Business Ethics and Islam

Assignment

26/05/18

Submitted to: Kamran Rashid

Submitted by: Zeeshan Memon

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Assignment

Contents
What is Business Ethics? ............................................................................................................................ 2
Importance of Business Ethics ................................................................................................................... 3
Islam in Business Ethics ............................................................................................................................. 3
Business related ethical enquiries in other religions ................................................................................ 5
Christianity ............................................................................................................................................... 5
Judaism .................................................................................................................................................... 6
Hinduism .................................................................................................................................................. 7
Comparison with Islam .............................................................................................................................. 8
Conclusion ................................................................................................................................................... 9
References .................................................................................................................................................. 10

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What is Business Ethics?

The concept of a formal corporate code of ethics and staff responsible for such activities
emerged during the 1980s after a series of events that took place years earlier which would harm
the business and the community as a whole. Today, almost every large company has an
established code of business practice and policy.

Ethics is generally described as an individual’s moral standards which arise from culture, core
values and beliefs that have developed in the specified community regarding right and wrong.

Several theories exist regarding ethics:

1. Utilitarian Approach:
This theory observes a both pros and cons of a particular situation, and leans towards an
outcome which delivers the greatest good for a larger number. In this way the distribution
of the choices is given weightage and influences decision according to the individual’s
own beliefs. Because if one person’s perspective is of good for one thing, it might be the
opposite for another person.
2. Rights Approach:
This approach is based off the view that people have the right to choose freely. Their
choices are to be treated fairly as long as they do not interfere with the rights of others.
3. Fairness Approach:
This theory states that all equal should be treated equally and all unequal treated
differently according to fairness. It speaks about favoritism and discrimination and how it
is observed as being wrong and against the values of ethics.
4. Leadership Stakeholder Approach:
An individual, who is also a stakeholder to a firm, is inclined to cooperate or go against
the company if treated accordingly. This treatment defines the perception for the
particular individual as being fair or unfair.
5. Kantian Approach:
The approach assumes that a person’s good is related to the overall community as a
whole. It focuses on the fulfilment of duties and responsibilities for fellow beings and
that they are taken into account when performing actions. These actions are driven by
motive and logic. Corporate leadership is an example of such an approach.

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6. Virtues Approach:
This theory focuses on the overall well being and development of the community. This is
done through certain virtues which include compassion, generosity, integrity etc. These
virtues play a role in determining the ethical behavior of an individual.

Importance of Business Ethics

Business Ethics is a tool of ethical application to determine and differentiate within the ethical
principles and values within the business environment. Business ethics is considered as a
normative and descriptive discipline both. As a practical approach, it is taken as a normative
approach, however in academics, it is taken as a descriptive approach.

Descriptive approach describes people’s behavior and the moral values they claim in their
actions. It involves research from various fields in order to grasp the understanding about
people’s ethical norms.

Normative ethics, on the other hand, involves creating and evaluating ethical norms. This way it
focuses on the actions which people should take in their behavior and if those actions are in line
with the acceptable and reasonable norms. The measures which are taken to quantify ethical
standards, such as the ethical matrix, are considered as normative.

There are six moral principles which have originated over the decades. These include the Golden
Rule, Kant’s Categorical Imperative, Descarte’s Rule of Change, Utilitarian Principle, Risk
Aversion Principle and the principle of ‘no free lunch’.

Islam in Business Ethics

Corporations have to be aware of their actions and decisions as ethical as it develops long term
effects in terms of image and profitability. But is there a formal framework to define ethics in a
business environment? In Islam, it is formed by a combination of two sources, the Quran and the
Sunnah. This framework provides clarity and defined guidelines in overcoming various ethical
issues which can occur in the business context. The Quran constructs the basic principles of
moral values for every Muslim. The Islamic framework plays an important role in managerial
ethics. It covers vast aspects of the managerial role from decision making to time management.
However it is not only limited to managerial role but covers every aspects of life. In Islamic

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context, an individual’s life revolves around him or her pleasing God. And the actions conducted
are part of ibadah.

