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8/2/2019 rafik isaa beekun

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Review : Islamic Business Ethics, From Dr. Rafik Issa Beekuns Book

In an age of global multi-nationals and public corporations, sophisticated strategic planning,

finance, marketing, management, accounting, technology and human-resource processes; there really

hasnt been a professional ethics framework defined for Muslims to ethically manage their businesses in

the 21st century corporate environment.

Islamic Business Ethic, begins to identify the practical elements of managing ethics within an

organization that business leaders can use, offering the framework of an overall Islamic ethics model for

an organization to adopt.

Ethics defined

Ethics is defined as a set of moral principles that distinguish what is right from wrong, and in an

Islamic context, the Quranic term khuluq is closest to it. Also, some other terms referenced from Quran

describing the concept of good are khayr(goodness),birr(rightousness), qist(equity), and

adl(equilibrium and justice).

Islamic Ethical System

There are six dominant ethical systems prevalent today and draws out some of the key parameters

that shape the Islamic ethical system. Some of these referenced include the importance of an individuals

intention in judging ethical behavior, freedom to believe, and the importance of humankind to

experience tazkiyah through active participation in this life. By behaving ethically in the midst of the tests

of this worldly life, Muslims prove their worth to God.

One of Islamic Business Ethics references is from the Quran and Sunnah. For example, in

support of the freedom to choose ones faith, Surah 2:256 from the Quran is referenced:

Let there be no compulsion in religion: Truth stands out clear from error: whoever rejects evil and

believes in God has grasped the most trustworthy handhold, that never breaks. And God hears and knows

all things.

In addition, an important reference to profit maximization not being the ultimate goal or only

ethical outcome of trade in Islam is supported through the following Surah 18:46:

Wealth and sons are allurements of the life of this world; But the things that endure, good deeds, are the

best in the sight of your Lord, as rewards, and best as the foundation for hopes.

Islam does not reject profits or trade and does not aim to remove all differences in income and

wealth that may result in various social and economic classes.

Five Axioms of Islamic Ethical Philosophy

There are five axioms that govern Islamic ethics:


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1. Unity (related to the concept of tawhid or oneness of God),

2. Equilibrium (related to the concept of adl or justice),

3. Free will (to a certain degree, man has been granted the free will to steer his/her own life as

Gods vicegerent on earth),

4. Responsibility (accountability for ones actions),

5. Benevolence.

In the case of the Unity axiom, the application to Muslim businesses is not to discriminate among

employees, suppliers, buyers, or any other stake-holder on the basis of race, color, sex or religion. One of

the supporting Surahs (49:13) referenced in this case is:

O mankind! Lo! We have created you male and female, and have made you nations and tribes, that you

may know one another.

Similarly the concept of equilibrium is put in context for the businesses both figuratively and

literally. Figuratively, equilibrium relates to the all-embracing harmony in the universe and is also seen as

a dynamic characteristic for each Muslim to strive for. Anayah on those who will be rewarded with the

highest place in heaven is referenced as follows:

Those who, when they spend, are not extravagant and not niggardly, but hold a just (balance) between

those two extremes; (Surah 25:67-68)

The practical implications of a system based on Islamic ethical principles for Muslim

professionals contain of permissible (Halal) and non-permissible (Haram) business areas. Some of the

Haram sources of income included are trading in alcohol, drug dealing/ trading, prostitution and any kind

of trade involving uncertainty.

Developing an Ethical Organization

In framing a business organizations ethical responsibilities it needs for developing an ethical

organization. How a culture of loose ethical oversight or leadership can essentially impact the whole

organizations business climate, including the dismal ethical reputation of many businesses from the

Muslim world with issues such as bribery/ kickbacks, discriminatory labor treatment, non-transparency,

not upholding promises, cheating/lying etc.

For an organization to practice ethics from an Islamic perspective is interestingly very much

correlates to the existing global emphasis and debate on Corporate Social Responsibility (CSR). Perhaps

CSR is a separate topic, but interesting comparisons could be made between the current global CSR

models and the Islamic perspective on Corporate Social Responsibility.

The three domains of Islamic perspective on corporate social responsibility identified include its

stakeholders, the natural environment, and the general social welfare.


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Ethics related organization stakeholders ( those who represent the people and/or organizations

that are affected by the actions of an organization), are categorized as a firms relationship to its

employees, how employees relate to the firm, and how the firm relates to other economic agents. A

summary of the these key stakeholders and their associated ethical issues to be addressed are shown

below:

Key Ethical Focus Areas

Focus Areas Stakeholder(s) Issues

Relationship of the firm to its

employees

Employees Hiring and firing; Wages and working

condition; Privacy

Relationship of employees to the

firm

Firm Conflicts of interest; Secrecy;

Honesty; Skills training and

qualifications

Relationship of the firm to key

stakeholders Suppliers

Buyers

Debtors

General Public

Stakeholders/Owners/

Partners

The Needy

Competition

Cost of Inputs

Hoarding and price manipulation;

quantity and quality of goods sold;

selling strategy; use ofriba in

finaning sales

Repayment terms; hoarding; abuse of

environment

Distribution of losses/

gains;Sadaqah; Fair competition

Excerpt From:Islamic Business Ethics, pg 39

Similarly, an organizations obligations and responsibilities towards the natural environment

again providing practical perspectives on its treatment of animals (application for animal based

pharmaceutical research, medicine etc.) and environmental pollution (applies to public safety and hazards

to air and water created through waste management by factories)

The third domain of the Islamic perspective on corporate social responsibility, general social welfare, is

also put in perspective for organizations.

Managing Ethics/ Social Responsibility

There are some of practical tools for organizations to put a structured ethical model in place.

Explicit tools referenced include:

Developing a Code of Ethics to guide the organizations ethical principles in all its interactions;


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Ensuring compliance by appointing key organization actors to an ethics review panel;

Appointment of an ethics advocate to probe managements decisions regularly;

Selection and training incorporating an employees ethical responsibilities to help set common

expectations and understanding within the organization; and,

Adjusting the award system to reward ethical behavior and encourage repetition.

Individual Responsibilities

The guidelines key business principles that Muslims are obliged to follow given the Islamic code

of ethics and Islams emphasis on individual responsibilities and accountability include

o Honestly and truthfulness

o Keeping your word

o Loving God more than trade

o Supporting intra-Muslim trade

o Being humble

o Using mutual consultation in business affairs

o Not dealing in fraud or bribery; and dealing justly.

Again,Islamic references. For example, in discouraging the temptations to exaggerate and lie

about ones products or services during sales or marketing, the importance of honesty and truth is

referenced as laid out by this saying of the Prophet Mohammad (saaw):

The merchants will be raised on the day of resurrection as evil-doers, except those who fear God, are

honest, and speak the truth.

Similarly, the following Ayah (4:29) is used in support of Muslims not resorting to extravagance (the

extravagant behavior of the dot-com companies during the internet boom comes to mind here):

O you who believe! Eat not up your property among yourselves in vanities: but let there be amongst you

traffic and trade by mutual good-will: nor kill (or destroy) yourselves: for verily God has been to you Most

Merciful.

Overall the book is indeed a great leap forward in helping Muslims engaged in business to act in

accordance with the Islamic system of ethics.

Islamic Business Ethics provides a framework for Islamic code of ethics; presenting practical

perspectives for organizations to incorporate and manage Islamic ethics and guide for managing ethics

within the organization, but definitely provides some key pieces to work with.


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