FACTORS AFFECTING INTEGRITY OF THE HALAL SUPPLY CHAIN

USING BLOCKCHAIN TECHNOLOGY

IN MALAYSIA

KADEER ZULIHUMA
1001333819

FAULTY OF BUSINESS AND INFORMATION SCIENCE

MASTER OF BUSINESS ADMINISTRATION
UCSI UNIVERSITY

APRIL 2020

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 ACKNOWLEDGEMENT

It is great pleasure for me to undertake this project, I am especially indebted to my

supervisor. Assistant Professor Dr. Abdul Samad Bin Shibghatullah, who has been very
supportive and to guide me in planning and executing this project.

I am grateful to all of those with whom I have had the pleasure to work with during this
project. I am thankful and fortunate enough to get constant encouragement, support and
guidance from all academic staff in the Faculty of Business Information Sciences in every
aspect this project work.

This journey would not have been possible without the support of my family. To my
family, thank you for encouraging me in all of my pursuits and inspiring me to follow my
dreams. I am especially grateful to my parents, who supported me emotionally and financially.
I always knew that you believed in me and wanted the best for me. Thank you for teaching me
that my job in life was to learn, to be happy, and to know and understand myself, only then
could I know and understand others.

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 DECLARATION OF ORIGINALITY AND EXCLUSIVENESS

I hereby declare that the dissertation is based on my original work except for quotations
and citations which have been duly acknowledged. I also declare that it has not been previously
or concurrently submitted for any other degree at UCSI or other institutions.

_____________________________
Kadeer Zulihuma(1001333819)
Date: 14/04/2020

Supervised by
_____________________________
Date:

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 ABSTRACT

Blockchain technology (BT) is a distributed and decentralized database that store transaction
information in a network. Due to providing better visibility and transparency, this technology
has gained a considerable attention in the recent years. This research is carried out with the
purpose of exploring the potential of blockchain technology to increase supply chain integrity
in halal food industry. Therefore, a literature on BT and its adoption in the halal supply chain
is given and a model is developed to identify the influence of BT on halal supply chain. Three
features of smart contract including traceability, decentralized, and anonymity are added to the
model as moderators to explore their influence on integrity of halal supply chain. According to
the survey of 251 halal supply chain practitioners in Kuala Lumpur, the proposed model was
tested. The results demonstrated that BT has a positive and significant direct effect on integrity
of halal supply chain, and traceability has a significantly positive influence on integrity of halal
supply chain. However, decentralization and anonymity have insignificant effect on integrity
of supply chain. Results of this research will provide companies with insight to the influence
of blockchain technology in integrity of halal supply chain, which assists them to implement
this technology successfully.

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 TABLE OF CONTENTS
ACKNOWLEDGEMENT .......................................................................................................ii
DECLARATION OF ORIGINALITY AND EXCLUSIVENESS .................................... iii
ABSTRACT ............................................................................................................................. iv
TABLE OF CONTENTS ........................................................................................................ v
CHAPTER 1 INTRODUCTION ............................................................................................ 1
1.1 Introduction ................................................................................................................. 1

1.2 Background of the study ............................................................................................. 1

1.3 Research Problem ........................................................................................................ 3

1.4 Research Question ....................................................................................................... 5

1.5 Research Objective ...................................................................................................... 5

1.6 Significance of the Study ............................................................................................ 6

1.7 Summary ..................................................................................................................... 6

CHAPTER 2 LITERATURE REVIEW ................................................................................ 7

2.1 Introduction ................................................................................................................. 7

2.2 Halal supply chain ....................................................................................................... 7

2.2.1 Definition of Halal ............................................................................................... 7

2.2.2 Definition and Concept of supply chain .............................................................. 8

2.2.3 Definition and Concept of Halal supply chain ................................................... 10

2.3 Definition of Block chain technology ....................................................................... 12

2.3.1 The Concept of Block chain .............................................................................. 13

2.3.2 Smart Contract ................................................................................................... 14

2.4 Blockchain and Supply chain relationships .............................................................. 15

2.5 Halal supply chain transformation with block chain technology .............................. 17

2.6 Hypothesis Development .......................................................................................... 21

2.6.1 Using Blockchain in Halal Supply chain ........................................................... 21

2.6.2 Moderating effect of Smart Contract Features................................................... 23

2.7 Conceptual/ Research framework of the study ......................................................... 25

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 2.8 Summary ................................................................................................................... 26

CHAPTER 3 RESEARCH METHODOLOGY.................................................................. 27

3.1 Introduction ............................................................................................................... 27

3.2 Research Design ........................................................................................................ 27

3.3 Data Collection Method ............................................................................................ 28

3.4 Sampling and Location.............................................................................................. 28

3.4.1 Population .......................................................................................................... 28

3.4.2 Rationale for Selecting Respondents ................................................................. 29

3.4.3 Sampling ............................................................................................................ 29

3.5 Questionnaire Design ................................................................................................ 30

3.6 Construct Measurement............................................................................................. 31

3.6.1 Origin of Construct ............................................................................................ 31

3.6.2 Scale of measurement ........................................................................................ 32

3.7 Pilot Test ................................................................................................................... 32

3.8 Data Screening .......................................................................................................... 33

3.8.1 Missing Data ...................................................................................................... 33

3.8.2 Multivariate Outliers .......................................................................................... 34

3.8.3 Normality Test ................................................................................................... 34

3.8.4 Linearity ............................................................................................................. 34

3.8.5 Multi-collinearity ............................................................................................... 35

3.9 Data Analysis ............................................................................................................ 35

3.10 Descriptive Analysis ................................................................................................. 35

3.11 Reliability Test .......................................................................................................... 36

3.12 Pearson Correlation Coefficient ................................................................................ 36

3.13 Regression Analysis .................................................................................................. 37

3.14 Summary ................................................................................................................... 37

CHAPTER 4 DATA ANALYSIS AND FINDINGS ........................................................... 38

4.1 Introduction ............................................................................................................... 38
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 4.2 Data Screening .......................................................................................................... 38

4.3 Missing Data ............................................................................................................. 38

4.4 Outliers ...................................................................................................................... 39

4.5 Normality test ............................................................................................................ 40

4.6 Linearity test .............................................................................................................. 41

4.7 Multi-collinearity Test............................................................................................... 42

4.8 Descriptive Frequency............................................................................................... 42

4.9 Descriptive Statistic................................................................................................... 43

4.10 Reliability Test (Cronbach Alpha) ............................................................................ 45

4.11 Pearson Correlation Test ........................................................................................... 46

4.12 Regression test........................................................................................................... 48

4.12.1 Simple Linear Regression .................................................................................. 48

4.12.2 Moderating Effect of Smart Contract ................................................................ 50

4.13 Frequency Statistics and Histogram .......................................................................... 52

4.14 Hypothesis ................................................................................................................. 57

4.15 Summary ................................................................................................................... 58

CHAPTER 5 CONCLUSION ............................................................................................... 59

5.1 Summary and Conclusion ......................................................................................... 59

5.2 Implications ............................................................................................................... 61

5.3 Limitation .................................................................................................................. 62

5.4 Future Work .............................................................................................................. 62

REFERENCES....................................................................................................................... 64
APPENDICES ........................................................................................................................ 71
Appendix 1: Questionnaire................................................................................................... 72

Appendix 2: Demographical Information ............................................................................ 78

Appendix 3: Tests and SPSS results .................................................................................... 82

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 LIST OF TABLES

Table 3.1: Determining sample size for a finite population..................................................... 30

Table 3.2: Origin of Construct ................................................................................................. 31
Table 3.3: Pilot Test on Variables............................................................................................ 33
Table 4.1: Missing Values ....................................................................................................... 39
Table 4.2: Tests of Normality .................................................................................................. 40
Table 4.3: Tests of Normality .................................................................................................. 40
Table 4.4: Linearity Test .......................................................................................................... 41
Table 4.5: Multi-collinearity Test ............................................................................................ 42
Table 4.6: Descriptive Frequency on Demographic Information ............................................ 43
Table 4.7: Descriptive statistics for all variables ..................................................................... 44
Table 4.8: Cronbach Alpha Coefficient Reliability Level ....................................................... 45
Table 4.9: Cronbach Alpha value ............................................................................................ 45
Table 4.10: Pearson correlation and its significant at the 0.01 level (2-tailed) ....................... 47
Table 4.11: Pearson correlation coefficient range ................................................................... 47
Table 4.12: Model Summary ................................................................................................... 48
Table 4.13: ANOVA test ......................................................................................................... 49
Table 4.14: Regression coefficient .......................................................................................... 49
Table 4.15: Moderating effect of Traceability ......................................................................... 51
Table 4.16: Moderating effect of Decentralization .................................................................. 51
Table 4.17: Moderating effect of Traceability ......................................................................... 52
Table 4.18: Summary of hypothesis and the corresponding results and remarks. ................... 58

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 LIST OF FIGURES

Figure 2.1: Segments of Halal Market (Elasrag, 2016) ............................................................. 8

Figure 2.2: Conventional Supply Chain Flow (Rasi, et al, 2017) ............................................ 10
Figure 2.3: Model of Halal Supply Chain Management (Rasi, et al, 2017) ............................ 12
Figure 2.4: Transaction of Block chain (Hewett & Deshmukh, 2019) .................................... 14
Figure 2.5: Smart Contract in supply chain using Blockchain technology (Rooyen, 2017) ... 17
Figure 2.6: Smart Contract in Halal supply chain using Blockchain technology .................... 19
Figure 2.7: Halal Supply Chain Activities (Rasi et al, 2017) .................................................. 20
Figure 2.8: Proposed Conceptual framework .......................................................................... 25
Figure 4.1: Outliers .................................................................................................................. 39
Figure 4.2: The effect of moderating variable ......................................................................... 50
Figure 4.3: Frequency table for Halal Procurement (HP) ........................................................ 53
Figure 4.4: Frequency table for Halal Distribution (HD) ........................................................ 53
Figure 4.5: Frequency table for Halal Manufacturing (HM) ................................................... 54
Figure 4.6: Frequency table for Halal Logistic (HL) ............................................................... 54
Figure 4.7: Frequency table for Traceability (TS) ................................................................... 55
Figure 4.8: Frequency table for Anonymity (ANN) ................................................................ 55
Figure 4.9: Frequency table for Decentralization (DEC)......................................................... 56
Figure 4.10: Frequency table for Integrity of Halal Supply Chain (INT) ................................ 56

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 LIST OF ABBREVIATIONS AND SYMBOLS

A
ANN Anonymity

B
BT Blockchain Technology

D
DEC Decentralization

I
INT Integrity of Halal Supply Chain

H
HD Halal Distribution
HL Halal Logistic
HM Halal Manufacturing
HP Halal Procurement
HSC Halal Supply Chain

S
SCM Supply Chain Management

T
TS Traceability

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 CHAPTER 1

INTRODUCTION

1.1 Introduction

This chapter generally includes the introduction of the research, which is necessary in
determining the aim and significance of research with the elements of background of the
research, problem statement, research question, research objective, and importance of the
research. It provides a general information about blockchain technology and its importance in
supply chain management, especially halal food supply chain that requires exceptional
monitoring.

1.2 Background of the study

Halal supply chain consists of a network of supply in which the products are given
special attention to assure halal integrity. Considering the increasing demand for halal products
throughout the world, both from Muslim and non-Muslim individuals, it is crucial to assure the
quality of the product through an integrated supply chain (Rasi, et al, 2017). Integrity means
honesty and demonstrates constant observation and strong ethical principles and values. It is
essential to maintain the integrity of the halal supply chain, all aspects of halal food integrity
must be cautious about the protection, and each actor involved in the supply chain must perform
all necessary steps to escape any cross-contamination that cause product to become non-halal
(Zulfakar, Anuar, & Talib, 2014). Moreover, food safety is part of halal integrity, and process
of traceability that grant track relevant information from product source to point of sale. In this
way, the entity can track and trace the food, such as ingredients of the food and expiry date,
manufacturing date, packaging at all stages of the whole process of production, and record the

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process along the way, including when, where, and how (Kadir et al., 2016). To achieve an
improved traceability, it is required to transfer the conventional supply chain and make it
digitalized, which can be done by using blockchain technology in the halal supply chain
management (SCM) system. It is recommended to use blockchain in halal supply chain due to
following reasons: Firstly, using blockchain technology helps to solve traceability issues,
because in blockchain technology all information is digitalized and every entity can have
instant access to records about the food and products. Using smart contract between buyers and
suppliers improve trust since data is immutable, as well as speed since third parties are
eliminated. Secondly, blockchain technology avoid delays and therefore lengthen shelf live
(Ibm, 2019). To elaborate blockchain technology on supply chain that related to halal, food
integrity, supply chain integration, Islamic practices and firms’ performance are reviewed.
Literature of the relevant theories and discussion of supply chain management and halal studies
form the foundation of conceptual framework.

