Porter’s and CSR Strategies by Islamic Cooperatives

Islamic cooperatives are built to provide funding for micro-scaled entities and low-income societies, but their markets are claimed by bigger Islamic and conventional financial institutions. To adapt to the competition, entities should properly adjust strategies from the available resources and entities’ capabilities to build cooperatives’ competitive advantages. This study conducted a content analysis in sixty (60) from 2,422 Islamic Cooperatives in East Java Province which inform their products and CSR activities on their websites and social media. Therefore, this study aims to know how far the Islamic cooperatives apply Porter’s generic model (differentiation, competitive cost, and market focus strategies) and Corporate Social Responsibility (CSR) activities by referring to Global Reporting Initiative (GRI) Standards (2021). Islamic cooperatives always consider the interest rate of other banks, diversify aqad and schemes for fund collection and financing, develop mobile banking applications, and determine specific customer focus, such as employees, students, village enterprises, and micro businesses with a focus on agriculture, trade, market, pond, and animal husbandry sectors. Concerning CSR, cooperatives also have a target to increase the prosperity of members and society. Cooperatives result in indirect economic impacts through services, products, working capital, and assistance for families and businesses surrounding the cooperatives. Only a few cooperatives initiate a waste-complete environmental program. Many cooperatives also give social support in the form of zakah, assets, religious activities, and employee training. Based on the results, this study implies providing insight for cooperatives about Porter and CSR strategies to increase the entities’ values and competitiveness.