From Traits to Resilience: How Muslim Entrepreneurs Thrive in Times of Crisis

Abstract

During the COVID-19, Muslim entrepreneurs had to adapt to remain resilient. These Muslim entrepreneurs can rely on entrepreneurial personality and skill traits to survive a crisis. This paper aims to expand the analysis of the several contributing factors to the resiliency of small- and medium-sized enterprises (SMEs) managed by Muslim entrepreneurs, as identified in various scholarly publications. Additionally, this study emphasises the significance of entrepreneurial personality and skill traits, investigates the mediating role of entrepreneurial orientation on the link between entrepreneurial traits and SME resilience, and explores the moderating effects of Muslim religiosity. Furthermore, it delves into specific Islamic principles such as “ikhtiar” (effort) and “tawakkal” (reliance on God), which contribute to the resilience of Muslim entrepreneurs. This study centres on Muslim business owners of small- and medium-sized enterprises (SMEs) in West Sumatra. The final sample obtained was 452 Muslim entrepreneurs. This research was conducted in 2021, at the peak of the COVID-19 pandemic. The findings indicate that entrepreneurial traits influence the resiliency of Muslim entrepreneurs in two distinct ways: directly and indirectly via entrepreneurial orientation. This research advances the entrepreneurial literature in three ways. First, research on entrepreneurial resilience is extended, considering the different dimensions of entrepreneurial personality and traits (negotiation skills, risk-taking, optimism, locus of control, and need for achievement). Second, this study explores the mediating role of entrepreneurial orientation on the relationship between entrepreneurial personality and skill traits toward entrepreneurial resilience. Finally, this study specifically discusses Muslim entrepreneurs as research respondents.

1. Introduction

As in other industries, the SME industry has changed drastically since 2020. The outbreak of the COVID-19 pandemic, which has restricted the movement of consumers and producers, is the primary factor driving this phenomenon (Kukanja et al., 2020; Thams et al., 2020). From the producer side, SME owners are constrained by reduced supply and increased production costs, exacerbated by consumer decline (Watermeyer et al., 2021). Although history shows that SMEs are an industry resistant to economic crises, the crisis caused by COVID-19 presents new challenges (Aburumman, 2020). During the economic crisis, SMEs could still carry out various activities to save their business, but during the pandemic, everything was halted (Atangana, 2020; Wardi & Trinanda, 2022). Entrepreneurs, consumers, and the government are locked down, and all activities are limited. Consequently, COVID-19 has had effects both on the supply and demand sides. When people’s movements are restricted, businesses experience a labour shortage due to employees being unwell or needing to care for dependent children or other family members—thus, implementing lockdowns and quarantines to control the pandemic results in even lower utilisation of available capacity (Bakar & Rosbi, 2020). Supply chains are frequently interrupted, which inevitably leads to disruptions. A sudden and drastic lack of supply and revenue for SMEs significantly impacts their ability to function, leading to considerable limitations (Bartis et al., 2021). In addition, customers also experience a reduction in income, anxiety around the possibility of infecting others, and heightened levels of uncertainty.

This condition brings different challenges, so even the most resilient and experienced SMEs must find new ways to escape this crisis (Kukanja et al., 2020). Entrepreneur resilience is a dynamic adaptation process that allows business owners to keep looking ahead to harsh and destabilising situations (Vassi & Frsa, 2022; Grèzes et al., 2023). Resiliency is the ability to survive and adapt to something unpredictable, which is crucial in helping entrepreneurs overcome difficulties (Caesar & Haryadi, 2022). In addition, a good entrepreneur can overcome problems related to stability while continuing to be oriented toward the future. Entrepreneurial orientation is often described as product innovation, undertaking somewhat risky ventures, and developing proactive innovations (Telagawathi et al., 2022; Susanto et al., 2022). SMEs can apply an entrepreneurial orientation if they dare to innovate market products, take risks, and innovate proactively (Afrinaldi et al., 2022). Thus, entrepreneurial orientation is the processes, practices, and activities that use product innovation, take risks, and try to innovate to beat competitors proactively.

Entrepreneur orientation is essential to the success of an SME because it enables them to devise a plan to begin something new and capitalise on possibilities when other businesses cannot do so (Arunachalam et al., 2018). Entrepreneurial orientation is a term for organisations that act entrepreneurially to define their operations, tactics, and decision-making styles (Arzubiaga et al., 2018). Any firm’s entrepreneurial orientation can be estimated by looking at how it functions on three dimensions: (1) innovativeness, (2) risk-taking, and (3) proactiveness. These dimensions also affect individuals (Arshad et al., 2020). In times of crisis, entrepreneurial orientation is required. This entrepreneurial orientation defines the characteristics necessary to thrive (Asad et al., 2016). Therefore. Entrepreneurial orientation is one of the predictors of entrepreneurial resilience.

Entrepreneurship aims to build resilience to survive crises, including a pandemic. However, even though resilience is an essential factor for entrepreneurs, little research has been conducted on incorporating entrepreneurial orientation and entrepreneurial traits (Cho & Baek, 2020), thus signifying a gap in this knowledge.

Successful entrepreneurs’ skills, capabilities, and cognitive abilities are described as entrepreneurial traits. Some entrepreneurs are born with certain traits, while others can learn them (Zelenski et al., 2013). Understanding and mastering these characteristics are critical since entrepreneurs assume all the risks associated with their business, which can be rewarding and stressful. On the other hand, entrepreneurs are in a better position to fulfil their goals if they demonstrate the appropriate entrepreneurial traits.

In addition to examining the relationship among entrepreneurial resilience, entrepreneurial orientation, and entrepreneurial traits, to be more focused, this study examines the resilience of Muslim entrepreneurs. Muslim entrepreneurs are a group that is rarely studied academically (Syamsul & Juhary, 2021), especially concerning their religiosity in business. Muslim entrepreneurs believe business is part of worship (ibada); therefore, Islamic values must be integrated into various business strategies (Musafa’ah, 2015). For a Muslim, business is not seen as a secular, worldly affair but as a form of devotion to Allah (S. Abdullah & Mikail, 2013). Moreover, Muhammad (the greatest prophet of Islam) was also an entrepreneur, and all his behaviour, actions, and words were laws in Islamic teachings (Juma, 2018).

