Islamic Fintech Leadership and Sustainable Entrepreneurship Value: The Mediating Impact of Technology Adoption in Malaysia’s Fintech Organizations

Islamic Fintech Leadership and Sustainable Entrepreneurship Value: The Mediating Impact of Technology Adoption in Malaysia’s Fintech Organizations

Raja Suzana Raja Kasim, Wan Fariza Azima Che Azman

Faculty of Entrepreneurship and Business, University Malaysia Kelantan, City Campus Pengkalan Chepa, 16100Kota Bharu, Kelantan

DOI: https://dx.doi.org/10.47772/IJRISS.2025.914MG0072

Received: 10 April 2025; Accepted: 12 April 2025; Published: 20 May 2025

ABSTRACT

The objective of this paper is to examine the mediating role of technology adoption (TA) in the relationship between Islamic Fintech Leadership (IFL) and sustainable entrepreneurship values (SEV) among Fintech organizations in Malaysia. The proposed model was evaluated through the utilization of SmartPLS-SEM 4.1.0.3. Information from Fintech organizations in Malaysia was gathered via a self-administered questionnaire. 260 questionnaires out of 294 have been incorporated into statistical analyses. Both IFL and TA have favorable and statistically significant benefits on SEV. Furthermore, the impact of IFL characteristics (Sharia-Leadership Values, Sharia Fintech Entrepreneurship Skills, and Sharia-compliant Fintech Solutions) on SEV is mediated by TA. It is highly suggested that Fintech organizations in Malaysia adopt IFL and cultivate the inventive potential that results from it to increase their resilience to Fintech offerings and disruptions. The findings also support and extend both the resource-based view theory and the extended Technology Acceptance Model into a collaborative framework. IFL and TA are the resources and capabilities applied in Fintech organizations, with TA being a mediator that stimulates the reflection of that affiliation as examined. This paper has contributed to the extant literature and suggests future studies to extend the study by employing varied methodological analysis.

Keywords: Technology Adoption, Islamic Fintech Leadership, Sustainability, Entrepreneurship, Fintech, Malaysia.

INTRODUCTION

Throughout the years, the financial industry has been a pioneer in embracing innovative technologies, including the emergence of Fintechs. These companies utilise distributed ledgers (blockchain), smartphones, artificial intelligence (AI), and machine learning (ML), in addition to data analytics, the Internet of Things (IoT), and other similar systems. The implementation of these technologies has fundamentally transformed the operations and customer service of financial institutions.

Fintechs have consistently exhibited a foundational inclination towards innovation and a constructive contribution to sustainability. Fintechs’ contribution to developing policies that facilitate the transition to a low-carbon environment is duly acknowledged by regulators and policymakers. Unique applications in green and sustainable finance include facilitating access to capital markets, promoting risk management, ensuring financial inclusion, and encouraging sustainable consumer behaviour.

In addition, as one of the few domains within the field of entrepreneurship research, IFL has been the subject of considerable conceptual and empirical interest. However, limited evidence was found associating IFL and Fintech sustainability with TA to create values and benefits. Thus, this warrants an urgent need to examine the mediating role of TA that may influence the association between ILF and Fintech sustainability.

LITERATURE REVIEW AND HYPOTHESIS

Islamic Fintech Leadership

Islamic Fintech Leadership (IFL) dynamics are also contingent on the Fintech development level of a nation. The extent of fintech penetration, scalability, and variety of services are still constrained at earlier stages of development. At this juncture, the willingness of policymakers to foster shariah as innovation and offer fundamental legal and regulatory certainty is crucial. Risks to financial stability, fair competition, and overall investor and consumer protection remain relatively low, which makes it crucial to address data gaps that impede the application of effective IFL skills in risk monitoring, customer protection for the most vulnerable, and financial integrity objective attainment.

Islamic leadership is a set of good and ethical leadership principles based on the Qur’an and Al-Sunnah (biography of the Prophet Muhammad s.a.w) as well as his companions in conducting the organization accurately and effectively. This principle of leadership is also known as Sharia-compliant leadership. Among the values of the principles that need to be applied are justice and “Ihsan” (doing good) [1]. Islam is a comprehensive religion that unites all aspects of life and does not distinguish between aspects of temporal, secular and religious life [2]. The Islamic leadership universality in Fintech organizations meets the needs of all, irrespective of religion, race, and status by emphasizing the well-being of all human beings, including wealth and financial matters [3]. The implementation of Sharia is not solely for Muslims except in beliefs and rituals matters [4]. Thus, researchers have agreed that the Islamic beliefs and organizational management should be under the same Sharia compliance.

Although Islamic leadership is the earliest principle used in the world civilization, the indicators for Islamic leadership are scattered, diverse and there is no clear consensus among academics [2, 5, 6, 7]. In fact, there are very limited studies on Islamic Fintech leadership [3]. Fintech leaders play a critical role in the development of a technology culture and cultivate relationships with a wide range of stakeholders outside the company while keeping pressing ethical issues in mind [8, 9]. To sustain during Covid-19 crisis, an organization must ensure that values, skills, and solutions are in line with external sources such as the latest technology [10].