Managers in a firm needs to act in the interest of the company’s shareholders and also follow
according to the Islamic framework in a way that they do not engage in forbidden (haram)
activities and always conduct halal business activities and transactions. The Islamic framework
revolves around three core elements, Unity (Tauheed), Justice (adl), and Trusteeship (Khilafah).

Islam emphasizes overall human well being through socio economic justice. The spiritual and
material requirements of individuals are balanced this way. As example of market forces driving
prices of commodities can be observed in a sense that Islam promotes a system where the social
need is adequately fulfilled and the resources obtained are not used for luxuries. The Prophet
Muhammad (peace be upon him) was himself a merchant and his wife Khadija was also involved
in business practices. This shows the significance of business aspects in Islam.

Ethical actions and profit making for firms do not always necessarily have to be aligned with
each other. The conflict between these two always persists. Due to the nature and beliefs of an
individual on what is right and wrong, the study of ethics becomes normative.

A company’s main objective is to earn as much profit as it can. However, accumulation and
hoarding of wealth not the main aim for a muslim. If wealth is distributed such that society does
well, the organization itself can do well. Hence it benefits the overall community.

There are various elements in the Islamic framework which define the ethical system. These
include:

Unity

Islam requires a whole community to work together for the well being of everyone involved. In
such a system everyone acts according to God’s will and hence there is a unity in each others’
actions and behavior.

Justice

Islam emphasizes on the creation of a just society which is based on equality, justice and devoid
of any exploitation tactics. The formation of productive wealth is looked upon positively. Islam
focuses on earning an honest living, by not lying and cheating and not breaking promises.

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Individuals should also keep circulating funds in the economy. Hence a redistribution of wealth
is encouraged this way.

Productive work

A Muslim is obliged to not just work for the sake of it but work productively. The emphasis can
be observed through the mention about this in the Quran many times. Productive work forms part
of the faith itself.

Trusteeship

Human beings should utilize the resources given to them the best they can. All business activities
conducted with the parameters of Islam are considered ‘ibadah’. Hence a person should not be
idle and put in as much effort for the betterment of fellow beings.

Business related ethical enquiries in other religions

Christianity
Ethical framework in Christianity started from the origination of the religion itself. It applies to
the socio-economic life and continued from the Jewish origins in both morality and practicality.
There have been many studies on Christian ethics which focus on several moral implications
such as human rights, labor and doing business on moral grounds. One of the major works which
has been followed in that of Thomas Aquinas, whose study has been based on Moral Natural
Law. This moral system has been based on morality on business transactions, contracts, market
prices etc. Christianity also values the productive work of individuals as a means to fulfillment of
spiritual life.

Christian ethical framework has been established and recognized through scripture. It develops
the structure on what is right and what is wrong. This way, even for business, it serves as a
guidance on what people ought to do and what they ought not to do. An example of such
scripture is the Ten Commandments, which provide the foundation of the laws currently
prevailing which include honest business transactions, human rights etc. The scripture also
focuses on the life and teachings of Jesus, which provide moral directions for conducting
business. These include management of possessions and productive work as well as love and
service to fellow human beings.

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However, such scripture is not set in stone as the ultimate guide to follow. Reason and logic has
to be derived from it in understanding the concepts of human interactions, the relationship with
God, and the consequences of human behavior, mainly based on pursue of ideals of love and
service to others and practicing good stewardship of money and resources.

A devout Christian is always conscious of the fact that at the workplace, he or she has to be
considerate of the quality of the product and such that the products are not hazardous to fellow
employees or the customers themselves. This is just one of the example as to how such a person
is well aware of the overall well-being of the whole society.

One of the fundamental guidance for Christianity is the Catholic Social Teaching. It emphasizes
on human dignity, human rights and development, and the overall common good for the
community. The Pope himself has played a role in introducing various concepts in the integrity
and sustainability of operating a business. The three main pillars of the Catholic Social Teaching
serve as major functions of corporate governance. These include providing guidance to establish
a strategy for a firm to contribute in the increasing well being of human beings. Secondly, it also
includes the cooperation of all stakeholders and finally, firm’s best performance in both internal
and external markets. These strategies and directions eventually then guide managers to ensure
long term stance on corporate sustainability and also focus on more greener efforts.