The resilience of Muslim entrepreneurs in times of crisis is also interesting to discuss, as Islam regulates its adherents in terms of how to carry out their lives, not limited to worship activities (Khatimah et al., 2024). One of Islam’s teachings is that a person’s fate is determined by their effort, known as “ikhtiar” (Refai & Haloub, 2023). Another important principle is “tawakkal,” which means trusting Allah while making an effort. These principles encourage Muslim entrepreneurs to persevere and remain hopeful even in the face of significant challenges (S. Abdullah & Mikail, 2013). Muslim entrepreneurs should be resilient in conducting business not only because of their personality and traits but also because of the encouragement of their beliefs (Rafiki et al., 2022).

The novelty of this research lies in examining religiosity as a moderating variable between entrepreneurial orientation and entrepreneurial resilience, addressing a gap in the literature. The use of religiosity as a moderator in entrepreneurship studies has been relatively underexplored. Additionally, this research focuses on Muslim entrepreneurs because Islamic teachings require them to integrate religiosity into various aspects of their lives, unlike entrepreneurs from more secular cultures.

Therefore, in addition to filling the knowledge gap, this research advances the entrepreneurial literature in three ways. First, it extends the research on entrepreneurial resilience by incorporating the different dimensions of entrepreneurial personality and traits (negotiation skills, risk-taking, optimism, locus of control, and need for achievement). Second, this study explores the mediating role of entrepreneurial orientation on the relationship between entrepreneurial personality and skill traits toward entrepreneurial resilience. Finally, this study specifically discusses Muslim entrepreneurs as research respondents. The three novelties of this paper are summarised in

Table 1. Studies that examine the relationship between entrepreneurial personality and traits and entrepreneurial resilience.

Authors	Dimensions of Personality and Traits (First Novelty)	Mediation of Entrepreneurial Orientations (Second Novelty)	Moderation of Muslims Religiosity (Third Novelty)	Conclusions
Kottika et al. (2020)	Negotiation Skills Need for achievement Optimism Locus of control Risk-taking	Yes	No	Entrepreneurial personality and traits positively directly impact entrepreneurial resilience, and indirectly through entrepreneurial orientations
Haddoud et al. (2022)	Openness Conscientiousness Extroversion Agreeableness Neuroticism	No	No	Entrepreneurial personality and traits positively impact entrepreneurial resilience
Farradinna et al. (2019)	Locus of control Self-regulation	No	No	Openness personality positively impacts entrepreneurial orientation.
Schutte and Mberi (2020)	Hard work Positive attitude Self-belief	No	No	Personality traits positively impact entrepreneurial resilience, which subsequently impacts survival trait
(Nasser, 2021)	unexplained	Yes	No	Personality traits positively influence entrepreneurial orientation, which subsequently impacts entrepreneurial resilience

.

The research’s essential contribution is the focus of the investigation on Muslim entrepreneurs. As the research object, Muslim entrepreneurs must be discussed in expanding entrepreneurial research because the number of Muslim entrepreneurs is increasing (Boubekeur, 2016). This aligns with the increasing Muslim population worldwide (Schlueter et al., 2020). Therefore, Indonesia, especially West Sumatra, was chosen as the research location because this country has the largest number of Muslims worldwide (Games et al., 2013). In addition, West Sumatra is inhabited mainly by Minangkabaunese, who are known as Muslims.

2. Theoretical Background and Hypotheses Development

2.1. Psychological Capital Theory

The “Psychological Capital Theory” is a relevant theory of entrepreneurial resilience (Soomro et al., 2018). Psychological Capital (PsyCap), as developed by Fred Luthans and colleagues, refers to an individual’s positive psychological state of development, comprising four essential components: self-efficacy, optimism, hope, and resilience (Tang, 2020). PsyCap applies to various fields but has significant implications for entrepreneurial resilience (Eisenberger & Stinglhamber, 2021).

According to this theory, entrepreneurs with higher levels of PsyCap are more likely to recover from setbacks, adapt to new situations, and maintain their motivation in adversity (Soomro et al., 2018). The relationship between the four components of Psychological Capital and entrepreneurial resilience, as briefly examined by (Soomro et al., 2018; Zeng et al., 2022; Machmud & Ahman, 2019):

• Self-efficacy is a person’s belief in their ability to complete a specific endeavour or attain a desired outcome. Entrepreneurs with self-efficacy view obstacles as surmountable, have confidence in their skills and are more resilient in the face of setbacks.
• Optimism refers to a positive outlook on future outcomes, regardless of obstacles or setbacks. Optimistic entrepreneurs maintain optimism, concentrate on opportunities, and persevere despite setbacks, enhancing their resilience.
• Hope entails establishing lucid objectives, developing strategies, and maintaining the resolve to achieve desired outcomes. Entrepreneurs with a strong sense of optimism maintain motivation and resiliency because they view setbacks as transient and believe they can find alternate routes to success.
• Resilience refers to the capacity to recover swiftly from setbacks, adapt to change, and persevere through difficult circumstances. Entrepreneurs with a high level of resiliency recover from setbacks more effectively, learn from their mistakes, and devise alternative solutions to problems.

Psychological Capital Theory posits that cultivating and maintaining these positive psychological resources can improve an entrepreneur’s ability to navigate the inevitable challenges of entrepreneurial ventures (C. Zhang et al., 2020). By developing self-efficacy, optimism, hope, and resiliency, entrepreneurs can strengthen their ability to endure setbacks, surmount obstacles, and ultimately achieve long-term success.

2.2. The Effect of COVID-19 on Innovation

COVID-19 has changed almost all aspects of life, from personal to professional. These changes also affect how the company interacts with its consumers (M. I. Abdullah et al., 2021; Hendrik et al., 2024). Furthermore, companies also agree that the crisis has brought significant new opportunities for growth (Afrinaldi et al., 2022; Sultan et al., 2023). However, these opportunities would vary in different industries; the emergence of these opportunities does not automatically mean companies can immediately seize them (Yu et al., 2022). Therefore, various innovations are required to take these opportunities (Yaya et al., 2022).

Initially, companies’ response to COVID-19 was focused on survival (Tuti et al., 2022). These responses are usually at their core, such as cutting costs, driving productivity, and implementing safety measures against the spread of COVID-19 (Thakore et al., 2022). Therefore, innovation costs tended to decrease at the early stage of the pandemic. As the COVID-19 pandemic progresses, business owners re-focus their attention and resources to respond to consumer needs (Shcherbak & Gryshchenko, 2022; Saputra et al., 2022); for this reason, significant innovations are needed. Reasonably, the first industries that have made the most innovations are pharmaceuticals and medicals (Gong et al., 2022).

