Commitment in Waqf Development Through Cross-Sector Collaboration between Islamic Financial Institutions and State Islamic Religious Councils: Innovative Strategy of Value-Based Intermediation for Sustainability

Abstract

Objective - Islamic Financial Institutions (IFIs) are founded upon principles of encouraging economic wellbeing for the betterment of society. Despite this, fresh measures are required to ascertain the sustainability of IFIs due to the deterioration recorded in annual rate growth levels that has slumped to 8.2% in 2016, compared to 24.2% in 2011. Similarly, waqf, which aims to contribute to socio-economic growth, appears to underperform due to inefficient management and lack of resources from State Islamic Religious Councils (SIRCs) in Malaysia. Therefore, growing attention is given to adding value to related operations so as to continuously expand without undermining their obligation towards societal welfare. Methodology/Technique - In responding to this issue, Value-Based Intermediation (VBI) through a cross-sector collaboration strategy has been proposed in this paper to streamline the investments of IFIs in executing their business responsibilities in a strategic manner, especially to generate sustainable socio-economic growth through waqf development projects. Nonetheless, in order to strategically perform in project collaboration for sustainability, strong commitment from IFIs and SIRCs is needed. Findings - A significantly positive relationship was discovered between the independent variables (affective commitment, normative commitment, and continuous commitment) and organisational sustainability. Novelty – The paper concludes with an assumption of the readiness of both organisations in effectively developing waqf projects, along with several recommendations for future studies in further contributing to the success of waqf development which will contribute to organisational sustainability. Type of Paper - Empirical. Keywords: G20, G21, G29. JEL Classification: Islamic Financial Institutions; State Islamic Religious Councils; Strategic Collaboration; Sustainability; Value Based Intermediation. DOI: https://doi.org/10.35609/jfbr.2019.4.1(4)