Synergizing Halal Compliance with Balanced Scorecard Approach: Implications for Supply Chain Performance in Indonesian Fried Chicken MSMEs

Abstract

The increasing demand for halal-certified food has intensified the need for micro, small, and medium enterprises (MSMEs) to adopt performance frameworks that capture both operational efficiency and halal compliance. Although previous studies have applied Balanced Scorecard (BSC) to evaluate supply chain (SC) performance, the incorporation of halal compliance into this framework has not been examined, especially in the context of MSMEs. In this study, we developed and tested a BSC-based framework that embeds halal principles to assess SC performance. The research involved 130 MSMEs and 130 consumers engaged in the fried chicken sector in Indonesia. An exploratory mixed-methods design was applied, combining qualitative interviews with quantitative analysis using Confirmatory Factor Analysis (CFA) and Structural Equation Modeling (SEM). The findings revealed customer perspective (CP) as the strongest driver in SC performance (β = 0.496, p < 0.001), whereas financial, business process, and growth perspectives demonstrated comparatively weaker or statistically insignificant effects. Furthermore, the findings underscore that consumer trust and halal adherence represent strategic assets for MSMEs, enabling stronger competitiveness and sustainable operations. By incorporating halal compliance with performance measurement theory, this study provides novel insights and practical guidelines for MSMEs and policymakers to strengthen halal food supply chains in emerging markets.

1. Introduction

The global food industry is undergoing a rapid transformation driven by rising consumer awareness of ethical, health, and religious considerations, with halal-certified products emerging as one of the fastest-growing segments. According to recent market reports, the global halal food market is projected to exceed USD 3 trillion by 2028, reflecting both the purchasing power of Muslim consumers and the increasing acceptance of halal products among non-Muslim markets. In Indonesia, the world’s largest Muslim-majority country, the enforcement of Law No. 33/2014 on Halal Product Assurance has made halal certification not only a religious necessity, but also a legal and economic imperative. Within this context, micro, small, and medium enterprises (MSMEs) play a pivotal role, as they constitute a major share of the national food sector and contribute significantly to employment creation and local economic growth. These dynamics underscore the urgency of equipping MSMEs with strategic frameworks that can simultaneously ensure halal compliance and enhance supply chain (SC) performance in increasingly competitive markets. In addition, the Balanced Scorecard (BSC) framework offers a holistic approach to evaluate and improve operational performance by integrating intangible elements into performance metrics [1].

Halal compliance in supply chains is essential to ensure that the commodity being sold meets the requirements throughout its production chain, which includes raw material sourcing, processing, distribution, and final product delivery. Rigorous process requires MSMEs to adopt meticulous operational practices, including verifying supplier certifications and adhering to strict hygiene protocols [2]. However, although the effectiveness of the BSC framework in aligning organizational strategies with performance metrics has been recognized, its application within halal-compliant supply chains remains underexplored. The BSC translates an organization’s mission and strategy into a comprehensive set of performance measurements that provide a framework for a strategic evaluation and system management. Furthermore, BSC facilitates a more holistic view of organizational performance by integrating multiple perspectives into strategic management practices [3]. Over the past few years, the demand for halal-certified products has continued to rise, especially in a Muslim-majority country like Indonesia. Thus, businesses must implement robust performance measurement tools to ensure their halal compliance and remain competitive. Aside from meeting demand, halal certification provides an opportunity for MSMEs to differentiate themselves in an increasingly competitive market. The benefits of halal certification also include increased consumer trust due to incorporating ethical considerations that resonate with socially conscious consumers, enabling MSMEs to target niche markets, gaining better customer loyalty and reduced-price sensitivity. The BSC framework is a tool for organizations to improve performance management and align their strategies, but it does not directly provide evidence linking halal certification to differentiated positioning specifically [4].

The intense competitive pressure faced by MSMEs highlights the growing need for strategic frameworks like the BSC. In the city of Malang, Indonesia, diverse culinary commodities are being sold in the region, ranging from traditional to modern cuisine. This condition attracts MSMEs to capitalize on the broad market potential. Increased consumer awareness and expectations regarding halal standards have created unique market dynamics that MSMEs must navigate. Malang’s strategic location and rich cultural heritage have made it a prime culinary tourism destination for both local and international tourists. The competitiveness of culinary tourism destinations is influenced by cultural distinctiveness, accessibility, and enterprise support systems. There are various drivers of tourism attractiveness, highlighting that unique cultural elements, comprehensive accessibility, and robust support from local enterprises are critical in forming competitive advantages for destinations [5]. The region offers a strategic market for MSMEs operating in the culinary sector. The competitive nature of this industry demands constant innovation, both in products and operational strategies.

Halal compliance is not only a religious obligation, but also an added value that enhances product competitiveness. According to the Theory of Planned Behavior, religious values can significantly shape purchasing behavior in Muslim-majority countries. Rising consumer expectations for transparency and halal compliance create both challenges and opportunities for MSMEs to meet these standards. Support from the government, certification bodies, and collaborations among business operators are vital to ensuring the sustainability and competitiveness of MSMEs in Malang. Halal compliance is not the sole responsibility of individual business operators, but a shared responsibility among various stakeholders in the culinary industry ecosystem. According to stakeholder theory, halal compliance requires active engagement from government, industry, and certification bodies to ensure integrity across the supply chain. Empirical evidence supports that the successful operation of halal food control systems hinges on the coordinated involvement of multiple stakeholders [6], while national contexts like Indonesia also emphasize government-led assurance mechanisms through institutions such as BPJPH [7]. Critical success in halal logistics further depends on responsive governmental regulation and streamlined bureaucratic processes [8]. Consumer trust is a critical differentiator in the halal food sector, especially in Muslim-majority markets where religious adherence strongly influences purchasing behavior [9].

Changes in consumer preferences, regulatory updates, and technological advancements require continuous improvement in operational processes. Digital and collaborative innovations have been identified as catalysts for sustainable SC performance [10]. Based on Rogers’ Diffusion of Innovation theory, the adoption of technology in supply chains follows a process of awareness, interest, evaluation, trial, and adoption, which MSMEs must navigate carefully to achieve digital transformation [11]. By integrating halal compliance into BSC perspectives such as financial, customer, internal processes, and growth, MSMEs can build resilient, competitive, and ethically sound supply chains [12,13]. Halal indicators can be mapped into BSC dimensions by using a strategy map that aligns organizational vision with operational KPIs. While such a strategy map provides a conceptual foundation for linking halal indicators with organizational objectives, there remains a lack of empirical evidence on its practical application within MSME contexts. Addressing this gap, the present study explores how halal compliance can be systematically embedded within the BSC framework to enhance SC performance in Indonesian fried chicken MSMEs. To guide the inquiry, the following research questions (RQs) were formulated:

• RQ1: How can the BSC framework be adapted to incorporate halal compliance indicators in MSME supply chains?
• RQ2: Which BSC perspectives (financial, customer, internal business process, and growth) exert the most significant influence on SC performance in halal food MSMEs?
• RQ3: What are the practical implications of integrating halal compliance into the BSC framework for improving competitiveness and sustainability in MSMEs?

MSMEs are vital contributors to food supply chains, employment, and local economies, but face intense competition that demands innovation, compliance, and strategic alignment. Halal certification, beyond being a religious obligation, functions as a legal, economic, and market differentiator that enhances consumer trust, loyalty, and competitiveness. The Balanced Scorecard (BSC) offers a holistic framework to integrate halal compliance into four perspectives—financial, customer, internal process, and growth—aligning organizational strategies with performance metrics. However, MSMEs in regions like Malang must also address dynamic challenges such as shifting consumer preferences, regulatory demands, and technological advancements, requiring collaboration among stakeholders, government support, and digital innovations to build resilient and competitive halal supply chains. While conceptual models link halal indicators with BSC perspectives, empirical evidence on their application in MSME contexts remains limited. This study addresses the gap in the empirical integration of halal compliance within the BSC framework, particularly in the context of MSME supply chains. Halal compliance indicators across BSC perspectives are analyzed and evaluated for their effects on SC performance among fried chicken MSMEs in Malang. The findings of this study contribute to the current literature by bridging performance measurement theory with halal SC research, offering a novel model that aligns religious obligations with strategic management practices.

