problems that threat their existence at the individual,
organisational, national and international level (Mohammad et al., 2015).
IWE refers to a set of moral principles that organise and direct employees’ attitudes and
behaviours at the workplace so that they are congruent with the teachings of the holy Quran
and the saying of Prophet Muhammad (saw) (Ali, 1988; Mohammad et al., 2016). Past studies
found that IWE has a significant effect on workplace in terms of employees’ commitment,
satisfaction, involvement and intention to leave (Murtaza et al., 2014; Yousef, 2001),
organisational change, innovation capability of an organisation, productivity and
competence of an organisation, and overall quality of an organisation (Abuznaid, 2009;
Kumar and Rose, 2009), and HRM practices (Mellahi and Budhwar, 2010). However, there is
a lack of research regarding the relationships between IWE, employees’ performance (EP),
PSY, and perceived organisational justice (POJ). Therefore, empirical research is needed.
Past literature found that EP, POJ and PSY can have substantial impacts on the
effectiveness, efficiency and success of organisation, and can determine an organisation’s
ability to survive and be sustained in the future (see Avey et al., 2009; Cropanzano et al.,
2009; Greenberg and Colquitt, 2005; Jeng and Pierce, 2014; Organ, 1988; Pierce et al., 2003;
Podaskoff et al., 2009). Thus, the present research considers these variables to be the
possible consequences of IWE.
Islam constantly emphasises on helping and supporting each other in social contexts like
a workplace. As stated in the Holy Quran, “Help one another in Al-Birr and At-Taqwa
(virtue, righteousness and piety); but do not help one another in sin and transgression”
(Quran 5:2). Furthermore, Islam emphasises the importance of justice, “We sent Our
Messengers with clear signs and sent down with them the Book and the Measure in order to
establish justice among the people […]” (Quran 57:25). Additionally, Islam emphasised the
importance of work and fulfilling its duties and responsibilities in the best manner. Holy
Quran stated what it means that believers that work righteousness, and to the full extent of
one’s capability will enter Heaven (Quran as cited in Ali, 1987, p. 7: 42). Accordingly, main
concern of this study is to address the direct and indirect effects of IWE on workplace IWE and
outcome. More particularly, this study argues that employees who are high on IWE are workplace
more likely to demonstrate favourable attitudes (e.g. POJ and PSY) and behaviour (e.g. IRB outcome
and ERB) that can help their organisation to prosper and be sustained. Moreover, this
research argues that employees who are strong on IWE are more likely to perceive their
organisation as being fair to them, and they are more inclined to develop possessive feeling
towards their organisation. This situation is likely to motivate them to demonstrate positive
behaviour towards their organisation, supervisor, and/or colleagues in terms of in role
behaviour (IRB), extra role behaviour (ERB). Therefore, this study assumes that IWE can
have an indirect effect on EP and through POJ and PSY.
The present study is expected advance the body of knowledge by being a pioneer
research that examines the direct effect of IWE on behavioural outcome (i.e. EP) and
attitudinal outcomes (i.e. POJ and PSY). It also examines the mediating role of POJ and
PSY in the relationship between “IWE and EP”. Examining these relationships in a
Malaysian context can enhance researchers’ understanding of the applicability of EP, PSY
and POJ theories in a non-western setting. Additionally, this study is valuable for both
researchers and managers alike. Particularly, the output of this study is likely to advance
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researchers’ knowledge of the crucial role of IWE in boosting employees’ attitude and
behaviour at workplace, thus motivating more research in this filed. Moreover, this study
is expected to identify the nature of the relationships between the first order (IRB and
ERB) and second orders (employee performance) based on theoretical argument and
logical explanation. This will motive future research to measure the construct of employee
performance at higher order, thus reducing model complexity and solving some
methodological issues (Hair et al., 2014).
Practically, this study can benefit human resource managers especially at offshore
companies that operate in Islamic countries (republics and kingdoms) with valuable
information to make a wise decision with respect to recruit and select of the right candidate
that can be asset rather than being liability. More clearly, individuals who follow IWE will
refrain from disrespectful, shameful, disgraceful and immoral behaviours that can harm the
organisation and its reputation. Thus, HRM ability to attract and hire those individuals is
likely to help the organisation to be more effective, efficient and capable to sustain to the
future smoothly and successfully. Additionally, the result of this study is expected to
encourage HRM to incorporate the guidance of IWE as a part of their internal constitution
and strategic direction to attain excellent job outcomes (e.g. Perceive workplace as fair,
consider their organisation as their own property, work hard with dedication and
perseverance to accomplish their main duties, and go the extra mile to help their
organisation). Moreover, this study is expected to motivate HRM to evaluate employees’
performance at different level; particularly, to consider both in role and ERB as well as their
overall performance.
The rest of the paper is organised as follows. The following section rigorously reviews
relevant literature and develops a conceptual framework. Next, the research methodology
utilised in this study is briefly discussed followed by the study findings. In the following
section, a conclusion and managerial implications are provided. It also acknowledges the
study limitations and provides suggestions for future research directions.