Judaism
Jewish tradition is not limited to a certain way of social and economic life. However, the sources
of Jewish law do regulate the way of life in a way that relations between business entities which
include buyers and sellers, borrowers and lenders are maintained and that the market is regulated
for economic well-being to flourish. This is to prevent exploitation of the weak to occur and
distribution of wealth to particular individuals only. The Torah serves as the ultimate guidance
for the Jewish teachings.

Jewish law promotes work ethics in a way that competition in the business environment should
occur in a way such that no unfair advantage is taken over by firms which are less resourceful.
Hence it encourages a life of honest living and dignity. Such business transactions are to be
conducted with full disclosure of information as well. Market prices should be just and
reasonable. Accurate measures of weights are also focused upon to prevent any kind of

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deception. Respect for local cultures is also given weight upon. These ethical practices in Jewish
tradition also are meaningful as a service to God.

The deceptive practices such as sale of item at an excessively high price or low price is
considered ona’ah. These kind of deceptions are not just limited to monetary deceptions but also
to verbal deceptions as well. Hence it is also forbidden to make false intent to purchase an item
when in fact the real intention is to only gather information. In such an instance the seller can
incur loss in terms of time and probably financial loss as well. It also serves to create a false
illusion as well for the seller. In addition to the Torah, the Talmud also plays a significant role in
developing the framework of Jewish business ethics. It focuses mostly on the rights and interests
of workers as well as management.

The Jewish teachings and beliefs do not just focus upon the questioning whether an individual
did business in good faith or not, but it bases its judgment on the fact whether the actions and
behavior have created value and how it has changed the person himself and those surrounding
him. It relies on the story of transformation which the individual will be able to tell to the Higher
Authority after death. Business ethics in classic Judaism is not about charity and altruism (which
are absolutely moral goods in themselves)—they are about real business activities and the
holiness and moral goodness found in those particular acts. The crucial message in Judaism is
that conducting business in good faith is no easy task, and a level playing field is to be
maintained every time. As the weak are to be protected from exploitation, the rich are also to be
protected, such that they are able to lend their funds. Emphasis is also done on clarity in business
transactions. So that any ambiguity is eliminated and successful business transactions can occur
without any issues. Such clarities can also enable markets to function efficiently. Doing business
in good faith does not necessarily mean that a business cannot flourish. The moral good that
comes from business activities done well is as real and meaningful as the moral good that may
come from anywhere else. That is business b'emunah.

Hinduism
One of the major ethical principles in Hinduism is Karma. It is an eternal moral law of cause and
effect, that is, whatever our actions and behavior in this life, the consequences of which are
reflected upon in the next life. Hence an individual’s future depends solely on him or her. One of
the fundamental texts which forms the basis of Hinduism is the Bhagavad-Gita. Five basic

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principles exist in the Hinduism ethical philosophy. These include ahimsa, truthfulness, no
stealing, pure life and no greed.

It is crucial for ethics to have a considerable role if an efficient market is to be encouraged.

When certain government laws and regulations cannot resolve particular issues relating to key
business problems, ethical judgments can intervene and make a positive impact. As mentioned,
in the Bhagawad Gita, Krishna advises Arjuna about the ethical system that is applicable even in
today’s world. Krishna elaborates on the character development and preventing ethical
dilemmas. The main text of Hinduism focuses on three elements:

a. Work (karmayoga)
b. Concentration (bhaktiyoga)
c. Knowledge (jnanayoga)

The text also mentions the power of lust and how one can avoid such an ethical failure by
controlling one’s senses with the help of spiritual strength.

