Islam and business conflict and collaboration
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Cranfield 13 July 2007 David Logan Islam and Business: Conflict and Collaboration Presentation structure The Muslim world in the new global social system Religion, ethics and business Islam and business The role of western business Islam and corporate giving

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Cranfield 13 July 2007David Logan

Islam and Business:

Conflict and Collaboration


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Presentation structure

  • The Muslim world in the new global social system

  • Religion, ethics and business

  • Islam and business

  • The role of western business

Islam and corporate giving


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The Muslim world is part of the new global social system

Governments 34%

For-profit 60%

Informal sector

Not-for-profit 6%

Approximate shares of US GDP in 2003


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Religion, ethics and business

  • Religious teaching of all denominations, provides a basis for ethical judgement on economic relations and business

  • Companies are the agents of the market

  • They have the choices about how they act

  • Their behaviour is critiqued at two levels

    • As part of the free market system as a whole

    • Individual company practice in relation to its stakeholders

  • Voluntary charitable giving is very important in all religions but especially so in Islam


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Islam and business

In principle, Islam is totally accepting of business

  • Its role is defined in the Holy Koran and the Hadiths “ … but Allah hath permitted trade and forbidden usury …” (Al-Baqurah 2:275)

  • The prophet urged “be involved in business as 9 out of 10 sources of income lie in business” (Ihya)

  • Of good work The Prophet said “working with your hands and all forms of buying and selling which is most legitimate and blessed” (Sabiq and Sayyid)

This is in contrast to communism/ socialism which is strongly anti-capitalist


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Islam and business

Conditions are set on business behaviour, it must not

  • Be greedy

  • Seek monopoly or manipulate the market

  • Exploit the poor

  • Trade in forbidden goods and services

    • Alcohol / drugs / tobacco

    • Pornography / gambling

    • Deal in pork products

    • Engage in ‘usury’ (riba)


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Islam and charity

  • Charitable giving is one of the five pillars of Islam

  • It binds the community together

  • ‘Zakat’ tax is the means of re-distribution

  • 2.5% of capital assets above a minimum – payable once a year

  • Usually collected by governments e.g Saudi Arabia

  • Nowadays left to individual believer

  • Vast majority of firms are family firms

  • The role of corporate giving as opposed to individual giving is unclear and needs definition – 1% of profits is a minimum


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The role of Western business

Western business can be seen as

  • Agents of ‘neo-colonialism’ continuing a western tradition of imperialism in the Muslim world

  • Purveyors of un-Islamic goods and services

  • Dominant and monopolistic

  • Occupiers of cultural space

  • Exploiters – not good citizens


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The role of western business

“The Europeans worked assiduously to enable the tide of this materialistic life with its corrupting traits and its murderous germs, to overwhelm all the Islamic lands to which their hands were outstretched … to flood the countries with their capital, their banks, and their companies; to take over the workings of the economic machinery as they wish; and to monopolise to the exclusion of the inhabitants, enormous profits and immense wealth.

… they imported their half-naked women into these regions, together with their liquours, their theatres, their dancehalls, their amusements, their stories, their newspapers, their novels, their whims, their silly games, and their vices …”

(Source: Hasan-al-Banna “Between Yesterday and Today” as quoted by Ruthvan)


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The role of western business

  • Overall the Muslim world has significantly missed out on inward investment and technology transfer

    • Oil and gas – approximately 85% of medium-term reserves are in Muslim countries

    • Consumer goods

    • Finance

    • Travel and tourism

  • Muslim countries need

    • Jobs and economic growth

    • Technology transfer


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Share of global reserves based on current production rates

% of global reserves

Source: Institute for the Analysis of Global Security


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The role of western business

  • Business is part of the ‘conflict’

  • Business is also part of the solution e.g creating growth and jobs

  • MNCs and Muslim societies can collaborate

  • However

    • The ‘corporate citizen’ is an under developed concept

    • Giving is seen as a personal responsibility

    • The social infrastructure is weak

  • Community involvement has a vital role to play

  • It needs to be handled with care

  • Oils need to lead – but don’t


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