2. Theoretical framework and hypotheses development


2.1 Work ethic in Islam
In Islam, work is viewed to be a sincere and dedicated effort that drives individuals to obtain
benefit for themselves, for others, and for the society as a whole (Graafland et al., 2006; Rizk,
2008). In support of this view, Ibn Kaldun (1989, p. 273), a medieval Arab sociologist,
mentioned that engaging in work and business activities can achieve four objectives:
PR “Enhance collaboration and mutual understanding among people, satisfy the needs of
people, increase wealth, and prompt the development of cities”. In the same manner,
Ikhwan-us-Safa (1999) argued that engaging in work can reduce poverty, attain good
manners and important skills, gain knowledge and reach salvation.
Researchers have emphasised the concept of work in Islam. For example, Abeng (1997)
stressed the importance of productive work. He points out that in more than 50 verses; work
is mentioned in the Quran. Rice (1999) emphasised that it is every Muslim’s duty to work
harder and smarter to build this world. Moreover, Islam stresses the importance of “quality
of work” (itqan) (Ali, 1992). Again, Ali (2005) emphasised the fact that people’s engagement
in economic activities is an obligation. On the other hand, unemployment found to have
significant association with increasing the level of crime and violence (Kadish, 1983).
For example drugs, robbery, vandalism, embezzlement, and other type of crime can
occur in any society due to the state of unemployment (Kadish, 1983; Sheehy, 1990;
Parboteeah et al., 2009).
Due to its spiritual and earthly importance, past studies discussed the notion and
importance of IWE at workplace. At the organisational level, researchers found that IWE is
considered to be a crucial antecedent of an organisation’s innovation, change and
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sustainability (see Abeng, 1997; Kumar and Rose, 2009; Jalil et al., 2010). At the individual
level, researchers found IWE to be a robust predictor of employees’ attitude and behaviour;
for example, Yousef (2000a, b) found that IWE plays a vital role as a predictor of job
satisfaction, organisational commitment, role ambiguity and locus of control. Additionally,
Ahmad (2011) found that employees who are high on IWE are more loyal to their
organisation compared to those who are low on IWE; hence, they are less likely to leave their
organisation. Moreover, Khan et al. (2013) contended that IWE is a strong predictor of
employees’ involvement at the workplace.
From the above-mentioned discussion, it is clear that IWE is pivotal in predicting
workplace attitude and behaviour. Therefore, this study attempts to contribute to the
existing knowledge by predicting its effect on important job outcomes, i.e. IRB, POJ and
PSY. To accomplish these objectives this study operationalise IWE as set of values
(honesty, integrity, transparency, patience, hard work, dedication, fairness, avoidance of
unethical ways of accumulating wealth) that stem from the Islamic scriptures that guide
individual to differentiate between right and wrong, good and bad at workplace (Ali, 1988;
Al-Ghazali (cited in Quasem, 1978; Mohammed et al., 2017; Mohammad et al., 2016)).

2.2 IWE and employee performance


Organisations need energetic, enthusiastic and highly performing employees to accomplish
their goals, meet their customer needs and expectation and ultimately enhance their
capabilities and achieve competitive advantage. Therefore, individuals’ performance is a
vital concept within work and organisational psychology. During the past four decade,
researchers have made advancement in clarifying and extending the concept of
performance. For example, Katz (1964) identified IRB and ERB as a major component of
performances, which are essential for any organisation to achieve its goals and to become
more effective and competitive in its environment. In the same manner, Koopmans et al.
(2014) and Williams and Anderson (1991) argued that employees’ performance consists of
both IRB and ERB. IRB refers to those types of behaviours that an employee is expected to
perform according to the official employment contract with employer (Koster and Sanders,
2006). In contrast, ERB refers to a discretionary behaviour that benefit the organisation and
its citizens and that goes beyond existing role expectation (Van Dyne et al., 1995).
Organ (1990) drew a border line between IRB and ERB by stating that IRB is motivated
by an economic exchange, whereasERB is driven by the social exchange. Borman (2004)
also made distinctions between task performance and citizenship performance. First, task
activities usually differ based on the types of job, but activities concerning citizenship are IWE and
mostly similar across jobs. Second, the level of task performance can be anticipated by workplace
individual’s knowledge, skills and abilities, whereas citizenship performance depends on outcome
individual’s predisposition. The current research follow Koopmans et al. (2014) and Williams
and Anderson (1991) and conceptualise employee’s performance as multidimensional
construct that consist of two dimensions, i.e. IRB and ERB.
The relationship between IWE and EP can be explained by Meglino and Korsgaard’s
(2004) other orientation theory. This theory explains the degree to which individuals are
concerned with the well-being of others (individuals, group, and organisation). In this
theory, individuals who are more other oriented, either due to dispositional characteristics or
due to the influence of contextual factors are less likely to make rational assessment of the
consequences of their activities (Sparrow et al., 2010). Based on this theory, this study
argued that individual who are high on other oriented values such as IWE not only try to
execute the duties of their work in perfect way, also they try harder to go the extra mile to
assist their organisation to progress and prosper.
Beside theoretical support empirical evidence also exists. For example Mirels and Garrett
(1971) found that individuals who endorse PWE are more tolerable for authoritarian
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leadership behaviour, and showed more interest in their work. In another study, Merrens
and Garrett (1975) demonstrated that those who are high on PWE were more dedicated
towards accomplishing their tasks. Nevertheless, there is a lack of studies that address the
effect of IWE on employee performance. On the basis of previous discussion and
assumption, the following hypothesis is developed:
H1. IWE will be positively associated with employee’s performance.