Furthermore, in the post-COVID-19 pandemic, companies continue to innovate because consumer behaviour has radically changed (Yuliati et al., 2022). Consequently, they no longer operate as they did in the past. What makes a business grow in the pre-pandemic era is no longer possible during a pandemic or post-pandemic (Adam & Alarifi, 2021; Bartis et al., 2021). New channels have been opened for consumers to meet their needs, mainly on digital channels such as e-marketplaces, social media, etc. (Witarsana, 2022). Even though the digital awakening has brought arguably similar changes in the business world (Industrial Revolution 4.0), the pandemic has accelerated the disruptive forces (Valdez-Juárez & Castillo-Vergara, 2022). With work-form-home and learn-from-home policies becoming mandatory during the pandemic, consumers have become familiar with digital engagement (Ulitin et al., 2022). Consumers browse their needs directly via the internet. Consequently, innovation is needed to take advantage of opportunities in the post-pandemic era (Svensson, 2022). For MSMEs, this is where the need for entrepreneurial orientation is (Telagawathi et al., 2022; Liu et al., 2022; Afrinaldi et al., 2022).

Entrepreneurial orientation is indicated by creativity and innovation (Z. Zhang et al., 2021). Entrepreneurs with an entrepreneurial orientation would operate their companies by applying ideas, skills, knowledge, and talents. A robust entrepreneurial orientation is characterised by product innovation development, including during crises (Nofiani et al., 2021).

2.3. Characteristics of Muslim Entrepreneurs

When conducting business, religious Muslim entrepreneurs adhere to the Koran and hadith (prophet Muhammad’s sayings and deeds), which are not necessarily motivated by economic reasons (Soepatini & Putra, 2020). Therefore, there are numerous distinctions between Muslim and Christian entrepreneurs (or Western entrepreneurs). In Western countries, economic activity motivation is often the maximisation of individual utility by economic agents (Kopren & Westlund, 2021). Muslim business activities must be primarily focused on pleasing Allah, which includes conducting business under the moral and ethical standards of Islamic practices, fulfilling one’s religious obligations, and contributing to the overarching Islamic goal of advancing society (Saad et al., 2018).

According to Islamic teachings, all business transactions, including those of entrepreneurs, must aim to achieve religious objectives (Boulven et al., 2018). Religion and economic activities are inextricably linked; hence, the set of financial behaviours is governed not only by secular, legal, and ethical principles but also by religious principles (Yaacob & Azmi, 2016).

In Islam, entrepreneurial success is assessed by personal financial success and the achievement and observance of religious goals and norms, which may benefit the entrepreneur in the afterlife (Musafa’ah, 2015). Muslim entrepreneurs do not engage in activities and businesses prohibited by Shariah law (Muin et al., 2015).

Furthermore, in Islam, money is valued for facilitating lawful economic transactions, but its exchange is not a permissible financial goal (S. Abdullah & Mikail, 2013). Interest charging or payment and methods involving excessive risk, uncertainty, speculation, and wasteful spending are prohibited for Muslim entrepreneurs (Saad et al., 2018). Islamic economies have devised methods to supply cash to Muslim businesses as an alternative to debt finance through credit sales, partnerships, and interest-free loans (Boulven et al., 2018).

In entrepreneurship, Muslim entrepreneurs often draw upon fundamental principles that significantly enhance their resilience and capacity to manage challenges effectively (Burns, 2022). Two basic concepts that play a crucial role in this context are ikhtiar and tawakkul (S. Abdullah & Mikail, 2013).

Ikhtiar, understood as effort or endeavour, underscores the necessity for diligent and purposeful efforts in all business activities (S. Abdullah & Mikail, 2013). For Muslim entrepreneurs, ikhtiar encompasses the physical exertion required to achieve objectives and the mental and spiritual commitment to aligning these efforts with Islamic ethical standards (Ita, 2014). This principle promotes persistence through difficulties, encourages the pursuit of innovative solutions, and reinforces resilience. By integrating ikhtiar into their business practices, entrepreneurs cultivate inner strength and mental clarity, which enhances their ability to navigate challenges effectively.

Conversely, tawakkul, meaning the act of entrusting outcomes to Allah after exerting maximum effort, complements the concept of ikhtiar (Hackett, 2014). Tawakkul instils a sense of trust in Allah regarding the results of one’s endeavours, thereby mitigating stress and anxiety related to the uncertainty of business outcomes. This principle encourages entrepreneurs to accept the results with serenity and gratitude, believing Allah’s wisdom ultimately guides the outcome (Games et al., 2013). Tawakkul provides a framework for maintaining inner peace and psychological resilience, even amidst fluctuating business conditions.

The interplay of ikhtiar and tawakkul establishes a comprehensive approach to resilience in entrepreneurship. Muslim entrepreneurs are encouraged to engage in persistent and ethically grounded efforts while trusting Allah’s divine wisdom (Vargas-Hernández et al., 2012). This dual approach fortifies their ability to address and overcome obstacles and fosters a constructive and optimistic perspective (Madichie & Gallant, 2012). By adhering to these principles, entrepreneurs navigate their ventures with a balanced blend of determination and spiritual reassurance, contributing to their overall success and well-being in the entrepreneurial landscape.

Research on Islamic entrepreneurship in non-Muslim majority countries highlights significant challenges and promising opportunities intricately linked to entrepreneurial resilience. Key challenges include a lack of awareness and understanding of Islamic business ethics among local stakeholders, difficulties accessing funding, and navigating regulatory environments that may not accommodate Shariah-compliant practices (El-Gohary, 2020) These obstacles necessitate a high level of resilience among Muslim entrepreneurs, who must continuously adapt and innovate to sustain their businesses under these constraints.

Despite these challenges, opportunities exist due to growing interest in ethical and sustainable business practices that align with Islamic principles, the potential for new market segments, and the rise in multicultural business environments (Rammal & Zurbruegg, 2007). Muslim entrepreneurs demonstrate remarkable resilience by leveraging these opportunities to overcome adversity and integrate their values into competitive business models. The presence of Islamic entrepreneurs enhances business diversity and can improve corporate reputation and consumer loyalty by reflecting broader ethical values (Adham et al., 2024).

