Hari Adi 2018

Journal of Islamic Marketing
The impact of religiosity, environmental marketing orientation and practices on

performance: A case of Muslim entrepreneurs in Indonesia
Pramono Hari Adi, Wiwiek Rabiatul Adawiyah,
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Impact of
The impact of religiosity, religiosity
environmental marketing
orientation and practices
on performance
A case of Muslim entrepreneurs in Indonesia Received 8 September 2016
Revised 27 February 2018
18 April 2018
Pramono Hari Adi and Wiwiek Rabiatul Adawiyah
Accepted 19 April 2018

Faculty of Economics and Business, Universitas Jenderal Soedirman,
Purwokerto, Indonesia
Abstract
Purpose – This paper aims to investigate the environmental marketing orientation of Muslim entrepreneurs
and looks at its relationship with environmental marketing and organizational performance in the context of
small and medium enterprises in Indonesian. The study also examines the role of religiosity as a moderator on
the relationship between environmental marketing orientation and green marketing.
Design/methodology/approach – The paper is empirical and quantitative in nature. The sample of the
study is Muslim entrepreneurs in West Java and Central Java Indonesia. The data were analyzed using
descriptive statistics and partial least square analysis.
Findings – Environmental orientation has a positive relationship with environmental marketing and
operational and economic performance. Nonetheless, the study suggests no significant influence of
environmental marketing on commercial performance due to “greenwashing” practices. Religiosity appears to
moderate the relationship between environmental orientation and environmental marketing practices.
Research limitations/implications – The lack of papers on Islamic marketing makes the depth of
discussion somewhat limited.
Practical implications – The recommendation of this study provides a new path to the local government
in mitigating the issue of environmental destructions occurring because of entrepreneurs’ business practices.
This study has demonstrated the importance of cultivating religious values among society and specifically
entrepreneurs as moral guidelines to further strengthen ethical behavior while conducting businesses. The
government may endorse more teaching hours on Islamic curriculum at school to create the generation of
religious entrepreneurs.
Social implications – The act of preserving the environments while conducting businesses is one form of
worship in Islam as such we call for the elaboration and application of strategies to instill the paradigm of
excellent merchants among Muslim.
Originality/value – This paper is the first of its kind which empirically testing the relationship between
environmental marketing and firms performance with religiosity as a moderator among Muslim
entrepreneurs in Indonesia.
Keywords Indonesia, Religiosity, Environmental marketing, Muslim entrepreneurs
Paper type Research paper
1. Introduction
Environment safety is one of today’s most pressing problems. It threatens the whole Journal of Islamic Marketing
world and the future generations, which entail the privilege to live in a healthy © Emerald Publishing Limited
1759-0833
environment. As society becomes more concerned with the natural environment, DOI 10.1108/JIMA-09-2016-0067
JIMA businesses have to implement holistic environmental strategies to address the societal
concern (Papadasa et al., 2017). Business leaders start to realize the importance of being
ethical to the nature. Ethics is one’s obedience to a set of principles or moral values
imposed by society (Putri et al., 2017). Green marketing is not merely an ethical act but
also internal and external opportunities (Lash and Wellington, 2011). A firm
campaigning for green label is morally viable to the environments. Therefore, green
strategy does not only act as a coping tool but also a way of sending a message to the
stakeholders that the businesses are protecting the environment.
Some companies have successfully integrated good business practice and sustainability
(Geels et al., 2015; Polonsky, 2011) as a signal to the stakeholders that they are ethical and
care for the ecosystem (Lash and Wellington, 2011). Once stakeholders perceive an
organization as “ethical”, the institution enjoys benefits in the form of positive word of
mouth (Garavan and Mcguire, 2010), increasing customer loyalty (Poole, 2009), higher
employee engagement and loyalty (Mumtaz et al., 2011; Poole, 2009). On the other hand,
unethical climate threatens organizational and employee well-being (Hsieh and Wang, 2016).
Understanding entrepreneurs ethical behavior while conducting business shall foster ethical
corporate cultures which benefits employees, customers, organizations and society at large
(Kashif et al., 2017).
The environmental narratives have gained momentum in the marketing literature;
nonetheless, few studies have integrated green issues as entrepreneurs’ ethical act in their
everyday business practices (Chahal et al., 2014; Chen and Chang, 2012; Cronin et al., 2011;
Fuentes, 2015; Vaccaro, 2009). Consequently, green marketing fails to achieve its potential
for improving the quality of life for consumers, nor benefits the ecosystem (Polonsky, 2011).
Past studies on the green marketing have successfully addressed some challenges
associated with environmental marketing adoption (Afande, 2015; Gordon et al., 2011; Gleim
et al., 2013). Misleading behaviors – false promises, ambiguous labels and deceptive
advertisement – while performing green advertising, have resulted in consumer skepticism
on green products (Nyilasy et al., 2014). The term “green washing” refers to a condition
whereby a product – as claimed by owners green – does not perform as promised (Pillai and
Patil, 2012). Research on green marketing is still in the stage of infancy, thus requiring
further exploration (Chen and Chang, 2012; Kumar et al., 2013; Tiwari et al., 2011, Vaccaro,
2009).
Despite the growing interest in the field of green marketing, research on the
environmental concern of small business (small and medium enterprises [SMEs]) firms with
Muslim owners is sparse. Numerous theories on business practices from different
perspective emerge; however, the role of religion in business/entrepreneurship has been
largely overlooked (Dana, 2010). Increasing attention to the importance of religiosity in
societal development signifies a considerable shift from the secularization theory. Therefore,
it is inappropriate to exclude religion when researchers attempt to analyze a secular social
science among unsecular social (Gümüsay, 2015). As some of those people are religious,
businesses research and practice need to incorporate transcendent value into their study. A
religiously based business practice is exclusive, as it requires specific and detailed
narratives and methods, a defined authoritative source and a transparent metaphysical
objective (Gümüsay, 2015). The model proposed in this study is the integration of three
fields, namely, religion, marketing and business performance.
Past studies have proposed religiosity as one of the socio-cultural value systems relevant
to ethical behavior in the workplace (Hunt and Vitell, 1986; Zarkada-Fraser, 2000;
Singhapakdi et al., 2000; Ho, 2010). However, most of the work on religiosity has been
carried out in Western and Christian societies (Kashif et al., 2017). This study adds to the
literature by focusing on Islam. As the second largest religion in the world, existing research Impact of
on Islamic management and marketing is limited, and at the same time, the market of religiosity
Muslim customers is expanding worldwide. Given these trends, a reflection on the
interaction between Islam and other management fields becomes particularly appropriate.
Therefore, the authors incorporate religiosity as a moderator in the relationship between
green marketing orientation and business performance. The model shall provide a holistic
approach and a new insight to complement and enrich existing business theory and practice.
Islam defines an environment as all God’s creatures on earth. The earth is also
considered by Islam to be a place of purification and worship of God. The concept of Divine
unity as the essence of Islam signifies the agreement of humanity and nature
(Ozdemir, 2003). The Quran expresses this truth as follows:
Do no mischief on the earth, after it hath been set in order, but call on Him with fear and longing
(in your hearts): for the Mercy of Allah is (always) near to those who do good (Qur’an, 7:56)
Business, including commerce and merchants, are afforded a highly honored place in Islam
(Lieber, 1968, p. 230). As an “entrepreneurial religion” (Kayed and Hassan, 2010) Islam
empowers and encourages entrepreneurial activity such as opportunity pursuit, risk-taking
and innovation (Gümüsay, 2015). Islam urges its followers to indulge in business to generate
profit instead of looking for instant money through usury. The Quran entails that: “[. . .]