In Islam, Muslims are banned from eating non-halal foods in daily living. The foods
that are halal, namely as halal food, must be consumed by Muslims. To supply chain food
industry, it has real example, food global safety alert. In 2018 December, in the US, E. coli
infections linked to romaine lettuce, so United states was alert to people against to eat romaine
lettuce because it has symptoms of Shiga toxin-producing, so everyone is infected with E. coli
(STEC), but diarrhea and vomiting often happen, which can cause fever on some people. Most
people got well in 5 to 7 days. Some infections are mild, while others are severe and even life-
threating (Cdc.gov.2019). This issue causes millions of people who have eaten the popular
lettuce, but investigators do not know precisely where, when or how the contamination
happened. This is not only once a time that happened. So many real examples still exist.
Therefore, in this example talking about the problems of supply chain flow, which is in the
traditional way of processes, has decreased the efficiency of the market. If the concept of
blockchain is applied to this processes, the technology can be traced through the food supply
chain, if this technology applied to romaine lettuce from the beginning, such as source details,
lot numbers, manufacturer, and processing data, expiration dates, storage temperatures, and
shipping and shipping details from source to destination are digitally linked to actual food
(Rooyen, 2017). The records during each transaction are verified by companies’ in-network
(farms, transport companies, packaging companies, warehouses, and stores) and a consensus
is formed (Rooyen, 2017). After verifying each block (record of each transaction), it is added
to a chain of transactions, which is immutable throughout the process. Ultimately, all-veggie

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items received in the store is validate and truthful, and this digital record can reveal food safety
issues between farm and retailers (Rooyen, 2017). As well as, in individual stores that digital
capture can help to market stores to well manage shelf-life products (Rooyen, 2017; Zailani et
al, 2018). As refer to the Supply chain and trade finance, the Blockchain request to make all
stakeholders in the supply chain to send, receive and track an electronic bill of lading, with
upload and send related trade documents such as orders, invoices, and transporting orders
(Zailani et al, 2018). The claim is linked to a delivered systematization network that can safety
record and prove the ownership and authority of documents. Therefore, in the process of
sending and sharing of verification information, the verified gross mass (VGM) information of
freight containers is shared using blockchain technology. Knowledge of the VGM of the
container is important to ensure the proper storage of the vessel to resist maritime and port
accidents. VGM data is stored on a public blockchain, which is granted perpetual record
insights from port officials, shipping firms, consigners and hosts of cargo. Also, this record
will replace tedious logs, spreadsheets, third party’s data and private databases. (Rooyen,
2017). In supply chain management (SCM), international clients may need to authenticate the
original documents through the notary function of the blockchain and optimize the best
creation, justification, and protection. When changing of ownership during a shipment called
merchant, retrospective to the source of all elements in the checklist material. Monitor and
automatic control of the use of third-party logistic services, transportation, and freight
forwarders through irrevocable and unchanged smart contract execution. When the returned
products are repaired or renovated, process management will be performed to ensure that
repairs follow strict protocols, and refurbished, the products again refer the formats and
standards that can be efficiently resolved by a Blockchain’s notarization. Those products that
are moved during the return logistics process may also be subject to warranty terms that require
changing ownership. Also, failed items can be traced back to the source of defects identified to
perform a root-cause analysis (Panigrahi et al, 2018).

1.3 Research Problem

Nowadays, due to the global safety crisis, the concerns of consumers about food safety,
quality, origin, and authenticity is increased (Zailani et al, 2018), and lack of uniformity has
caused issues in halal supply chain (Talib, Hamid, & Chin, 2016). The traditional supply chain
is complex, and all of the information is outbreak and cannot be observed clearly. It is because

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everything is recorded on the paper, so there is a need to provide end to end visibility to deliver
information quickly (Zailani et al, 2018). Another concern is ingredients and cleanliness of the
food, and possibility of cross-contamination of halal food with any non-halal ingredients in the
process of storage and distribution, which does not conform to the Islamic principle (Zailani et
al, 2018). Currently, trust in the halal supply chain is solely according to presence of the halal
logo or halal certification on the packages (Ali et al, 2017) as it allows the consumers to
acknowledge that products are made based on the halal guideline and principles of Sharia law.
Despite the existence of halal certificate, consumers are questioning the legality of the
displayed certificates and halal logo (Azmi, et al, 2018). It is due to the fact that there have
been several reports of displaying fake certificates or halal logo in Malaysia, which negatively
impacted the reputation of Halal industry, and it cast doubt and tarnished trust among halal
consumers. Hence, it is vital to improve trust between all actors of halal food network in order
to enhance the integrity status of the halal food supply chain (Zulfakar et al, 2014; Zailani,et
al, 2018). Putting an effort to build a comprehensive and strict halal quality assurance system
or a using a dedicated transportation to deliver the halal food products, can go on waste if other
actors that directly deal with them in the supply chain do not trust the firm in providing halal
products (Zulfakar et al, 2014).

Moreover, the inability to trace the supply chain is common for industries such as agri-
food and creates challenges in the management of the Halal supply chain. Developing a
traceability system, which is trusted and reliable, in the Halal food supply chain will potentially
enhance the transparency and therefore improves the integrity of halal supply chain (Zulfakar
et al, 2014). Some studies offered existing technology such as Radio Frequency Identification
Device (RFID) (Accorsi et al, 2016; Dabbene et al, 2016; Farooq et al, 2016) to develop and
improve halal traceability, however very few studies addressed blockchain–SCM integration,
and there is a need to further study adopting blockchain technology in supply chain (Azmi et
al, 2018; Tsang et al, 2019; Queiroz et al, 2019).

With the purpose of addressing this research gap, this research attempts to elaborate on
the integrity of the halal supply chain using blockchain technology, to understand the integrity
of the halal supply chain and related factors, as well as the importance of the blockchain on
integrity of halal supply chain.

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 1.4 Research Question

Given that the adoption of blockchain in Halal supply chain is relatively young, and
relevant research on adoption of blockchain technology in halal supply chain in Malaysia is
not sufficient (Azmi et al, 2018), the purpose of this research is to evaluate the moderating
effect of traceability, decentralization and anonymity as features of Smart Contract on integrity
of halal supply chain. Therefore, this study answers the following question:

1. To what extend using blockchain technology in halal supply chain (halal procurement, halal
manufacturing, halal distribution, and halal logistic) influence integrity in halal supply chain?

2. What is the moderating effect of traceability, decentralization and anonymity on integrity of

in halal supply chain?

1.5 Research Objective

The objectives of the studies are as follows:

1. To identify relationship between blockchain technology in halal supply chain (halal

procurement, halal manufacturing, halal distribution, and halal logistic) with integrity
in halal supply chain, and also the moderating effect of traceability, decentralization
and anonymity on integrity of in Halal supply chain.

2. To develop relationship between blockchain technology in halal supply chain (halal

procurement, halal manufacturing, halal distribution, and halal logistic) with integrity
in halal supply chain, and also the moderating effect of traceability, decentralization
and anonymity on integrity of in Halal supply chain.

3. To verify relationship between blockchain technology in halal supply chain (halal

procurement, halal manufacturing, halal distribution, and halal logistic) with integrity
in halal supply chain, and also the moderating effect of traceability, decentralization
and anonymity on integrity of in Halal supply chain by data collection.

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 1.6 Significance of the Study

Considering the increasing attention toward blockchain in supply chain, by 2025

blockchain is expected to become the fundamental component of halal business (Preece, 2018).
Therefore, the result of this research is beneficial for researchers to gain greater understanding
about the influence of blockchain on integrity of halal supply chain in Malaysia. The existing
researches about blockchain and supply chain are very limited and such studies mainly had
carried out in other countries (Queiroz, Telles, & Bonilla, 2019). Therefore, this study
addresses the imbalance between the increasing attention toward blockchain in halal supply
chain and insufficient researches that has been carried out.

Furthermore, this research reveals an in-depth insight into the factors influencing
integrity of halal supply chain, using blockchain and smart contract feature including
traceability, decentralized and anonymity. Therefore, the result has theorical and practical
significance for companies to successfully implement blockchain in halal supply chain.

1.7 Summary

This chapter provided research introduction, research background, research problems,

research questions and research objectives that will be addressed throughout the research. The
importance and contributions of this research is highlighted which will be further explained in
the later chapters.

In the following chapter the literatures and existing studies are assessed to give an
insight into the factors influencing integrity of halal supply chain using blockchain technology.

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 CHAPTER 2

LITERATURE REVIEW

2.1 Introduction

This chapter includes an in-depth overview and analysis of the key concepts,
definitions, and theories from secondary resources such as journal articles, books, and any
sources relevant to this research. This chapter includes two main parts. Firstly, the Blockchain
and halal supply chain stages and processes. Secondly, the association between the Blockchain
and Halal supply chain, and the effectiveness of this using Blockchain technology on the halal
chain. Lastly, a conceptual framework is proposed followed by summary of the content of the
chapter.

2.2 Halal supply chain

2.2.1 Definition of Halal

Nowadays, the Islamic religion is the largest that growing fastest comparing with the four most
great religions in the world population with approximately 1.8 billion Muslims in 2011, and it
is expected to reach to 2.2 billion in 2030 (Majlis, 2011). Therefore, the consumer's demand
for halal products is gradually increasing every year.

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 Figure 2.1: Segments of Halal Market (Elasrag, 2016)

Based on Elasrag (2016), 61% of the of halal market belongs to halal food (Figure 2.1).
Halal foods often perceived as clean, safe, and good quality. Generally, all Muslims follow
their beliefs and the religion of Islam. In 2010, Yousef (2010) highlighted that the halal food
trade value of the global halal market is estimated at RM 1628.60 billion (US$547 billion) in
the global halal market. (Omar & Jaafar, 2011). As a result, all countries are focusing on
produce more halal food producers.

The Malaysia government has fully supported the creation of the Halal Development
Corporation (HDC). Halal certification is used in halal food to protect Muslims consumers as
well as non-Muslim consumers whom consider their health and safety, which is the main part
of this certification and is the main selling point of the market (Aziz & Vui, 2013). But, using
the halal certificate to attract clients as a marketing tool is impractical. Halal originates from
the word “Halla” that indicates something to be lawful, legitimate, legal, allowable or
permissible by Islamic law (Al-Jallad,2008). Nowadays, many customers prefer to buy halal
products as such products are accepted by consumers throughout the world (Bonne, 2008).

2.2.2 Definition and Concept of supply chain

Lambert, Stock and Ellram (1998) described supply chain as “the alignment of firms
that bring products or services to market”. Chopra and Meindl (2007) stated that “a supply
chain consists of all parties involved, directly or indirectly, in fulfilling a customer request.

8
Within each organization, such as a manufacturer, the supply chain includes all functions
involved in receiving and filling a customer request. These functions include, but are not
limited to, new product development, marketing, operations, distribution, finance, and
customer service”. To elaborate supply chain in detail, it can be said that it is a movement of
units of goods from raw materials from seller to buyer using several modes of transportation
(Felea, & Albăstroiu, 2013). All the actors in supply chain management including suppliers,
manufacturers, distributers and consumers are integrated, from the very first stage of raw
material, to the final product which will be delivered to the customer (Peter, 2016).

A supply chain includes the constant flow of data, products, and funds between
distinguishable levels (Peter, 2016). The store provides information of product such as pricing
to the customer. Then, the retailer confirms the order. The distributor obtains the order
information from the retailer, and the retailer will transfer the replenishment units by lorry to
the retailer’s storage room. After completing this process, then the store manager will transfer
funds to the distributors. (Felea, & Albăstroiu, 2013). The distributor from supply chain flow
shares information such as pricing, and send delivery schedules to the retailer.