Islamic Fintech leaders must invest in developing employees’ skills to support and motivate them to deal and adapt with the use of technology [9]. In this study, Islamic Fintech leadership (referred hereinafter simply as IFL) is defined as “individual who are well-versed and competence in Sharia leadership values and able to exploit the use of technology to deliver Sharia-compliant financial solutions, products, services and investments to clients regardless of their religion, race and status” [4, 3].

Sustainable Entrepreneurship Values

The idea of profit-maximizing corporations, according to neoliberal thinking, will result in a trickling down of wealth and well-being into society, for example, through the income that employees of these companies can generate. It challenges the narrow definition of a business’s purpose, as it is relevant when sustainable enterprises thrive in the SDGs example. SDGs and SEV were related in the concept of either a human or a business where this entity can only thrive within the so-called “sweet spot” that exists between the ecological ceiling and the social foundation.

[11] identified five elements that are frequently included in definitions of SEV. Firstly, it is involving the process of identifying, developing, and exploiting opportunities. Second, the triadic relationship inherent in the definition of sustainable development to balance economic, social, and environmental consequences are supported. Third, definitions make mention of the transformative promise to create future goods and services. Fourth, definitions include the source of opportunities, which can be created by resourceful entrepreneurs or discovered by an actor’s alertness to a market failure that can be exploited. Fifth, some researchers explicitly state entrepreneurs, who takes advantage of opportunities. Scholars does emphasise the assumption that SEV is a process across definitions.

In general, SEV is an entrepreneurial action mechanism for the sustainability of nature and ecosystems while generating economic and non-economic benefits to investors, entrepreneurs, and societies [12]. The “role of entrepreneurial action linked to the concept of opportunity recognition is fundamental in the pursuit of sustainability and development” [13, 14]. SEV is the process of that involve the discovery, creation, or exploitation of future entrepreneurial opportunities by entrepreneurs [11, 15] that contribute to sustainability by generating social and environmental benefits for others in society [15, 16, 17, 18].

Technology Adoption (TA)

In the field of technology adoption (TA) research, technology acceptance model (TAM) developed by Davis in 1989 [19] has received special attention [20]. The word ‘adoption’ in this study is used interchangeably with acceptance and usage. TA is defined as a decision to voluntarily accept or adopt new technology; therefore, willingness is a critical factor in the successful of technology adoption [21].

TA also can be defined as the acceptance, intention to use, integration, and attitude toward the use of new technologies in society [20, 22]. This area has prompted various researchers to propose the TAM to predict the adoption of certain new technologies by measuring usefulness and ease of use [20]. However, the original TAM has limitation, that may fail to capture the main beliefs that influence the attitudes towards current technology [20].

According to [23]. PU and PEOU are insufficient to predict the technoloy adoption. Two other extensive factors to consider are perceived trust and perceived risk.  Extended TAM of perceived trust and risk could estimate SEV by using a Fintech platform. This determinant has a strong influence on the technology adoption [22]. Indeed, previous international studies examines that perceived trust and risk are two critical factors in Fintech adoption [20]. On the other hand, an extended TAM could also impact the leadership decision to use Fintech [24, 25]. From this perspective, extended TAM can be considered appropriate to examine the moderating impact of TA in Malaysian Fintech organizations.

In this study, TA is referred to the voluntarily decision to adopt the financial technology in the organization [20, 21, 22]. Consequently, this paper aims to examine the mediating role of TA in the relationship between IFL and SEV among Fintech organizations in Malaysia.

Conceptual Framework

The conceptual framework is depicted in Fig. 1 in order to translate the aforementioned relationship into the hypotheses of this study.  IFL, TA, and SEV are the three constructs that comprise the conceptual framework which is also served as the theoretical framework of the study. The mediating variable in this study is the TA, whereas the predictor variable is denoted as the IFL. The outcome variable is the SEV.

Fig. 1. The Conceptual Framework

Arrow (a) indicates the relationship between the IFL and SEV which tested H1.  Arrow (b) indicates the relationship between the IFL and TA which tested H2.  In illustrating the extent to which both TA and SEV have good linkages between them, the relationship is indicated by the direction of the arrow (c) which tested H3. Arrow (d) indicates the TA act as mediator in the relationship between IFL and SEV (which tested H4). Thus, the following highlights the hypothesis of this study:

• H₁:         there is a significant relationship between IFL and SEV pursued.
• H₂:         there is a significant relationship between IFL and TA pursued.
• H₃:         there is a significant relationship between TA and SEV.
• H₄:         there is a positive relationship between IFL and SEV mediated by TA.

RESEARCH METHODOLOGY

This paper employs a descriptive correlational research design. A survey paper is utilised to gather feedback on the correlation between variables. The phenomenon is elucidated by an examination of descriptive data acquired through questionnaires. The purpose of the correlational study is to investigate the mediating relationship that exist between the dependent and independent variables [26]. The investigation of potential correlations between variables and enables the methodology and data to ascertain the various categories of relationships [27].