Allah has permitted trade and forbidden usury [. . .]” (2:275). The Holy Prophet peace be
upon him (PBUH) said: “There are 70 parts of worshiping (Ibadat). The best part of it is that
of earning in a lawful (Halaal) way.” Moreover, business is the way in which most of the
bounties from Allah are sent down, as it is said in the Hadith:
You ought to be engaged in commerce because ninety-nine per cent of the bounties of God are
contained therein (Mansor, quoted in Hamid et al., 1993, p. 136)
As a complete way of life, Islam emphasizes the importance of becoming excellent
merchants by having a balanced life. Muslim entrepreneurs, as God’s vicegerents on the
earth, must be honest and trustworthy to the environment. There are various verses in
the Quran and narration in the Hadist mentioned about the importance of nature, which
provide guidelines for sustainable practices toward animals and the environment. The
prophet (PBUH) told one of his companions Saad bin Abi Waqqas when taking ablution and
said: “O Saad, how wasteful you are!” Saad asked if water could be wasted in taking one’s
ritual ablution. The prophet responded: “Yes, even if you are using the running water of a
river.” (cited in Gumusay, 2015, p. 8).
Muslim entrepreneurs should avoid doing sinful deeds including any activities to
seek wealth unjustly, improper use of resources and property and dishonesty in
business (Qur’an 6: 142; 7: 31; 2: 188). An excellent merchant shall eliminate production
waste through the efficient use of resources while generating profit. Thus, Islam urges
its followers to maintain the cleanliness of the environment as well as preserving it
from destructions. A saying of the Prophet narrated by Ahmad, effectively endorsing
both entrepreneurial and sustainable practice, recommends: “Even when the day of
judgment approaches if anyone has a plant in hand, he should quickly plant it.” Even at
the time of war, the Prophet (PBUH) urged the follower not to destroy the nature as
narrated by Bukhari. The Prophet said that:
[. . .] do not kill women or children or an aged, infirm person. Do not cut down fruit-bearing trees.
Do not destroy an inhabited place. Do not slaughter sheep or camels except for food. Do not burn
bees and do not scatter them. Do not steal from the booty, and do not be cowardly.
JIMA Accordingly, the phenomena of “business and nature balance” should become a distinct
feature of business embedded among Muslim entrepreneurs in Indonesia, a country with a
vast majority of Muslim.
However, the reality is different from most people’s expectations. The environmental
condition in Indonesia is deteriorating on a day-to-day basis. The level of air pollution in
Indonesia is alarming. World Bank put Jakarta (the capital of Indonesia) as the most
polluted city after Beijing, New Delhi and Mexico City. The primary cause of the damage
was the negligent behavior of individuals as well as companies in running their business, for
example, people dumping garbage in the river and destroying the forest with illegal logging
that causes erosion. This condition is worsening by an increased number of vehicles
operating on the road, which causes air pollution. The government has started to become
alert to the possible environmental catastrophe it is bringing upon the society, along with
the health and economic challenges that will follow. The increasing society’s concern about
environmental quality worldwide opens up emerging opportunities for green markets to
international green marketers (Lee, 2008). Thus, many industries have started to implement
green initiatives to ensure sustainable growth (Hasan and Ali, 2015).
Preserving the environments while conducting businesses is one form of worship in
Islam. We have learned much about the effects of environmental safety but our
understanding of how Muslim entrepreneurs’ compliances toward Islamic teaching on the
environmental safety is limited. As a country with a Muslim majority, the market of Muslim
customers in Indonesia is growing. The demand for green products and sustainable
business activities was determined by an increase in the customers’ awareness concerning
environmental issues, as well as by stricter regulations imposed by the Indonesian
Government. Given these trends, the interaction between religiosity and green marketing
becomes particularly pertinent. The inclusion of metaphysical value by investing in higher
individual and societal well-being (Adawiyah and Pramuka, 2017) shall shed light on
Islamic marketing development theory. Muslim entrepreneurs with high religious
orientation will hold steadfast to the principles of the Islamic environmental ethic as the
fundamental values taught by the Qur’an. Ethical green marketing is one of the
determinants of desirable business performance (Nyilasy et al., 2014). This study attempted
to prove the proposition by performing a survey on environmental awareness of Muslim-
owned SMEs located in Indonesia. The result shall fill in the gap in the existing body of
literature pertaining to green marketing practices on SMEs.
The paper is based on following structure. At the outset, the review of the literature on
the Islamic perspective on environment and excellent merchant is discussed. Section 2
presents a framework for critical dimensions of green marketing. Section 3 discusses the
methodology adopted for data collection followed by data analysis. Section 4 summarizes
the findings, Section 5 provides the conclusions and Section 6 explains the managerial and
theoretical implications and includes suggestions for future research.
2. Theoretical foundation
2.1 Islamic perspective on environment marketing
Islam considers all of God’s creations as the environment. God creates the mountains, the
rivers, the skies, the sun, the moon and the stars, and He adorns the earth with various
creatures. Human beings, as God’s vicegerents on the earth, are given the trust to bring
prosperity on the earth which is executed in the form of balancing between human needs
and nature preservation. Just as we are not the lords of nature and the world, the world is not
our property which we can dispose of as we wish or as we are able. Nature was created by
God, and it belongs to God (Ozdemir, 2003). The Qur’an expresses this truth as follows:
Behold! In the creation of the heavens and the earth; in the alternation of the night and the day; in Impact of
the sailing of the ships through the ocean for the profit of mankind; in the rain which God sends
down from the skies, and the life which He gives therewith to an earth that is dead; in the beasts
religiosity
of all kinds that He scatters through the earth; in the change of the winds, and the
clouds subjugated between the sky and earth – [here] indeed are signs for a people who thinks
(Qur’an, 2:164)
Our duty is to preserve God’s creation carefully and in no way waste its natural resources
when using or consuming them. One way to preserve the environment is through
maintaining the cleanliness of our surroundings. The Prophet Muhammad (PBUH) had
consistently given full attention to cleanliness of every sort throughout His life. We should
never forget this admonition of the Qur’an:
God loves those who turn to Him constantly and He loves those who keep themselves pure and
clean (Qur’an, 2:222)
The Qur’an emphasizes the balance of nature, which requires every Muslim to be careful to
observe the balances and rights of society. As a businessperson, every Muslim should
consider environmental issues and balancing it with primary customer needs. The
environment provides great support of companies’ sustainability. Thus, safe environmental
behavior is one way to increase peoples’ awareness on environmental safety. Protecting the
environment should be every Muslim’s responsibility. Thus, Islam perceives the rights and
balances of business operation as universal rules that every Muslim entrepreneur must
observe. As stated in the Quran that:
The sun and the moon follow courses [exactly] computed and the herbs and the trees – both [alike]
bow in adoration. And the firmament He has raised high, and He has set up the balance [of
justice], In order that you may not transgress [due] balance. So establish weight with justice and
fall not short in the balance (Qur’an, 55:5-9)
Islam does not tolerate any form of destruction on ecological balances or the order and
systems of nature. As God’s vicegerent (deputy), man is the sole being whom God holds
responsible for the earth, to whom He has entrusted its preservation. Such a deputy would
not betray the trust of the One who created the world with a particular order, balance and
harmony (Ozdemir, 2003). Thus, Islam provides guidelines to ensure that all stakeholders’
interests are safeguarded while performing business transactions. As such, Muslim
businesses are able to maintain a balance between their responsibilities to the company in
terms of profits, to the consumers in terms of providing safe and quality products, and
toward ensuring the welfare of society (Abdullah and Ismail Ahmad, 2010) by minimizing
environmental waste.
2.2 Islamic approach on great entrepreneurs