The supply chain may also involve one entity at every stage (Peter, 2016). In the supply
chain customer is very important as the main intention of any supply chain is to successfully
respond to demands and gain customer satisfaction. It is the main part of the feature of the
information, funds, and goods flow along with both directions of this chain (Felea, &
Albăstroiu, 2013). In reality, most supply chain flows are web (Peter, 2016). Sometimes it’s
called supply network or supply net web (Figure 2.2). It is not necessary to have every stage of
supply chain exactly as Figure 2.2. A suitable design of supply chain relies on the customer’s
demands and the roles of the actors in each stage.

9
 Figure 2.2: Conventional Supply Chain Flow (Rasi, et al, 2017)

2.2.3 Definition and Concept of Halal supply chain

Generally, a halal supply chain includes four important aspects (Figure 2.3), as
regarding the goals of the halal food supply chain, the firm must follow at least the basic
principles and observe the halal food producer in every operation that produces the product.
They are halal procurement, halal manufacturing, halal distribution, and halal logistics (Rasi et
al, 2017). Halal merchandise should involve Islamic laws requiring products to be safe, and
even business even is secure in Halal means, and halal businesses are concerned with food
services and commercials, tourisms and so on. In any halal incident, business dealings between
the two parties should be ensured like transportation or storage, must follow to Islamic law
principles (Syazwan, 2014). Business can be defined as an effective and efficient process and
storage method for planning, implementing and controlling products, services and data
connections from source to point of consumption to meet customer needs (Donald et al, 2019).

At the same duration, the modern supply chain is overseas and complex (Hewett &
Deshmukh, 2019). All of the information is outbreak and cannot get clear, because of the noise,
and also because everything is on paper, so need to provide end to end visibility depend on
each other to deliver information quickly. When releasing the potential to share products across

10
the world globalization has also created inefficient processes that can involve hundreds of
levels, multinationals, and numerous parties in each transaction. These recent trends are
evidence of consumers demanding to know more about products they are buying from who
made them to how they were sold (Hewett & Deshmukh, 2019). Extend a company’s basic
supply chain, often across the boundaries of several companies to coordinate related activities
such as purchasing, manufacturing, warehousing, transportation, customer service, demand and
supply planning of all companies. The most achievable results of supply chain management
are the more real-time sharing of sales information, which can help mitigate the impact of
supply chain inventory and could significantly reduce costs (Coyle et al, 2017). The
generalizability of much-published research on conventional supply chain management does
not emphasis on halal principles according to shariah law at the stage at every stage in the
supply chain. Halal companies in Malaysia must comply with three standards by the Malaysian
Ministry of standards. the standards are in respect of requirements for cargo transportation and
cargo chain services warehouses (MS 2400-1:2010 [P]), and related activities (MS 2400-
2:2010[P]), and management system (MS 2400-3:2010[P]), Earlier, in the year of 2009,
ministry of standards Malaysia has established in 2014 by the department of standards which
is MS 1900:2014. In short, unlike the conventional supply chains, the halal supply chain is tied
up with more standards and regulations that must be strictly followed by all.

From the perspective of integrity in halal supply chain management. Honesty and
integrity, showing a consistent firm belief, strong moral standard, and values. Halal integrity
means that products maintaining halal without any non-halal ingredients (Zailani et al, 2010).
According to maintain the halal integrity all along the supply chain, every stage of halal
processing must be aligned with shariah law. The integrity of halal food must be considered
that fully protected and all parties in the supply chain must take all required steps to avoid any
cross-contamination that will cause the product to become non-Halal (Mohd Hafiz
Zulfakar.2014). Besides that, food safety is part of halal integrity, which is increasing
consumers’ confidence, traceability, and quality issues. According to the Islamic school of
thought, if there is cross-contamination between halal and haram, the halal will become non-
halal (Mahidin, Mohd-Saifudin, & Othman, 2017). It is stated that any cross-contamination
should be avoided to ensure halal status throughout the whole supply chain processes and to
protect the integrity of the product. It means that the products must be halal from the point of
origin until it reaches the point of consumption. In the study by Lodhi (2009), the author
explained the halal food supply chain and critical control points, in which every stage along

11
the chain must be strictly regulated accordingly halal standards to keep away any non-halal
elements that may breach the integrity of the halal products and ruin the halal status. To
summarize the concept of the halal supply chain, it can be concluded that the halal supply chain
adopting some elements and practices related to their products and services halalness
(Muhamed, et al., 2016). The basic concept of the halal chain is to ensure that the integrity and
quality of the halal products are protected throughout the entire supply chain. Thus, the
organization needs to plan and pay attention at each stage to maintain the halal quality, as
shown in Figure 2.3, which is transform from above the model of conventional supply chain
management flow (Figure 2.2). Overall, the halal supply chain is needed in the entire chain
network to enhance the quality according to Shariah compliances and meet the Muslim's needs
and expectations.

Figure 2.3: Model of Halal Supply Chain Management (Rasi, et al, 2017)

2.3 Definition of Block chain technology

Blockchain technology has become the popular industry office buzz words in the recent
years. The Blockchain technology was developed in 2009 by Satoshi Nakamoto, a Japanese
national who may not have a real identity (Willie, 2019). This Blockchain is, fundamentally,

12
in a distributed database system, and stores data about transactions or order information, which
is protected by encryption and it is managed by a consensus mechanism (Swan, 2015).

Blockchain is a transaction history that represents a digital ledger, and it is a peer to

peer (P2P) separated and suburbanized ledger technology which will be helped to record
transactions, agreements, contracts, and events (Chirisdis & Devetsikiotis, 2016). It is
computing on computers (also called nodes) operated by different participants. That enables
participants to introduce records with attested and changeless encryption protection
(Krishnamurty, 2018).

Effectiveness of this separated system during an industrial context, if no entity can

manage the issue of disclosure and liability between entities, it can be resolved single and
establishments where the interests of the parties do not seem to be essentially aligned.
Information that is vital to all parties, and in real-time which can be updated, could huge
information, that is large of profit to organizations and provide chains, and currently receiving
main analysis attention from OSCM scholars (e.g. Kache and Securing 2017). Improving the
transparency, efficiency, and trust of data sharing depends on the information encryption and
encoding in the blockchain (Misra, 2018). In the significant, commercial blockchain is biggest
in the pilot or proof of idea stage across a good vary of use cases. Two of the most promising
use cases are payments and supply chain.

2.3.1 The Concept of Block chain

Blockchain is one of the distributed ledger technology, it is a series of immutable data

records with timestamps, managed by a cluster of computer clusters owned by a non- single
entity (Rosic, 2019). DLT is used to securely and transparently store and exchange assets and
information between two parties anywhere in the world, transparency way (Uzsoki, 2019).
(Figure 2.4). And also, without a consensus of the network, the data uploaded to the blockchain
will not be interchangeable. So, the blockchain is more secure, and the decentralized
blockchain’s characteristic does not rely on a central point of control.

The blockchain has three main characteristics, private, public and hyper ledger. The
private blockchain is using in the company inside between employer sharing files and hyper
ledger blockchain able to use basic services such as citizenship, education, justice, health care,

13
banking, and insurance. Collaborative ride-sharing applications to insure protection of driver
and occupant data. A public blockchain can access to all people. The purpose of composing
the blockchain is to set the way people consume from clothes to food. Once a solution is found,
it must be opened responsibly with all these hopes, people are concerned about hype,
information security, interoperability, and access (Hewett & Deshmukh, 2019).

Figure 2.4: Transaction of Block chain (Hewett & Deshmukh, 2019)

2.3.2 Smart Contract

A smart contract is a business agreement in the form of a computer agreement between

two business parties (Salmerón-Manzano, & Manzano-Agugliaro, 2019). This digitalized
program run and implement on blockchain technology, and information are stored in a public
database, which is unchangeable and traceable. The transactions that happen in a smart contract
is a term that was introduced by computer scientist and cryptographer pioneer Nick Szabo in
1994 (Stankovic, 2018). Szabo recognized the power of a decentralized digital environment.
Meaning that data will be transferred instantly and automatically, without any intermediates
(Salmerón-Manzano, & Manzano-Agugliaro, 2019). Therefore, Blockchain technology is
served as a platform for offering, accepting, and forming a legal and binding authentic contract,
which is known to improve transparency and trust. It is called “smart” due to the fact that all
involved parties are fully aware of contract terms and witness the same information and

14
transactions that the other entities are able to see. Therefore, it eliminates the need for third
parties, such as lawyers or brokers with reduces the cost (Alharby, Aldweesh, & van-Moorsel,
2018).

The parties involved, can protect their privacy, using public keys instead of identities.
Smart contracts can be used within the food related industry such as in inventory, support
services, and transportation. Thus, smart contract improves several supply chain managements
by eliminating delays, improving responsiveness, reducing transaction, increasing visibility
and trust in the network (Queiroz et al, 2019).

2.4 Blockchain and Supply chain relationships

A blockchain applied in a supply chain management (SCM) context might build the
foundation for transformations in other types of industries. Therefore, traditional relationship
models are reconfigured, mainly due to the disintermediation of the transactions. Global supply
chains involve many types of organizations and transactions and they are becoming built up
digital. At the main of these digital transactions are trust is the core interaction with
partnerships. As a result, organizations need a dynamic and trusted comprehensive system to
verify and manage digital business identities. One of the most considerations is whether to use
a public or private ledger and which permission model to use. Choosing either of the public or
private ledgers, will influence functionality, security, and compatibility with other
stakeholders’ systems, and perhaps most importantly, affects the company’s competitive
position. Importantly, supply chain decision-makers can sort out market hype and choose the
best solution for their specific needs. According to the diagram of blockchain and supply chain
flow (Figure 2.5). Following the concept of Blockchain during the processes, it has Traceability
within food supply chains, the first example of this process that using blockchain technology
to track this way is chicken, details from farm to warehouse, batch numbers, and processing
data, expiration dates, storage temperatures, and shipping detail are all digitally linked to the
actual food destination. Companies in the network (farms, transport companies, packaging
companies, warehouses, and stores) validate the information captured in each block (the record
for each transaction), and after validation it will added to a chain, which is immutable
throughout the process. Ultimately, all chicken products that are delivered to the store are
verified and authentic, and the record that is stored in the network, contains food safety issues

15
between farm and retailers (Rooyen, 2017). The digital capture can also help to market stores
to control shelf-life of products in each stores (Rooyen, 2017). As refer to the Supply chain and
trade finance, the Blockchain request to make all stakeholders in the supply chain to send,
receive and track an electronic bill of lading, with upload and send related trade documents
such as orders, invoices, and transporting orders (Rooyen, 2017). The claim is linked to a
delivered systematization network that can safety record and prove the ownership and authority
of documents. Therefore, in the process of sending and sharing of verification information, the
verified gross mass (VGM) information of freight containers is shared using blockchain
technology.

Knowledge of the VGM of the container is important to ensure the proper storage of
the vessel to resist maritime and port accidents. VGM data is stored on a public blockchain,
which is granted perpetual record insights from port officials, shipping firms, consigners and
hosts of cargo. Also, this record will replace tedious logs, spreadsheets, third party’s data and
private databases (Rooyen, 2017). In supply chain management, international clients may need
to authenticate the original documents through the notary function of the blockchain and
optimize the best creation, justification, and protection. When changing of ownership during a
shipment called merchant, trace back to the source of all components in the bills of material.
Monitor and automatic control of the use of third-party logistic services, transportation, and
freight forwarders through irrevocable and unchanged smart contract execution. When the
returned products are repaired or renovate are process management will be performed to ensure
that repairs follow strict protocols, and refurbished, the products again refer the formats and
standards that can be efficiently resolved by a Block chain’s notarization. Those products that
are moved during the return logistics process may also be subject to warranty terms that require
changing ownership. Also, failed items can be traced back to the source of defects identified to
perform a root-cause analysis (Rooyen, 2017).

