Factors Influencing SMEs Sustainability: The Role of Islamic Crowdfunding

Abstract

Small and Medium Enterprises (SMEs) contribute to generating the economy such as income and employment generation, widespread of product and services in city and rural areas. Almost 98.5 percent of business establishments in Malaysia are SME companies cut across all sizes and sectors. However, SMEs in Malaysia are unable to access external financing due to excessive, rigid procedures imposed by financial institutions and government agencies. To address and resolve this critical issue, with the advance of technology, entrepreneurs have become more independent and creative in raising capital through a process known as crowdfunding. This study intends to examine the role of Islamic crowdfunding towards SMEs sustainability in order to assist their financing need for business expansion or start-up in Malaysia. Furthermore, this study will empirically test the influence of strategic competitiveness and technology adoption on SMEs' sustainability. Primary data are collected using a self-administered questionnaire from a sample of 259 SMEs in Selangor. The data was computed using SmartPLS-3.2.8 to examine the direct effect on SME's sustainability. The findings show that Islamic crowdfunding, technology adoption and strategic competitiveness influenced the SME's sustainability. Thus, this study disclosed that Islamic crowdfunding would also increase the capacity to boost SMEs' sustainability and development in Malaysia.