2. Theoretical Framework and Literature Review

Integration of halal compliance into the BSC framework offers a comprehensive approach to measure organizational performance across various perspectives, particularly for MSMEs in the halal food sector. Organizations choose to adopt halal certification not only for operational excellence, but also to gain social legitimacy in religious markets. Integrating halal compliance into the BSC allows MSMEs to align institutional expectations with internal performance metrics. According to Prihatmoko et al. [14], integrating halal compliance into a BSC framework enables MSMEs to effectively align their institutional commitments with internal performance metrics, thus enhancing their market positioning and consumer trust. BSC emphasis on both tangible and intangible metrics aligns well with the rigorous requirements of halal compliance, which necessitates meticulous attention to ingredient sourcing, safety protocols, and transparency [15]. Research indicates that embedding halal compliance into strategic performance measurement can enhance trust, customer loyalty, and operational resilience, thereby providing a competitive advantage in the marketplace [4].

2.1. Relationship Between Financial Perspective and Supply Chain Performance

The financial perspective in SC management is critical, as it directly impacts operational efficiency and profitability. Halal certification can be viewed through the lens of Return on Compliance (ROC), where upfront certification costs are offset by long-term revenue gains from loyal halal-conscious consumers. According to Widiarty [16], the mandatory nature of halal certification under Indonesian Law Number 33 of 2014 positions itself not only as a regulatory requirement, but also as a market differentiator for MSMEs. This legislation reinforces the long-term benefits of halal compliance, suggesting that businesses may experience enhanced consumer trust and loyalty, ultimately leading to increased revenue from halal-conscious markets. Financial resources facilitate initial investments in technology and infrastructure, which are essential for enhancing SC performance. Financial integration within the SC supports better resource allocation and responsiveness, which are vital for maintaining competitive advantage [17]. A robust financial framework allows for better risk management and operational control, which are crucial for MSMEs in the volatile food industry. Moreover, integrating digital strategies and new technologies may further optimize cost–revenue ratios in MSMEs [18]. According to SC finance (SCF) theory, integrating financial flows within SC operations can significantly enhance liquidity and working capital, which is particularly critical for MSMEs pursuing halal certification—a process often burdened by substantial initial costs. Evidence shows that SCF reduces financial constraints, optimizes cash flow, and reinforces supplier–buyer relationships. Additionally, SCF contributes to SC resilience and productivity gains [19].

2.2. Relationships Between Customer Perspective and Supply Chain Performance

CP is paramount in shaping SC strategies, particularly in the food sector where consumer preferences can shift rapidly. In the halal food sector, trust is not merely a transactional attribute, but a relational one, as emphasized in the Commitment-Trust Theory, where perceived integrity and shared values drive consumer loyalty. Md Nawi et al. [20] demonstrated that employees’ knowledge and attitudes regarding halal practices influence firms’ commitment to halal standard practices, which, in turn, affect consumer trust and loyalty. Understanding consumer demand is essential for maintaining SC stability. Integrating customer feedback into SC processes enhances product quality and responsiveness, thereby improving overall performance. Effective customer relationship management leads to better SC integration, which is crucial for MSMEs aiming to meet customer expectations in a competitive market [21]. Trust is the cornerstone of long-term customer relationships, especially in religious markets where halal compliance builds emotional and moral bonds with consumers. Research conducted by Mursid et al. [22] supports this notion, demonstrating how customer trust, shaped by halal company identity and customer satisfaction, plays a critical role in promoting loyalty among halal restaurant patrons. The study emphasizes that the emotional and moral bonds established through halal compliance are fundamental for retaining loyal customers in religious markets.

2.3. Relationship Between Business/Internal Process Perspective and Supply Chain Performance

Internal processes within an organization significantly influence SC performance. The SCOR model offers a standardized method to assess and improve internal halal control processes within supply chains, enabling firms to monitor critical activities such as sourcing and certification. According to [23], the SCOR model is instrumental in evaluating halal traceability systems and their impact on business performance, facilitating improvements in halal compliance among Indonesian MSMEs. Effective internal communication and employee satisfaction are critical for achieving SC integration, which directly impacts performance metrics [24]. Internal communication practices and quality management are essential for enhancing SC responsiveness, which is particularly relevant for MSMEs in the food industry [25]. This reinforces the importance of digitalization in streamlining internal processes, thereby improving both internal and external SC integration [26]. External pressures related to sustainability can encourage MSMEs to revamp their internal processes for better green performance [27]. Internal focus not only enhances operational efficiency, but also contributes to better alignment with customer needs and market demands. Total Quality Management (TQM) principles emphasize continuous quality improvement and standardization—an approach that aligns with halal process requirements, ensuring compliance at every stage of internal operations. Oladele et al. [28] highlight that the effective implementation of TQM can enhance organizational performance across multiple facets, illustrating its relevance in environments requiring stringent adherence to quality standards such as halal compliance.

2.4. Relationship Between Growth Perspective and Supply Chain Performance

Growth perspective emphasizes the importance of scalability and adaptability in SC management. Organizational learning and innovation are key to the BSC growth perspective. In halal supply chains, this includes training on halal standards and investment in traceability technology. Voak [29] argues that developing competencies related to halal regulations and standards is vital to ensure consistent compliance with halal requirements. Furthermore, it also emphasizes the importance of employee training and technology investment to enhance operational capabilities and maintain compliance in a dynamic regulatory environment. Aside from employee development and technology investment, another important aspect for the long-term growth and resilience of a business is to develop a sustainable chain strategy. Kinoti et al. [30] illustrates that adopting circular SC practices can enhance sustainability and economic growth, thereby positively influencing overall SC performance. Furthermore, Iyer [31] emphasizes that leveraging information and technology (IT) capabilities can facilitate growth by enhancing demand chain collaboration, which is essential for MSMEs aiming to expand their market reach. Growth perspective in the BSC aligns with dynamic capabilities theory, emphasizing the need for continuous innovation and learning, especially in navigating regulatory changes in halal standards. Linh et al. [3] discuss how effective halal SC management requires ongoing adaptation to still evolving halal certifications and standards, thereby underscoring the importance of organizational learning and flexibility in maintaining compliance and competitiveness. We illustrate the research hypotheses in Figure 1.

We formulate the following hypotheses (Hs) (Figure 1):

H1: 

The financial perspective has a positive effect on supply chain performance in food MSMEs implementing halal certification.

H2: 

The customer perspective positively influences supply chain performance in food MSMEs through enhanced trust, loyalty, and responsiveness driven by halal compliance.

H3: 

The internal business process perspective positively influences supply chain performance in food MSMEs through effective halal control, quality management, and digitalized process integration.

H4: 

The growth perspective positively influences supply chain performance in food MSMEs through organizational learning, employee development, technology investment, and sustainable supply chain strategies.

3. Materials and Methods

3.1. Research Design

A mixed-methods approach was adopted to evaluate the interplay between the BSC framework and halal supply chains. This approach allows the integration of quantitative and qualitative data, providing a more comprehensive understanding of the research problem. Quantitative surveys were utilized to capture data related to financial performance, consumer perceptions, business processes, and growth initiatives, while qualitative interviews explored managerial challenges and strategies. Mixed-methods design enhances the richness of the data collected and allows for triangulation, which minimizes bias and strengthens the validity of the findings [32,33]. All outputs from the AI tools were carefully reviewed and edited by the author(s) to ensure academic rigor and accuracy.