Islam urges its followers to be great entrepreneurs; defined as those who possess the quality
of attributes as demonstrated by our Prophet (PBUH) throughout His business life. In one of
the hadits from Abdullah Ibn ‘Umar, it is stated that Allah’s Messenger (PBUH) said:
The trustworthy, honest Muslim merchant will be with the Prophets, the honest men, and martyrs
on the Day of Resurrection (Majjah, Al-Hakim, and Ad Daruquthni).
An excellent merchant who always prioritized honesty and trustworthiness will be among
those who enter heaven. Honest traders are expected to provide information regarding their
products accurately. Explanations on product defects should be fully disclosed to the
potential buyer.
JIMA Meanwhile, trustworthiness means that every Muslim trader must preserve the
environment while doing business. Every business activity must be carried out carefully
without destroying its surroundings. Products must be produced lawfully. As such, selling
woods from illegal logging, for example, is prohibited in Islam. Favorable attitudes bring
blessing and goodness in trading, as the saying of the Messenger of Allah – peace and
prayer of Allah be upon Him:
If they (sellers and buyers) are honest and they explain (the condition of merchandise or the
payment), then Allah will bless them both in that transaction but if they lie and conceal (it), then it
will lose its blessings (Narrated by Bukhari, no. 1973 and Muslim, no. 1532).
Thus, a great merchant, according to Islamic teaching, is a green merchant, those who
conduct business honestly and, at the same time, preserve the environment.
2.3 Environmental marketing concept

Environmental marketing is also known as green marketing (Mishra and Sharma, 2010;
Ottman, 1992). Environmental marketing is considered as one of the major trends in modern
business (Wossen Kassaye, 2001). It incorporates a broad range of activities, including
product modification, changes to the production process, packaging changes and modifying
advertising for the purposes of fulfilling customers’ needs and wants, which leads to the
achievement of maximum profit without making a severe impact on the environment
(Bansal, 2005; Lee, 2008; Ottman et al., 2006). In addition, Ottman et al. (2006) urged that
every business organization should integrate all environmental considerations into all
aspects of marketing practices. A company producing green products will have better
access to the market as compared to those who do not produce green products (Das et al.,
2012). Environmental concern can become a source of competitive advantage in the market.
Previously, the high cost of technological investment associated with handling
environmental issues is perceived as a form of threat toward firms’ profitability (Walley and
Whitehead, 1994). Nowadays, the opposite phenomena prevail when firms have started to
realize that focusing on the natural environment is a potential source of competitive
advantage (Christmann, 2000; Porter and van der Linde, 1995a), which prospers
stakeholders and the ecosystems.
Environment marketing adoption is a form of social responsibility, indicating companies’
commitment toward social responsibility (Luo and Bhattacharya, 2006). Firms’ awareness of
social responsibility is increasing as many firms start to act in an environmentally
responsible way by disclosing in their annual report of the number of funds allocated for the
environment. Thus, environmental marketing becomes a key strategy to compete globally
(Glorieux-Boutonnat, 2004).
Previous studies reveal that external pressure such as government regulations on
environmental safety is among the reason for the green marketing adoption (Clemens and
Douglas, 2006). Most countries impose penalties for managers and owners of firms that are
found to be non-compliant with environmental regulation (Clemens and Douglas, 2006).
Environmental regulation imposed by governments of any country is aimed at protecting
consumers against production waste that may harm consumers (Chaudhary et al., 2011).
Thus, green marketing can be used as a tool to face government pressures.
Environmental marketing can act as a strategy to face stiff competition in the market
and as an approach to obtain maximum profit (Das et al., 2012). Green marketing is not
merely offering environmentally friendly products to customers but also about how to
produce and distribute the products safely. Environmental challenges on marketing
strategies can be overcome through the development of ecologically safer products,
recyclable and biodegradable packaging, better pollution controls and more energy-efficient Impact of
operations to remain competitive (Adawiyah, 2017; Akenji, 2014; Maniatis, 2016; Yang et al., religiosity
2015).
Green marketing is part of the Islamic teaching exhorting every Muslim to conduct
business while preserving the natural environment. The explanation of green marketing in a
paragraph of the Qur’an is as follows:
And remember Moses prayed for water for his people; We said: “Strike the rock with thy staff.”
Then gush forth therefrom twelve springs. Each group knew its place for water. So eat and drink
of the sustenance provided by Allah, and do no evil or mischief on the (face of the) earth
(Quran, 2:60).
2.4 Environmental marketing in Indonesia