2.3 IWE and perceived organisational justice


Since the 1960s, the concept of justice was discussed by many researchers. During the
1960s, the focus was predominantly on the concept of distributive justice, which was
introduced and defined by Adams (1963) to be the extent to which employees perceive the
fairness of outcomes compared to their inputs. In the mid-1970s, the focus shifted to
procedural justice. Thibaut and Walker (1975) were the pioneers in introducing this
concept. They argued that employees’ concern is not only confined to the outcome that
they receive to evaluate the fairness of organisation, but that it also extends the
procedures that were used to distribute and determine this outcome. Furthermore, during
the 1980s, researchers focused on interactional justice, which refers to the extent to which
individuals are affected by their organisation’s decisions and thus are treated with
dignity, politeness and respect (Bies and Moag, 1986).
Other researchers argued that the relationship between organisational justice as well as
attitudinal and behavioural variables can be explained better by focusing on a holistic
concept of organisational justice, rather than considering its dimensions separately
(Ambrose and Arnaud, 2005; Greenberg, 2001; Lind, 2001; Proost et al., 2015). The present
research follows this convention, and defines OJ as employees’ overall perception of the
fairness of an organisation (Ambrose and Schminke, 2009).
The theory of other orientation (Meglino and Korsgaard, 2004) can be used to justify the
relationship between IWE and POJ. According to this theory, people who score high,
on other orientation, are less likely to think in such a way that can maximise their benefit
and reduce their cost when making choices (Meglino and Korsgaard, 2006). Based on this
theory, individuals higher in other oriented values, such as IWE are more likely to perceive
their organisation to be fair, even under difficult conditions. This argument was supported
by other researchers who contend that people higher on prosocial traits are likely to be less
affected by the level of fairness or benefits they obtain from their organisation (see Jawahar
PR and Carr, 2007; Orvis et al., 2008). On the basis of the above discussion, it can be said
that theoretical and empirical evidence suggests that individuals higher in IWE are more
likely to be less influenced by expectations of reciprocity. Accordingly, the following
hypothesis is developed:
H2. IWE will be positively associated with POJ.

2.4 IWE and Psychological ownership


PSY was labelled as a cognitive and affective construct, and defined to be a mental state in
which individuals develop a feeling of ownership towards a specific target (Avey et al., 2009;
Pierce et al., 2003). This target or object can be material (e.g. an organisation) or immaterial
(e.g. an idea) (Ozler et al., 2008; Pierce et al., 1991). Pierce et al. (2001) argued that a feeling of
PSY is grounded in human personality since their birth (innately). It may arise for both
material and immaterial objects, and it has important emotional attitudinal and behavioural
effects on individuals who experience ownership. Indeed, this feeling of possessiveness
spurs them to exert extra efforts and working hard to prevent, protect and maintain an
object from any harm, danger or risk (Avey et al., 2009).
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Within an organisational context, the feeling of PSY can be developed the same as it
does in other context, and entails granting employees opportunities to exercise control
over several targets, such as their job, task and workplace (Pierce et al., 2004). Avey et al.
(2009) contended that employees’ sensation of PSY is likely to lead to positive and
beneficial attitudinal and behavioural outcomes for themselves and their organisations.
Moreover, Dittmar (1992) claimed that a feeling of ownership causes people to view
tangible and intangible objects to be part of the extended self that triggers a sense of
responsibility of one’s entity. Additionally, Porteous (1976) demonstrated that a feeling
of ownership provides people a sense of place, belonging and personal space. Therefore, it
is crucial to understand the variables that can enhance employees’ feelings of PSY inside
an organisation.
Guided by other orientation theory, this study proposed IWE as crucial antecedent that
can affect employees’ feeling of PSY. Based on this theory, individuals who are high on
IWE are more likely to develop positive feelings towards their job and their organisations
in terms of PSY. These feelings trigger employees to view their job and/or organisation as
their own, which increases their feeling of responsibility. In addition to the theoretical
justification, empirical support also exists. For example, past research found a positive
relationship between work ethic and employees’ attitude, such as satisfaction
commitment, locus of control, self-efficacy, etc. (see Wayne, 1989). Nevertheless, there is
a lack of studies that address the relationship between work ethic from an Islamic
perspective and PSY. Therefore, in this study, it is assumed that individuals who are high
on IWE are more prone to feel that their job and/or organisation are their personal
psychological property. By taking into consideration this assumption, the following
hypothesis is developed:
H3. IWE will be positively associated with PSY.

2.5 Perceive organisational justice and employee performance


The direct relationship between POJ and both EP can be explained by social exchange
theory (Blau, 1964). According to this theory, a relationship requires that one party (person,
group, organisation) provides a service for another party (person, group, organisation), with
the expectation of gaining future benefits of comparable value from them. In this regard,
when employees believe that they are being treated fairly, they develop a positive
commitment to their organisation (Organ, 1988) and increase their trust in their supervisor,
which, in turn, increases the likelihood of demonstrating a positive behaviour in terms IRB IWE and
and ERB. Based on this argument, the following hypothesis is developed: workplace
H4. Perceive organisational justice will be positively associated with employee performance. outcome

2.6 PSY and employee performance


According to Dirks et al. (1996), when employees have a sense of PSY towards their
organisation, this influence their behaviour through a sense of responsibility they create.
More particularly, when employees have possessive feeling, they engage in behaviours to
control, protect, enhance, material and impartial targets of ownership (Hall, 1966). In the
same manner, this study argued PSY for the organisation generate feeling of responsibility
that lead to the investment of time, efforts, energy to support the organisation to achieve its
targets. Based on this argument, the following hypothesis is developed:
H5. PSY will be positively associated with employee performance.
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2.7 The mediating role of POJ and PSY


A mediator variable is the mechanism through which the independent variable can affect
the dependent variable (Baron and Kenny, 1986; Preacher and Hayes, 2004, 2008). More
clearly, the predictor variable affects the mediator which then causes the dependent variable
(Shadish and Sweeney, 1991). A mediator explains how or why a relationship exists between
the independent variable and the criterion variable (Holmbeck, 1997).
Past studies found constant relationship between workplace ethics and employees’
behaviour (see Gao and He, 2017; Mohammad et al., 2015). Also past literature found that an
employees’ ethical behaviour affects their attitude at workplace in positive way (Koh and
Boo, 2004; Orvis et al., 2008). Additionally, researchers (e.g. Cropanzano et al., 2002;
Masterson et al., 2000; Tekleab et al., 2005; Pierce and Jussila, 2011) found POJ and PSY to be
a good predictor of employees’ behaviour. Therefore, it is likely to say that POJ and PSY
may act as a core mediating mechanism that transmits the effect of its antecedents on
various outcomes.
On the basis of the above discussion, this study argued that POJ and PSY serve as a
mediator in the relationship between IWE and EP. Based on this argument, the following
hypotheses are developed:
H6. The relationship between IWE and EP will be mediated by POJ.
H7. The relationship between IWE and EP will be mediated by PSY.