3.2. Sampling

We implemented a purposive sampling approach involving 130 MSMEs and 130 consumers from Malang City, Batu City, and Malang Regency in Indonesia. These locations were intentionally selected based on their characteristics as vibrant culinary tourism hubs with rapidly growing markets. In addition, the selection of these regions was motivated by their differing regulatory enforcement environments, levels of market maturity, and exposure to tourism-driven consumer demand. Malang City represents a relatively mature urban market with more structured regulatory oversight, Batu City reflects a tourism-oriented economy where halal compliance is increasingly emphasized for visitors, while Malang Regency includes more traditional MSMEs with varying degrees of formal certification. According to Statistics Indonesia [34], these regional differences may shape how MSMEs adopt halal practices, allocate resources, and interact with SC partners, thus offering a more comprehensive understanding of halal compliance dynamics across contexts. Purposive sampling was used to target respondents with specific relevance to the research objectives. MSME respondents included fried chicken businesses that both had and did not have halal certification. This sampling approach aims to ensure adequate representation of diverse practices within the halal compliance spectrum. Consumer respondents were selected through on-site surveys to capture perspectives on halal standards and purchasing behavior. The sampling strategy was designed to ensure the inclusion of key stakeholders and to provide a comprehensive understanding of the complexities of halal compliance among MSMEs.

3.3. Measurement Scales

All survey items were measured using a four-point Likert scale ranging from 1 (“strongly disagree”) to 4 (“strongly agree”). The choice of a four-point scale without a neutral midpoint was deliberate, as it encouraged respondents to provide a clear opinion rather than selecting a neutral response. While this design may restrict variability compared to five- or seven-point scales, it was considered appropriate for MSME respondents who may have varying levels of familiarity with survey instruments. The potential limitation of reduced variability is acknowledged, but this trade-off was deemed acceptable to ensure clarity and decisiveness in responses.

3.4. Instrumentation

Data collection involved structured questionnaires employing four-point Likert scores, alongside semi-structured interviews. Data were analyzed by using CFA and Structural Equation Modeling (SEM) to test the hypothesized relationships. The SEM was constructed by using AMOS 24th version (IBM, New York, NY, USA), facilitated detailed analyses, ensuring the reliability and validity of the findings [35]. The selected techniques enhanced the robustness of the research, combining survey data with insights from interviews to provide a holistic understanding of the research problem. Indicators and variables of BSC are shown in

Table 1. Variables of Balanced Scorecard.

Variables	Description
FP (Financial Perspective)
FP 1: Break-Even Point (BEP)	Helps determine the minimum sales volume needed to cover total costs Useful for assessing financial feasibility and pricing strategies
FP 2: Revenue/Cost (R/C)	Measures profitability by comparing revenue against costs Indicates how efficiently business activity converts costs into revenue
FP 3: Return on Investment (ROI)	Evaluates the efficiency of an investment or compares the efficiency of multiple investments Often used to make informed decisions on capital allocation and resource optimization
FP 4: Profit Margin	Represents the percentage of profit a company earns from its sales A key metric for gauging financial health and operational efficiency
CP (Customer Perspective)
CP1: Level of Market Share	Indicates competitive position and brand acceptance in the marketplace A higher market share typically correlates with stronger bargaining power and economies of scale
CP2: Value-Added Perception	Reflects how customers perceive the additional benefits or unique features of a product/service Directly influences willingness to pay and brand loyalty
CP3: Level of Customer Interaction on Processes	Captures how actively customers participate in or influence service/product design and delivery Greater customer involvement can lead to higher satisfaction and co-created value
CP4: Level of Customer Satisfaction	Measures how well a product/service meets or exceeds customer expectations Strongly influences customer loyalty, word-of-mouth, and repeat business
CP5: Customer Retention Strategies	Focuses on maintaining long-term relationships with existing customers, often more cost-effective than acquiring new ones Retention strategies (e.g., loyalty programs) directly impact profitability and brand reputation
BP (Business Perspective)
BP1: Process Efficiency	Ensures resources (time, labor, materials) are used optimally, reducing waste and costs Drives operational excellence and consistent output quality
BP2: Response Time	Measures speed in addressing customer orders, market changes, or production issues Faster response times can lead to improved customer satisfaction and competitive advantage
BP3: Level of Flexibility	The ability to adapt to changes in demand, customization, or market conditions. High flexibility can mitigate risks and improve customer responsiveness
BP4: Level and Extension of Transparency	Involves open communication about processes, data, and performance across the supply chain Greater transparency builds trust among stakeholders and supports agile decision making
BP5: Level of Collaboration	Collaboration among SC partners leads to shared knowledge, reduced costs, and innovative solutions Cross-functional and cross-organizational teamwork is essential for synergy and alignment
BP6: Level of Waste Reduction	Reducing material, time, and energy waste contributes to lean operations and cost savings Essential for sustainable practices and process optimization
BP 7: Level and Extension of Proses Integration	Integration can streamline workflows, reduce duplication, and enable end-to-end visibility
GP (Growth Process)
GP1: Adequacy and Extension of Technologies	Adopting advanced technologies (e.g., Industry 4.0, IoT) is crucial for productivity and competitiveness Reflects the organization’s capability to innovate and modernize
GP2: Adequacy of Infrastructure to New Technologies	Ensures existing physical and digital infrastructure can support modern systems and processes Reduces bottlenecks, downtimes, and ensures smooth integration of emerging technologies
GP3: Level of Integration (Information and Technologies)	Focuses on combining data, systems, and tech to streamline workflow and decision making High integration fosters real-time collaboration and agility in responding to market changes
GP4: Level of People Competencies	Human capital (skills, training, expertise) is key to implementing and sustaining growth initiatives Competent workforce ensures smooth adoption of new processes and tools
GP5: Level of Leadership Engagement	Leadership commitment drives cultural change, resource allocation, and continuous improvement Engaged leaders champion strategic objectives and influence organizational direction

Financial perspective variables adopted from [16]; CP variables adopted from [18]; business perspective variables adopted from [17]; growth process variables adopted from [21].

and indicators and variables for SC performance are shown in

Table 2. Research variables of supply chain performance.

Variables	Description
Raw Material Quality (SC1)	High-quality raw materials reduce defects and prevent downstream process failures Effective supplier selection and strict quality control minimize production costs and improve overall SC performance
Production Process (SC2)	An efficient and timely production process directly enhances overall SC efficiency Continuous improvement efforts help reduce costs, shorten production cycles, and maintain consistent product quality
Distribution and Storage (SC3)	Reliable distribution and storage ensure on-time delivery and product preservation Effective inventory management lowers logistics costs and reduces damage or spoilage risks
Improvement and Adaptation (SC4)	The ability to innovate and adapt (e.g., to changes in market demand or technology) enhance SC resilience Continuous process innovation and improved SC efficiency foster long-term competitive advantage
Quality and Customer Satisfaction (SC5)	Service quality and customer satisfaction are key indicators of SC success Measuring customer perceptions (e.g., using SERVQUAL) provides a benchmark for ongoing improvements in the supply chain
Product Competitiveness (SC6)	Product competitiveness reflects the ability to compete globally in terms of quality, cost, and innovation A well-integrated SC enables rapid and efficient response to market demand, thereby enhancing competitive advantage

Adopted from [17].