16
 Figure 2.5: Smart Contract in supply chain using Blockchain technology (Rooyen, 2017)

2.5 Halal supply chain transformation with block chain technology

Blockchain could be separated ledger technology, created within the style of internet
parties keeping and substituting the transformation of information. The prevailing tasks of
monetary establishments were determined by the ledger of the records and managed by a
selected establishment, in spite of whether or not there was associate actual storage of the
possession on the assets (Oh and Shong, 2017). Within the bank deposit that accounts for
numerous of currency being circulated today, banks manage the balance for every client, to
approve and record deposits and withdrawals, and therefore the financial institution records
within the ledger the balance for every bank, and handle the transfers of funds between the
banks (Oh and Shong, 2017). the existing financial organization, during which the ledger is
managed by trusted intermediates of supplier, was developed within the method specified
trustworthy Service Provider (Figure 2.6) is established, which is combination and
development of transformation with (Model of halal supply chain management diagram refer
to Figure 2.3 and smart contract in supply chain using blockchain technology refer to Figure
2.5), so the organization of trust involved is secured (EU, 2016). Therefore, it has the difficulty
of management price to forestall the trust of the system being broken due to issues, like
managing.

17
 Blockchain does not need to intermediate the third party, which will remove the control
points and decreases the management costs. Therefore, the data is shared between all the
entities, so it is hard to control arbitrarily. Since several establishments participate in the
transactions, the international remission service, in which the purchasers have to a pay high
fees are considered to be the most helpful areas of blockchain technology, which make the
transactions possible without an intermediary transaction between the individuals (Davidson et
al., 2016). To increase trust, smart contracts are used in which modifications and forgery on
the records is almost not possible (Ekblaw et al., 2016). The Blockchain uses the ledger with
the group action detail and distributes it into the P2P network, rather than putting it into the
central server of an organization (Oh and Shong, 2017). Therefore, it is believed that it will
pioneer the business model of the monetary establishments (Feenan, 2017).

Blockchain technology is not only talking about general ledger transaction knowledge
into the P2P network but also classifies it as a P2P network, instead of placing it in the
centralized server of the financial institutions, therefore participants can be created on the
trading platform to record and manage the transaction data, solve the hacking issues in high-
value knowledge management and transactions at the same time (Oh and Shong, 2017).
Nowadays, financial institutions are building and operating their business model based on the
participation of the trusted third service provider. Thus, Blockchain technology will ready to
make the business model of the financial institutions as a result of it will using a P2P network
without the trusted third-party service supplier between trading partners to manage transaction
records (Oh and Shong, 2017).

18
 Figure 2.6: Smart Contract in Halal supply chain using Blockchain technology
Adapted from Rooyen (2017) and Winser et al (2015)

According to Rasi et al (2017) a halal supply chain consists of four main activities,
which are:

(1) Halal procurement

(2) Halal manufacturing

(3) Halal distribution

(4) Halal logistics, and details of activities is illustrated in figure 2.6.

19
 Halal Supply
Chain

Halal Procurement Halal Manufacturing Halal Distribution Halal Logistic

Halal supplier selection Top manager commitment Halal packaging Halal segregation
Halal labelling Halal certification Halal container
Supplier relationship Shariah compliant fund

Figure 2.7: Halal Supply Chain Activities (Rasi et al, 2017)

In the Halal Supply Chain (Figure 2.6 and Figure 2.7), halal procurement is identified
as halal purchasing, including activities based on the supply chain that concentrates on
improving the integrity of halal. For the activities of each producer, in order to assure the
integrity of the halal supply chain, identifying of all inputs, by-products, and resources are
necessary. Particularly, considering the intricacy of a halal supply chain and the lack of
traceability tools (Ali et al, 2013), the selection of a suitable supplier is vital. The selecting of
the halal-certified suppliers and halal materials needs to be done carefully. The Halal brand is
another important aspect that must be considered by the organization's logo. By using halal
procedures for halal products, halal production is the process of entering the halal
transformation process. For Halal manufacturing the commitment of senior management, halal
certification management systems, and Islamic-compliant funding is very important. The
commitment of senior management to halal manufacturing is the main factor as the senior
management plan the direction of their organizations. Once an organization is identified as a
halal producer or manufacture, the whole system of the organization is required to be changed.
The distributor of halal is considering the use of halal packaging and halal containers. Halal
certification on the halal packaging is important for the packaging of halal products. Product
handling and halal traceability of the packaging is another method of halal integrity (Ab-Talib,
& Mohd-Johan, 2012). Another basic condition of logistics packaging is to consider and protect
the goods during transportation and distribution (Mohame et.al, 2012) and make practical
measures to protect workers who handle the goods from chemical, liquid, or failed products.
(Mohamed et.al, 2012). The packaging is used to make sure that halal products are separated
from non-halal products by using separate racks (Ab-Talib & Mohd-Johan, 2012). Halal
logistics includes organizing, protecting and producing products and materials before reaching
the consumers (Omar & Jaffar, 2011). In logistics, packaging will control and protect the

20
products throughout the process of delivery and distribution (Ab-Talib & Mohd-Jahan, 2012).
Halal integrity is important because halal logistics capabilities are significant to ensure the
supply chain from farm to fork (Tieman, 2007). The halal status does not only consider the
product ingredients, but it also considers the logistics side of halal and non-halal food products
in the supply chain.so during these all producers they have recorded all the information by
using blockchain technology under smart contracts in the establishment of the halal supply
chain.

2.6 Hypothesis Development

2.6.1 Using Blockchain in Halal Supply chain

Based on the research results by Queiroz et al (2019), very few studies discussed about
the influence of blockchain on supply chain management over the past decade. Therefore, it
indicates the lack of researches focusing on blockchain and integrity in supply chain (Queiroz
et al, 2019). As it was mentioned in section 2.5, Halal Supply Chain consists of four main
activities which are explained in the following.

2.6.1.1 Halal procurement on using Block chain

To use Blockchain technology in the halal supply chain, halal procurement is going to
record information about the item or products, certification of origin, and details of suppliers,
resources and materials, such as, halal species, and any genetic crows’ contaminations from
Haram species by conventional breeding. Therefore, blockchain provides complete traceability
and monitoring system, which are deal with between supplier and buyer under smart contract.
Besides, halal suppliers should monitor the agricultural production system, such as appropriate
use of land, water, and chemicals, and provide the halal food and fodder (Rasi et al, 2017).

21
 2.6.1.2 Halal manufacturing on using Blockchain

Halal manufacturing is an entity that is also called the halal producer. In the halal
manufacturing, the raw material and also added ingredients must be certified halal. Besides, it
includes a well-organized packaging process, and transforming process (Mohammed et al,
2016). To ensure all ingredients are halal, and to improve integrity, the companies in supply
chain use blockchain technology to share information of raw materials and organization of the
products for the benefits of the customers. Therefore, during this process, Blockchain will
record this information, and share it with all of the entities from the supply chain (Rasi et al,
2017).

2.6.1.3 Halal distribution on using Blockchain

Halal distribution is an entity that provides halal packaging for the halal products or
goods from the halal manufacturer which are finished products. Using Blockchain will help
this entity confirm the safety of the product, expiry date, manufacturing date and ingredients
or components of the Halal products. The distributor department deliver the products to the
retailer that sells the Halal products or goods to the end-user customers (Rasi et al, 2017).

2.6.1.4 Halal logistic on using Blockchain

Halal logistic is considered as functions of logistics such as, transportation and

packaging of products, warehouses to keep the halal products in storage, and documents of the
bills, orders of financial transactions. Halal transportation has also benefited halal logistics
activities (Tan et al., 2012). Logistic service provides information and communication
technology, which is necessary to maintain the integrity of halal, and to enhancing the
performance and efficiency of logistics and supply chain networks. Besides, the application of
information technology components for halal transportation includes location tracking of the
products or goods identification and data communication. (Ab-Talib, & Abdul-Hamid, 2014).

22
Moreover, information technology controls logistic operation transparent and activities, which
will improve the service and product level. Therefore, by using of blockchain technology all
the information about transactions between supply chain entities will be recorded, which will
also increase the efficiency of system.

Thiruchelvam et al (2018) studied the adoption of Blockchain Technology in the Coffee

Supply Chain Trade. In this study the researchers investigated the effect of market access,
premium pricing, traceability, transparency, and sustainability on blockhain efficiency and
perceived usefulness. The results indicated that blockchain technology in the coffee supply
chain helps coffee producers/farmers to gain better market access, sustainability, and
traceability and therefore increase the fair trade and transparency in the supply chain. Francisco
and Swanson (2018) proposed a framework for adopting technology of Blockchain for Supply
Chain Transparency. The researcher concluded that using blockchain in supply chain
contribute to companies’ competitive advantages. Kamble et al (2018) revealed that supply
chain practitioners believe that blockchain technology is beneficial for improving the supply
chain effectiveness. Therefore, this study offers the following hypotheses:

Hypothesis 1. Adopting blockchain in halal supply chain positively impacts the integrity of
the halal supply chain in the food industry.

2.6.2 Moderating effect of Smart Contract Features

2.6.2.1 Traceability

Traceability is defined as the ability to track origin and history of a product (Sutawijaya
& Awangsari, 2019). In Halal food industry, with the use of traceability the practitioners can
trace the halal status of a product throughout blockchain network. In this way, all the
information activities that the Halal food products have went through such as origin of the
product, the time and date of transferring product, etc is stored. The primary characteristics of
traceability systems are (Banerjee et al, 2015): (a) register the origin of units of ingredients, (b)
storing detailed information about time and location units are transformed, and (c) a

23
comprehensive system that shares and transfers relevant traceability information with the
product to the subsequent stage.

The feature of traceability helps to monitor the halal control points to retrieve detailed
information, and in case of suspension of any cross contamination with non-halal ingredients,
appropriate measures should be taken to control and avoid any unwanted events (Zulfakar,
Anuar, & Talib, 2014). According to the study by Rohmah el al (2019), cooperation between
supply chain sectors is vital to achieve ethical halal traceability. Consumers must be able to
access information about product halalness, food quality and food safety. The findings by
Thiruchelvam et al (2018) points out the importance of traceability and indicated that it helps
to increase transparency. Therefore, this study offers the following hypotheses:

Hypothesis 2: Traceability positively moderates the relationship between blockchain-based

halal supply chain and integrity of halal supply chain

2.6.2.2 Decentralize

Yli-Huumo et al (2016) stated “the goal of Blockchain technology is to create a

decentralized environment where no third party is in control of the transactions and data”.
Eliminating a central control increase speed, and remove delays as many-to-one traffic flows
are avoided (Dorri et al., 2016). Similarly, the study by Khyzer et al (2018) revealed that
decentralization has a positive mediating effect on supply chain practices. Therefore, this study
offers the following hypotheses:

Hypothesis 3: Decentralization positively moderates the relationship between blockchain-

based halal supply chain and integrity of halal supply chain

2.6.2.3 Anonymous

The blockchain network is characterized by the anonymity aspect. Anonymity in this

sense implies that the respective identities of the users in the network are anonymous, and the
transaction on the ledger are treated as eliminating from an anonymous entity. The aspect of
24
anonymity is often propagated by the existence of no-trusting parties’ interaction in a
decentralized environment. Depending on the nature of the contract anonymity may be
necessary while in others, the anonymity aspect may not be essential (Nzuva, 2019). Therefore,
this study offers the following hypotheses:

Hypothesis 4: Anonymity positively moderates the relationship between blockchain-based

halal supply chain and integrity of halal supply chain

2.7 Conceptual/ Research framework of the study

Moderator variables

Traceability Decentralize Anonymous

H2 H3 H4
Independent variable Dependent variable

Halal Supply Chain

• Halal procurement using Blockchain Integrity of the halal
• Halal manufacturing using Blockchain H1 supply chain in the food
• Halal distribution using Blockchain industry
• Halal logistic using Blockchain

Figure 2.8: Proposed Conceptual framework

This proposed conceptual framework (Figure 2.8) is the results of the comprehensive
literature review, which includes blockchain in halal supply chain as independent variable (IV)
(halal procurement, halal manufacturing, halal distribution, and halal logistic), and moderator
variables of traceability, decentralization and anonymity as three moderators with the purpose
of investigating the effect of variables on improving the integrity of the halal supply chain
(DV).

