This study investigates the institutional and individual factors influencing halal practices among asnaf entrepreneurs in Malaysia, with a particular focus on the mediating role of capacity-building programs. Grounded in institutional theory, the research examines how normative pressure, resource constraints, zakat institutional support, and entrepreneur awareness impact halal practice. Data was collected from 128 asnaf entrepreneurs through a structured survey and analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM). The findings reveal that normative pressure, resource constraints, zakat institutional support, and awareness significantly influence halal practices. Furthermore, access to capacity-building programs mediates the relationship between zakat institutional support and halal practice, highlighting the critical role of training and development initiatives. This study extends institutional theory within the context of faith-based micro-entrepreneurship and underscores the need for integrated financial and non-financial support mechanisms to enhance halal practice among asnaf entrepreneurs. The results offer theoretical insights and practical implications for policymakers, zakat institutions, and development agencies working to empower asnaf entrepreneurs in the halal economy.
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