Empirical case studies, such as those on Islamic finance institutions in Western countries, illustrate how Muslim entrepreneurs employ resilience strategies to navigate regulatory challenges and market demands while maintaining adherence to Islamic principles (Ayar & Gürbüz, 2021). These studies underscore the ability of Islamic entrepreneurs to balance their ethical commitments with practical business needs, contributing to their overall resilience and success. Thus, integrating Islamic business ethics into global markets presents significant potential for impact and growth and exemplifies Muslim entrepreneurs’ resilience in non-Muslim majority contexts.

2.4. Entrepreneurial Resilience and Entrepreneurial Personality and Traits

The toughness of a business actor shows entrepreneurial resilience in a crisis (Farradinna et al., 2019). Resilience is characterised by the ability to adjust to unexpected and unwelcome environmental changes, persevere in facing challenges, and recover from unpleasant situations (Lightsey, 2006). Therefore, the ability of an entrepreneur to endure becomes the most crucial aspect of their success. As a result, a resilient entrepreneur will be more successful than others who are less adaptable. Furthermore, entrepreneur communities have a greater level of adaptability than non-entrepreneur communities, implying that entrepreneur performance may be determined through resilience (Pyka & Zanger, 2019). As a result, an entrepreneur must develop resilience to accomplish business orders and sustain business continuity.

The more capable entrepreneurs can survive in a business, the better their resilience (Schutte & Mberi, 2020). Therefore, entrepreneurial resilience is crucial because SMEs always face uncertain conditions with limited resources (Nasser, 2021). This research on entrepreneurial resilience is a human resources study because it considers entrepreneurial personality and traits. The relationship between these two variables has been found several times with consistent results (Haddoud et al., 2022). Entrepreneurial personality and traits with varied dimensions are almost always found to affect entrepreneurial resilience positively.

Entrepreneurs should clearly understand their business (Wolff et al., 2015). Consequently, they must be capable of planning long-term and short-term objectives. In addition, they must be able to communicate clearly and efficiently. Furthermore, being driven by a substantial emotional investment in one’s work is another essential trait of a successful entrepreneur. Finally, because becoming an entrepreneur requires a significant commitment and a lot of hard work, those who pursue it must be enthusiastic about the work that they are performing (Yaghoubi & Naroei, 2011).

This study uses the dimensions offered by Kottika et al. (2020) because it summarises previous studies. These dimensions are negotiation skills, risk-taking, optimism, locus of control, and need for achievement.

Negotiation skills are soft skills for bargaining, where one negotiates a problem to achieve a mutually agreed-upon final result. This skill involves emotional intelligence for managing oneself and interacting with others.

Risk-taking is the ability to weigh and take risky but profitable behaviour or actions. Since entrepreneurship is an activity that is very close to risk, every SME owner must have the courage to take risks.

Optimism refers to an understanding of the belief that everything will have good results and the attitude of always having good hopes in everything. SME owners are always encouraged to be optimistic, especially in a business competition. Entrepreneurs always say that they continue to think positively when starting a business until they are successful. They provide one of the keys to the success of entrepreneurs is optimism.

Locus of control is a personal characteristic dependent on inner strength. Therefore, it is self-determining and strongly desires to be independent and autonomous.

Need for achievement refers to an individual’s desire for significant accomplishment, skill mastery, control, or high standards.

Thus, the first hypothesis of this study is:

H1. 

Entrepreneurial personality and traits: (a) negotiation skills, (b) need for achievement, (c) optimism, (d) locus of control, and (e) risk-taking have a positive effect on entrepreneurial resilience.

2.5. The Mediating Role of Entrepreneurial Orientation

Entrepreneurial orientation is shown by creativity and innovation (Covin & Wales, 2012; Susanto et al., 2023). When executives are designing plans in the hopes of doing something new and taking advantage of chances that other businesses cannot take advantage of, entrepreneurial orientation is a significant factor that needs to be considered as part of the process. Entrepreneurial organisations utilise entrepreneurial orientation in their day-to-day operations, work processes, and decision-making procedures (Wang & Yen, 2012). Entrepreneurs with good entrepreneurial orientation consistently generate new strategies when solving challenges (Cruz & Nordqvist, 2012; Eggers et al., 2012). Entrepreneurial orientation is also indicated by a willingness to take high risks when promised high rewards (Ekpe & Mat, 2012).

Based on previous literature (Fatoki, 2012; Gupta & Pandit, 2012; Hafeez & Shariff, 2012), Entrepreneurial orientation is one of the variables that positively determine entrepreneurial resilience. On the other hand, challenges and crises demand creativity and innovation from SMEs (Jalali, 2012). Furthermore, in several studies (Al-Dhaafri et al., 2013; Rosenbusch & Rauch, 2013), entrepreneurial orientation has been used as a mediating variable between entrepreneurial personality, and skill traits and entrepreneurial resilience. Therefore, in this study, entrepreneurial orientation is a mediator between constructs, and its direct relationship is examined. As a result, we believe there is an indirect link between entrepreneurial personality and traits and entrepreneurial resilience.

This leads us to expect that:

H2. 

Entrepreneurial orientation acts as a mediator between (a) negotiation skills, (b) need for achievement, (c) optimism, (d) locus of control, and (e) risk-taking and entrepreneurial resilience.

H3. 

Entrepreneurial orientation has a positive effect on entrepreneurial resilience.

2.6. The Moderating Effect of Religiosity

Numerous individuals’ lives are significantly shaped by their religious beliefs (Elaziz & Kurt, 2017). Individuals, particularly believers, can apply religious principles to their activities, including business practices and the workplace (Iguchi et al., 2018). Entrepreneurs guided in their decision-making by the moral precepts presented in their religions are more likely to engage in such action. Religion can be an effective, ethical framework since it promotes spirituality and humanity, resulting in positive moral behaviour based on compassion, trustworthiness, and honesty (Preko & Mohammed, 2020). Furthermore, religiosity can impact a person’s resilience in a crisis or an unwanted situation (King & Crowther, 2004). This is because they believe that an almighty God supervises everything they do. According to Islam, every striving believer will be rewarded in this world and the afterlife (Musafa’ah, 2015). This ideology strengthens Muslim entrepreneurs’ mental fortitude in the face of adversity.