3. Research methodology
In this study, a quantitative approach was utilised to achieve the research objectives and
data that were collected through a survey questionnaire. The unit of analysis was the
employees of Islamic financial institutions (Islamic banks and insurance Takaful
companies). Because it was difficult to get a list of all elements of the population,
non-probability judgmental sampling was employed. Within the organisational context,
using this type of sampling is a good choice because it permits a theoretical generalisation of
the findings (Calder et al., 1981).
The scales used to measure the study variables were borrowed from existing literature.
ERB and IRB were measured using ten items adapted from Williams and Anderson (1991)
(e.g. I assist others with their duties, I express loyalty towards my organisation, I perform
task that are expected of me). Additionally, POJ was measured by using six items adapted
from Ambrose and Schminke (2009) (e.g. Overall, I’m treated fairly by my organisation,
PR In general, I can count on this organisation to be fair). Furthermore, PSY was measured by
using seven items adapted from Pierce et al. (2001) (e.g. This is my organisation, I sense that
this is my company). Moreover, IWE was measured by using a short version of Ali’s (1992)
instrument, which consisted of 17 items (e.g. Laziness is a vice, Dedication to work is a
virtue, Good work benefits both one’s self and other). Respondents were asked to indicate
their level of agreement for each statement by using a seven-point Likert scale where
1 ¼ “strongly disagree” and 7 ¼ “strongly agree”.
As a guideline, the recommended number of respondents are to have five times
observation as the number of variables to be analysed (Hair et al., 2006). Following this rule,
the minimum number of respondents in this study were required to be 200 (40 × 5). In total,
400 questionnaires were handed personally to 14 organisations that agreed to participate in
this study (eight Islamic banks and six Insurance Takaful companies). Of the 400
questionnaires, 320 were returned and 301 were found usable for further analysis.
The demographic result (Table I) revealed that respondents were almost equal in gender
in which 45.5 per cent were males and 54.5 per cent were females. The majority of the
respondents (79.7 per cent) were 35 years old and less. With respect to ethnicity, the majority
were Malay (97.7 per cent). The results of descriptive analysis showed that 45.8 per cent of
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the participants were administrative staff. With regards to respondents’ work experience,
75.1 per cent of the respondents had 10 years work experience and 78.4 per cent of the
respondents had a ten-year work experience in the same organisation. With respect to
participants’ monthly income, 72.8 per cent earn less than RM3000.

4. Results
4.1 Model evaluation
Before evaluating the model, this study examined the presence of common method variance
(CMV ), which refers to the variance explained due to measurement methods rather than the

Demographics variables Number of participant (301) Percentage

Gender
Male 137 45.5
Female 164 54.5
Age
35 and below 240 79.7
36 and above 61 20.3
Ethnicity
Malay 294 97.7
Chines 3 1.0
Indian 2 0.7
Other 2 0.7
Income
3,000 and below 219 72.8
3,001 and above 82 27.2
Tenure
10 years and below 236 78.4
11 years and above 65 21.6

Table I. Experience
Demographic profile 10 years and below 226 75.1
of the respondents 11 years and above 75 24.9
constructs of interest (Podsakoff et al., 2003). The CMV exists when one factor explains more IWE and
than 50 per cent of the variance (Podsakoff et al., 2003). In this study, CMV was assessed workplace
using Harman’s single factor test as proposed by Podsakoff et al. (2003). The outcome of this outcome
test indicated that none of the five constructs explained more than 50 per cent of the total
variance. This result assured that CMV was not a serious problem in this study.
The hypotheses developed in this study were tested using structural equation modelling.
In this regard, partial least squares (PLS) was utilised since the main focus of PLS is
consistent with the research objectives, i.e. to predict the relationships in the inner model
using multiple regressions (Gefen et al., 2000). The software SmartPLS version 3.0 (Ringle
et al., 2015) was used to analyse the data. Moreover, non-parametric bootstrapping with
5,000 replications was used to obtain the standard errors of the estimates (Chin, 1998).
Following Anderson and Gerbing’s (1988) two stages procedure to assess the model
(Figure 1), in the first stage the validity of measurement model was evaluated followed by
testing the theoretical relationships in the structural model.

4.2 Assessment of measurement model ( first order)


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The measurement model identifies the relationships between indicators and their respective
constructs (Ringle et al., 2010). The evaluation of measurement model is decided based on
reliability, convergent and discriminate validity (Chin, 2010).