25
 2.8 Summary

This chapter explained about blockchain, halal supply chain, and smart contract through
a comprehensive literature review. The importance of blockchain in halal supply chain is
discussed and the gap in the literature review is addressed. Considering the literature review,
three feature of smart contract including traceability, decentralization and anonymity are
studied to form the conceptual framework. In the following chapter, information about research
methodology, data collection and analysis will be provided to address the influence of
aforementioned factors.

26
 CHAPTER 3

RESEARCH METHODOLOGY

3.1 Introduction

This chapter underlies the procedure of analysing information. It includes research

design, data collection method, development of questionnaire, target population and sampling
strategy, statistical analysis, and the chapter ends by a summary of the findings.

3.2 Research Design

A research design is an approach which is employed in order to generate scientific

study. The research designs helps to assure the final result enables researcher to answer the
research question clearly (Vaus, 2007). The importance of research design in this study is to
investigate the influence of blockchain and smart contract in integrity of halal supply chain

Quantitative research method is a research method that consist of numbers and

measures in a systemic manner in order to obtain specific relationship among variables. The
purpose of this approach is to evaluate the relationship between measurable variables in order
to describe and predict the outcome (Leedy, 1993). The quantitative study end with either
acceptance or rejection of hypothesis developed in the research. An entire quantitative study
ends with confirmation or disconfirmation of the hypothesis tested.

In this study, the quantitative approach is employed to assess the association between
the independent variable (halal supply chain using blockchain) and dependent variable
(integrity of halal supply chain). This method begins with data collection and followed by
application of descriptive as well as inferential statistics.

27
 3.3 Data Collection Method

Data collection is a technique of gathering data from the specific sources in order to
find the answers of research question and assessing the hypothesis and outcomes (Sekaran and
Bougie, 2009). Several quantitative data collection techniques, including questionnaires,
interviews, focus companies (Tashakkori & Teddlie, 1998, cited in Jeanty & Hibel, 2011, p.
646). Considering halal supply chain is a new approach in the supply chain industry, in this
research a survey questionnaire is used, to get relevant data from the perspective of each
respondent and experience in order to identify the effect of blockchain technology in halal
supply chain. A survey questionnaire helps to gain valuable knowledge about large population
by only surveying a selected sample of the population. In this approach, researcher provides
questionnaire to the respondents and demonstrates the result of responses in the form of
descriptive statistic and other statistical analysis (Perumal, 2014). In this study, close-ended
questionnaire approach is used.

3.4 Sampling and Location

In this study, it may consist of the rationale for selecting respondents, sampling size,
selection method, sampling frame and location and form of data generated, whereas the part of
probability sampling consists of a time of sampling selection and depth of information per
respondent. Therefore, the sampling was chosen halal food supplier, manufacturer, distributor,
retailer, and target halal small-medium enterprises (SME) and companies. The study location
was chosen Kuala Lumpur, to interview the target companies those participants, and also
through presentations to explain to them about the project. Those who were interested and
participated in this study.

3.4.1 Population

In this study, the target population combined of small and medium size enterprises
(SME) in Kuala Lumpur. According to the report provided by The Edge Communications Sdn
Mhd (2019), around 320 small and medium size of enterprises from various industry, including

28
food and beverages, cosmetics, halal ingredients, logistics, biotechnology, pharmaceutical and
personal care attended the Malaysia Halal Expo 2019. The questionnaire is distributed in halal
companies including Nestle foods Malaysia Sdn Bhd, Kawan food, Yakult, Secret receipt, and
Old town white coffee. These included supply chain employees and staffs, directors or
managers, operations directors or managers, purchasing directors or managers, Logistic
directors or managers. Each category of respondents will be providing some information which
will be useful for this study.

3.4.2 Rationale for Selecting Respondents

The selection of respondents needs to be representative of the population (Teddlie &

Tashakkori, 2009). The population of this study will be targeted on quantitative research, which
is considered necessary, where the information is composed through a series of interviews and
specific populations (Ngah, Zainuddin and Thurasamy, 2014). For this research study, the data
is collected from entities in the halal small business enterprises that are related to the supply
chain, such as suppliers, manufacturers, distributors, retailers, because those all the entities are
sharing information for the benefits of the end-user customers. Shared information is that using
blockchain technology to record all the information digitally to share with all entities.

3.4.3 Sampling

This study used a quantitative methodology to focus on the goals of the statistical, or
numerical analysis of data collected through votes, and selected questionnaires. Since this
study evolved around supply chain entities that suppliers, manufacturers, distributors, and
retailers of small enterprises of managers based whole equity, therefore, relationship with
blockchain technology is significantly the most acceptable notifies for this research study.
Because of the importance of halal food and consumption in the halal market are particularly
suitable for this study. Sample size calculated by targeted SME population size 32000,
according to the 3200 SME Company and each company have 10 employees, which is involve
of the supply chain operations. So confidence level 95% (Krejcie and Morgan, 1970) , margin
of error 5%, so the purpose of the amount of respondents who would be taking part in the
survey 380 responders (refer to Table 3.1. determining sample size from given population).

29
The Table 3.1 is references for the population to identify to take the sample size. Moreover,
the total amount of questionnaire was being distributed both through the methods of online
collection and hard copy of questionnaire.

Table 3.1: Determining sample size for a finite population

Source : Krejcie and Morgan (1970)

3.5 Questionnaire Design

The questionnaire is developed based on existing researches and designed in English as

it is widely understandable. The researcher ensures individuals about the confidentiality of
information, and it will not be disclosed to public or any unauthorised person.

The questionnaire is divided into two main segments, which are Segment A and Segment B.
Segment A addresses demographic information of each respondent, and Segment B includes
questions about specified variables.

30
 3.6 Construct Measurement

This study consists of measurement of independent variables including Halal supply

chain, Smart contract and Halal supply chain integrity for SME in halal supply chain in
Malaysia.

3.6.1 Origin of Construct

All questions are adapted from previous research studies which has been done in similar
area of study, and detail is shown in Table 3.2.

Table 3.2: Origin of Construct

Halal HP1: Using BT helps to make sure suppliers are reliable and can fulfil Rasi et al (2017)
procurement requirements of JAKIM (Jabatan Kemajuan Islam Malaysia) Rodrigo et al
(HP) HP2: Using BT helps to improve relationship with suppliers. (2018)
HP3: Using BT helps to make sure the meat and food is Halal Kamble et al
(2019)
Halal HM1: Using BT helps to ensure the integrity of Halal Manufacturing (eg, it Rasi et al (2017)
manufacturing guarantees that only certified halal raw materials are used) Rodrigo et al
(HM) HM2: Using BT helps to monitor the situation as the records are visible to (2018)
all the market participants in SC Kamble et al
HM3: Using BT helps to eliminate possible inclusion of Haram or doubtful
substances in the products
(2019)
HM4: I feel good that in BT certificates and qualification statuses will
remain immune from forgery and other compromise
Halal distribution HD1: Using BT helps to ensure the integrity of Halal Distribution ( eg it Rasi et al (2017)
(HD) guarantees that containers used for halal products are not mixed together Rodrigo et al
with the ones used for non-halal products) (2018)
HD2: Using BT improve food ingredients safety by making sure the selected Kamble et al
packaging materials do not have any toxic effect on the product.
HD3: Using BT improves halal traceability of the packaging and helps to
(2019)
determine product’s origin
Halal Logistic HL1: Using BT Facilitate origin tracking in SC and helps to know where the Rasi et al (2017)
(HL) ingredients came from and where they were delivered Rodrigo et al
HL2: Using BT helps to ensure the integrity of Halal logistics ( eg it makes (2018)
sure the container or lorries used in the delivery are used only to deliver Kamble et al
halal product)
(2019)
Traceability TS1: I feel good that public will see the information which are sent over the Rasi et al (2017)
(TS) blockchain Kamble et al
TS2: It is good that smart contracts allow to track real-time performance and (2019)
improve trust between the participants
Anonymity ANN1: I think using smart contract protect our privacy as it allows to use a Rodrigo et al
(ANN) generated address to avoid identity exposure (2018)
ANN2: I prefer to use a public key rather than my personal
information
Decentralization DEC1: I think it is good idea that smart contract eliminates the requirement Monrat et al
(DEC) for any intermediaries (eg banks) to validate and verify the transactions (2019)
DEC2: I feel decentralized system will be better compare to conventional
centralized transaction systems (eg banks)
DEC3: Using smart contract will minimise my transaction delays
DEC4: I feel safe using smart contract as it reduces the risk of fraud

31
 Integrity INT1: I think using BT improves public’s trust and ensures the Rasi et al (2017)
(INT) trustworthiness of Halal food integrity Rodrigo et al
INT2: Implementation of BT in halal food supply chain will improve quality (2018)
of our products. Kamble et al
INT3: Implementation of BT in halal food supply chain will improve trust
between partners
(2019)
INT4: Using BT improve food ingredients safety through establishing SC
transparency in all processes from manufacturers to the individual
consumers
INT5: I trust BT as the records are permanent and immutable. (eg it is not
possible to falsify a SC payment transaction or the records of inventory,
warehousing conditions, delivery times and dates etc)

3.6.2 Scale of measurement

The questionnaire is designed based on the dependent variable (DV) and independent
variable (IV), which were discussed in the previous chapters. Measurement is crucial to a
quantitative study, because it has the importance in connecting between empirical survey and
quantitative analysis of numerical data (Teddlie & Tashakkori, 2003). There’s no guarantee of
a quantitative study worth that, it just has used statistics as statistics can be misapplied either
intentionally or unwillingly (Jeanty & Hibel, 2011).

This study uses a five-point Likert scale in order to specify the degree of participants’
agreement or disagreement with each statement, in which 1= strongly disagree, 2= disagree,
3= neutral, 4=agree, 5= strongly agree. The items measure the degree of effect of blockchain
technology, on supply chain collaboration with smart contract, on supply chain integrity from
local firm’s perspective in Kuala Lumpur.

3.7 Pilot Test

Prior to conducting actual survey for the research, pilot test is necessary in order to
determine if the questions are consistent and reliable (Cavana et al, 2001; Sekaran, 2003). As
suggested by Canava et al (2001), reliability refers to the degree which a measure is un-bias,
thereby shows consistent measurement in different time and different items in the instrument.

32
 The suggested sample size for pre-test should be between 15-30 respondents which is
required to be distributed among the same populations as the actual survey (Malhotra, 2004);
Hence, in this research sample size of 30 is chosen.

Table 3.3: Pilot Test on Variables

Variables Cronbach Alpha

Halal Procurement (HP) .794
Halal Manufacturing (HM) .834
Halal Distribution (HD) .729
Halal Logistic (HL) .721
Traceability (TS) .716
Anonymity (ANN) .763
Decentralized (DEC) .767
Integrity (INT) .825

According to Table 3.3, all variables are reliable with desire values above 0.7.

3.8 Data Screening

It is crucial to perform data screening attainment in any multivariate analysis in order

to ensure the outcome from a quantitative research is meaningful. The quality of data screening
directly effects on the quality and the output of the analysis. Therefore, data screening is
important to check the reliability and validity of the data (Abdulwahab et al, 2011).

3.8.1 Missing Data

It is crucial to determine the missing data before starting analysis. Because problems
might occur if there is missing data during the research process. Missing data may affect the
generalization of the result of the study or cause bias issue as the respondents may leave the
questions unanswered (Abdulwahab et al, 2011).

33
 3.8.2 Multivariate Outliers

One of the steps to screen the data is to examine the outliers. Outliers states the
observations that are in more distant in comparison with the rest of data (Sheridan et al, 2010).
A multivariate outlier is a combination of unusual scores on at least two variables. One way to
detect the outliers effectively is by examining Mahalanobis distance. The Mahalanobis distance
helps to discover influential multivariant outliers by using predetermined threshold that will
show if a point can be categorized as outliers.

3.8.3 Normality Test

The normality test of collected data is a prerequisite assessment for conducting

statistical tests in quantitative research. If the collected data are not normally distributed,
resultant mean for the value of output is not representative, which means a wrong selection of
value of output and furthermore results wrong eventual interpretation to the analysis by using
such a set of value to calculate significance value of output (Prabhaker et al., 2019). There are
variety of methods that are applicable to test data normality, Shapiro-Wilk and Kolmogorov-
Smirnov test are the two well-known and widely applied methods to test normality out of these
methods. Both of two methods can be utilized for dealing with large sampling size that over 50
samples. For Shapiro-Wilk and Kolmogorov-Smirnov methods, null hypothesis states that data
are taken from normal distribution if P >0.05.

