This study aims to examine the role of nongovernmental organization (NGO) partnerships in enhancing absorptive capacity, innovation and performance among Muslim entrepreneurs in small businesses. It offers a novel perspective by focusing specifically on Muslim entrepreneurs and the unique dynamics of NGO−small business partnerships within the context of Muslim societies.
This study analyzed data from 218 Muslim entrepreneurs in the small business sector using structural equation modeling-partial least squares (SEM-PLS). The SEM-PLS process included the measurement model, structural model and PLS-Predict.
The empirical findings indicate that partnerships with NGOs have a positive impact on both potential absorptive capacity and realized absorptive capacity. These mechanisms serve as key drivers of innovation capability among Muslim entrepreneurs in the small business sector. Furthermore, innovation capability has been found to have the most significant influence on overall entrepreneurial performance.
This study provides a novel contribution by examining the role of NGO partnerships in enhancing absorptive capacity, innovation and entrepreneurial performance among Muslim small business owners, an underexplored area. Anchored in the institutional-based view, this study highlights how external institutional forces, particularly NGOs, serve as enabling mechanisms that shape entrepreneurial behavior and strategic capacity-building in response to institutional environments. By embedding IBV, this research sheds light on how institutional supports influence knowledge-related processes and innovation dynamics within the context of Islamic entrepreneurship.