IWE1 PSY1 PSY2 PSY3 PSY4 PSY5 PSY6 PSY7

IWE2

IWE3 PSY
ERB1
IWE4
ERB2
IWE5
ERB3
IWE6 ERB
ERB4
IWE7
ERB5
IWE8

IWE9 IWE EP

IWE10

ERB1
IWE11

IWE12 IRB2

IRB
IWE13 ERB3

IWE14 ERB4

ERB5
IWE15 POJ

IWE16

IWE17 POJ1 POJ2 POJ3 POJ4 POJ5 POJ6


Figure 1.
The hypothetical
Notes: EP, employee performance; ERB, extra role behavior; IRB, in-role behavior; POJ, model
perceived organizational justice; PSY, psychological ownership
PR Reliability. The reliability of measures signify the extent to which the measure is free from
error and thus may produce stable and consistent result, which is considered as an
indication of the goodness of the measure (Cavana et al., 2001). For this study, the
assessment of the internal consistency reliability was conducted at the construct level using
composite reliability (CR) (It indicates the extent to which a construct is measured by its
respective items) (Sekaran, 2003), and Cronbach’s coefficient α (CA) (it indicates the extent to
which a set of indicators measures the same underlying construct) (Cronbach, 1946). At the
item level, the reliability was assessed using indicator reliability (it indicates the absolute
correlation between a construct and each of its measure variables). Table II reveals that
the factor loading for all items exceeded the threshold value of 0.60 (Chin, 1997) except for
IWE17, IWE12, and PSY7, hence these three items were omitted. Same table shows that CR
and Cronbach α for all constructs surpassed the acceptable value of 0.70 (Henseler et al.,
2009). Thus, reliability of constructs was established at the items and constructs level.

Construct Items Loadings AVE CR rho CA


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IWE IWE1 0.785 0.596 0.953 0.952 0.950


IWE2 0.768
IWE3 0.632
IWE4 0.843
IWE5 0.837
IWE6 0.830
IWE7 0.863
IWE8 0.746
IWE9 0.700
IWE10 0.622
IWE11 0.679
IWE13 0.795
IWE14 0.814
IWE15 0.787
IWE16 0.821
ERB ERB1 0.800 0.574 0.813 0.819 0.870
ERB2 0.561
ERB3 0.770
ERB4 0.763
ERB5 0.793
IRB IRB1 0.855 0.749 0.937 0.917 0.916
IRB2 0.845
IRB3 0.881
IRB4 0.835
IRB5 0.908
POJ POJ1 0.887 0.771 0.940 0.944 0.953
POJ2 0.835
POJ3 0.900
POJ4 0.916
POJ5 0.914
POJ6 0.813
PSY PSY1 0.877 0.646 0.892 0.920 0.920
PSY2 0.842
PSY3 0.814
PSY4 0.886
PSY5 0.882
Table II. PSY6 0.697
Reliability and Notes: AVE, average variance extracted; CR, composite reliability; CA, cronbach’s coefficient α. IWE17,
convergent validity IWE12 and PSY7 were deleted due to low factor loading
Convergent validity. Convergent validity refers to the extent to which a set of indicators that IWE and
measure the same construct are in agreement. It was assessed using factor loading, average workplace
variance extracted (AVE), and CR (Hair et al., 2010). Table II shows that the factor loading of
all items surpassed the suggested value of 0.60 (Chin, 1997). The same table displays the
outcome
values of AVE that reflect the average amount of variance explained in the indicators by
their respective construct and CR, exceeded the recommended value of 0.50 and 0.70,
respectively (Henseler et al., 2009). In short, convergent validity was established.
Discriminant validity. Discriminant validity indicates that all constructs were distinct
from each other because each construct is strongly related to its own items rather than other
constructs. As shown in Table III, the square root of the AVEs (diagonal values) of all
constructs were greater than their corresponding correlation coefficients (off-diagonal
values), which satisfy the criterion of discriminant validity (Fornell and Larcker, 1981).

4.3 Assessment of measurement model (second order)


Based Williams and Anderson (1991) and Koopmans et al.’s (2014) conceptual definition of
employees’ performance as well as the theoretical argument set via Jarvis et al. (2003), and
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Ringle et al. (2012) this study argued that employees’ performance is characterised as higher
order, multidimensional latent construct in the form of second-order reflective-formative type.
First, the direction of causality start at dimensions and end at higher order construct because
the employees’ performance is defined by IRB and ERB. Therefore, dropping or changing any
of these two dimensions will change the conceptual meaning of the underlying construct of
employees’ performance. Second, the measurement items of IRB are not interchangeable with
items measuring ERB because they do not have similar content or share common theme.
For example, items measuring IRB cannot be replaced by items measuring ERB. Third,
indicators are not necessary to covary. For instance, items measuring IRB are not necessary to
correlate with items that measure ERB. Intercorrelations among formative indicators are
neither necessary nor desirable because it can lead to the occurrence of Multicollinearity
problem (Edwards, 2001). Therefore, internal consistency among indicators is not relevant for
formative construct ( Johnson et al., 2011).
Based on the above discussion, the second-order formative model was evaluated based
multicollinearity, significance level of outer weight and outer loading (Hair et al., 2016).
As shown in Table IV the factors’ weight were greater than 0.10 (Andreev et al., 2009).
All the factors are positively and significantly associated with employee performance which

IRB IWE OCB POJ PSY

IRB 0.865
IWE 0.429 0.772
ERB 0.383 0.223 0.757
POJ 0.406 0.308 0.316 0.878
PSY 0.336 0.316 0.201 0.317 0.836 Table III.
Note: Diagonals represent the square root of AVE while off-diagonals represent the correlations Discriminant validity

Construct Dimensions Weight t-values VIF


Table IV.
EP ERB 0.455 17.10 1.467 Second-order
IRB 0.523 21.15 1.218 assessment
PR is consistent with the underlying theory. In addition the values of VIF are less than
3.3 (Diamantopoulos and Siguaw, 2006), indicating multicollinearity is not a problem.
In nutshell the measurement model at first-order and second-order reached satisfactory
level, thus it is possible to proceed to second stage of analysis.