The Indonesian Government has recently imposed stricter regulations on environmental
safety. Based on Regulation Number 5 1984, industries are required to ensure the balance of
their business activities with natural environment conservation. All firms, on both large to
small scales, are encouraged to protect the environment by implementing a favorable
environmental policy throughout its operation. Business firms need to practice the three R’s
of management waste, namely, reducing, reusing and recycling, which will directly add to
the cost of processing and, finally, establish favorable companies’ behavior toward the
environment (Kotler, 1997).
Most studies on the green marketing adoption were carried out in the context of large
firms, and few were performed on small-scale firms. The government effort to introduce
environmental safety at all levels has motivated firms to comply with the regulation. The
government purposes of introducing the regulations and restrictions are to protect
consumers from buying dangerous goods. Despite close monitoring of small businesses
activities by regulatory authorities, consumer complains stemming from businesses’
fraudulent, unethical or morally questionable practices is evident in Indonesia.
2.5 Islamic religiosity scale

Religion is viewed as a system of beliefs and practices that reign people’s reactions and
understandings regarding what is supernatural and sacred (Johnstone, 1975). As such,
religions determine individuals’ life objectives, judgments, inspirations, rationality and
satisfaction (Zimbardo and Ruch, 1979), as well as individuals’ attitudes toward goods and
services (Shyan Fam et al., 2004). Therefore, religion serves as a means of filtering incoming
messages, thus directly affecting the outcome of marketing communications (Cyril De Run
et al., 2010). Therefore, religion in general and Islam, in particular, is a marketing element
that affects marketing decisions in exploring its role in consumption (Cornwell et al., 2005;
Cyril De Run et al., 2010). Religiosity refers to the degree of one’s commitment toward
religious beliefs. Initially, religiosity was thought to be a single dimensional construct
measured only by a person’s attendance to a religious center and his/her contribution to that
sect (Mokhlis, 2009).
Indonesia is a country with a vast majority of Muslims; therefore, the religiosity
measurement used in this study comes from an Islamic perspective. Lately, there has been a
high interest in the Muslim religiosity as an area of empirical investigation. Therefore, some
of the new scales that are based on the theological worldview of Islam have been created
(Adawiyah and Pramuka, 2017).
JIMA 2.6 Conceptual framework and hypothesis development
Highly competitive firms surpass their competitors by generating more value-added
products or services (Barney and Clark, 2007; Peteraf and Barney, 2003) through the
adoption of unique marketing strategies. Recent pressure from stakeholders is in the force
shaping the need for many firms to adopt more environmentally friendly marketing
approaches (Afande, 2015) as their survival strategy. Marketing theories have long ignored
the influence of environmental concern in marketing strategy formulation (Afande, 2015),
especially from an organizational level. This study is performed at the macro level by
looking specifically at the consequences of environmental marketing orientation on
organizational performance.
The resources-based view theory states that every firm is a unique entity and possesses
resources or capabilities to increase its competitiveness in the market (Barney, 1991). The
business milieu is moving pervasively, which requires companies to be more creative in
maintaining the competitive advantage possessed (Wihuda et al., 2017). Competitive
advantages may result in strength when firms’ own unique resources that is not replicable.
The majority of inquiries allege that the businesses who own extraordinary and exclusive
resources, such as capabilities, organizational processes, firm attributes, information and
knowledge (Barney, 1991) could defeat their rivals (Idris et al.2003). Firms can combine their
internal and external resources to gain competitive advantage (Pinasti and Adawiyah, 2016).
Hart (1995) proposed a new orientation of the resource-based view of firms, taking into
account environmental safety as a source of competitive advantages. Integrating ecological
protection into a business process shall create resources and capabilities for increasing a
firm’s competitive advantages. In this context, environmental marketing strategies and
managers’ religiosity are perceived as crucial intangible resources possessed by Muslim-
owned businesses.
The theory of planned behavior (TPB) by Ajzen (1991) proposes that human behavior
occurs as a result of significant deterrents, which triggers intentions to behave in a certain
way. According to TPB the three antecedents of behavioral intention are attitude, subjective
norms and perceived behavioral control (Ajzen, 1991). The TPB model was extended by
Ajzen (2002) by added past behavior as another determinant of behavioral intention. The
attitude construct denotes how people feel toward making an ethical decision in the future.
Entrepreneurs consider the risks faced by their organizations before adopting the green
marketing policy. Meanwhile, the subjective norms construct norms signifies entrepreneurs’
reaction to higher-order principles that determine what is right or wrong. While subjective
norms refer to external influences, moral norms are intrinsic to the individual. Perceived
behavioral control refers to entrepreneurs’ perceptions of their ability to perform a given
behavior. Muslim entrepreneurs with high environmental concern shall adopt green
marketing as their pivotal businesses’ practices.
2.6.1 Environmental orientation, environmental marketing and religiosity. Firms can
adopt eco-marketing orientation as a strategic competitive advantage (Miles and
Munilla, 1993). Following increasing stakeholders’ demand for environmental issues,
companies are forced to include ecological values within their culture (Fraj et al., 2009).
Firms need to find a way to harmonize a relationship with their surroundings while
doing business operations. As a result, eco-friendly firms shall appoint managers with
specific environmental qualifications (Aragon-Correa and Sharma, 2003) so that the
managers can continuously search for the best environmental practices as part of the
company’s marketing strategies. Thus, environmental orientation has a positive effect
on environmental marketing strategies through the development of eco-friendly
products, packaging, green supply chain management and delivering green messages
through advertising (Sroufe, 2003). Miles and Covin (2000) urged that being a good Impact of
environmental steward helps to create a reputational advantage that leads to enhanced religiosity
marketing performance. Similarly, many researchers agreed on the relationship
between environmental values with environmental marketing strategies (Afande, 2015;
Fraj et al., 2009). This discussion leads to the following hypothesis:
H1. A company’s environmental orientation will positively influence the development
of green marketing.
Religiosity refers to the degree of people’s belief in the presence of God in every aspect of
their life (Alhouti et al., 2015). The role of the religious beliefs of corporate executives
(individuals who exercise managerial control) has received increasing attention in the
academic literature (Ibrahim et al., 2008). Although the relationship between executives’
religiosity and environmental concern might seem obvious, empirical researchers are still