3.8.4 Linearity

Linearity represents the association between Independent Variables (IV), and

Dependent Variables (DV). It represents the degree to which change in the dependent variable
is constant across the range of values for the independent variable. The linearity should be less
than p <0.05 to show there is some significant linear associatio between DV and IV.

34
 3.8.5 Multi-collinearity

Multicollinearity refers to the relationship between variables and indicates when at least
two variables are strongly correlated. The redundant information increase the possibility of
error, which will alter the output of analysis. Therefore, according to Sheridan et al (2010) such
data need to be reconsidered.

Multicollinearity can be calculated via measuring Variable Inflation Factor (VIF) for
all independent variables. Following is the rule of thumb for the VIF:

• If VIF is less than 3; then there is no problem

• If VIF is more than 3; then there is a potential problem

• If VIF is more than 5; then there is very likely problem

• If VIF is more than 10; then there is definitely problem

3.9 Data Analysis

The statistical software used in the research is the IBM Statistical Package for the Social
Science (SPSS) to analyse data collected. It is a reliable and comprehensive tool to manage the
data collected from the respondents.

3.10 Descriptive Analysis

Descriptive analysis includes gathering of data which is related to present study, and
then organization, tabulation, depiction and description the outcomes of collected data. The
main objective of descriptive analysis is to provide a knowledge base which can be a foundation
and ground for further quantitative analysis (Baha, 2016). One of the most common approaches
of the descriptive analysis is survey method which is closely related to present study.

35
 3.11 Reliability Test

In quantitative research, reliability refers to the uniformity, immutability and

repeatability of outcomes. In other words, which means, the results that the researcher
concluded is considered reliable if corresponding outcomes have been achieved in same
situations but different circumstances (Mohajan, 2017). However, it is also meant to as whether
the approach that employed by the researcher is consistent even across different researchers as
well as different projects. However, one issue of reliability is necessary to be concerned is the
time as it is closely associated with subjectivity. For instance, once a researcher adopts a
subjective approach for the study, there is a compromise towards the degree of reliability inside
the work.

The coefficient of reliability is ranging between 0 and 1, in which 1 equalling with

perfect reliability while 0 equaling to no reliability. The reliability is also calculated by
employing the test of correlation in the test-retest and alternate forms. For high-stakes setting,
reliability must be more than 0.9, but in less important situations, values of 0.8 or 0.7 are also
acceptable. Generally, it is considered as high if reliability is greater than 0.7 (Mohajan, 2017).

3.12 Pearson Correlation Coefficient

The Pearson correlation analysis is conducted in order to evaluate the strength of

association between two variables (Kerlinger, 1973). A Pearson coefficient (r) can be in the
range of +1.00 to -1.00.

This statistical test is utilized to assess the covariation, or relationship, between one
variable to another. If the value of coefficient found to be 0, it means there is no relationship
between two specified variables. If the r value is more than 0, it indicates there is positive
correlation while less than zero indicates negative correlation. Pearson Correlation analysis is
used in this research in order to test the association between independent variables and
dependent variable.

36
 3.13 Regression Analysis

Regression analysis is referred as a statistical tool that is utilized for clarifying

association between dependent variable (DV) and independent variables (IV). It is said that
regression tool has long been central to the field of econometrics that is economic statistics
(Sykes, 1993). Regression analysis with a single explanatory variable is regarded as simple
regression. However, the other type of regression analysis – multiple regression more suited
the present study as it allowed additional factors to separately enter the analysis so that the
consequence of each can be calculated. At the base of present study, halal certification, price,
quality, trust and commitment stood for independent variables whereas consumers purchase
intention towards halal brand cosmetics products. Therefore, it was more valuable to choose
multiple regression analysis to measure the effect of various coinstantaneous influences upon
a single dependent variable.

3.14 Summary

In this chapter, details of methodology, design of the research, target population, data
collection approach, and process of analysing data is provided. Next chapter will interpret and
shows results of analysing collected data.

37
 CHAPTER 4

DATA ANALYSIS AND FINDINGS

4.1 Introduction

In this chapter several approaches are used in order to analyse data and extract
information from collected data. The interpretation of information is done by using SPSS, and
proper explanation of each finding is provided. The process of data analysis includes data
screening which is used for the purpose of validating data and identifying missing data. In
addition, Pearson’s Correlation Coefficient analysis, multiple regression analysis are carried
out. Lastly, the acceptance and rejection of the hypotheses are discussed.

4.2 Data Screening

The data screening includes five tests, which helps to determine missing data, outliers,
normality, linearity, and multi-collinearity

4.3 Missing Data

According to Table 4.1, there is no missing value and all the questions are valid. Since,
this research used Google forms to collect data, any form with missing data is not allowed to
be submitted. Therefore, all data are available.

38
 Table 4.1: Missing Values

Statistics
HP HD HM HL TS ANN DEC INT
N Valid 251 251 251 251 251 251 251 251
Missing 0 0 0 0 0 0 0 0

4.4 Outliers

The outliers represent the abnormal data which are not representative of target
population. Thus, such data are possible to be removed (Figure 4.1).

Figure 4.1: Outliers

39
4.5 Normality test

According to the Table 4.2, all the statistic values of the variables are in the range of -
1 to +1. Therefore, all the values are in normal curves.

Table 4.2: Tests of Normality

Tests of Normality
Kolmogorov-Smirnova Shapiro-Wilk
Statistic df Sig. Statistic df Sig.
HP .176 251 .000 .939 251 .000
HM .192 251 .000 .950 251 .000
HD .284 251 .000 .873 251 .000
HL .270 251 .000 .875 251 .000
TS .317 251 .000 .778 251 .000
DEC .239 251 .000 .896 251 .000
ANN .342 251 .000 .813 251 .000
INT .179 251 .000 .947 251 .000
a. Lilliefors Significance Correction

Table 4.3: Tests of Normality

N Skewness Kurtosis
Statistic Statistic Std. Error Statistic Std. Error
HP 251 -.025 .154 -.747 .306
HM 251 .238 .154 -.598 .306
HD 251 .284 .154 -.375 .306
HL 251 .142 .154 -.397 .306
TS 251 -.237 .154 .891 .306
DEC 251 .537 .154 -.417 .306
ANN 251 -.469 .154 .555 .306
INT 251 .318 .154 -.394 .306
Valid N (listwise) 251

Similarly, all values of Skewness are between -1 and +1, and Kurtosis is in range of -2
to +2, which shows the normality of the variables (Table 4.3).

40
4.6 Linearity test

According to Table 4.4, the results of linear test are all less than 0.05 (p<0.05) which
shows a relationship between variables are linear.

Table 4.4: Linearity Test

Sum of Squares Sig.

INT * HP Between Groups (Combined) 16.875 .000
Linearity 15.886 .000
Deviation from Linearity .989 .095
Within Groups 25.435
Total 42.310
INT * HM Between Groups (Combined) 17.934 .000
Linearity 15.671 .000
Deviation from Linearity 2.263 .003
Within Groups 24.376
Total 42.310
INT * HD Between Groups (Combined) 14.161 .000
Linearity 12.454 .000
Deviation from Linearity 1.707 .013
Within Groups 28.149
Total 42.310
INT * HL Between Groups (Combined) 14.509 .000
Linearity 13.213 .000
Deviation from Linearity 1.296 .011
Within Groups 27.801
Total 42.310
INT * TS Between Groups (Combined) 22.129 .000
Linearity 20.679 .000
Deviation from Linearity 1.449 .000
Within Groups 20.181
Total 42.310
INT * DEC Between Groups (Combined) 17.159 .000
Linearity 16.405 .000
Deviation from Linearity .754 .406
Within Groups 25.151
Total 42.310
INT * ANN Between Groups (Combined) 5.170 .000
Linearity 2.150 .000
Deviation from Linearity 3.020 .002
Within Groups 37.140
Total 42.310

41
4.7 Multi-collinearity Test

Table 4.5 illustrate the outcome of multi-collinearity test and indicates the values of
Variable Inflation Factor (VIF) is less than 5. Therefore, no problem is recognised. Moreover,
tolerance value in SPSS is more than 0.01 which means that the signs of multi-collinearity
issues are not strong.

Table 4.5: Multi-collinearity Test

Collinearity Statistics
Model Tolerance VIF
1 (Constant)
HP .427 2.344
HM .361 2.770
HD .356 2.806
HL .402 2.490
TS .677 1.477
DEC .670 1.493
ANN .862 1.160

4.8 Descriptive Frequency

An overview of the demographic information is shown in the Table 4.6, which represent
the frequency and percentage for each category. The demographic data compromises of gender,
age, education, area of responsibility, percentage of Muslim workers , and “halal” certificate.
In the following, the result will be further explained based on the frequency analysis.

42
 Table 4.6: Descriptive Frequency on Demographic Information

Frequency Valid % Cumulative %

Gender Female 135 53.8 53.8
Male 116 46.2 100.0
Total 251 100.0
Age > 45 1 .4 .4
18 to 24 21 8.4 8.8
25 to 34 193 76.9 85.7
35 to 44 36 14.3 100.0
Total 251 100.0
Education Bachelor Degree 119 47.4 47.4
Diploma or below 116 46.2 93.6
Master's Degree and above 16 6.4 100.0
Total 251 100.0
Area of Responsibility Distribution 6 2.4 2.4
Logistic 54 21.5 23.9
Other service area 85 33.9 57.8
Procurement 10 4.0 61.8
Production 96 38.2 100.0
Total 251 100.0

According to the Table 4.6, 251 respondents taking part into this survey, in which 135
(53.8%) of the respondents are female and 116 (46.2%) of respondents are male. It shows that
there is almost equal percentage of respondents in gender categories. Based on the data
collected, there is a variety of age categories, with the majority of the respondents aged between
25 and 34 years, with 193 participants that make up 76.9% of all respondents, followed by
14.3% in the range of 35 to 54, 8.4 percentage in the range of 18 to 24, and the least number is
belongs to age of 45 and above with 0.4%.

Table 4.6 reveals that a considerable number of respondents are educated and have
degree above bachelor’s degree. Moreover, the results shows, significant number of the
respondents are responsible for production with 38.2% out of all the respondents and the least
belongs to distribution, which is 2.4% of respondents.

4.9 Descriptive Statistic

Descriptive statistics is utilized in order to describe the basic features of dataset. It

provides a simple meaningful summary of samples as well as the measures of a part or entire

43
population. The descriptive statistic is generally divided in two main categories including 1)
measures of central tendency such as mean, mode, and median, and 2) measures of variability
(spread) such as the minimum, maximum, standard deviation and variance (Thompson, 2009).
In order to provide a single variable construct (measure), the average value of questions belongs
to each variable is computed. Table 4.7 illustrates the values of minimum, maximum, mean,
standard deviation and variance for each variable.

Table 4.7: Descriptive statistics for all variables

Descriptive Statistics
N Minimum Maximum Mean Std. Deviation
Statistic Statistic Statistic Statistic Statistic
HP 251 3.00 5.00 4.1341 .49637
HM 251 3.00 5.00 4.0319 .47852
HD 251 3.00 5.00 4.0837 .53049
HL 251 3.00 5.00 4.0578 .56360
TS 251 3.00 5.00 4.1215 .48392
DEC 251 3.00 5.00 3.7281 .40622
ANN 251 2.00 5.00 3.7888 .52463
INT 251 3.20 4.80 3.9936 .41139
Valid N (listwise) 251

The mean is the most popular method used in order to measures the central tendency
(Thompson, 2009). The mean indicates the average of all values in a distribution. Based on the
Table 4.7, the value of mean for all variables fall in the range of 3.7 to 4.2. This result indicates
that the respondents were generally agreed or had no comment on the statement in the
questionnaire. The highest value of mean belongs to Halal Procurement (HP), which indicates
the respondents generally agreed that blockchain in halal procurement effects the integrity of
halal supply chain. It is followed by TS, HD, HL, HM, INT, ANN, and DEC with the values
of 4.12, 4.08, 4.05, 4.03, 3.9, 3.78, and 3.72 respectively.