4.4 Assessment of structural model


According to Becker et al. (2012), when the second-order construct is formative and the
repeated indicators method is used, first-order dimensions explain all variance in the
second-order construct. Therefore, other exogenous variables in the model cannot explain
any variance of the second-order construct, thus path coefficient of the second order will
be close to zero (Ringle et al., 2012). To overcome this problem, Chin et al. (2003), and Ringle
et al. (2012) suggested to use two-stage approach. At first-stage PLS algorithm is run on the
full model to obtain latent variable scores of each latent. In the second stage, parsimonious
model with latent variables scores is evaluated to estimate path coefficient and their
significant level (Figure 2).
In this study EP is multidimensional construct in the form of reflective-formative, hence
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two-stage approach was implemented to assess the structure model. The structural model
represents the theoretical relationships among the constructs. Its predictive power was
decided based on the significant level of path coefficients and the amount of explained
variance (R2) in the endogenous constructs (Sang et al., 2010). Moreover, these two values, i.e.
R2 and path coefficients together indicate to which extent the discrepancy between data and
conceptual model is minimised (Chin, 1998). PLS algorithm and bootstrapping procedure
with 5,000 resample was applied to generate the path coefficients and their corresponding
t-values to determine whether these paths are significant or not (Hair et al., 2013). Because all
direct relationships developed in this study were positive, a one-tailed test for t-student

POJ

POJ

ERB

IWE IWE EP
IRB

PSY

PSY

Figure 2.
Two stage analysis Notes: EP, employee performance; POJ, perceived organizational justice; PSY, psychological
ownership
distribution was applied. According to Hair et al. (2011), critical t-values for one-tailed test IWE and
were 1.28 ( p o0.10), 1.645 ( p o0.05) and 2.33 ( po 0.01). workplace
Results illustrated in Table VI show all path coefficients, standard error, corresponding outcome
t-values, and the explanatory power of estimated model as indicated by R2 values. Falk and
Miller (1992) suggested that R2 must be greater than 0.10 in order for the model to have
predictive power. In this study, 30.3 per cent of the variance in EP, 10.05 per cent of the
variance in PSY, and 10.11 per cent of the variance in POJ can be explained by the model,
thus satisfying the criteria of Falk and Miller (1992). Moreover, IWE was found to be
significantly associated with EP ( β ¼ 0.274, p o0.001), POJ ( β ¼ 0.316, p o0.001) and PSY
( β ¼ 0.303, p o0.001), respectively, hence supporting H1, H2, and H3. Moreover, POJ was
found positively associated with EP ( β ¼ 0.305, p o0.001) and PSY ( β ¼ 0.159, p o0.05),
respectively, thus supporting H4 and H5. Additionally, the model’s ability to predict (Q2)
was examined using blindfolding procedures (Geisser, 1975; Stone, 1974). Models with Q2
values greater than zero imply that the model has predictive relevance (Fornell and Cha,
1994). In this study Q2 values of EP, POJ, and PSY were greater than zero, therefore, it can
be concluded that the structural model has predictive relevance Table V.
To examine the presence of a mediation effect, bootstrapping procedures were
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implemented as suggested by Preacher and Hayes (2004, 2008). First, PLS algorithm was
run to get the path coefficient, followed by bootstrapping procedures with 5,000 resample
being run on the full model to obtain the significant level of these paths. The bootstrapping
analysis (Table VI) showed that the indirect effect of β1 ¼ 0.316 × 0.305 ¼ 0.096 was
significant with a t-value of 3.69, p o0.001, 95% CI: [0.045-0.146]. Moreover, the indirect
effect of β2 ¼ 0.303 × 0.159 ¼ 0.048 was significant with a t-value of 2.28, po0.05, 95% CI:
[0.006-0.0.091]. These results showed evidences for the mediation effect of POJ and PSY
between IWE and EP respectively. Therefore, H6 and H7 were accepted.

5. Discussion
This study empirically tested the direct and indirect effects of IWE on employees’ attitude
and behaviour at Islamic financial institutions in Malaysia. A brief discussion on the results
is presented below.

5.1 Direct effect of IWE


In this study, IWE was hypothesised to predict EP. This hypothesis was supported by
data. This is consistent with other orientation theory, which assumes that individuals who
are high on IWE are more willing to work hard to accomplish the objectives of their

Hypotheses Path coefficient SE t-value (bootstrap) 95% confidence interval Decision

H1: IWE → EP 0.274 0.049 5.51 0.18–0.37 Supported


H2: IWE → POJ 0.316 0.048 6.49 0.21–0.40 Supported
H3: IWE → PSY 0.303 0.045 6.62 0.20–0.39 Supported Table V.
H4: POJ → EP 0.305 0.056 5.35 0.19–0.42 Supported Summary of
H5: PSY → EP 0.159 0.062 2.54 0.04–0.27 Supported structural model