lacking. Some existing literature contends that religiosity has a strong impact on work
values (Parboteeah et al., 2009). Religiosity has a significant influence on values, which then
affects attitudes and behavior (Ramasamy et al., 2010). Personally held values and beliefs of
executives are influential in two ways (Meglino and Ravlin, 1998). First, their values and
beliefs influence their own decisions, and secondly, they influence the values, beliefs and
behavior of their subordinates. As explained earlier, trustworthy traders will be with the
Prophet in heaven. Trustworthiness means that every Muslim trader must preserve the
environment while doing business. Every business activity must be carried out carefully
without destroying its surroundings. Thus, individuals’ attitudes and behavior toward
goods and services are colored by the degree of their religious belief (Shyan Fam et al., 2004).
Therefore, the higher the managers’ religiosity, the higher their commitment toward
environmental safety will be.
Few studies have integrated religiosity in the context of ethics (Vitell, 2009, Kashif et al.,
2017); therefore, Gundolf and Filser (2013) suggest more studies are needed to explore the
role of religiosity on corporate ethical behavior. Religion serves as a means of filtering
incoming messages, thus directly affecting the outcome of marketing communications (Cyril
De Run et al., 2010). Therefore, religion in general and Islam in particular is a marketing
element that affects marketing decisions in exploring its role in consumption (Cornwell et al.,
2005; Cyril De Run et al., 2010). Individuals with high religious orientation and commitment
score high on religiosity which trigger an attitude that fosters noble intent (Atakan et al.,
2008; Bateman and Valentine, 2010; Weaver and Agle, 2002). This discussion leads to the
following hypothesis:
H2. Religiosity moderates the relationship between environmental orientation and
environmental marketing.
2.6.2 The effect of environmental marketing on firms’ performance. It is debatable whether
environmental marketing practices bring competitive advantages and business
opportunities for firms (Fraj et al., 2009). Despite the substantial publication on the
relationship between green marketing practices and organizational performance, the results
were inconclusive. Those who proposed a negative correlation between variables based their
arguments on the belief that implementing environmental marketing requires high initial
cash outlays that may, at a later time, affect the return on investment (ROI) (Walley and
Whitehead, 1994). Other empirical evidence suggests a neutral or negative relationship
between environmental practices and organizational performance and economic gains for a
firm (Filbeck and Gorman, 2004). Recent studies revealed that ecological concern affects
a firm’s profitability (Christmann, 2000; Menguc and Ozanne, 2005). Other authors work by
JIMA a resource-based view theory and conclude that environmental management leads to higher
capabilities and creates unique resources in the form of technology, human capital and other
intangible assets (Sharma and Vrendenburg, 1998). Environmental marketing allows firms
to reduce costs, increase productivity and process flexibility (Hammer and Champy, 1993)
because eco-friendly practices will reduce pollution, eliminate contaminating materials and
optimize the use of resources (Porter and van der Linde, 1995b). Because of the cost-
efficiency, a firm will produce goods cheaply, in a faster and better way, thus leading to a
higher economic return. So, the following hypothesis is proposed:
H3. Environmental marketing practices will positively influence the firm’s operational
performance.
The firm’s operational performance will positively affect the firm’s economic
H4.
performance.
2.6.3 Environmental marketing, commercial performance. The adoption of environmental
marketing brings commercial advantages for the firms (Ar, 2012; Chang, 2011). For SMEs, green
innovation includes the development of new, more environmentally friendly products and
changing process or production methods (Oxborrow and Brindley, 2013). Previous researchers
have indicated that a company with advanced environmental initiatives (Chang, 2011) can gain
better market reputation and external image (Miles and Covin, 2000), superior financial and
market performance (Punitha and Rasdi 2013). Thus, green products and services are becoming
the center of business strategy, which is driven by competitive pressure and customers’ needs
(Agbejule et al., 2004), as being environmental marketing may directly influence customers’
satisfaction and loyalty (Crane, 2000). Earning a financial advantage is a crucial motivation for
business firms to implement eco-friendly as a marketing strategy (Cronin et al., 2011).
Organizational performance in this study refers to environmental performance, economic
performance and intangible performance (Laosirihongthong et al., 2013). Meanwhile, Fraj et al.
(2011) measure performance regarding environmental performance, economic performance and
marketing performance. Environmental performance is measured by low-cost operations,
lower energy consumption and the use of recycling waste to preserve the environment
(Gholami et al., 2013). While financial performance is measured using ROI, internal rate of
return and market share, operational performance reflects the ability of a firm to use its
resources effectively to achieve objectives. Thus, the following hypotheses are proposed:
H5. Environmental marketing has a positive effect on commercial performance.
H6. Environmental orientation has a positive impact on the commercial performance.
H7. Commercial performance has a positive influence on economic performance.
3. Methodology
3.1 Research design and sample
This study is quantitative with a survey type. In particular, the study is causal research as
the research is designed to find the relationships between independent and dependent
variables at one point in time (cross-sectional). The primary instrument used for data
collection was questionnaires with close-ended questions. Authors sent out questionnaires
to Muslim small business owners/managers directly to their office. To maintain a subject-to-
item ratio of 10:1 stipulated by Randall and Gibson (2013), a minimum of 270 respondents
was required. A total of 270 questionnaires were distributed among selected small
manufacturing firms producing goods with environmental friendly labeling. The response
rate was 82.59 per cent where a total of 223 Muslim owners gave usable questionnaires for Impact of
further analysis, well above the average of 35.7 per cent commonly achieved in quantitative religiosity
organization studies (Baruch and Holtom, 2008). The respondents were producing different
products, namely, household goods, foods and beverages, furniture, garments and fertilizers.
Existing scales identified through the literature review were modified to suit the research
purpose and particular study context. All the items on the scale are measured on a five-point
Likert scale (1 = strongly disagree, 5 = strongly agree). Respondents were asked about their
perceptions of the adoption of green marketing orientation and green selling behavior and
the factors influencing the adoption of green selling behavior by SMEs. The independent
variables were the elements of marketing orientation selected as factors affecting the
adoption of green selling behavior. The indicators of marketing orientation encompass
social influence, environmental attitudes and environmental concern, perceive seriousness
on ecological problems, environmental responsibility, the effectiveness of environmental

