Effect of strength of the external environment and Islamic business ethics on the performance of Islamic finance companies with intellectual capital mediation

Abstract

The purpose of this study is to analyze sharia microfinance strategies to encourage the economy at the community level such as the Integrated Business Centers (BMT) based on Sharia principles. Primary data were obtained from questionnaires on 283 BMT managers in Java. Using PLS analysis, strengthening corporate performance is measured by Islamic business ethics with intellectual capital as mediation. This model construct is unique and provides value in this study. The results showed that the strength of the external environment did not directly affect the performance of the BMT; Islamic business ethics and intellectual capital have positive and significant effects on BMT performance; and Intellectual capital is proven to mediate the indirect effect of the strength of the external environment and Islamic business ethics on BMT performance. Islamic Business Ethics in its application greatly supports the vision and mission of BMT. With the good implementation of Islamic Business Ethics, the level of customer confidence from BMT increases and will automatically increase BMT performance. Strength of the External Environment able to influence BMT performance after mediation from the Intellectual Capital. Intellectual Capital owned by BMT employees is an inseparable part and greatly supports BMT performance. This is evident in this study in which qualified intellectual capital from the employees had a good impact on improving BMT performance.