. CP in this study is divided into Likert scores of 1 (strongly disagree), 2 (disagree), 3 (agree), and 4 (strongly agree). R/C is divided into Likert scores of 1 (R/C < 1), 2 (R/C = 1), 3 (R/C ≥ 1–3), and 4 (R/C > 3)

In addition to the above variables, triangulation techniques were employed by combining survey data with interview insights to ensure research robustness. This approach minimized bias and provided a holistic understanding of the research problem. Advanced statistical tools, including AMOS, facilitated detailed analyses, ensuring the reliability and validity of the findings.

4. Results

4.1. Financial Perspective (FP)

In this study, Revenue per Cost (R/C) is divided into Likert scores of 1 (R/C < 1), 2 (R/C = 1), 3 (R/C ≥ 1–3), and 4 (R/C > 3) (

Table 3. Likert score for financial perspective.

Variable	Likert Score
	1	2	3	4
FP2: R/C	15	56	59	0
FP3: ROI	43	48	25	14
FP4: Profit Margin	94	29	6	1

R/C, Revenue per Cost; ROI, Return on Investment.

). The Likert scores for R/C, Return on Investment (ROI), and profit margin were predominantly 2 and 3. This reflects that the financial condition of halal fried chicken MSMEs observed in this study is relatively stable but not yet optimal. For R/C, it is shown that businesses are already making a profit, as indicated with 59 respondents with a Likert score of 3 (R/C > 1), although they have not yet reached a high level of profitability. This suggests that most MSMEs are still in the process of capital recovery and improving operational efficiency, particularly in raw material management and distribution. Similarly, 48 respondents had a Likert score of 2 for ROI (ROI 26–50%), indicating that most MSMEs earn profits from their investments but are still in a growth phase. This is influenced by limited capital and fluctuating market demand, which means their profits have not yet been optimized. Moreover, 94 respondents had Likert score of 1 for profit margin (profit margin 1–25%), indicating that most MSMEs only earn small profits from their total sales. The reason for this is due to the high operational costs, price competition with non-halal products, and suboptimal production efficiency. This indicates that most halal fried chicken MSMEs in Indonesia are already profitable but face challenges in increasing their profitability further. The main factors affecting this include high production costs, limited capital and operational efficiency, and fluctuating market demand. It is then suggested that MSMEs need to optimize marketing strategies, improve production efficiency, and leverage halal value as a competitive advantage to attract customers and enhance their market competitiveness.

Analysis of financial performance in the context of halal compliance and the BSC approach for fried chicken MSMEs in Indonesia reveals important insights regarding financial metrics such as R/C, ROI, and profit margin. The findings indicate that most MSMEs operate with an R/C ratio greater than 1, signifying profitable returns on investment. These findings align with previous research emphasizing the importance of halal certification in enhancing financial performance by meeting regulatory requirements and potentially increasing market competitiveness [36]. ROI and profit margin in our study are categorized into several Likert scores, where score 1 corresponds to achieving 1–25%, score 2 to achieving 26–50%, score 3 to achieving 51–75%, and score 4 to achieving 76–100%. The distribution of ROI predominantly falls within the 26–50% range, indicating good capital efficiency in generating profits. Additionally, the concentration of profit margins within the 1–25% range from net sales highlights the challenges faced by MSMEs in achieving higher profitability, an issue also discussed in the literature addressing operational barriers and market dynamics affecting small businesses [37]. Implementation of the BSC approach can facilitate the mapping of financial and non-financial performance indicators, optimizing the financial performance of these SMEs. The strategic framework underscores the importance of integrating halal values into strategic management, which can enhance the competitiveness of MSMEs in the fried chicken sector in Indonesia. Integrating halal compliance within the BSC framework will not only help to improve financial performance metrics, but also foster a more sustainable business model for fried chicken MSMEs in Indonesia. Synergy between halal compliance and effective SC management practices is vital to maintaining operational sustainability and improving overall financial health [38].

4.2. Customer Perspective (CP)

CP in this study is divided into Likert scores of 1 (strongly disagree), 2 (disagree), 3 (agree), and 4 (strongly agree) (

Table 4. Likert score for customer perspective.

Variable	Likert Score
	1	2	3	4
CP1: Level of Market Share	0	14	74	42
CP3: Level of Customer Interaction on Processes	2	13	69	46
CP4: Level of Customer Satisfaction	2	26	80	22

). The predominance of Likert scores of 3 and 4 for the variables Level of Market Share (CP1), Level of Customer Interaction on Processes (CP3), and Level of Customer Satisfaction (CP4) in our study indicates that most respondents had a high level of trust in halal fried chicken businesses. The total scores obtained in each variable reflect how customers perceive and engage with these businesses. In CP1, 74 respondents had Likert score of 3, which shows that most customers recognize that halal fried chicken businesses have a good market share and are well-known among consumers. Furthermore, some also believe that these brands are very strong in dominating the market. Although this figure is high, not all customers are fully loyal or consider the brands to be the absolute market leaders. In CP3, 69 respondents showed a Likert score of 3. This number indicates that many customers are starting to actively engage with the business, whether through asking questions about halal products, providing reviews, or participating in promotional programs. However, most customers are still at a general level of interaction (score 3), while highly engaged customers (score 4) are fewer. This suggests that although customer interaction is relatively high, there is still an opportunity for MSMEs to further encourage customer engagement through digital marketing strategies or loyalty programs. Meanwhile, 80 respondents selected score 3 for CP4. This shows that most customers expressed satisfaction with the products and services they received, but only a small number felt very satisfied. In addition, while market share and customer interaction are relatively strong, there are still areas that need improvement to enhance customer satisfaction to the highest level, such as product innovation, service quality improvement, or a more efficient ordering system.

The predominance of Likert scores of 3 and 4 suggests that the respondents of our study already had a loyal and actively engaged customer base, although there is still room for improvement. In particular, maintaining and increasing customer satisfaction can still be achieved to reach the very satisfied level (score 4). It is then suggested that halal fried chicken MSMEs need to maximize their marketing strategies, enhance halal transparency, and strengthen the customer experience to ensure that market trust can be converted into greater satisfaction and stronger customer loyalty. Level of Market Share (CP1), Level of Customer Interaction on Processes (CP3), and Level of Customer Satisfaction (CP4) in our study reflect the successful implementation of the BSC in Indonesian fried chicken MSMEs. Most of the values fall within the score of 3 (>1), with the highest contribution in CP3 amounting to 69 respondents. Customer interaction with processes has a significant positive impact on improving SC performance. Customer interaction significantly enhances SC performance, as evidenced by the high scores for customer interaction processes and customer satisfaction [39]. There is also a high number of respondents with Likert score of 4, particularly in the CP3 and CP1 variables. This reflects increased market trust and operational efficiency. The synergy of halal compliance should ensure that products meet Sharia standards while simultaneously improving customer satisfaction. This alignment will not only build customer trust, but also improve operational efficiency, which is essential for maintaining competitiveness in a saturated market [5]. The importance of integrating halal compliance and the BSC in supporting business sustainability and competitiveness in a competitive market is then highlighted in our study. Similarly, previous studies on effective and agile supply chains showed that high visibility and collaboration positively affect customer-level metrics [40].

4.3. Business Process

The business process variables of our study are divided into four Likert scores, where score 1 indicates strongly disagree, score 2 indicates disagree, score 3 indicates agree, and score 4 indicates strongly agree (

Table 5. Likert score for business process (BP).