behavior and concern for self-image. The dependent variable was green selling behavior.
3.2 Measurement
Authors undertook a comprehensive literature review to determine the most appropriate
measures for each variable used in the model. The questionnaire encompassed 56 items
denoting the theoretical constructs and demographic information. The constructs of
environment marketing orientation (11 items) was measured using the scale developed by
Banerjee (2002). Meanwhile, to measure commercial performance (six items), operational
performance (five items) and economic performance (five items), authors adopted
measurements developed by Morgan et al. (2004) as well as Sharma and Vredenburg (1998).
The religiosity construct was measured using 22 items adapted from Zamani-Farahani and
Musa, (2012) and Jana-Masri and Priester (2007). All these scales were adopted in several
past studies (Tiliouine et al., 2009; Do Paco and Raposo, 2009; Pietrzak and Cook, 2013). All
items were translated from English into Indonesian and back-translated into English to
fulfill the requirements of high-quality instruments.
4. Findings
4.1 Respondents’ profile
Our sample consists 223 of small business owners/managers with Muslims identity. The
respondents were females dominating (56 per cent), while the remaining 44 per cent were
males. Despite the glass ceiling theory that limits women’s’ movement in their career life,
this study confirmed the prominent role of female small businesses’ owners/managers in
Indonesia. The Indonesian social stigma on female resilience in business is becoming
apparent. The small businesses main activities were: furniture and handicraft, 64 (28.7 per
cent), household goods producers 54 (24.22 per cent), local textile producers 38 (17.04 per
cent), making organic fertilizer, 32 (14.5 per cent), the remaining, 19 (8.52 per cent) and 16
(7.17 per cent) were house developers and traditional food producers, consecutively. The
respondents’ age ranged from 32 to more than 40 years, with the mean age of 35.12 years
and SD of 1.393 years.
4.2 Testing measurement model or outer model

There are three criteria used to assess the validity of the research model: convergent validity,
discriminant validity and composite reliability. To determine whether the model qualifies
outer convergent validity, the following steps must be followed: first, the loading factor
should be above 0.70, but if the value of the loading lies between 0.40 and 0.70, it is still
acceptable (Hair et al., 2013). Second, the significant p-value should be less than 0.05 (Hair
JIMA et al., 2013). In the convergent validity, all indicators with a correlation value less than 0.40 are
excluded from the model because they are not reliable. Average variance extracted (AVE) is
used to evaluate the convergent validity. The criteria should be above 0.50 (Hair et al., 2013).
The result of the validity test indicated that the loading values for all indicators of
religiosity environmental orientation, environmental marketing practices, commercial
performance, operational performance and economic performance, were higher than 0.50
with a significant p-value of less than 0.05. The average variance extracted scores were 0.636
for religiosity, 0.592 for environmental orientation, 0.574 for environmental marketing, 0.799
for commercial performance, 0.732 for operational performance and 0.590 for economic
performance, which was higher than 0.50. Therefore, all the indicators have met the
convergent validity criteria.
The discriminant validity test was measured based on the value of latent variable
correlations. The criteria were determined based on the value of square roots of average
variance extracted (AVE) which should be above the correlation score between the latent
variables in the same column. As indicated in Table I that the value of the square roots
average variance extracted (AVE) was higher than the correlation value between the latent
variables. All AVE values were mainly higher than their corresponding squared multiple
correlation values, indicating that each construct was able to discriminate itself (their items)
from another construct. Therefore, the study concluded that the measurement model
exhibited good convergent validity, construct reliability and discriminant validity.
The reliability test can be seen through the composite value of reliability and value
Cronbach’s alpha. Both must be valued above 0.70 as a condition of reliability (Hair et al.,
2013). Reliability test results can be seen in the following table.
The VIF collinearity full value in Table II is a full collinearity test result which includes
vertical and lateral multicollinearities. The criteria for testing the collinearity is that the full
value should be lower than 3.3. Based on Table II, it can be seen that the full value of VIF
collinearity of each variable is lower than 3.3, so the model is free from problems of vertical
and lateral collinearity and common method bias.
4.3 Structural test model

Testing the hypothesis in this model is based on the results of path coefficient value, and the
p-value. Value path coefficient and p-values in this model can be seen in Figure 1.
Based on Figure 1, it appears that the coefficient path on the influence of environmental
orientation on environmental marketing is 0.741 with a P-value of 0.001. Thus, it can be
concluded that environmental orientation has a positive and significant impact on
environmental marketing, so the first hypothesis is accepted. The findings of this study
Variables EO EM CP OP EP R
EO (0.798) 0.707 0.614 0.745 0.741 0.657