This study is unique in that it incorporates religiosity into the research model. Previously, the model that connects the constructs used in this study has been proven several times. But so far, no research has focused on Muslim entrepreneurs, whereas Muslim entrepreneurs rely on their religiosity to maintain mental toughness in crises (S. Abdullah & Mikail, 2013). The better the religiosity of an entrepreneur, the more he believes that there is a divine power that will protect him as long as he is still willing to work hard (Jridi et al., 2018). This study’s relationship between entrepreneurial orientation and entrepreneurial resilience is moderated by entrepreneurial religiosity. This has never been studied in the previous literature. Thus, we can propose that:

H4. 

As religiosity increases, the positive influence of entrepreneurial orientation on entrepreneurial resilience increases.

Figure 1 depicts the conceptual framework.

3. Methodology

3.1. Sampling and Data Collection

The empirical investigation of this study centres on Muslim business owners of small- and medium-sized enterprises (SMEs) in West Sumatra. However, the business sector owned is not limited. According to (Trinanda & Evanita, 2019), SME companies are attractive to study because their nature is diverse and dynamic. To test the proposed hypothesis, this study analyses SMEs in West Sumatra. This area was chosen because most SME owners are ethnic Minangkabau, 100 per cent Muslim. By surveying West Sumatra, this investigation found the factors determining Muslim entrepreneurs’ resilience. The selection of West Sumatra as the research site is justified by several unique characteristics that align well with the objectives of this study. First, West Sumatra is predominantly inhabited by the Minangkabau ethnic group, comprising approximately 97% of the population. The Minangkabau people have long been recognised as highly skilled entrepreneurs in Indonesia. Previous research has attributed this entrepreneurial prowess to their adherence to a matrilineal culture, where men do not inherit property and thus are incentivised to pursue entrepreneurship from a young age (Games et al., 2013). Second, the Minangkabau community is entirely Muslim, and their customs and traditions are deeply rooted in Islamic teachings. The local saying, ‘adat basandi syarak, syarak basandi kitabullah’, which translates to ‘customs based on Islamic law, and Islamic law based on the Quran’, reflects the strong integration of Islamic principles into their daily lives (Games et al., 2013). These distinctive characteristics make West Sumatra an ideal setting for this study, as they provide a unique context for exploring Muslim entrepreneurs’ resilience and entrepreneurial traits.

Based on data from the Indonesian Central Bureau of Statistics (BPS Indonesia), the number of SMEs in West Sumatra was 580,344 businesses in 2017. However, no data on the number of Muslim SME owners is available. For this reason, the researchers compared the BPS data with the SME owner contact list provided by the Department of Industry and Trade (Disnaker) in each city and district in West Sumatra. Disnaker data contains essential information such as name, cellphone number, email, and the religion of the SME owner. Questionnaires were distributed after the enumerator team contacted potential respondents via email or WhatsApp. If the prospective respondent agrees to fill out the questionnaire, the enumerator can send an online or printed one or come directly to the SME location. During initial communication with SME owners, enumerators also used a control question, “Are you a Muslim?” before asking respondents to fill out a questionnaire. If the prospective respondents answered no, they were not asked to complete the questionnaire. Since primary data collection was carried out from the beginning of August to September 2021, the peak of the COVID-19 pandemic, enumerators who visit SME businesses directly apply health protocols such as wearing masks, washing hands, and maintaining a physical distance.

Initially, the target sample was 500 SME owner entrepreneurs in West Sumatra. However, after verifying for missing and outlier data, etc., the final sample was 452 Muslim entrepreneurs (90.4% response rate). Each of these entrepreneurs survived the economic downturn brought on by the COVID-19 pandemic, which proves their resilience. The stratified sample technique was applied by gender (73% male and 27% female) and age (71.2% between 18 and 44 years and 28.8% over 45 years).

3.2. Measures

Primary data were collected through online and offline survey methods via Google Forms and printed questionnaires. Before answering the survey questions for this study’s purposes, each respondent was confirmed and selected as someone who could survive the economic crisis caused by the COVID-19 pandemic. Then, respondents were asked to indicate their personality and skill traits with different dimensions related to their entrepreneurial orientation and resilience.

All concepts were measured with the Likert scale (Trinanda et al., 2021). The adaptation scale from the existing literature (Kottika et al., 2020) for personality and skills traits, entrepreneurial orientation, and entrepreneurial resilience and Abror et al. (2021) to measure religiosity. To measure entrepreneurial resilience with the item’s sales volume, profits, ROI, and market share, researchers used data from August 2020 to August 2021 for each SME. However, this has limitations because these data are influenced by other variables, such as the industry in which the SME is involved. Researchers did not apply controls for these influences, which became a limitation in this study.

3.3. Measurement Assessment

Before analysing the conceptual model, we used confirmatory factorial analysis to assess the scale’s reliability and validity.

Table 2. Item descriptive and convergent validity.

Construct	Source	Factor Loading	CR	AVE	Cronbach Alphas
Negotiation Skills	Kottika et al. (2020)		0.825	0.542	0.791
Preparation for negotiations.		0.747
Ability to negotiate under pressure.		0.810
Expression during negotiation.		0.696
Persuasiveness during negotiating.		0.684
Decisiveness when negotiating.		0.743
Ability to control emotions during negotiations.		0.787
Ability to use power during negotiation.		0.816
Need for Achievement	Kottika et al. (2020)			0.532
The desire to always achieve something.		0.763
The ability to understand the motivations of others to work hard.		0.883
Desire to face and complete challenges.		0.643
Feeling happy about an achievement.		0.845
Optimism	Kottika et al. (2020)		0.851	0.589	0.847
The self-confidence that performance will improve in the future.		0.857
Confidence that the economy will improve.		0.644
Hope for improvement in life and economy.		0.669
Locus of Control	Kottika et al. (2020)		0.809	0.591	0.798
Faith in control of fate.		0.654
Belief in the ability to control others.		0.881
Ability to execute plans.		0.903
Confidence that results will be obtained from hard work.		0.853
The belief is that success is the result of the right time and place.		0.919
Risk-Taking	Kottika et al. (2020)		0.858	0.551	0.866
Confidence in investing to get big rewards.		0.936
Tendency to choose risky but promising jobs.		0.863
Enjoy taking risks.		0.919
The fear of living a dull life.		0.936
Enjoyment of speed driving.		0.863
The belief is that risk is the spice of life.		0.933
The pleasure of doing something last minute.		0.945
Entrepreneurial Orientation	Kottika et al. (2020)		0.959	0.801	0.954
Emphasis on R&D, technology leadership, and innovation.		0.876
Consistency in offering a new line of products in the last five years.		0.848
Dramatic product changes.		0.834
Always the first to initiate change.		0.674
Often become a company that offers new products.		0.866
Strong preference for high-risk projects.		0.960
The belief that change can only be made with bold actions.		0.939
Adopting a wait-and-see strategy when dealing with decision-making situations.		0.868
Religiosity	Abror et al. (2021)		0.889	0.556	0.789
Believe that religion is essential in life		0.645
Believe that Islam will lead to a better life		0.676
Believe that prayer will help		0.901
Prophet Muhammad (peace-be-upon-him) was a role-model		0.778
Priority to perform the pilgrimage		0.623
Believe that God will help		0.823
Entreprenurial Resilience	Kottika et al. (2020)		0.930	0.968	0.938
Sales volume.		0.865
Profits.		0.974
ROI.		0.984
Market share.		0.868