Variable	Likert Score
	1	2	3	4
BP 1: Process Efficiency	0	1	95	34
BP 4: Level of Extension and Transparency	25	15	51	39
BP 5: Level of Collaboration	1	23	78	28
BP 7: Level Extension of Process Integration	1	7	93	29

). The Likert score results show that most respondents selected score 3 and 4 across all observed variables, that is, Process Efficiency (BP1), Level of Extension and Transparency (BP4), Level of Collaboration (BP5), and Level Extension of Process Integration (BP7). The results further indicate that the business processes in halal fried chicken MSMEs have been running quite well, with high efficiency, increased transparency, and growing collaboration. The predominance of scores 3 and 4 suggests that most respondents perceive that business processes are already functioning at a good level, although there is still room for improvement in various operational aspects. One of the main factors contributing to this dominance is the increasing standardization of operations and business process digitalization, which many MSMEs have started implementing to enhance efficiency and effectiveness in SC and distribution. Moreover, 95 respondents selected score 3 for BP1. This shows that most MSMEs have achieved a reasonably good level of process efficiency, supported by the implementation of Standard Operating Procedures (SOPs) in production and distribution. However, challenges remain in raw material and distribution management, preventing efficiency from reaching its full potential. For BP4, the result reflects that MSMEs are beginning to implement transparency in business operations, particularly concerning halal certification and product information, as indicated with 51 respondents selecting the score of 3. However, there are still limitations in customer communication and education, making transparency not yet fully optimized. Meanwhile, 78 respondents selected score 3 for BP5. This indicates that many MSMEs have established partnerships with suppliers and distributors to improve operational flow, but they still face challenges in maintaining long-term collaboration and ensuring more effective coordination. Lastly, 93 respondents selected score 3 for BP7. Overall, the predominance of score 3 and 4 across all business process variables indicates that halal fried chicken MSMEs have achieved a relatively good level of efficiency. Nevertheless, there are still opportunities for improvement in process digitalization, transparency enhancement, collaboration strengthening, and operational integration optimization. Based on our finding, MSMEs still need to increase technology adoption, strengthen partnerships with business partners, and improve customer education and information transparency to achieve a more effective business process.

The evaluation results indicate a strong performance in Process Efficiency (BP1) and Process Integration (BP7), with a significant majority of respondents expressing agreement regarding the efficiency and integration of organizational processes. This suggests that organizations should effectively implement operational practices supported by robust workflows and optimized systems, leading to minimal dissatisfaction in these areas. Feedback regarding Level of Extension and Transparency (BP4) and Level of Collaboration (BP5) reveals mixed sentiments, with some respondents expressing dissatisfaction. Processes and operational goals are essential for long-term success, as they foster a cohesive environment where efficiency can thrive. Appreciation for an organization’s efforts in extension and transparency was tempered by the recognition of gaps in communication practices, which may lead to inconsistencies across different locations. This aligns with stakeholder theory, which emphasizes the importance of understanding stakeholder concerns to enhance transparency and operational effectiveness [41]. Moreover, collaboration in our study is generally viewed positively, although challenges such as misaligned team goals and inadequate tools have been identified, which can hinder effective teamwork. It has been demonstrated that cross-functional and multi-stakeholder collaboration is also crucial for achieving green SC performance [42]. The significance of intercultural competence in global team collaboration further underscores the need for organizations to address these barriers to enhance collaborative efforts. It is imperative for organizations to prioritize improvements in transparency through standardized reporting mechanisms and clear communication frameworks.

4.4. Learning and Growth Perspective

The learning and growth perspective in our study is categorized into four Likert scores, where score 1 indicates strongly disagree, score 2 indicates disagree, score 3 indicates agree, and score 4 indicates strongly agree (

Table 6. Likert score for learning and growth perspective (LGP).

Variable	Likert Score
	1	2	3	4
LGP1: Adequacy and Extension of Technologies	1	9	89	32
LGP2: Adequacy of Infrastructure to the new technologies	9	39	49	33
LGP4: Level of People Competence	5	28	64	33
LGP5: Level of Leadership Engagement	1	8	74	48

). The Likert score results indicate that most respondents selected scores 3 and 4 for the variables of Adequacy and Extension of Technologies (LGP1), Adequacy of Infrastructure to the New Technologies (LGP2), Level of People Competences (LGP4), and Level of Leadership Engagement (LGP5). This predominance suggests that most respondents believe that the adoption of technology, infrastructure readiness, employee competencies, and leadership engagement in halal fried chicken MSMEs are relatively good, while still requiring further improvement. Furthermore, our finding also indicates that MSMEs are already in the phase of adapting and optimizing technology, as well as developing human resources, yet they have not fully achieved optimal performance across all aspects. A total of 89 respondents of our study selected score 3 for LGP1. This indicates that most MSMEs have begun adopting technology in their business operations, such as digital point-of-sale (POS) systems or technology-based inventory management. However, it is found that not all MSMEs have fully implemented technology, leaving room for further development and adoption. For LGP2, 49 respondents scored 3, which reflects that supporting infrastructure, such as internet connectivity, technological devices, and operational systems, is already fairly adequate. However, there are still challenges regarding accessibility and investment in more advanced infrastructure. Meanwhile, 64 respondents selected score 3 for LGP4. This indicates that most employees and MSME owners possess good competencies in managing their businesses, particularly in operational management and marketing. However, there remains a need for further training, especially in technology utilization, digital marketing strategies, and data-driven business management. Lastly, 74 respondents selected score 3 for LGP5. This score reflects that most MSME leaders are actively involved in managing their businesses and making strategic decisions. However, there is still room for improvement in their engagement with innovation, employee development, and enhancing business competitiveness.

However, several challenges still need to be addressed, such as increasing investment in technology, enhancing workforce training and development, and improving leadership involvement in business innovation. To achieve more optimal growth, MSMEs should broaden their use of technology, enhance employee skills, and develop infrastructure that better supports adaptation to modern business advancements. The learning and growth perspective emphasizes an organization’s commitment to strengthening its internal capabilities to achieve a sustainable performance. Adequacy and Extension of Technologies (LGP1) and Infrastructure Readiness (LGP2) peaked in phase three, reflecting the strategic focus on optimizing and adopting advanced technological solutions to enhance operational efficiency. Competency Development (LGP4) showed significant improvement during the same phase, highlighting the effectiveness of employee training programs in aligning workforce skills with organizational needs. Leadership Engagement (LGP5) achieved the highest score, underscoring the critical role of leadership in driving innovation, motivating teams, and fostering a culture of continuous improvement. Advancements demonstrate a comprehensive approach that integrates technological, infrastructural, and human capital development to build organizational resilience and adaptability. Leadership Engagement (LGP5) is another critical factor that influences the effectiveness of competency development and innovation within organizations. Transformational leadership, in particular, has been linked to fostering a culture of continuous improvement and motivating teams to embrace change [43,44]. Research highlights that leadership plays a crucial role in driving innovation and enhancing employee engagement, which is vital for organizational resilience [45]. Studies indicate that the ability of leaders to integrate innovation and religious compliance can bolster overall growth [46].

4.5. Supply Chain

The supply chain variables of our study are divided into four Likert scores, where score 1 indicates strongly disagree, score 2 indicates disagree, score 3 indicates agree, and score 4 indicates strongly agree (

Table 7. Likert score for supply chain.

Variable	Likert Score
	1	2	3	4
CP1: Level of Market Share	1	11	84	34
CP2: Value-Added Perception	2	15	82	31
CP3: Level of Customer Interaction on Processes	7	12	76	35
CP4: Level of Customer Satisfaction	2	14	74	40
CP5: Customer Retention Strategies	6	13	83	28

). The Likert score results of our study showed that most respondents selected score 3 and 4 for the variable of Level of Market Share (CP1), Value-Added Perception (CP2), Level of Customer Interaction on Processes (CP3), Level of Customer Satisfaction (CP4), and Customer Retention Strategies (CP5). This predominance suggests that the SC aspect in halal fried chicken MSMEs has developed well, particularly in terms of value-added perception, customer interaction, and retention strategies. It reflects that MSMEs have implemented effective SC strategies, although there is still room for improvement in process optimization and customer satisfaction. A total of 84 respondents selected score 3, and 34 respondents selected score 4, bringing the total to 118 respondents for CP1. This indicates that most respondents perceive the market share of this business as broad and growing, although there is still potential to increase competitiveness in a larger market. For CP2, 82 respondents scored 3 and 31 respondents scored 4, totaling 115 respondents. This score reflects that most customers recognize the added value of halal products they consume, such as halal certification guarantees, higher-quality raw materials, and better health aspects.