EM 0.707 (0.769) 0.677 0.668 0.613 0.628
CP 0.614 0.677 (0.757) 0.623 0.616 0.645
OP 0.745 0.668 0.623 (0.894) 0.737 0.568
EP 0.741 0.613 0.616 0.737 (0.856) 0.607
R 0.657 0.628 0.645 0.568 0.607 (0.700)
Table I. Notes: EO: Environmental Orientation; EM: Environmental Marketing; OP: Operational Performance; CP:
Discriminant validity Commercial Performance; EP: Economic Performance; R: Religiosity; italic data signifies the correlation
analysis results score between the latent variables in the same column
support previous claims that green orientation brings potential benefits to firms (Gordon Impact of
et al., 2011; Gleim et al., 2013; Hasan and Ali, 2015; Sroufe, 2003). Therefore, firms can adopt religiosity
green marketing as a strategic competitive advantage (Miles and Munilla, 1993). Currently,
managers are required to include environmental safety as part of their culture (Hasan and
Ali, 2015). Eco-friendly firms shall appoint managers with specific environmental
qualification (Aragon-Correa and Sharma, 2003) so that the managers can continuously
search for the best environmental practices as part of the company’s marketing strategies.
The result of this study is also in line with many researchers who agreed on the relationship
between environmental values with environmental marketing strategies (Afande, 2015).
The second hypothesis states that religiosity moderates the relationship between
environmental orientations with environmental marketing. Based on Figure 1, it can be
seen that the path coefficient on the role of religiosity as the moderator of the
relationship between environmental orientations toward environmental marketing is

0.125 with a p-value of 0.003. Thus, it can be concluded that religiosity moderates the
relationship between environmental orientations to environmental marketing, so H2 is
accepted. The result of this study supports the claim that religiosity has a substantial
impact on work values (Parboteeah et al., 2009) which then affects attitudes and
behavior (Ramasamy et al., 2010). Managers’ attitudes and behavior toward goods and
services are influenced by their religious belief (Shyan Fam et al., 2004). Therefore, the
Variables EO EM CP OP EP R
Comp reliability 0.950 0.945 0.889 0.952 0.932 0.954

Cronbach’s alpha 0.941 0.936 0.850 0.936 0.908 0.950
Full Collin. VIF 2. 277 2.081 1.5 64 2.489 2.592 1.100
Table II.
Notes: EO: Environmental Orientation; EM: Environmental Marketing; OP: Operational Performance; CP: Reliability analysis
Commercial Performance; EP: Economic Performance; R: Religiosity results
Figure 1.
Structural model
JIMA higher the managers’ religiosity, the higher their commitment toward environment
safety will be. Religion serves as a means of filtering incoming messages, thus directly
affecting the outcome of marketing communications (Cyril De Run et al., 2010).
Therefore, religion in general and Islam in particular is a marketing element that affects
marketing decisions in exploring its role in consumption (Cornwell et al., 2005; Cyril De
Run et al., 2010).
H3 suggests that environmental marketing has a positive effect on operational
performance. Based on Figure 1, it can be seen that the path coefficient on the relationship
between environmental marketing to operational performance is equal to 0.868 (rounded up
to 0.87) with a significant p-value of 0.001. It can be concluded that environmental marketing
has a positive effect on operational performance. Thus, H3 is accepted. The result of this
study supports the view that marketing is a crucial role in determining firms’ performance
(Tiwari et al., 2011), specifically, eco-friendly marketing allows firms to reduce costs,
increase productivity and process flexibility (Hammer and Champy, 1993). Moreover, eco-
friendly practices will reduce pollution, eliminate contaminating materials and optimize the
use of resources (Porter and van der Linde, 1995b).
H4 proposes that operational performance has a positive effect on economic
between operational performance on economic performance is 0.895 (rounded up to 0.90)
with a significant p-value of 0.001. It can be concluded that the operational performance has
a positive and significant impact on economic performance. Thus, H4 is accepted. The result
of this study is consistent with the view that environmental concern has a positive effect on
a firm’s profitability (Christmann, 2000; Menguc and Ozanne, 2005; Saxena and Khandelwal,
2012). Moreover, the finding also supports the view that environmental management leads
to higher capabilities and creates unique resources for a firm (Sharma and Vrendenburg,
1998). On the other hand, the result of this study contradicts the argument that suggests a
neutral or negative relationship between environmental practices and organizational
performance and economic gains for a firm (Filbeck and Gorman, 2004).
H5 proposed a positive relationship between environmental marketing and commercial
performance. The result of the analysis indicates that the path coefficient on the influence of
environmental marketing on commercial performance is equal to 0.09 (rounded to 0.09), with
a significant p-value of 0.09 which is above 0.05. It can be concluded that environmental
marketing does not have a positive effect on the commercial performance. The finding of
this study supports the view that the adoption of green marketing faces some challenges
(Gordon et al., 2011, Gleim et al., 2013, Hasan and Ali, 2015) due to “greenwashing” practices
such as misleading advertisements, false promises, unclear labels and inconsistent
performance that cause confusion among customers. Greenwashing is a situation whereby
the green claims made by firms do not perform as promised (Hasan and Ali, 2015). Also, lack
of government regulations in Indonesia to enforce green practices among firms contributes
to the “greenwashing” practices. Therefore, this study does not support the view that the
adoption of environmental marketing brings commercial advantages for the firms (Ar, 2012;
Chang, 2011).
H6 proposes a positive relationship between environmental orientation and commercial
between operational performances on economic performance is 0.75 with a significant
p-value of 0.001. It can be concluded that the environmental orientation has a positive impact
on the commercial performance. Thus, the hypothesis is accepted. The result of this study
supports a previous claim made by Leonidou et al. (2013), which suggests that green
orientation brings benefits toward firms’ performance. The finding is also in line with a
recent study by Fraj et al. (2011) which allege that green marketing helps firms to manage Impact of
resources efficiently, leading to favorable commercial performance. religiosity
The last hypothesis proposes a positive relationship between commercial performance
and economic performance. As indicated in Figure 1, the path coefficient on the relationship
between environmental marketing on commercial performance is 0.067 (rounded up to 0.07)
with a significant p-value of 0.16. Therefore, the commercial performance does not influence
economic performance. As explained earlier, the adverse consequence of “green washing”
practices is a lack of trust from customers on green labeling, consequently lowering
corporate image. Irregular firms’ performance on the green campaign will result in low
commercial performance and economic performance of SMEs in Indonesia.
5. Conclusions
The study provides significant contributions in bringing the knowledge gap that exists in
the literature and practical contributions for the development of Islamic marketing in the
Indonesian small business context. On theoretical contributions, this study used an
integrated model of green marketing theory and entrepreneurship theory to analyze small
business performance in Indonesia. The study supports the view that religiosity moderates
the relationship between environmental orientation and environmental marketing.
Moreover, environmental marketing has a positive influence on operational and economic
performance except for commercial performance. The study advances an in-depth
understanding of the importance of environmental concern and eco-friendly marketing
practices in attaining the operational and economic performance of firms. The study
contributes to marketing management literature by adding Islamic viewpoints on
environmental marketing and empirically testing the practices of environmental marketing
among Muslim entrepreneurs.
6. Limitations and recommendations for further research

