Measuring Corporate Halal Reputation: the corporate halal reputation index

Due to a large, young and fast growing Muslim demographics in combination with a substantial and fast expanding global Islamic economy, Muslim markets in the Middle East and Asia are one of the leading consumer markets today. Doing business in Muslim markets means next to food and product safety also meeting halal requirements. A series of high profile halal crises in recent years with top brands have shaken public confidence in the ability of brand owners to assure the halal integrity of halal certified products. Through social media, a single halal issue can easily snowball into a major crisis for brands on a global scale. Companies need to understand that their brand and business can be at serious risk with a halal issue and crisis.

A corporate halal reputation is a collective representation of the firm’s past actions and halal performance, and the firm’s future ability to meet halal requirements.

Corporate Halal reputation risk is the possibility or danger of losing one’s corporate halal reputation or social capital of a brand, in particular its trust, Islamic values and network. The loss of corporate halal reputation affects the competitiveness, market share, financial performance, trust and loyalty of stakeholders, loyalty and availability of employees, media relations, and even the licence to operate.

A ‘Corporate Halal Reputation Index’ is proposed, which acts as predictor for corporate halal reputation and sales in Muslim markets. Halal authenticity, trustworthiness of halal certification body, messages by company & supply chain partners, messages by external stakeholders; and the moderating variables category of Islamic brand and sensitivity of product; are expected to determine the corporate halal reputation. Alignment between the corporate halal reputation drivers and halal market requirements will be critical for brands to earn and protect their ‘Licence to Operate‘ in Muslim markets.

This study shows that corporate halal reputation management is different from conventional corporate reputation management. The ‘Corporate Halal Reputation Index’ is envisioned to be the new key performance indicator for both top management and halal committee (halal management team) operating in Muslim markets.

For the full academic paper, please visit the Journal of Islamic Marketing.