summarises the findings of these tests. First, the factor loading of the items in each construct is used to assess item reliability. Convergent validity was supported by obtaining a loading factor above the threshold value (0.6). A minimum cut-off number was discovered on all constructs using the Cronbach alpha coefficient (0.70) (Wardi et al., 2021). Furthermore, as recommended by Singh and Chahal (2017) and Koç (2017), composite reliability and average variance extracted (AVE), values meet the minimally acceptable criterion (0.70 and 0.5.0, respectively).

The present study also examined the criteria for Goodness of Fit (GoF), which included normed Chi-square (CMIN/DF), Adjusted Goodness of Fit Index (AGFI), Goodness of Fit index (GFI), Comparative Fit Index (CFI), and Tucker–Lewis index (TLI), as well as Root Mean Square Error of Approximation. The criteria are presented in

Table 3. The measurement model goodness of fit.

Construct	No. of Items	CMIN/DF	Goodness of Fit Indices
			CFI	TLI	GFI	AGFI	RMSEA
Default model	19	4.100	0.920	0.990	0.914	0.843	0.061

, as Byrne (2010) stated. Furthermore, the present investigation employed the thresholds of 5 for CMIN/DF, 0.90 for CFI, TLI, and GFI, 0.80 for AGFI, and 0.08 for RMSEA, as proposed by Bentler and Bonett (1980). The study has conducted preliminary investigations, such as assessments for outliers, normality, multicollinearity, and heteroscedasticity, as stated by Pallant (2013). In addition, discriminant validity verification has been performed, as summarised in

Table 4. Discriminant validity.

	1	2	3	4	5	6	7
Negotiation skills	0.736 a
Need for achievement	0.324 b	0.729
Optimism	0.212	0.204	0.767
Locus of control	0.329	0.329	0.355	0.768
Risk taking	0.009	0.023	0.015	0.042	0.742
Entrepreneurial orientation	0.251	0.257	0.247	0.473	0.130	0.894
Entrepreneurial resilience	0.311	0.112	0.123	0.333	0.433	0.354	0.983

^a Square root of AVE of each factor. ^b Squared correlations between pairs of factors.

.

3.4. Hypotheses Testing

When analysing a system of structural equations, the sample size is essential to evaluate hypotheses with validity. A power test must be implemented (Horzum et al., 2015) using Gpower version 3.1.9.7 software. This research has met the requirement of a score greater than 0.80.

With EQS 6.2, the structural model results are shown in

Table 5. Model fit and structural coefficients.

Hypothesised Relationships	T-Value	Estimate Coefficients	Supported
H1a: Negotiation Skills → Entrepreneurial Orientation	2.823 ***	0.124	Yes
H1b: Need for Achievement → Entrepreneurial Orientation	3.423 ***	0.156	Yes
H1c: Optimism → Entrepreneurial Orientation	ns	ns	No
H1d: Locus of Control → Entrepreneurial Orientation	3.638 ***	0.177	Yes
H1e: Risk Taking → Entrepreneurial Orientation	10.474 ***	0.146	Yes
H3: Entrepreneurial Orientation → Entrepreneurial Resilience	5.283 ***	0.259	Yes

***: p < 0.001; ns: not significant.

. The adjustment’s goodness indices are within the literature’s acceptable ranges (BBNNFI = 0.901, IFI = 0.916, CFI = 0.915, RMSEA = 0.067). Negotiation skills (H1a: β1a = 0.124), need for achievement (H1b: β1b = 0.155), locus of control (H1d: β1d = 0.177), and risk-taking (H1e: β1d = 0.146) affect entrepreneurial orientation. Almost all the relationships between the five dimensions of entrepreneurial personality and traits align with the proposed hypothesis. Finally, entrepreneurial orientation affected entrepreneurial resilience (H3: β3 = 0.259).

3.5. Mediation Test of Entrepreneurial Orientation

After investigating the direct relationship, the bootstrap method was used to analyse the indirect effect using Preacher and Hayes (2004).

Table 6. Assessing the indirect effects.

Mediation Effects	Direct Effect	Indirect Effect	Standard Error	95% Bias-Corrected CI	Result
H2a: NS → EO → ER	Significant/Supported	0.0357	0.0159	[0.0047; 0.0680]	Partial mediation
H2b: NAch → EO → ER	Significant/Supported	0.0523	0.0155	[0.0225; 0.0839]	Partial mediation
H2c: O → EO → ER	Significant/Supported	Not Significant	0.0196	[−0.0125; 0.0787]	Not mediation
H2d: LoC → EO → ER	Significant/Supported	0.0638	0.0150	[0.0346; 0.0948]	Partial mediation
H2e: RT → EO → ER	Not Significant/Not Supported	0.0134	0.0069	[0.0013; 0.0285]	Full mediation

NS: negotiation skill; NAch: the need for achievement; O: optimism; LoC: locust of control; RT: risk-taking; EO: entrepreneurial orientation; ER: entrepreneurial resilience.

summarises the indirect effects, standard errors, and bias-corrected confidence ranges generated from bootstrap estimation. These values are presented with a 95% level of accuracy.