Although the study design was rigorously prepared, it is subject to some limitations. First,
the data used in the study only came from 270 Muslim entrepreneurs located in Central and
West Java, so it is likely that the generalizability of the findings to other contexts remains
limited (Hair et al., 2013). Data drawn from Muslim entrepreneurs in other parts of Indonesia
are required to verify the theoretical advances offered here. Besides, a single country setting
also limits the generalizability of the findings as culture and ethnicity strongly affect
entrepreneurs’ perceptions of ethicality and thinking patterns – even when the job
characteristics are identical (Kashif et al., 2017). An examination of customer perceptions of
the entrepreneurs green marketing policy and practices using self-reported questionnaire
would add strength and clarity to the model presented in this study. Second, this study is
cross-sectional where data were collected at a single point in time; there is a potential of non-
response bias which results in the inclination of the measures of outcome. This is a
particular problem when the characteristics of non-responders differ from responders.
Additionally, cross-sectional research omits changes in behavior, societal attitudes and
norms over multiple periods, as such it ignores changes in the level of religiosity over series
of time. Finally, the data collection instrument used was self-administered questionnaires
raising the opportunity for response bias, as it requires functional literacy of the
respondents when filling in the questionnaires. One respondent may consider an act as
ethical others might not. Moreover, critical issues such as experience, subjective norms,
moral norms, family and education background of respondents have been purposefully left
out of this study, but we at this moment acknowledge the need for them to be taken into
account.
JIMA 7. Managerial implications of the study
The recommendation of this study provides a new path to the local government in
mitigating the issue of environmental destructions occurring because of entrepreneurs’
business practices. We concur with some of the recommendations offered in green
marketing studies that government regulations on environmental safety are among the
reason for the green marketing adoption (Chaudhary et al., 2011; Clemens and Douglas,
2006). Moreover, considering the importance of ethics in social life, it is necessary and
common to incorporate ethical values into the law or regulations (Putri et al., 2017).
The fact that religiosity act as a significant moderator on the relationship between
marketing orientation and business performance has confirmed the pivotal role of religiosity
in shaping green marketing behaviors. This study has demonstrated the importance of
cultivating religious values among society and specifically entrepreneurs as moral guidelines
to further strengthen ethical behavior while conducting businesses. The government may
endorse more teaching hours on Islamic curriculum at school to create the generation of
religious entrepreneurs who see themselves as God vicegerent on earth (Qur’an, 51:56).
Muslim entrepreneurs, as God’s vicegerents on the earth, must be honest and trustworthy to
the environment. Our findings support the view that religious education shall increase the
levels of religiosity and reduce environmental safety-profit dissonance behavior.
The green marketing policy adopted by companies should provide social benefits to
everyone and everything in the surrounding. Nowadays, corporate social responsibility
(CSR) becomes a globally phenomenon approaching every businesses including the small
one. CSR is the never-ending commitment by business to behave ethically and stimulate
economic development while improving the workforce quality of life and the local
community. Firms with “green flag” should demonstrate their concern to the environment
by allocating certain portion of their profit (read CSR) to prosper their stakeholders. In this
context, among the issue that small businesses should address in their CSR is how to
educate the surrounding people on environmental conservation based on religious thought.
Small businesses with green vision should consider religious based education as a specific
issue that is mostly appropriate and relevant in organizations’ CSR programs. According to
Ajzen (1991), the power of subjective norms, attitudes and perceived behavioral control
would determine one’s intention hence behavior. Indonesia is a country laid on five
principles, known as Pancasila, as a way of live. The first principle is believed in God. The
people have strong faith on their religious norms and place strong trust on their spiritual
leaders (ulama). Therefore, for the CSR program to be successful, SMEs should conduct the
religious education in conjunction with the ulama. Hence, what constitutes a socially
responsible and sustainable green organization depends partially on the amount of fund
allocated for the stakeholder in the form of CSR.
Likewise, our testing an established theory using data on Islamic marketing in the
Indonesian small business context reflecting the everyday experiences of Muslim
entrepreneurs increases the likelihood of audiences, especially those interested in adopting
our recommendations. Considering limited literature on Islamic marketing on the one hand,
and growing market of Muslim customers, on the other hand, a reflection on the interaction
between Islam and other management fields becomes necessary. The act of preserving the
environments while conducting businesses is one form of worship in Islam; therefore, we
call for the elaboration and application of strategies to instill the paradigm of excellent
merchants among Muslim. Additionally, it is wise and favorable to introduce some religious
activities to employees such Morning Prayer before starting up their work, halting business
operation at the time of prayer call, praying in congregation and circular studies on Islamic
business law (muamalah) regularly.
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Corresponding author
Wiwiek Rabiatul Adawiyah can be contacted at: wiwiekra@gmail.com
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Journal of Islamic Marketing

The impact of religiosity, environmental marketing orientation and practices on

Journal of Islamic Marketing, https://doi.org/10.1108/JIMA-09-2016-0067

*Related content and download information correct at time of download.

Accepted 19 April 2018

2.2 Islamic approach on great entrepreneurs

2.3 Environmental marketing concept

2.4 Environmental marketing in Indonesia

2.5 Islamic religiosity scale

on ecological problems, environmental responsibility, the effectiveness of environmental

4.2 Testing measurement model or outer model

4.3 Structural test model

EO (0.798) 0.707 0.614 0.745 0.741 0.657

relationship between environmental orientations toward environmental marketing is

Comp reliability 0.950 0.945 0.889 0.952 0.932 0.954

6. Limitations and recommendations for further research

Journal, Vol. 15 No. 2, pp. 111-130.

Journal of Strategic Marketing, Vol. 8 No. 3, pp. 277-296.

ﬁnancial advantage”, Journal of Business Ethics, Vol. 23 No. 3, pp. 299-311.

hotel industry”, Asian Social Science, Vol. 9 No. 17, p. 79.

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