Commitment and trust in achieving financial goals of strategic alliance

Abstract

Purpose – This paper aims to illustrate theoretically and empirically the decision and result of strategic alliance between baitul maal wa tamwil (BMT) and Islamic banks as a relationship based on trust, mutual-trustworthiness and commitment. This paper also identifies the basic criteria for the resilience of a strategic alliance, the challenges and the barriers in a strategic relationship along with managerial and operational implications. Design/methodology/approach – In this study, we have chosen to use the confirmatory approach through a structured questionnaire by means of field survey to 131 BMT spread throughout Central Java and Yogyakarta. From the total sample, 89 BMT fulfilled the sampling criteria, that is: has operated for a minimum of two years and does not experience any financial difficulties during those two years; has done a financing contract with an Islamic bank; channels some of its funds to micro, small and medium enterprises; and is in the form of a cooperative, and not a micro financial institute. Data treatment uses the method of listwise deletion. Data analysis uses equation model with the software LISREL version 8.80. To validate the result of data analysis, we have also run a focus group discussion with Directorate of Syariah Banking, Bank of Indonesia, and in-depth interviews with BMT parent cluster (Inkopsyah). Findings – This research shows that commitment contributes positively in achieving the financial goals of an alliance. Coordination and initial agreement has a positive and significant influence in forming commitment from BMT and trust from Islamic banks. Other than coordination and initial agreement, the trust given by Islamic banks also came from the social capital owned by BMT. Originality/value – The trust and commitment will assist the building of strategic alliance between Islamic banks and BMT. Apart from financial purposes, the alliance between the two will also encourage natural knowledge-sharing.

Trust, commitment, customer intimacy and customer loyalty in Islamic banking relationships

“…Therefore, providing secure banking products that are fully compliant with Islamic principles and excellent service quality are important in Islamic banking. Although the definition of trust in bank-to-customer relationships has been established ( Järvinen, 2014;Nienaber et al, 2014), There are a consensus in Islamic banks in defining trust as honesty, confidence, integrity and trustworthiness (Amin et al, 2013;Jamshidi et al, 2015;Martin and Murphy, 2017;Sumaedi et al, 2015;Tsarenko and Tojib, 2009;Tyler et al, 2007;Ullah et al, 2016;Wahyudi, 2014). This study adopts the definition of trust given by Amin et al (2013), who studied trust in the relationships between customers and Islamic banks.…”

Social capital and economic performance of the Muslim world

“…He argues that zakat, sadaqah and qard hasan can be used to support social business in addition to some Islamic banking instruments. Wahyudi (2014) argues that coordination and initial agreement has a positive and significant influence in forming commitment from baitul maal wa tamwil (BMT) and trust from Islamic banks. Other than coordination and initial agreement, the trust given by Islamic banks also came from the social capital owned by BMT.…”

Opportunism and conflict as precursors of non-economic and economic satisfaction outcomes in seller–customer business relationships

“…Relationship marketing is especially relevant in B2B markets, where a long-term relationship orientation can benefit the economic (sales volume) and financial (profitability) objectives of the parties involved in the relationship (Chao, Chen, and Yeh 2015). Several previous studies in the relationship marketing domain have focused on the positive precursors of non-economic satisfaction, such as trust and commitment, in various contexts and settings from a buyer's perspective only (Bansal, Irving, and Taylor 2004;Boateng and Narteh 2016;Hashim and Tan 2015;Morgan and Hunt 1994;Wahyudi 2014). However, a limited number of academic studies have investigated the direct and indirect relationships between opportunism and conflict (as precursors of non-economic satisfaction), on the one hand, and the outcomes of non-economic and economic satisfaction on the other, from a seller's perspective.…”