According to the findings of the investigations, four out of the five indirect effects are statistically significant since the confidence interval for their estimate’s 95% bias correction does not contain zero. Therefore, as a consequence of the direct influence of (a) negotiation skills, (b) need for achievement, (c) optimism and (d) locus of control on entrepreneurial resilience is significant, this study finds entrepreneurial orientation is a partial mediator of entrepreneurial personality and skill traits towards entrepreneurial resilience. On the other hand, entrepreneurial orientation does not mediate the relationship between optimism and entrepreneurial resilience since it does not meet criterion 1 Holmeck (1997).

3.6. Test of Moderation in the Relationship Between Entrepreneurial Personality and Traits and Entrepreneurial Resilience

The bootstrap method, established by Preacher and Hayes (2004), was utilised to analyse the moderating effect of religiosity. The data processing results in model 1 (

Table 7. Moderation bootstrapping results.

Structural Path	Estimate Coefficients	Standard Error	p-Value	95% Bias-Corrected CI	Result
H4: EO × R → ER	0.0757	0.0349	0.0308	[0.1444; −0.0069]	Supported

) show that entrepreneur religiosity significantly moderates the effect of entrepreneurial orientation on entrepreneurial resilience (β4 = 0.057; p = 0.0308).

4. Discussion

4.1. Study Findings

This research finds that almost all of the first hypotheses (H1a, H1b, H1d, and H1e) are supported, except for H1c. This research aligns with several previous studies which found that negotiation skills needed for achievement, locus of control, and risk-taking positively and significantly affect entrepreneurial orientation (Sturm et al., 2023; Ooi et al., 2023). It proves that if Muslim entrepreneurs improve these dimensions, their entrepreneurial orientation will also be stronger. Zighan and Abualqumboz (2022) found that negotiation skills are needed by an entrepreneur so that the market can accept the ideas and products he offers. In this case, it is recommended that Muslim entrepreneurs increase their persuasiveness and use appropriate facial expressions when negotiating.

Furthermore, the need for achievement is a strong motivation that encourages Muslim entrepreneurs to have an entrepreneurial orientation because they always want to achieve something. These results align with previous research (Azazz & Elshaer, 2022; Hoque et al., 2023). To increase the need for achievement, Muslim entrepreneurs must improve their ability to motivate others to work hard. Locus of control is also a predictor of the entrepreneurial orientation of a Muslim entrepreneur. For this reason, Muslim entrepreneurs must believe (faith) that fate lies in their efforts. Also, risk-taking was found to have a positive and significant effect on entrepreneurial orientation. Based on the research results, all items on this dimension are strong, but it can be suggested to Muslim entrepreneurs that they prefer significant opportunities but have measurable risks.

This research also proves that entrepreneurial orientation can significantly influence entrepreneurial resilience. That is, the stronger the entrepreneurial orientation of a Muslim entrepreneur, the more resilient he will be in facing crises. This result is in line with previous research. To strengthen entrepreneurial orientation, one thing that Muslim entrepreneurs can do is always to be the first to initiate change. Finally, this study found that religiosity can increase the effect of entrepreneurial orientation on entrepreneurial resilience, especially in Muslim entrepreneurs.

4.2. Theoretical Contribution

The COVID-19 pandemic demands resilience from entrepreneurs, including Muslims. Although this crisis differs from previous crises, often triggered by the economy, the pandemic is multifaceted. Consumer and producer movements are physically restricted, so normal business cannot be carried out. In contrast to the economic crisis, which affects consumers’ consumption capability, the COVID-19 pandemic affects both consumers and producers (SMEs). Consumers and producers cannot move physically and must confine themselves to their residences, limiting their interaction with anyone else. As a result, consumers’ consumption is automatically reduced. On the other hand, producers (SMEs) will face supply shortages, labour shortages, and other issues. As a result, the current crisis is unique from previous economic crises experienced by SMEs.

Some previous literature identifies the relationship between entrepreneurial traits and entrepreneurial resilience. Still, few have discussed the mediating role of entrepreneurial orientation, and none have focused on Muslim entrepreneurs’ resilience. There needs to be more literature on this subject applied to SMEs. The research’s key contribution is to measure the impact of entrepreneurial traits on entrepreneurial resilience by placing entrepreneurial orientation as a mediator. As per the prior research, several dimensions of entrepreneurial traits have been proven to significantly and positively affect entrepreneurial resilience.

This research proposes that negotiation skills needed for achievement, locus of control, and risk-taking predict entrepreneurial resilience. Furthermore, when mediated by entrepreneurial orientation, almost all indirect relationships increased significantly (except for risk-taking on the entrepreneurial trait when moderated by entrepreneurial orientation).

Based on this research, we propose that entrepreneurial religiosity is important in building entrepreneurial resilience. The association between several dimensions of entrepreneurial attributes and entrepreneurial resilience is moderated by the level of religiosity of SME owners (high or low). This discussion concludes that high religiosity increases the positive relationship between entrepreneurial orientation and entrepreneurial resilience.

The results of this study can also be used as a reference for teaching entrepreneurship in schools and universities, especially in countries/regions with large Muslim populations. Teachers and lecturers can add the importance of religiosity in the course syllabus as material when explaining entrepreneurial resilience.

4.3. Managerial Implications

This research bridges the gap between theory and practice by providing actionable insights that can be used in various domains. Economically and commercially, the findings can inform business development strategies and training programmes designed to enhance entrepreneurial resilience. In teaching, these insights can be integrated into entrepreneurship, ethics, and resilience curricula. The recommendations for supportive regulatory frameworks and educational programme can influence public policy. This study contributes to the body of knowledge on entrepreneurial resilience, particularly within the context of Islamic entrepreneurship.

This research presents an important lesson for Muslim SME owners to build resilience. First, entrepreneurs must increase the various dimensions of entrepreneurial personality and traits because this will increase resilience in a crisis. Second, Muslim entrepreneurs must improve their negotiation ability by increasing persuasiveness. In addition, achievement and locus of control are needed in times of crisis by increasing motivation to work hard and believe in being able to control one’s fate. A visionary entrepreneur can recognise what others cannot. They approach problems in unusual ways, thinking freely and imaginatively and questioning the status quo. They aspire to reshape the world through their product or business and will go to any length to achieve that goal. A successful entrepreneur must have a focal point and a dedication to their objective, where they produce inventive ideas, make decisions, invent products and services, and so on.

