The influence of institutional coercive pressures and social capabilities on corporate social performance of zakat-funded social initiatives

Corporate zakat has emerged as a significant mechanism for the private sector to support social initiatives in line with Shari’ah principles. The distribution of zakat for social initiatives demonstrates a form of social performance where companies fulfill both their religious obligation and their role in promoting social welfare. Building on this foundation, corporate zakat also contributes to broader global agendas such as the Sustainable Development Goals (SDGs), particularly in reducing inequality, alleviating poverty, and promoting inclusive economic growth. Within the framework of Corporate Social Responsibility (CSR), zakat complements other forms of social investment, such as impact investing and blended finance, by mobilising resources from the private to the social sector to create both economic and social impact. However, there has been little research on the factors influencing corporate zakat payers to enhance the corporate social performance of zakat-funded social initiatives. Drawing on two theoretical lenses, Institutional Theory and Social Resource Based View (SRBV) Theory, this study examines the influence of institutional coercive pressures (government support, tax incentive, CSR regulatory framework and the role of zakat institutions) and social capabilities (mission statement, top management commitment, stakeholder engagement, cross-sector collaboration and social innovation) on the corporate social performance of zakat-funded social initiatives. The corporate zakat payers in the Federal Territories of Malaysia and the state of Kedah are selected due to the proactive approaches between zakat institutions in these regions and the private sector in implementing zakat-funded social initiatives. A quantitative approach was conducted using a set of questionnaires distributed to the company representatives responsible for corporate zakat management. The research model was further analysed using the Partial Least Squares-Structural Equation Modeling (PLS-SEM) technique.