Comparison with Islam

It is observed that a lot of overlap exists between the main Abrahamic faiths. Islam, which has
more than a billion scholars, is the second largest religion in the world. Its history started with
the prophet Muhammad (peace be upon him), who was born in Mecca around 570 A.D. The
Quran was written during his time and the divine revelations came directly to him from the onw
Creator, Allah. The central concept within Islam is the one of Tawheed, that is, unity with God.
This is because life is considered to exist in unification on the basis of human life and is
supposed to be lived according to God’s will. God has dictated particular terms in conducting
business.

Christianity is also one of the largest religions in the world with Jesus Christ as the central figure.
In this religion’s teachings, Jesus makes specific remarks on the way to conduct business so as
towards the road to making profits, one should beware of greed and prioritizing money instead of
God. A sense of justice is also focused upon such as strict adherence to obligations and contracts
and actions in the work place to develop common good for the society as a whole.

Judaism originated around 1900 BC with the covenant made between God and Abraham. The
main foundation of the Jewish teaching has been articulated in the form of Torah. The ways of

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conducting business and profit making has been one of the guiding principles in this source in
accordance with ethical and moral standards. Productive work is considered as a partnership with
the divine.

Hinduism originated in India around 3000 and 1500 BC. Currently, most of the Hindus
themselves reside in India. Hinduism has a positive attitude towards business and creating
wealth, yet wealth is not the supreme goal. Ethics (dharma) and salvation (moksha) are more
important.

Conclusion
Ethics are the building blocks of our society which also create the foundation for the
corporations in today’s world. Flourishing of business ethics is crucial for the operation of
efficient markets where the well being of each and everyone is catered to. This way, the
community can thrive peacefully and corporations can gain long term sustainability in the
business. It can build a society filled with trust, confidence and fairness. The main religions
provide guidance for moral standards for all ways of life. Business dealings has also become a
part of such teachings. Unethical behavior should not be tolerated in any organization. Morals
may be relative, but ethics are well understood, some of which may be codified into procedures,
taboos, processes, rules, regulations, and laws. In change management, it’s imperative to
understand why a procedure, process, rule, regulation or law was introduced before removing it;
take into account interconnectivity among stakeholders and outcomes.

Fairness or justices may be distributive, procedural, and interactional. Customers, employees and
stakeholders perception and relationship to corporations depends on their perception of fairness.
Corporate leadership can apply the principles of ethics in business to develop the firm’s
relationship with all the stakeholders. In as much as we would like, to depend on the goodness of
people in corporate leadership, we must create duties that we expect of them. We require that
everyone be responsible for the outcomes of their actions. Determining intention or motive is
challenging, but previous actions or omission may guide in the subjective analysis of intentions.
In corporate leadership, the Duties Ethics and the Justices or Consequential theory may lend
themselves to measuring, while the virtues ethics and motives may be had to quantify or
measure.

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References
Syed Jamaluddin, (2003, January). Understanding the framework of business in Islam in an era of
globalization

Domenec Mele, (2015, May 18), Religious approaches on business ethics

Joan Fontrodona, (2016, September 9). Christian Ethics and Spirituality in Leading Business
Organizations

Md. Hafij Ullah, (2014). Development of Ethical Business: An Islamic Framework

Munir Quddus, Henri Bailey, Larry White, (2005). Business Ethics – Perspectives from Judaism,
Christianity and Islam

David Kim, David Mccalman, (2009, November). Moderism, Christianity and Business Ethics: A
Worldview Perspective

David F Amakobe, (2016, October). Business Ethics

Hafiz Muhammad Fakhar Zaman, (2015, February). ISLAMIC VALUES AND ETHICAL SYSTEM TOWARDS
BUSINESS: DOES ISLAM PROVIDE BEST FRAMEWORK TO THE CORPORATE WORLD?

Domenec Mele, (2006). How World Religions View Business Ethics. Retrieved from
http://www.ieseinsight.com/doc.aspx?id=556

S. Prakash Sethi, (2015, January 21). Hinduism and Business Ethics

David Golinkin, (2003, October). The basic principles of Jewish business ethics

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