Meanwhile, 76 respondents selected score 3 and 35 respondents selected score 4, bringing the total to 111 respondents for CP3. This indicates that halal fried chicken MSMEs have successfully enhanced customer interaction in their business processes, whether through direct communication, social media, or loyalty programs. However, there is still room to further increase customer engagement, for example, by introducing customer feedback programs or implementing community-based marketing strategies. For CP4, 74 respondents scored 3 and 40 respondents scored 4, totaling 114 respondents. This result indicates that while most customers are satisfied with the products and services provided, there are still challenges in delivering an even better customer experience, particularly in terms of service speed, product variety, and innovation in offerings. Finally, for CP5, 83 respondents selected score 3 and 28 respondents selected score 4, bringing the total to 111 respondents. This suggests that MSMEs have fairly good customer retention strategies, including loyalty programs, consistent service, and ongoing promotions. However, there is still room for improvement in maintaining long-term customer engagement, enhancing service personalization, and building stronger relationships with loyal customers. To further improve SC effectiveness, MSMEs should optimize digital technology for customer management, expand market reach through more aggressive marketing strategies, and increase product innovation to sustain long-term customer loyalty.

The supply chain variables provide a comprehensive evaluation of performance across critical indicators for Indonesian fried chicken MSMEs. Level of Market Share (CP1) achieved a highest respondent score of 3 (84 respondents), which reflects substantial progress in market expansion initiatives. Value-Added Perception (CP2) also recorded a highest score of 3 (82 respondents), indicating successful efforts to enhance the perceived value of products among customers. Customer Interaction on Processes (CP3) demonstrated a strong performance. This highlights effective customer engagement in SC operations. Customer Satisfaction (CP4) achieved a maximum of 74 respondents, showcasing organizations’ commitment to fulfilling and exceeding customer expectations. Similarly, Customer Retention Strategies (CP5) attained their best performance with a score of 3 (83 respondents), illustrating the effectiveness of approaches aimed at maintaining customer loyalty and fostering long-term relationships. Our findings emphasize the critical role of aligning SC activities with customer-centric strategies to optimize operational efficiency and competitiveness. MSMEs can enhance their SC resilience, ensuring sustainable growth and adaptability in an ever-changing market landscape. Value-Added Perception (CP2) is another vital indicator, which signifies successful product differentiation. Ability to meet customer needs through innovative product offerings is crucial for MSMEs, particularly in the competitive food sector. Studies have shown that halal certification can enhance consumer trust and perception of value, thereby positively impacting market performance [4,47]. Furthermore, the implementation of halal standards in food manufacturing has been linked to improved performance outcomes, emphasizing the importance of compliance with consumer expectations [9].

4.6. Common Method Variance (CMV)

This study used Hermann’s one-factor test to understand CMV threat. The result of the test shows that the factors account for 24.78% of the inconsistency, a value less than 50%, meaning that CMV was not a threat in this study. According to Baumgartner [48], if the value of CMV is more than 50% of the total variance in all items, CMV is a threat to the study.

4.7. Confirmatory Factor Analysis (CFA)

The quantitative analysis conducted in this study utilized CFA to validate the measurement model. CFA was performed on items capturing the four BSC dimensions, which include financial, customer, business, and growth, as well as the SC indicators. The initial model yielded suboptimal fit indices, as shown below (

Table 8. Confirmatory Factor Analysis (CFA).

Index	Observed Value	Threshold Criteria	Interpretation
GFI	0.613	≥0.80	Below threshold, poor fit
TLI	0.800	≥0.90	Below threshold, marginal fit
CFI	0.821	≥0.90	Below threshold, marginal fit
CMIN/df	3.781	≤3.00	Above threshold, poor fit
RMSEA	0.147	≤0.08	Above threshold, poor fit

GFI, Goodness-of-Fit Index; TLI, Tucker–Lewis Index; CFI, Comparative Fit Index; CMIN/df, Chi-square/df; RMSEA, Root Mean Square Error of Approximation.

).

To improve the model fit, specific refinements were made, including the removal of two low-loading indicators, specifically one from the business process perspective and one from the growth perspective. Additionally, several error covariances were allowed between closely related observed variables, particularly within the customer and SC constructs, based on modification indices. These adjustments significantly enhanced model parsimony and alignment with theoretical expectations. In the initial CFA results, two indicators showed factor loadings below the acceptable threshold of 0.50, specifically, one item from the business process perspective (BP6: Level of Waste Reduction) with a factor loading of 0.41 and one item from the growth perspective (PP2: Adequacy of Infrastructure to New Technologies) with a factor loading of 0.44. Both indicators were, therefore, removed from the measurement model to improve overall fit indices. The removal of these items did not compromise the theoretical validity of the BSC dimensions, as the remaining indicators adequately captured the core constructs of business process (e.g., process efficiency, collaboration, and integration) and growth (e.g., technology adoption, leadership engagement, and staff competencies). Thus, the structural integrity of the BSC framework remained intact, and each perspective continued to be represented by multiple robust indicators. This refinement enhanced model parsimony while maintaining the theoretical comprehensiveness of the constructs.

The revised indices either met or exceeded conventional thresholds (

Table 9. Model fit indices (Confirmatory Factor Analysis).

Index	Initial Model	Threshold	Revised Model
GFI	0.613	≥0.80	0.855
TLI	0.800	≥0.90	0.918
CFI	0.821	≥0.90	0.934
CMIN/df	3.781	≤3.00	1.535
RMSEA	0.147	≤0.08	0.064

GFI, Goodness-of-Fit Index; TLI, Tucker–Lewis Index; CFI, Comparative Fit Index; CMIN/df, Chi-square/df; RMSEA, Root Mean Square Error of Approximation.

), confirming the convergent validity and construct reliability of the BSC dimensions and SC indicators [49]. Factor loadings for SC1 (raw material quality) and SC2 (production efficiency) exceeded 0.84, demonstrating strong measurement consistency [50]. Customer perspective items—particularly those related to the transparency of halal labeling—showed high loadings (above 0.75), reinforcing the centrality of consumer trust in this domain [51]. The refined model, thus, establishes a robust foundation for further structural analyses, ensuring that each of the BSC perspectives (financial, customer, business, growth) and SC variables represent distinct, yet interrelated, latent constructs. Significance of adequate model fit cannot be overstated, as it underpins the validity of subsequent SEM path estimates.

4.8. Structural Equation Modeling (SEM) Path Analysis

To validate the measurement model, SEM was employed to probe the direct effects of the four BSC perspectives on SC performance. The structural model for BSC and halal SC integration is presented in Figure 2.

4.9. Connecting Customer Perspective (CP) to Supply Chain

Our findings for the CFA and SEM analyses indicate a robust relationship between CP and SC performance, with CP emerging as a statistically significant predictor among the BSC dimensions (

Table 10. Structural path estimates.

Path	Coeff.	p-Value	Interpretation
SC ← CP	0.496	p < 0.001	Significant
SC ← GP	0.803	0.417	Large coefficient but not sig. (p > 0.05)
SC ← BP	−0.511	0.608	Negative, non-significant
SC ← FP	0.114	0.365	Positive, non-significant

SC, supply chain; CP, customer perspective; GP, growth perspective; BP, business perspective; FP, financial perspective.