Hypotheses Indirect effect (a × b) SE t-value 95% confidence interval Decision


Table VI.
H6: IWE → POJ → EP β1 ¼ 0.316 × 0.305 ¼ 0.096 0.026 3.69 0.045–0.0.146 Supported Summary of the
H7: IWE → POJ → PSY Β2 ¼ 0.303 × 0.159 ¼ 0.048 0.021 2.28 0.006–0.0.091 Supported indirect effect
PR department and exceed their basic job requirements to help their organisation and its
citizens. This result is also in line with past studies, which found that employees who are
high on work ethic are more likely to demonstrate helping behaviour toward their
organisation and colleagues (see Smith et al., 1983). Moreover, the result of this study
indicates that Islamic values are rooted in the environment of these financial institutions.
For instance, Islamic banks stress on fairness at the workplace, prohibit interest,
gambling, and financing of prohibited products and services, such as night clubs and
casinos. Consequently, this Islamic environment is likely to affect the ethical behaviour of
its employees positively, which in turn motivates employees at these organisations to
transcend their official duties.
Moreover, this study hypothesised that IWE would predict organisational justice.
This hypothesis was also supported. This result is in agreement with other orientation
theory, which posits that employees who are considered to be highly oriented on other
values (such as IWE) are likely to be less sensitive by the level of fairness they receive from
their organisations. This result is also in line with the opinion by Huseman et al. (1987) that
individuals’ sensitivity toward equity varies due to differences among individuals in terms
of their values and beliefs. This result also in line with the ethical behaviour model (Collins,
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2012). According to this model, individuals difference (age, gender, education, religion, work
experience, value orientation, etc.) have great effect of their attitude. For example,
Individuals who are high on Islamic values are more likely to perceive workplace fairness
positively compared those individuals who are low on IWE.
IWE was also theorised to be positively related to PSY. Result demonstrated that IWE
predicted PSY and explained high portion of its variance. This result was consistent with
the other orientation theory, which suggested that individuals who are high on other
oriented values tend to be responsible and accountable towards their job and organisation.
These feelings of responsibility and accountability were reflected in their possessive feeling
towards their organisation in the form of “this is my organisation”, “I sense this company is
mine”, and “I feel a high degree of personal ownership for this organisation”. This result was
also consistent with Van Dyne and Pierce’s (2004) argument that PSY can be increased and
decreased by the influence of personal and organisational variables. Therefore,
organisations could enhance their employees’ level of possessive feelings by following
and applying the values of Islam in the workplace. Additionally, this result also consistent
with the ethical behaviour model (Collins, 2012). This model argued that individuals’
dispositional variables in terms of age, gender, religion, work value orientation, etc. can
exert positive effect on their attitude at workplace. For example, individuals who are high on
Islamic values are more inclined to develop possessive feeling towards their job and
organisation compared to those who are low on IWE.

5.2 Indirect effect of IWE


The findings of this research showed that IWE also has an indirect effect on EP through POJ
and PSY. These results are in line with other orientation theory and social exchange theory.
According to these theories, individuals with high oriented values, such as IWE do not think
in a rational way to maximise their output and reduce their cost. Rather, they are more
concerned about other people’s welfare. Therefore, they tend to be less sensitive about the
level of fairness they receive from their organisation and more inclined to develop
ownership feeling toward their organisation. Additionally, when employees consider their
organisation as being fair, and perceive it as their own property they become more
motivated to reciprocate by demonstrating a positive and favourable behaviour in the form
of IRB and ERB. Moreover, this result is in agreement with the ethical behaviour model
(Collins, 2012). According to this model, individuals’ dispositional variables will exert
positive or negative effect on their attitude, which, in turn, can influence their behaviour
positively or negatively. More clearly, employees who are high on IWE are likely to develop IWE and
positive attitude which in turn affect their behaviour positively. workplace
The findings of this study show that noble Islamic work values, such as cooperation, outcome
empathy, forgiveness, kindness, compassion and harmony are embedded in the personality
of employees of Islamic banks. Therefore, when employees of Islamic banks consider their
organisation as being fair, they feel indebted to respond to this fair treatment by showing a
constructive behaviour that could help their supervisors, colleagues, and the whole
organisation to move forward and compete in the local and global market.

6. Theoretical contribution
This study contributes significantly to the body of knowledge by being a pioneer study to
develop relatively new linkages in relation to IWE, i.e. the effect of IWE on employees’
performance, their perception of justice and their feeling of ownership. The findings of this
research show that IWE positively and significantly affect workplace outcomes, which
emphasise the important role of individual difference variables in explaining the variance in
attitudinal and behavioural variables. Accordingly, it is advisable to incorporate IWE with
present theories that can explain human behaviour such as theory of reasoned action, and or
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theory of planned behaviour. This inclusion may enhance and advance researchers’ and
academicians’ understanding about employees’ ethical behaviour at workplace. Furthermore, the
current study contributes significantly to the theoretical work of IWE and EP by incorporating
the mediating role of POJ and PSY. The findings demonstrate that these two variables were able
to mediate and explain the relationship between IWE and employees’ performance. This result
stresses the essential role of attitudinal variables as a mediator, and it suggest researchers to
consider other attitudinal variable as a mediator to explain the relationship between IWE and
employees’ behaviour. Moreover, this study highlights the important role of other orientation
theory and social exchange theory in explaining the relationship between dispositional variables
with attitudinal and behavioural variables in Asian context. Lastly, this study confirms the
reliability and validity of employees’ performance as latent variable measured at second order.