Second, entrepreneurs must also have a high entrepreneurial orientation. This is shown by creativity, innovation, and willingness to take measured risks. It would be very beneficial if Muslim entrepreneurs initiated the change. A proactive person sees opportunities and threats ahead of time and attempts to address them, whereas a reactive person merely reacts to them. It is always preferable to be proactive rather than reactive as an entrepreneur. In the post-COVID era, various problems will arise that require adaptability from the business world. This is an opportunity for Muslim entrepreneurs to become change agents and encourage other entrepreneurs to escape the crisis.

Finally, especially for Muslim entrepreneurs, it is very important to understand that religiosity is one of the building blocks of business robustness. This research encourages Muslim entrepreneurs not to separate their business activities from their religiosity. Religiosity is essential for businesspeople, especially as a “fence” of their activities. Interestingly, the results of this study are also in line with Islamic teachings. Islam allows business activities as long as they do not violate Allah’s commands. Prophet Muhammad (the greatest prophet in Islam) was also an entrepreneur. Furthermore, entrepreneurship activities can also be considered worship and are rewarded with “Pahala” (an Arabic word that means reward bestowed by Allah the Almighty to a Muslim man or woman when he or she does good deeds) if the business is conducted with good intentions and benefits others.

As for the government, the findings of this study can be used to consider implementing public policies to increase SME owners’ resilience. As previously mentioned, SMEs are the economic “backbone” of the economies of developing countries. For this reason, it is imperative to maintain the continuity of the SME business and must be prepared to withstand crises. Based on this research, the government can train entrepreneurs in various skills such as negotiation skills, risk-taking skills, motivational training, etc. With the improvement of these skills, it is hoped that entrepreneurs will become more resilient to crises. The government can also encourage Muslim entrepreneurs to increase their religiosity in running a business.

Supporting Muslim entrepreneurship has broader societal benefits, including job creation and social cohesion. By fostering an environment that encourages Muslim entrepreneurs, communities can benefit from increased economic activity and the promotion of ethical business practices. This support can lead to improved quality of life and a more inclusive society that values diversity in business.

Policymakers should recognise the importance of fostering an entrepreneurial orientation among Muslim entrepreneurs. This can be achieved by designing and implementing policies encouraging innovation, risk-taking, and proactive business strategies. Creating regulatory frameworks that support Shariah-compliant business practices will also facilitate the integration of Islamic principles in business.

In addition, there is a need for educational programmes that enhance entrepreneurial skills and traits among Muslim entrepreneurs. These programme should focus on negotiation skills, risk-taking, optimism, locus of control, and the need for achievement. By providing targeted training and development opportunities, policymakers can help entrepreneurs build the competencies necessary to thrive in challenging environments.

4.4. Limitations and Future Research

Various limitations in this study can be used as a starting point for further research. First, the dimensions of entrepreneurship and traits are very diverse, and this study only uses a few. Further, researchers can modify or combine various dimensions to fit their research context. It would be fascinating if the subsequent research used the factor analysis method by applying all the completed dimensions. Second, this study is the first to consider religiosity as one of the factors forming resilience. Subsequent studies should confirm this.

Furthermore, to measure entrepreneurial resilience, researchers use sales volume, profits, ROI, and market share as measurement items. However, this has limitations because these data are influenced by other variables, such as the industry in which the SME is involved. Further research should apply controls for these influences.

Although this study’s findings contribute to our understanding of entrepreneurial behaviour, placing them in the proper context is critical. First, the research was limited to a single geographical area (i.e., West Sumatera and Indonesia). Because there are other Muslim entrepreneurs in different places and cultures, the effects of religiosity on entrepreneurial behaviour can differ from religion to religion. More research is needed to understand the impact of religiosity on entrepreneurial behaviour in diverse geographic regions, cultures, and beliefs.

It is also essential to critically engage with this study’s limitations. One limitation is the focus on a specific geographic region, West Sumatra, which may not fully capture the experiences of Muslim entrepreneurs in other non-Muslim majority contexts. Additionally, the data were collected during the peak of the COVID-19 pandemic, which could influence the generalizability of the findings to different periods.

Another limitation is the reliance on self-reported data, which may be subject to biases such as social desirability or recall bias. Future studies should consider triangulating data sources to enhance the robustness of the findings. Additionally, exploring longitudinal designs could provide insights into how entrepreneurial resilience evolves.

Future research could also benefit from adopting a mixed-methods approach, combining quantitative survey data with qualitative interviews or case studies. This methodology would offer a more comprehensive understanding of Muslim entrepreneurs’ personal experiences and strategies during the pandemic, allowing for a deeper exploration of how they navigate challenges and leverage opportunities in non-Muslim majority contexts.

5. Conclusions

This study aims to investigate the numerous factors contributing to the resiliency of small- and medium-sized businesses owned and operated by Muslim business owners, which were identified from various works of literature. Furthermore, this study emphasises the significance of entrepreneurial personality and skill traits, analysing the moderating effects of Muslim religiosity on the relationship between entrepreneurial personality and traits and entrepreneurial resilience, as well as the mediating effect of entrepreneurial orientation on that relationship. To do this, a survey of Muslim entrepreneurs (N = 452) was conducted, recording their perceptions of the various constructs studied in this study.

Empirical results suggest that to build entrepreneurial resilience, entrepreneurial traits, which consist of (a) negotiation skills, (b) risk-taking, (c) locus of control, (d) need for achievement, and (e) entrepreneurial orientation, are very important. This variable mediates the relationship between the two constructs, especially for entrepreneurial orientation. Furthermore, SMEs should consider increasing their religiosity to build entrepreneurial resilience.

This study provides valuable insights into the resilience of Muslim entrepreneurs in non-Muslim majority countries during the COVID-19 pandemic. The research highlights that entrepreneurial orientation—innovativeness, proactiveness, and risk-taking—is crucial in developing entrepreneurial traits and SME resilience.

Therefore, to summarise the key findings of this research:

• Entrepreneurial traits, including negotiation skills, risk-taking, optimism, locus of control, and need for achievement, influence resilience directly and indirectly through entrepreneurial orientation.
• Entrepreneurial orientation mediates the relationship between entrepreneurial traits and resilience, emphasising the importance of innovation, proactiveness, and risk-taking.
• Islamic principles provide an ethical foundation that supports resilience, helping entrepreneurs navigate challenges with a balanced approach of effort and reliance on divine support.