Islamic Banking Performance and Internal Sharia Capital Collaboration

Abstract

Objective: This study examines the impact of Internal Sharia Capitals, including Organization, Operational, Infrastructure and Spiritual to Collaboration Strategy. This objective is essential to explore whether the Sharia Capital from three companies has affected the collaboration strategy after merging. Another objective of this study is to analyze the collaboration strategy as a mediator in the relationship between Innovation and Business Performance.   Research Method: This research used a quantitative method with structural equation modelling analysis. Data was collected from 300 Sharia bank executives throughout Indonesia. Data was processed using SmartPLS version 4.1.0 to analyze the hypotheses for this study.   Research Result & Discussion: This research finds that Operational Sharia Capital impacted Collaboration Strategy significantly. Innovation and Collaboration Strategy significantly affected business performance. Strategic Collaboration also mediated the relationship between Innovation Strategy and Business Performance. This study provides crucial information on the importance of Operational Sharia capital in a newly merged Islamic financial industry. It is similar to other financial industries in that the organization needs strategic innovation to improve business performance. Additionally, our study found that having behavioral operation management, called Behavioral Operation, to follow strict rules like Sharia Law will affect Collaboration and increase the opportunity to have better business performance.   Originality and Value: Sharia capital is internal capital in Islamic Financial Industry. Based on result of study and exploring previous studies about this capital, Authors can conclude that this industry need strong operational capital, Innovation and Collaboration Strategy to have impact in business performance. The other value of this study is an interesting result of new merging sharia bank need to focus on operational and ensure it comply with Sharia rules.