A technique to evaluate variability is by measuring the standard deviation. Standard

deviation indicates to what extent the data is concentrated over the mean (Thompson, 2009).
As it can be seen, DEC has the least standard deviation which is 0.40, and the highest value

44
(0.56) is reported for HL. It can be concluded that the data is more spread for HL and
respondents had variety of opinions toward this variable.

4.10 Reliability Test (Cronbach Alpha)

It is necessary to measure the reliability of the collected data before analysing the
results. A reliability test helps to measure the stability and consistency of data collected.
Cronbach's alpha is one of the well-known methods to examine the internal consistency (Heale
and Twycross, 2015). It is mostly utilized when a survey consists of multiple Likert questions,
which form a scale, and therefore reliability determination is required. Table 4.8 shows the
reliability level according to Cronbach Alpha coefficient range.

Table 4.8: Cronbach Alpha Coefficient Reliability Level

Source: George and Mallery (2016)

The Cronbach value falls in the range of 0-1, and the reliability coefficient closer to
1.00 indicates the greater consistency and reliability of the data used in this research.

Table 4.9: Cronbach Alpha value

Variables Number of Items excluded Cronbach Alpha Remark

Items
Halal Procurement (HP) 3 0 .721 Acceptable
Halal Manufacturing (HM) 4 0 .763 Acceptable
Halal Distribution (HD) 3 0 .866 Good
Halal Logistic (HL) 2 0 .759 Acceptable
Traceability (TS) 2 0 .826 Good
Anonymity (ANN) 2 0 .826 Good
Decentralized (DEC) 4 0 .858 Good
Integrity (INT) 5 0 .734 Acceptable

45
 Source: Developed for this research

According to the Cronbach values for each variable in the Table 4.9, the data passed
the reliability test. Generally, there is a good consistency and reliability of data in HP, HM,
HD, HL, TS, ANN, DEC, and INT with value of 0.721, 0.763, 0.866, 0.759, 0.826, 0.858, .903
and 0.740 respectively. Therefore, the data is reliable and further study can be proceeded.

4.11 Pearson Correlation Test

Pearson correlation coefficient measures the strength of a linear association between

two variables and is represent by r. The Pearson correlation coefficient, r, illustrates how well
the data points fit the new model (Gilchrist and Samuels, 2011).

Table 4.10 demonstrates Pearson correlation and its significant at the 0.01 level (2-
tailed). It involves the values for dependent variables which is Integrity of Halal Supply Chain
(INT), and moderator, which is smart contract that includes TS, ANN, DEC, and also the
independent variables including the halal supply chain (HSC) that includes HP, HM, HD, and
HL. The r value is a number between +1 and -1. When r is 0 it can be concluded that two
variables has no relationship, and when r is more than 0, it indicates a positive relationship,
which shows that when the value of a variable increases, the value of other variable also
increases. However, the value blow 0, shows a reverse relationship. Meaning that when the
value of one variable increases, the other variable’ value will be reduced.

46
 Table 4.10: Pearson correlation and its significant at the 0.01 level (2-tailed)

Correlations
HSC TS DEC ANN INT
HSC Pearson Correlation 1 .396** .423** .143* .668**
Sig. (2-tailed) .000 .000 .023 .000
N 251 251 251 251 251
TS Pearson Correlation .396** 1 .510** .267** .699**
Sig. (2-tailed) .000 .000 .000 .000
N 251 251 251 251 251
DEC Pearson Correlation .423** .510** 1 .232** .623**
Sig. (2-tailed) .000 .000 .000 .000
N 251 251 251 251 251
ANN Pearson Correlation .143* .267** .232** 1 .225**
Sig. (2-tailed) .023 .000 .000 .000
N 251 251 251 251 251
INT Pearson Correlation .668** .699** .623** .225** 1
Sig. (2-tailed) .000 .000 .000 .000
N 251 251 251 251 251
**. Correlation is significant at the 0.01 level (2-tailed).
*. Correlation is significant at the 0.05 level (2-tailed).

Evans (1996) described the strength of the correlation and suggested the following
correlation description for the absolute value of r:

Table 4.11: Pearson correlation coefficient range

Pearson correlation coefficient, r strength

.00-.19 “very weak”
.20-.39 “weak”
.40-.59 “moderate”
.60-.79 “strong”
.80-1.0 “very strong”

Source: Evans (1996)

Considering the Pearson correlation (Table 4.10) and the Evan’s description (Table
4.11), the strength of variables falls into the spectrum between “very weak” to “very strong”.

The first correlation is Halal Supply Chain (HSC) versus traceability (TS) that denotes
the correlation of 0.396 or moderate positive relationship between two variables. There is a
strong correlation between Halal Supply Chain (HSC) and Integrity of Halal Supply Chain
(INT) with r-value of 0.668. Similarly, the results suggested that traceability (TS) and Integrity
(INT) have a strong correlation as the r-value is 0.699. Moreover, the Sig. value (0.00), which

47
are recorded less than 0.01, indicate a statistically significant relationship between each two
variables. For example, there is a statistically significant strong positive relationship between
halal supply chain (HSC) and integrity of halal supply chain (INT) to use blockchain
technology in halal supply chain.

4.12 Regression test

In order to indicate and evaluate the effect between depend and independent variables,
two forms of regression are commonly use, which are simple linear regression and multiple
linear regression. A simple linear regression is utilized when only one independent variable
estimates the outcome (one depend variable) (Greener, 2008). A multiple linear regression is
used when several independent variables is involved to predict the outcome of dependent
variable.. The multiple regression analysis is used to predict and evaluate the association and
relationship between a single continuous depend variable and two or more independent
variables (Greener, 2008). Thereby, in this research, both simple and multiple regression is
used.

4.12.1 Simple Linear Regression

A simple linear regression is utilized when there is only one independent variable and
one depend variable. The independent variable is used to estimate the outcome (Greener, 2008).

Table 4.12: Model Summary

Model Summaryb
Adjusted R Std. Error of the
Model R R Square Square Estimate
1 .668a .446 .444 .30689
a. Predictors: (Constant), HSC
b. Dependent Variable: INT

The model (Table 4.12) consists of the predictor variable which is blockchain in halal
supply chain (HSC), and it is used to predict the outcome variable which is integrity of halal
supply chain (INT). As it was discussed in previous sections, R value shows the simple
correlation coefficient. It indicates the strength of relationship between the predictors and

48
outcome (depend variable). In this case, R is 0.668 which shows a strong relationship. This
suggest that the model is good predictor of the outcome.

R Square value represents the amount of variation in the outcome variable (INT) that
can be explained by the effect of blockchain in halal supply chain. The R square value is 0.446,
which means 44.6% of the variance in the data can be explained by the predictor variables that
is relatively large.

Table 4.13: ANOVA test

ANOVAa
Model Sum of Squares df Mean Square F Sig.
1 Regression 18.859 1 18.859 200.241 .000b
Residual 23.451 249 .094
Total 42.310 250
a. Dependent Variable: INT
b. Predictors: (Constant), HSC

According to ANOVA Table 4.13, the P value is 0.000 which is less than 0.05,
therefore, the ANOVA result indicates the model is significant predictor of HSC, F(1.249)=
200.241 , p=0.000.

Table 4.14: Regression coefficient

Coefficientsa
Standardized
Unstandardized Coefficients Coefficients
Model B Std. Error Beta t Sig.
1 (Constant) 1.498 .177 8.442 .000
HSC .612 .043 .668 14.151 .000
a. Dependent Variable: INT

There are two important columns in coefficient Table 4.14, which are unstandardized
coefficients and Sig. column. By looking at the Sig. column it can be clearly seen that the
Significant value is 0.000 which is less than 0.05, thereby, it can be concluded that, the
blockchain in halal supply chain (HSC) significantly contributed to the integrity of halal supply
chain (p=0.00)

49
 The unstandardized coefficients indicate to what extent this predictor contribute to the
model by looking at B value. Thereby:

Using blockchain in halal supply chain (B = 0.612): as using blockchain in halal supply
chain increases by one unit, the integrity in halal supply chain increase by 0.612 units.

The result illustrates that using blockchain in halal supply chain will have a positive
effect on integrity of the halal supply chain.

4.12.2 Moderating Effect of Smart Contract

A moderator clarifies ‘when’ a dependent variable (DV) and independent variable (IV)
are related (Figure 4.2). Therefore, a moderator modifies the association between DV and IV,
by affecting the direction and strength of the association (Hayes, 2017).

X Y

Figure 4.2: The effect of moderating variable

Source: adapted from Hayes (2017)

In this study a hierarchical multiple regression is used to determine the influence

moderating variables including Traceably, Decentralization, and Anonymity. To test
moderation, the approach is used based on the study by Hayes (2017).

50
4.12.2.1 The Moderating effect of Traceability

In order to determine the moderating effect of traceability on the integrity of halal

supply chain, traceability is added to the regression model. According to the results in table
4.15, traceability (b=.2144, s.e.=.065, p=.0011) is accounted for a significant portion of
positive effect on integrity of halal supply chain.

Table 4.15: Moderating effect of Traceability

Model
coeff se t p LLCI ULCI
constant 4.0259 1.0934 3.6821 0.0003 1.8724 6.1795
HSC -0.4597 0.2705 -1.6996 0.0905 -0.9924 0.073
TS -0.4318 0.2658 -1.6248 0.1055 -0.9553 0.0917
Int_1 0.2144 0.065 3.2993 0.0011 0.0864 0.3425

Therefore, it reveals that traceability has a positive influence on integrity of the halal
supply chain.

4.12.2.2 The Moderating effect of Decentralization

In order to determine the moderating effect of decentralization on the integrity of halal

supply chain, it is added to the regression model. Based on the represented results in table 4.16,
decentralization (b=-.09, s.e.=.092, p=.28) does not affect on integrity of halal supply chain.

Table 4.16: Moderating effect of Decentralization

Model
coeff se t p LLCI ULCI
constant -0.9365 1.4383 -0.6511 0.5156 -3.7695 1.8964
HSC 0.8155 0.3432 2.3763 0.0182 0.1396 1.4915
DEC 0.8334 0.3898 2.1382 0.0335 0.0657 1.6012
Int_1 -0.0983 0.092 -1.0685 0.2863 -0.2795 0.0829

Therefore, it reveals that decentralization has no influence on integrity of the halal

supply chain.

51
4.12.2.3 The Moderating effect of Anonymity

In order to determine the moderating effect of anonymity on the integrity of halal supply
chain, it is added to the regression model. According to the results in table 4.17, anonymity
(b=.023, s.e.=.079, p=.76) is not effecting on integrity of halal supply chain.

Table 4.17: Moderating effect of Traceability

Model
coeff se t p LLCI ULCI
constant 1.5428 1.2681 1.2166 0.2249 -0.955 4.0405
HSC 0.5065 0.3035 1.669 0.0964 -0.0912 1.1042
ANN 0.006 0.3351 0.0179 0.9857 -0.6541 0.6661
Int_1 0.0235 0.0798 0.2939 0.7691 -0.1338 0.1807

Therefore, it reveals that anonymity has no influence on integrity of the halal supply
chain.

4.13 Frequency Statistics and Histogram

In this section, frequency histograms for all the variables has been shown. The graphs
for Frequency Histogram, Normal Q-Q Plot, and Detrended Normal Q-Q Plot are in Appendix
3. Histogram helps the researcher to discover the frequency distribution of each value in
dataset, in the form of graph.

52
The histogram for Halal Procurement (HP) is illustrated in Figure 4.3.

Figure 4.3: Frequency table for Halal Procurement (HP)

The histogram for Halal Distribution (HD) is illustrated in Figure 4.4.

Figure 4.4: Frequency table for Halal Distribution (HD)

53
The histogram for Halal Manufacturing (HM) is illustrated in Figure 4.5.

Figure 4.5: Frequency table for Halal Manufacturing (HM)

The histogram for Halal Logistic (HL) is illustrated in Figure 4.6.

Figure 4.6: Frequency table for Halal Logistic (HL)

54
The histogram for Traceability (TS) is illustrated in Figure 4.7.

Figure 4.7: Frequency table for Traceability (TS)

The histogram for Anonymity (ANN) is illustrated in Figure 4.8.