). The critical roles of consumer satisfaction, loyalty, and trust in halal authenticity mean they function as determinants of SC outcomes in the context of halal-compliant MSMEs [52]. The substantial impact of CP (β = 0.496, p < 0.001) suggests that businesses prioritizing customer-centric strategies can enhance operational efficiency and drive sales growth, particularly in the competitive fast-food sector, where brand reputation and religious legitimacy are intertwined [53]. Figure 2 shows the structural model for BSC and halal SC integration. The results emphasize that halal compliance transcends mere regulatory adherence; it serves as a strategic differentiator in the marketplace. In Indonesia, where the majority of the population identifies as Muslim, halal certification significantly influences consumer purchasing decisions [54]. Our findings align with the marketing literature that posits consumer-driven metrics as pivotal for MSMEs, particularly in sectors where ethical considerations are paramount [53]. As such, businesses that align their operations with consumer expectations regarding halal authenticity can foster trust and loyalty, which are essential for sustaining a competitive advantage in the food industry. Operational insights derived from this analysis suggest that MSMEs should actively engage consumers by leveraging halal transparency as a marketing tool. This can be achieved through clear communication of halal certifications, educational initiatives about halal processes, and effective use of social media to showcase commitment to halal principles [55]. Such proactive engagement not only enhances consumer trust, but also positions MSMEs favorably in a rapidly evolving market landscape, where consumer expectations are increasingly shaped by ethical considerations.

4.10. Relationship Between Growth Perspective (GP) and Supply Chain

Our findings regarding the GP reveal a high coefficient (β = 0.803, p-value = 0.417), indicating the complexities involved in linking long-term strategic investments to immediate SC performance. Leadership engagement and staff competencies may enhance SC effectiveness, while practical constraints such as financial limitations, cultural resistance, and inconsistent application of these strategies can impede the realization of these benefits in the short term. The literature supports this notion, highlighting that the alignment of strategic investments with operational outcomes is often fraught with challenges, particularly for MSMEs [56]. Interviews with MSME stakeholders explained these findings, revealing that many MSMEs prioritize immediate operational efficiency due to limited resources. This often results in fragmented or partial adoption of growth-oriented initiatives, such as employee training programs that lack continuity, thereby diminishing their cumulative impact on SC metrics. Technological upgrades, including inventory management systems or halal certification tracking, are frequently implemented in isolated phases rather than being integrated across all operations, which further complicates the potential for improved performance [56]. Another critical factor influencing the non-significance of the GP is the inherent lag time associated with growth-related investments. For instance, leadership development necessitates sustained effort and cultural adaptation before it can translate into measurable improvements in SC performance. Aligns with the broader understanding that strategic investments require time to manifest their full potential, particularly in the context of MSMEs, where resource constraints are prevalent [56]. Moreover, a cultural shift within MSMEs is essential to position growth-oriented investments as integral to their operational strategy rather than discretionary expenditures. MSMEs can cultivate a more resilient and adaptive supply chain. Future research should consider longitudinal studies to capture the delayed effects of growth-related investments, providing a more nuanced understanding of how the growth perspective interacts with other dimensions of the BSC to enhance overall performance.

4.11. Relationship Between Business/Internal Process and Supply Chain

The negative, non-significant coefficient (β = −0.511, p-value = 0.608) for internal process initiatives indicates that, within the examined sample, efforts aimed at enhancing internal processes such as waste reduction, process integration, and SC transparency were either inconsistently implemented or inadequately scaled. Our finding suggests that while internal processes are theoretically essential for operational efficiency, their practical execution within MSMEs often lacks the strategic rigor necessary to yield measurable performance improvements [57]. It also emphasizes that the effectiveness of internal processes is contingent upon their systematic implementation, which appears to be lacking in the current context. Several factors may contribute to the observed non-significance of internal process initiatives. Firstly, MSMEs frequently encounter resource constraints that hinder their ability to fully optimize internal processes. For instance, while waste reduction initiatives are recognized as effective cost-saving measures, their successful implementation typically requires investments in technology and training that may be beyond the reach of smaller enterprises [58]. Process integration across the SC necessitates collaboration and coordination with suppliers and distributors, a capability that many MSMEs may lack due to insufficient leverage or technological infrastructure [59]. Another critical aspect influencing the negative coefficient is the scalability of these initiatives. Previous studies have highlighted that these methodologies may not be able to deliver the anticipated outcomes without appropriate customization [50], particularly in resource-constrained environments [60]. The negative coefficient may reflect the limitations of cross-sectional data in capturing the benefits of internal process improvements. Initiatives often experience a lag time before their impacts become evident, indicating the necessity for longitudinal studies to comprehensively understand their contributions to SC performance [61]. Future research could explore the interplay between internal processes and other dimensions of the BSC, such as customer and financial perspectives, to provide a more holistic view of their role in enhancing overall performance [62]. MSMEs should consider adopting a phased approach to internal process optimization. The initiation of low-cost, high-impact initiatives—such as basic workflow standardization or digital tools for process tracking—could lay the groundwork for more advanced strategies.

4.12. Relationship Between Financial Perspective (FP) and Supply Chain

The modest. non-significant path from FP metrics to SC performance (SC) (β = 0.114, p-value = 0.365) underscores a critical dynamic in the context of MSMEs within Indonesia’s halal food sector. Our finding suggests that short-term financial metrics, such as ROI, profit margins, and the Revenue-to-Cost (R/C) ratio, are not the primary determinants of SC success. This aligns with the perspective that in consumer-driven markets, particularly those influenced by ethical considerations like halal compliance, non-financial factors often exert a more substantial impact on overall performance [63]. One possible explanation for this result is the evolving priorities of MSME owners in the halal food sector. Many have shifted their focus from maximizing immediate profits to fostering consumer trust, brand loyalty, and ethical alignment. Intangible factors not only enhance market standing, but also create sustainable competitive advantages. Research indicates that consumer-driven metrics, such as trust in halal authenticity, often outweigh strictly monetary considerations, especially in sectors where religious and ethical values significantly influence purchasing decisions [63]. Many MSMEs may still be in the early stages of adopting halal compliance measures and integrating them into their operational frameworks. A gradual process often necessitates upfront investments in certification, training, and infrastructure, which may temporarily suppress short-term financial gains [64]. Consequently, the financial benefits of such efforts may not yet be fully reflected in their SC performance metrics. MSME owners may prioritize intangible outcomes over immediate profitability. For instance, many businesses actively invest in consumer education about their halal practices, focusing on transparency and authenticity to build trust. Such consumer-centric strategies, while not immediately reflected in financial metrics, lay the groundwork for long-term success by fostering strong customer relationships and loyalty [65]. This approach aligns with the findings of [66], which highlight the resilience of MSMEs during challenging times, emphasizing the importance of trust and ethical practices in maintaining consumer loyalty. Regarding a strategic perspective, our finding underscores the necessity for MSMEs to balance financial performance with consumer-driven and ethically based factors. MSMEs should consider adopting a dual-focus approach that simultaneously strengthens their financial fundamentals while enhancing alignment with consumer expectations. Involvement of financial leverage metrics as supportive tools rather than primary drivers will ensure that profitability and ethical considerations complement rather than conflict with one another [36]. Policymakers and industry associations also have an important role in addressing this dynamic. Provision of financial support in the form of subsidies, grants, or low-interest loans for halal certification and operational upgrades could help MSMEs navigate the financial pressures associated with compliance. Moreover, training programs that emphasize the interplay between ethical practices and financial performance could equip MSME owners with the tools needed to align these dimensions effectively [67]. In addition, there is a lag time between investments, such as in certification, training, or infrastructure, and their measurable effects on performance. Moreover, some misalignment could exist, because the standard BSC indicators may not fully capture the specific requirements of halal supply chains.