In order to investigate the relationship between Fintech sustainability, EO and TA, this article examines Fintech businesses in Malaysia as a population.  Thus, the unit of analysis is aimed at the organisational level. Payment, e-wallet, prop-tech, digital bank, blockchain, cryptocurrency, remittance, AI/data, marketplace, crowdfunding, insurtech, wealthtec, Know Your Customer (KYC), and reg-tech are types of Fintech offerings and organisations that participated in this study.

Among a population of 294 Malaysian Fintech organisations, 260 Fintech organisations had participated in this study. Some 126 questionnaires (48.5 percent) were returned out of a total of 260 that were distributed. Nonetheless, 121 (46.5 percent) were deemed usable and subsequently analysed.

FINDINGS

Partial Least Squares Structural Equation Modeling (PLS-SEM)

Reliability Analysis. The analysis of the Cronbach’s Alpha values for EO, TA, and Fintech sustainability exceeded 0.7. This paper concluded that every item utilised in the model’s development was reliable [28]. In the context of composite reliability, the loadings of the indicators were distinct, and it was determined that all values above 0.7 for every item in the final model (see Table 1). The reliability of the indicators may be deemed satisfactory when the values exceed 0.7 [28].

Subsequently, the AVE results presented in Table 1 for all constructs exceed 0.5, indicating a sufficient convergent validity [28]. The result yielded that a particular construct has explained more than half of the variance of its indicators [29, 30, 31]. Following the outer loadings and AVE report, it is further certified that the measures of the constructs have attained an adequate level of convergent validity and have met the convergent validity criteria involved in considering the measurement model of this paper.

Table 1. FSEVQ Measurement Model.

The Heterotrait-Monotrait Ratio (HTMT) is the most recent technique for evaluating the constructs’ discriminant validity and determining the correlation between dependable latent variables [30]. Determining potential indiscriminate validity among conceptions is challenging [32, 33]. Furthermore, the HTMT criterion maintained the constructs’ discriminant validity and promoted the condition that the confidence interval for any of the constructs did not contain one (1) or unity [28, 34]. By applying a significance level of 0.90, Table 2 confirms that there is insufficient evidence to suggest that discriminant validity is lacking, and all constructs in this paper meet the measurement criteria consistent with existing literature.

Table 2. FSEVQ Heterotrait-Monotrait Ratio (HTMT).

Path Coefficients. Path coefficients are predicted as the path relationship in the structural model between the constructs in the model. Each path relationship also was examined through regression coefficient (β). The result shows that Islamic Fintech Leadership (IFL à SEV, t-value = 6.105, p-value = 0.000) established a significant relationship. Islamic Fintech Leadership (EO à TA, t-value = 26.296, p-value = 0.000) also established a significant relationship (see Table 3). Nevertheless, the technology adoption (TAà SEV, t-value = 3.502, p-value = 0.000), generate a significant relationship [29, 31]. Figure 2 shows the structural model, whilst Figure 3 shows the bootstrapping model of this paper.

Table 3. Mean, STDEV, T-Values, and P-Values.

Fig. 2. The Structural Model

Fig. 3. The Bootstrapping Model.

Mediation Analysis

The approach includes the significance of the mediating impact (p-value), the t-value, and the mediating impact size [35, 36, 37]. From the bootstrapping procedure, TA does have the direct relationship with SEV (TAàSEV, t-value = 3.502, p-value = 0.000) in a negative manner. The result further extends that TA does have a significant mediation path between the relationship of IFL and SEV (EOàTAàSEV, t-value = 3.213, p-value = 0.001). Based on the bootstrap β value of the path model, it is evident that there is a negative and significant relationship between TA on SEV and the mediation path (see table 4).

Table 4. Mean, STDEV, T-Values, and P-Values.

TA does mediate the relationship between EO and SEV. This paper has expanded the current flow of knowledge by utilising SmartPLS-SEM 4.1.0.3 path modelling as an analysis tool to examine the relationship between EO and SEV with the mediation role of TA among Fintech organisations in Malaysia. IFL and SEV with mediation role of TA among Fintech organisations in Malaysia. From the model of this paper, Fintech organizations should scrutinise the aisle of TA to be able to developed an imperative SEV business model. They also need to strive to exchange the ability in an effective manner to collaborate based on technology relationship.

CONCLUSION

This paper incorporated the variables of IFL, TA and SEV into a conceptual model that has been tested empirically. The framework established the IFL impact on SEV relationship, mediated by TA. The results offer insight into knowledge regarding SEV and their predictors in role in action. This paper emphasized the importance of SEV for Fintech organizations sustainability and its value creation agenda in financial industry. This value has contributed to the new construct of SEV in Malaysian business perspectives. This paper expands the existing theoretical understanding on the relationship between IFL and SEV by contributing to the multi-dimensional construct perspective. Consequently, a thorough knowledge of the intricate phenomena involving Fintech companies’ disparate operational styles has been made possible. Together with adding to the corpus of knowledge about Fintech emerging economies, the mediating role of TA in the relationship between IFL and SEV has also contributed to the current rising practical demands in industry and academia.

ACKNOWLEDGEMENT

The Fundamental Research Grant Scheme from the Ministry of Higher Education Malaysia supported this research. The grant code is FRGS/1/2023/SS04/UMK/02/1.

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