Islamic Business Ethics

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ISLAMIC BUSINESS ETHICS

by

Dr. Rafik Issa Beekun University of Nevada and Islamic Training Foundation November 01, 1996

Copyright © 1996, International Institute of Islamic Thought PO Box 669, Herndon, VA 20170 (703) 471-1133 Please do not reproduce or translate in any manner without the written permission of the International Institute of Islamic Thought

Islamic Business Ethics

Table of Contents
DEFINING ETHICS FACTORS INFLUENCING ETHICAL BEHAVIOR IN ISLAM LEGAL INTERPRETATIONS ORGANIZATIONAL FACTORS INDIVIDUAL FACTORS THE ISLAMIC ETHICAL SYSTEM ALTERNATE ETHICS SYSTEMS Relativism Utilitarianism Universalism Rights Distributive Justice Eternal Law Islamic Ethical System AXIOMS OF ISLAMIC ETHICAL PHILOSOPHY Unity Equilibrium Free Will Responsibility Benevolence DEGREES OF LAWFUL AND UNLAWFUL BEHAVIOR IN ISLAM HALAL AND HARAM BUSINESS AREAS HALAL EARNINGS Work in Agriculture Work in Industry and Professional Areas HARAM EARNINGS DEVELOPING AN ETHICAL ORGANIZATIONAL CLIMATE AN ISLAMIC PERSPECTIVE OF THE SOCIAL RESPONSIBILITY OF ORGANIZATIONS ORGANIZATIONAL STAKEHOLDERS Relationship of the Firm to Its Employees Relationship of Employees to the Firm

Islamic Business Ethics

Relationship of the Firm to Other Stakeholders THE NATURAL ENVIRONMENT Treatment of Animals Environmental Pollution and Ownership Rights Environmental Pollution and Free Resources (air, water, etc.) THE GENERAL SOCIAL WELFARE ARGUMENTS FOR AND AGAINST SOCIAL RESPONSIBILITY ORGANIZATIONAL MODES OF SOCIAL RESPONSIVENESS MANAGING SOCIAL RESPONSIBILITY EXPLICIT ORGANIZATIONAL APPROACHES Developing a Code of Ethics Ethical Oversight Appointment of an Ethics Advocate Selection and Training Adjusting the Reward System IMPLICIT ORGANIZATIONAL APPROACHES PERFORMING A SOCIAL AUDIT GENERAL ETHICAL GUIDELINES FOR MUSLIMS IN BUSINESS PUNISHMENT AND REPENTANCE FOR UNETHICAL BEHAVIOR NO COERCION IN ETHICAL BEHAVIOR PUNISHMENT PHILOSOPHY IN ISLAM EXPERIENTIAL EXERCISES AND QUESTIONNAIRES INDEX

ISLAMIC BUSINESS ETHICS
You are the best of peoples, evolved for mankind, enjoining what is right, forbidding what is wrong, and believing in Allah. (Qur’an 3:110) Every day, individuals face ethical issues at work, and rarely know how to deal with them. A recent review of articles published in the Wall Street Journal during only one week in 1991 uncovered a whole array of issues being faced by employees: stealing, lying, fraud and deceit, etc.1 Surveys both in the USA and internationally reveal rampant unethical behavior in businesses. For instance, a recent survey of 2,000 major US corporations revealed that the following ethical problems (arranged in order of importance) concerned managers: (1) drug and alcohol abuse, (2) employee theft, (3) conflicts of interest, (4) quality control issues, (5) discrimination in hiring and promotion, (6) misuse of proprietary information, (7) abuse of company expense accounts, (8) plant closings and lay-offs, (9) misuse of company assets, and (10) environmental pollution.2 Internationally, the ethical values of businesses are also deficient. In a survey of 300 companies across the world, over 85% of senior executives indicated that the following issues were among their top ethical concerns: employee conflicts of interest, inappropriate gifts, sexual harassment, and unauthorized payments.3 Is it naive for a Muslim businessman to behave ethically in a globally, competitive environment? The answer is a resounding NO! In Islam, ethics governs all aspects of life. The conditions for everlasting success or falah in Islam are the same for all Muslims–whether in conducting their business affairs or in carrying out their daily activities. Without specifying any situational context, Allah describes people who attain success as those who are “inviting to all that is good (khayr), enjoining what is right (ma‘ruf) and forbidding what is wrong (munkar).”4 Within a business context, however, 1

Cherrington, J. O. and Cherrington, D....
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