4.13. Qualitative Insights

In addition to the survey, qualitative insights were derived from in-depth interviews with 15 participants, comprising 10 MSME owners/managers (both halal-certified and non-certified) and 5 consumers. The MSMEs were purposively selected to capture diversity in certification status, size, and years of operation, while consumer respondents were recruited through on-site approaches in Malang City, Batu City, and Malang Regency. The interviews lasted between 30 and 45 min, were conducted face-to-face, and followed a semi-structured format. All sessions were audio-recorded with consent, transcribed, and anonymized. Data were analyzed thematically using NVivo version 14th (Lumivero, Dongguan, China) software, with two coders independently coding transcripts; disagreements were resolved by discussion to improve reliability. Member checks with three MSMEs further strengthened validation.

Qualitative insights gathered from the interviews revealed several operational challenges faced by MSMEs, including high costs associated with halal-certified materials and the need for frequent retraining of staff. One MSME owner in Batu stated, “The price of halal-labeled chicken in modern retail is generally higher than what’s sold in traditional markets, while our profit margins are very thin. If we’re not careful, we could end up at a loss.” This identified challenges of our study echo findings from previous studies that highlight the financial and logistical barriers to achieving halal certification [68]. Another respondent noted, “We’ve already had halal training before, but staff keep turning over. So, we have to repeat the training, which takes time and costs.” Consumer trust in halal transparency emerged as a key driver of brand loyalty and market differentiation, reinforcing the importance of maintaining high standards in halal compliance to foster consumer confidence [69]. The results from the interviews further underscore the significance of leadership engagement and continuous improvement initiatives. Business owners emphasized the necessity for comprehensive training programs to enhance employee awareness of halal principles and the BSC framework. Our finding aligns with research suggesting that effective training and leadership commitment are crucial for successful halal certification processes [70]. Technological adoption, such as inventory management systems, was identified as a potential enabler for improved performance, although financial and knowledge-related barriers were noted as significant obstacles [71].

Thus, the qualitative evidence provides in-depth explanation for the quantitative SEM findings. While the SEM model indicated that CP exerted the strongest positive influence on SC performance, the interviews revealed that consumer trust in visible halal compliance was the key mechanism underpinning this relationship. Conversely, the lack of significant effects from the financial and business process perspectives in the quantitative analysis was supported by interview data showing MSMEs’ difficulties in converting halal certification costs into immediate financial benefits and their limited capacity to streamline internal processes. Moreover, the integration of qualitative insights with SEM provides further explanation for the non-significant paths. The high costs of halal-certified materials clarify why the FP did not yield significant effects, as these expenses constrained profitability despite compliance efforts. Similarly, frequent staff turnover and the need for repeated retraining explain the non-significant coefficient of the business process perspective, since internal process improvements could not be consistently sustained.

5. Discussion

The findings of our research reflect a critical shift in the perception and implementation of halal compliance within the MSME landscape. The CP emerged as the most influential factor, primarily as it directly addresses consumer trust, which is essential in Muslim-majority regions like Indonesia. Businesses that prioritize transparency in their halal labeling and invest in consumer education can create a strong competitive advantage by building loyalty and fostering repeat patronage [72]. This dynamic underscores the need for MSMEs to view halal compliance not merely as a regulatory hurdle, but as an opportunity to strengthen their market positioning [47,73]. Beyond the strong influence of the CP, the insignificant effect of financial, business process, and growth perspectives requires further interpretation. First, many MSMEs only adopt halal practices partially, so the expected improvements in financial or operational outcomes cannot be fully realized. Second, benefits related to finance, growth, and internal processes often appear gradually, creating a time lag between the initial investment and observable results. Third, there is a degree of misalignment, as conventional BSC measures emphasize efficiency and profitability, while halal supply chains require indicators such as traceability, staff retraining, and compliance audits that are not easily captured by standard metrics. These factors indicate that the non-significant findings do not imply that these perspectives are unimportant, but rather that their impact is incremental and context-dependent. This interpretation highlights the importance of adapting performance frameworks to the realities of halal MSMEs.

Financial and process-oriented improvements may have less immediate impact to long-term success. Continuous investment in training, leadership development, and technological infrastructure is crucial. Adoption of automated systems for tracking halal compliance can streamline operations and reduce human error. However, such measures require significant upfront resources [36]. The challenge lies in balancing these investments with day-to-day operational demands, a dilemma shared by many MSMEs operating in resource-constrained environments [72]. Recent research also emphasizes that systematic evaluations of halal SC management—particularly in culinary enterprises—can reveal specific performance gaps and improvement opportunities [74]. Furthermore, policymakers and industry associations have a vital role. MSMEs need a supportive ecosystem that includes subsidized certification processes, targeted training programs, and access to halal-compliant raw materials. Collaborative models involving public and private stakeholders can help lower barriers to entry for halal certification [75]. Potential for innovation in this space is immense. Collaborative platforms that connect MSMEs with academic institutions and industry leaders could serve as incubators for new technologies and best practices. Such initiatives would not only amplify the impact of halal compliance efforts, but also foster a culture of continuous improvement across the SC [4]. Digital platforms could educate both producers and consumers about the benefits of halal compliance, aligning market expectations with operational realities [76]. The CP currently drives SC performance, and integrating financial, business, and growth perspectives is essential for sustainable success. Halal compliance as a strategic enabler rather than a cost center is crucial. MSMEs should adopt a balanced approach that leverages both immediate and long-term benefits, as previously demonstrated [77].

6. Limitation

This study has several limitations that should be acknowledged. First, the use of purposive sampling involving MSMEs and consumers from only three regions (Malang City, Batu City, and Malang Regency) restricts the generalizability of the findings to other geographic areas and broader halal food sectors. Second, the relatively small sample size may not fully capture the diversity of practices and consumer perceptions across Indonesia. Third, the use of a four-point Likert scale, while designed to encourage decisiveness, may have reduced variability in responses compared to five- or seven-point scales, potentially limiting the richness of measurement. Additionally, the study relied on established scales and indicators within the Balanced Scorecard framework, which may not comprehensively represent all aspects of halal compliance or supply chain performance. Finally, the cross-sectional design of the research precludes the ability to assess long-term or lagged effects of halal certification and performance improvement efforts. Future research should adopt larger and more diverse samples, utilize alternative measurement scales, and apply longitudinal designs to strengthen the generalizability and robustness of the findings.

7. Conclusions

This study demonstrated that integrating halal compliance into the BSC framework significantly improves SC performance in MSMEs. Our finding highlighted CP as the most statistically significant variable. Moreover, our findings also confirm that while financial and business process perspectives showed limited short-term impact, they are essential for long-term strategic development, especially in resource-constrained MSMEs. This research addresses a critical gap by linking halal compliance with performance measurement systems, offering a novel framework that bridges operational and religious accountability in MSMEs. To implement these findings, MSMEs can start by mapping halal indicators into their existing BSC dimensions—such as using customer feedback to assess trust in halal claims, or tracking internal training to measure staff readiness in halal practices. Thus our study suggests that policymakers should offer structured incentives and capacity building to support MSMEs in adopting halal practices more systematically. Despite these contributions, the study has several limitations. The use of purposive sampling in three regions of Malang limits the generalizability of the findings, as the sample may not represent all halal food MSMEs across Indonesia. The cross-sectional design also restricts the ability to capture long-term or lagged effects of halal compliance initiatives on SC performance. Future research should, therefore, adopt longitudinal approaches to examine how impacts evolve over time, expand to different sectors beyond fried chicken MSMEs, and consider alternative analytical models that incorporate dynamic capabilities or resilience frameworks. By addressing these limitations, subsequent studies can provide a more comprehensive understanding of how halal compliance shapes business performance in diverse contexts.