7. Implications for HRM


The findings of this study have important implications for managers, particularly HRM at
local and multinational companies who are running their business in Islamic environment.
First, the findings demonstrate the significant role of IWE in enhancing and improving
employees’ performance, perception of justice, and their PSY. Therefore, managers of these
organisations need to have certain knowledge and a clear understanding of the values
pertaining to Islam that are relevant to work and how to materialise these values in the
workplace. Accordingly, HRM is advised to adopt the Islamic code of ethics that can help them
and their staff to comprehend the values of Islam. Second, past studies showed that ethics can
be taught to individuals (see Jones, 2009), therefore, HRM needs to conduct training programs
to instil the Islamic values and to emphasise the crucial role of these values in enhancing the
effectiveness and efficiency of the organisation. Third, IWE emphasised on noble values such
as working hard, perseverance, dedication, honesty, etc., hence it is importance for HRM
during their process of recruiting and hiring to target and select individuals that are described
as moral and ethical. This type of employees can help organisation to move forward, prosper
and sustain. This scenario can be achieved by assessing the curriculum vitae of the
candidates, by contacting their previous employer, and by administering personality test.
Last but not least, past literature found that PWE exerted influential effect on workplace
values in most of the industrialised countries (Arslan, 2000; Fifka, 2013), hence this study
argued that IWE can have vital effect in shaping values of employees at workplace in
countries where Muslim are the majority. Accordingly, HRM in these countries are advised to
implement code of ethics that is based on the principles of Islam.
PR 8. Conclusion
The main purpose of this study was to examine the direct and indirect effects of IWE on
behavioural and attitudinal variables among Islamic financial institutions in Malaysia. The
findings of this study provide support for the direct effect of IWE on PSY, perceived
organisational justice and employees’ performance. Additionally, this study found support
for the mediating effect of perceived organisational justice and PSY between IWE and
employees’ performance. Most importantly, the output of this research confirms the
applicability of other orientation theory and social exchange theory in explaining workplace
outcome in non-western culture. Overall, the study reveals some important facts. First, it
shows that IWE increases the ability to predict and understand employees’ attitude and
behaviour at the workplace. Second, it demonstrates that IWE is able to explain a moderate
to high portion of variance in these constructs. Third, it suggests that IWE exerts more
effects on attitudinal variable (PSY) compared to behavioural variables (EP) as indicated by
the path coefficient and amount of explained variance. Additionally, this study reveals the
possibility of incorporating IWE with the well-established theories that try to explain
human behaviour at work place such as theory of planned behaviour.
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9. Future research directions


Although the present research has its merits, it is not free from some limitations that may
provide directions for future researchers. This study used cross-sectional data to accomplish
the research objectives, which can raise questions about the causality. Future research can
employ a longitudinal study to avoid this issue. The sample of this study incorporated only
Islamic banks and Takaful companies. However, there are other Islamic institutions such as
Malaysian Pilgrims Fund Board (Tabung Haj), International Islamic Liquidity Management
CORP, etc. which are following an Islamic approach. Future studies are advised to consider
these organisations to make the findings more extensive. Moreover, the respondents of this
study were taken only from Islamic financial institutions in Malaysia, which can limit the
generalisability of the findings to other countries. Future studies can duplicate this study in
a different research context and in different countries in order to increase the population’s
generalisability of the findings.
This study proved the mediating role of attitudinal variable, such as POJ and PSY in
relation to IWE. The, future studies are recommended to include other attitudinal variables
as a mediator, such as organisational commitment, job satisfaction and perceived
organisational support. Besides, this study predicts the effect of IWE on two attitudinal
variables (i.e. POJ, PSY) and one behavioural variable (EP). Future studies are advised to
examine the effect of IWE on other attitudinal variable (e.g. job stress, trust, intention
to adopt green behaviour, etc.) and behavioural variable (e.g. HRM practices,
counterproductive behaviour, pro-environmental behaviour, etc.) to advance the theory of
IWE. Furthermore, this study examined the effect of IWE on individual variables such as
perceive organizational justice, PSY, and employees’ performance. Future studies are
recommended to test the effect of IWE on organizational variables (e.g. organizational
culture, organizational structure, organizational performance, organizational change, etc.) as
well as group variables (e.g. group cohesiveness, group performance, etc.) to highlight and
clarify the crucial role of IWE at different level.

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Further reading
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of organisational justice”, Academy of Management Journal, Vol. 40 No. 5, pp. 1190-1207.

About the authors


Jihad Mohammad is Senior Lecturer at International Business School, UTM, Malaysia. He has received
his DBA Degree from Universiti Kebangsaan Malaysia. He has presented papers at various
international and national conferences and published articles in peer-reviewed international journals
such as, Journal of Islamic Marketing, Asia Pacific Journal of Marketing and Logistics, and Asian
Academy of Management Journal. Jihad Mohammad is the corresponding author and can be contacted
at: jihad@ibs.utm.my
Farzana Quoquab is Associate professor at International Business School, UTM. She has received IWE and
her Doctorate Degree of Business Administration degree from Universiti Kebangsaan, Malaysia. workplace
She has presented papers at various international and national conferences and published articles in
peer-reviewed international journals such as Global Business & Economics Anthology, IIUM Journal of outcome
Case Studies in Management, World Review of Business Research, Business and Management Quarterly
Review, Economics and Tecknology Management Review, Global Business and Management Research:
An International Journal, Asian Case Research Journal, Asia Pacific Journal of Marketing and Logistics
and Asian Academy of Management Journal.
Fazli Idris is Associate Professor at the UKM - Graduate School of Business, Universiti Kebangsaan
Malaysia. He received his BBA from East Texas State University and MBA and PhD from UKM.
His research works have appeared in several journals such as European Journal of Economics, Finance
and Administrative Sciences, Total Quality Management, Singapore Management Review and Journal of
Comparative International Management.
Mohammed Al-Jabari is Assistant Professor of Marketing and Human Resource department in City
University college of Ajman (CUCA). His research interests include relationship marketing, brand
management, consumer behaviour, small and medium enterprise development and retailing.
Nazimah Hussin is Senior Lecturer at UTM IBS. She has BSc in Finance from Arizona State
University USA, MSc in Islamic Economics, Banking and Finance from Loughborough University UK
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and PhD in Islamic Finance from Durham University UK. She is also a Fellow of the Higher Education
Academy UK. She has presented papers at local and international institutions including LSE, KYOTO
Durham University and University of Wales, Lampeter.
Raed Wishah is Assistant Professor at the King Talal Faculty of Business and Technology, Princess
Sumaya University for Technology, Amman, Jordan. He obtained his Bachelor of Art degree from Eastern
Illinois University, Charleston, IL 2006. He received his Master’s Degree in Business Administration
focusing on finance from Argosy University 2008, and his PhD in Business Administration focusing on
HRM and information systems, Chicago 2012.

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