Figure 4.8: Frequency table for Anonymity (ANN)

55
The histogram for Decentralization (DEC) is illustrated in Figure 4.9.

Figure 4.9: Frequency table for Decentralization (DEC)

The histogram for Integrity of Halal Supply Chain (HSC) is illustrated in Figure 4.10.

Figure 4.10: Frequency table for Integrity of Halal Supply Chain (INT)

56
4.14 Hypothesis

Hypothesis 1. Adopting blockchain in halal supply chain positively impacts the integrity of
the halal supply chain in the food industry

According to the results of statistical analysis that was carried out in this research, this
hypothesis is accepted. Considering the value of person correlation coefficient (.668) and a
significant value of 0.000 (less than 0.01), there is a strong positive relation between blockchain
in halal supply chain (HSC) and integrity in halal supply chain (INT). Moreover, the result of
simple linear regression with p value of 0.000 (less than 0.05) and the beta value of 0.612 (B=
0.612), indicates that, HSC is one of the important factors influencing integrity of halal supply
chain (INT). The result finds support in the study conducted by Thiruchelvam et al (2018).

Hypothesis 2: Traceability positively moderates the relationship between blockchain-based

halal supply chain and integrity of halal supply chain

According to the results of statistical analysis that was carried out in this research, this
hypothesis is accepted. The moderating effect of traceability (TS) was examined by utilizing
bootstrapping method and assessing the effect of HSC on INT in the presence and absence of
TS by using multiple linear regression. According to the results, the value of p is 0.0011 (less
than 0.05) and value of beta is 0.2144, meaning that the TS significantly contribute to positive
effect on integrity of halal supply chain (INT).

Hypothesis 3: Decentralization positively moderates the relationship between blockchain-

based halal supply chain and integrity of halal supply chain

According to the results of statistical analysis that was carried out in this research, this
hypothesis is rejected. The moderating effect of decentralization (DEC) was examined by
utilizing bootstrapping method and assessing the effect of HSC on INT in the presence and
absence of DEC by using multiple linear regression. According to the results, the value of p is
0.28, which is greater than 0.05. It indicates that DEC has insignificant effect on integrity of
halal supply chain (INT).

57
Hypothesis 4: Anonymity positively moderates the relationship between blockchain-based
halal supply chain and integrity of halal supply chain

According to the results of statistical analysis that was carried out in this research, this
hypothesis is rejected. The moderating effect of anonymity (ANN) was examined by utilizing
bootstrapping method and assessing the effect of HSC on INT in the presence and absence of
ANN by using multiple linear regression. According to the results, the value of p is 0.7691,
which is greater than 0.05. It indicates that ANN has insignificant effect on integrity of halal
supply chain (INT).

Summary of the hypotheses is represented in Table 4.18.

Table 4.18: Summary of hypothesis and the corresponding results and remarks.

Hypothesis Variable Pearson P Unstandardized Remark literature

correlation value coefficient B reviews in
RS
H1 HSC with INT .668 0.000 .612 Accepted Thiruchelvam
et al (2018)
H2 TS moderate .699 0.0011 .2144 Accepted -
with INT
H3 DEC moderate .760 .286 -0.09 Rejected -
with INT
H4 ANN moderate .225 .7691 0.0235 Rejected -
with INT

4.15 Summary

In this chapter the collected data is analysed through deploying reliability test, simple
and multiple linear regression test. Moreover, the correlation between the dependent,
independent, and moderator variables was revealed. Based on the findings two of the
hypotheses are accepted and two of the hypotheses are rejected. A summary of the current
research, limitations, and recommendations for future studies is provided in the following
chapter.

58
 CHAPTER 5

CONCLUSION

5.1 Summary and Conclusion

This research investigated and provided an in-depth insight about the influence of
blockchain on halal supply chain in Malaysia (Kuala Lumpur). According to the aim and
objectives of the research, the direct influence of blockchain on halal supply chain (HSC) is
evaluated, and the moderating role of three features of smart contract namely as traceability
(TS), decentralization (DEC) and anonymity (ANN), as a link between blockchain and integrity
(INT) of halal supply chain, are assessed. In order to accomplish the purpose of the study, a
comprehensive literature review on existing researches is done, and a conceptual framework is
proposed. The proposed conceptual framework is compromised of one independent variable,
which is blockchain in halal supply chain (halal procurement, halal manufacturing, halal
distribution, halal logistics), and three moderator variables including traceability,
decentralization and anonymity. Given the variables, four hypotheses have been developed in
which the findings indicated that two hypotheses were accepted, and two hypotheses
(moderating role of decentralization and anonymity) were rejected.

Findings of the research suggested that according to the supply chain practitioners,
blockchain has a significant positive effect on integrity of halal supply chain. It indicates that
blockchain is generally accepted, and it is believed to be influential in integrity of halal supply
chain, specially in halal procurement and halal logistic, in which the information of origin of
product as well as transportation is recorded.

59
 The results further show that traceability has a significant positive moderating effect on
the integrity of halal supply chain. It indicates that the participants found traceability as an
important variable and they are willing to share halal status of a particular food product at every
stage of the supply chain. Therefore, it is easier to trace the products and ensure the quality and
safety of halal food.

The findings revealed that based on the supply chain participants, the moderating effect
of decentralization is insignificant in integrity of halal supply chain. Decentralization includes
using decentralized transaction system which eliminates the third party from controlling the
transactions and data. It indicates that participants are not sure if security is preserved or it is
endangered when a trusted third party is eliminated. According to the results, this moderator
has no significate positive or negative effect, which shows the blockchain providers has to
increase awareness about trustworthiness and security of such decentralized technology, as the
main concern of the supply chain participants is in banking transactions.

Similarly, the results of the survey indicated that the moderating role of anonymity is
insignificant toward the integrity of halal supply chain. Anonymity as a feature of smart
contract, allows the users of blockchain based technologies to use their identities anonymously.
In the blockchain each user is given a public key instead of personal information which protects
the user privacy and avoids identity exposure. According to the survey results, the supply chain
practitioners believes anonymity has no significant positive or negative effect on integrity of
the halal supply chain. It indicates the blockchain providers has to increase awareness about
privet or public options that allows using identities publicly or protecting the identities by using
public key instead. It can be seen that the main concern of participants is willingness to share
identities to enhance the transparency and allow other users I the network to acknowledge who
is responsible for a certain transaction or data.

Therefore, this research reveals insights into blockchain in halal supply chain from
perspective of supply chain practitioners, which can be used by supply chain technology
providers to understand factors influencing integrity of halal supply chain. The use of such
findings is further discussed in the section 5.2.

60
 5.2 Implications

Supply chain actors are the primary key in maintaining and guaranteeing the halalness
of a product. Therefore, cooperation between different actors must be maintained to ensure the
trustworthiness of halal food integrity.

Using blockchain can help the integrity of halal supply chain and ensures the quality
and halalness of the food. As the actors of the supply chain plays the key roles in halal supply
chain integrity, the findings of this research assist companies to understand the concerns about
the blockchain technology in halal supply chain. Therefore, the findings help to manage and
successfully implement blockchain technology in halal supply chains. There are some
recommendations that companies can take them into consideration while implementing
blockchain technology. For instance, the concept of blockchain is generally accepted by the
halal supply chain and most of the participants believes blockchain improves the integrity of
halal supply chain. However, the companies have to increase knowledge and awareness of the
employees about the features of smart contract such as decentralization and anonymity.
Majority of participants stated decentralization has no significant effect on integrity of halal
supply chain which shows that enough trust is not stablished between users of supply chain,
and they prefer to have a trusted third party in order to accomplish transaction.

Moreover, the results show that majority of participants are either neutral or agreed to
use public key instead of personal information. However, the anonymity had an insignificant
effect on integrity of halal supply chain. It indicates that the users are willing to use public key
instead of their identities, however anonymity is not a key indicator of integrity of halal supply
chain. Hence, it can be concluded that supply chain actors did not find such feature disturbing,
or cause of any discomfort. Therefore, the researcher suggests the companies to ensure that
users are aware of private or public options for privacy, that allows users to choose the status
for identity exposure, and highlight the importance of such feature in the integrity and
blockchain technology.

61
 Using these findings will help companies to implement blockchain technology in a way
that improve integrity of the halal supply chain, which entails mutual benefits across the whole
halal supply chain.

5.3 Limitation

There have been limitations during accomplishing this study that can be further
improved in future studies. Firstly, the data collection is limited to companies in Kuala
Lumpur, which limits the generalization of the findings. In order to increase the reliability of
the results, future studies can extend the sample size to include greater number of companies.

Secondly, blockchain technology in supply chain is relatively new concept, and the
participants are familiar with blockchain technology but lack experience or practical
knowledge about this revolutionary technology.

Additionally, this study focused on smart contract features (traceability,

decentralization, and anonymity) however other constructs such as inter-organization trust can
help to understand the influence of blockchain on integrity of halal supply chain.

Finally, the current study did not discuss the influence of blockchain in each halal
supply chain activities including halal procurement, halal manufacturing, halal distribution,
halal logistics). Thus, the future studies can investigate their relationship with integrity of halal
supply chain.

5.4 Future Work

There are several recommendations that researchers can consider for future studies.
Given the limitations in the section 5.3, the future researches can investigate the influence of
blockchain in each halal supply chain activities including halal procurement, halal
manufacturing, halal distribution, halal logistics) on integrity of halal supply chain.

62
 There are other constructs that can be further investigated, such as inter-organisation
trust, in order to identify their influence on integrity of halal supply chain.

Moreover, this research collected data using survey from limited number of companies.
Considering the fact that blockchain technology in supply chain is relatively new concept, and
the participants lack experience or practical knowledge about this revolutionary technology,
future studies can conduct other research methods such as interview, to gain an in-depth
information about blockchain in halal supply chain.

63
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APPENDICES

71
Appendix 1: Questionnaire

72
73
74
75
76
77
Appendix 2: Demographical Information

Gender
Cumulative
Frequency Percent Valid Percent Percent
Valid Female 135 53.8 53.8 53.8
Male 116 46.2 46.2 100.0
Total 251 100.0 100.0

78
 Age
Cumulative
Frequency Percent Valid Percent Percent
Valid > 45 1 .4 .4 .4
18 to 24 21 8.4 8.4 8.8
25 to 34 193 76.9 76.9 85.7
35 to 44 36 14.3 14.3 100.0
Total 251 100.0 100.0

79
 Education
Cumulative
Frequency Percent Valid Percent Percent
Valid Bachelor Degree 119 47.4 47.4 47.4
Diploma or below 116 46.2 46.2 93.6
Master's Degree and above 16 6.4 6.4 100.0
Total 251 100.0 100.0

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 What is your area of responsibility?
Cumulative
Frequency Percent Valid Percent Percent
Valid Distribution 6 2.4 2.4 2.4
Logistic 54 21.5 21.5 23.9
Other service area 85 33.9 33.9 57.8
Procurement 10 4.0 4.0 61.8
Production 96 38.2 38.2 100.0
Total 251 100.0 100.0

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Appendix 3: Tests and SPSS results

Outliers, Tests of Normality, and Q-Q tables

Kolmogorov-Smirnova Shapiro-Wilk
Statistic df Sig. Statistic df Sig.
HP .176 251 .000 .939 251 .000
HM .192 251 .000 .950 251 .000
HD .284 251 .000 .873 251 .000
HL .270 251 .000 .875 251 .000
TS .317 251 .000 .778 251 .000
DEC .239 251 .000 .896 251 .000
ANN .342 251 .000 .813 251 .000
INT .179 251 .000 .947 251 .000
a. Lilliefors Significance Correction

N Skewness Kurtosis
Statistic Statistic Std. Error Statistic Std. Error
HP 251 -.025 .154 -.747 .306
HM 251 .238 .154 -.598 .306
HD 251 .284 .154 -.375 .306
HL 251 .142 .154 -.397 .306
TS 251 -.237 .154 .891 .306
DEC 251 .537 .154 -.417 .306
ANN 251 -.469 .154 .555 .306
INT 251 .318 .154 -.394 .306
Valid N (listwise) 251

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