The Islamic ethical system differs from secular ethical systems and the moral code advocated by other religion. The moral code embedded in Islamic ethics emphasizes the relation of man to his Creator. Because God is Perfect, Muslims have a code that is neither time bound nor biased by human whims. The Islamic ethics is enforceable at all times because it’s Creator and Monitor is closer to man than his jugular vein and has perfect eternal knowledge. Some of the key parameters of the Islamic ethical system can be summarized as follows:
Ethical decisions are based on the Al-Qur’an and Hadith.
- Actions and decisions are judged to be ethical depending on the intention of the individual. Allah knows our intention completely and perfectly.
- Good intentions followed by good actions are considered as acts of worship. Halal intentions cannot make haram actions halal.
- Decisions that benefit the majority or a minority are not necessarily ethical in themselves.
- Islam uses an open system approach to ethics, not a closed, self-oriented system.
An Islamic Ethics in Global Business among Islamic Countries
There are some guidelines govern the Islamic Ethics with relation to business conduct. Muslims or Islamic countries are required to behave Islamically in their business or global business dealings because Allah Himself is witness to their transactions:
“In whatever business you may be, and whatever portion you may be reciting from the Qur’an and whatever deed you (mankind) may be doing – We are witnesses hereof when you are deeply engrossed therein.”
(Yunus 10:61)
These are some principles of Islamic business ethics that Islamic countries should follow:
a) Honesty
In the current Western dominated world, corporate and business culture is usually synonymous with commercial culture which emphasizes more on profits and market share. Sometimes, in such business environment, greed becomes the prime motivator while wealth and power the prime objectives. The strongest country will defeat the weakest country. That greed will become the worst enemy of honest business. The concept of honesty in business as revealed by Qur’an and preached and practiced by Prophet Muhammad s.a.w requires that all business transactions be based on the fundamental principle of mutual cooperation for the highest possible level of mutual benefit for both buyer and seller. In every transaction therefore there must be al-‘adl (justice) and al-ihsan (benevolence) (N.M.Affandi, 2002).
Islam insists on absolute honesty in business because of the invaluable and totally indispensable nature of business to the economic well-being and social harmony of any community. Therefore, Prophet Muhammad s.a.w assured honest businessmen of Allah’s most generous reward:
“An honest and trustworthy merchant will be with the martyrs on the Day of Resurrection.”
(Ibn Majah and Al-Hakim)
“An honest and trustworthy merchant will be with the Prophets, the truthful and the martyrs.”
(Al-Tirmizi)
Prophet Muhammad s.a.w not only had the honest credentials acknowledged by enemies, but also had personally proven that he was the most honest trader. His beloved wife, Khadijah, was also very wealthy trader renowned for her honesty. Honesty is quality which a Muslim Businessman in Islamic Countries should develop and practice in himself. Honesty is especially important for Muslim business persons because of the need to make a profit and the temptations to enhance the attributes of their product or service during a sale pitch. In a hadith Prophet s.a.w said:
The merchant will be raised on the Day of Resurrection as evil-doers, except those who fear Allah, are honest and speak the truth.
(Al-Tirmizi, Ibn Majah and Al-Darimi)
It is therefore the duty of every Islamic country and Muslim businessman to always remember Allah’s command to practice absolute honesty in business. They must be honest in their business dealing, import and export between the countries, and the quality of products. Without a high standard of honesty in business conduct, tightening of laws and regulations would be ineffective.
b) Truthfulness
Truthfulness is a basic ethical value of Islam. Islam is, in a way, the other name of truth. Allah speaks truth, and commands all Muslims to be straight forward and truthful in their dealings and utterances. Allah says,
“Oh believers! Fear Allah, and say the right thing.”
(Al Ahzab 33:70)
Islam strongly condemns falsehood and deceit in any form (Ahmad, 1991). Truthfulness is repeatedly mentioned in both the Qur’an and Hadith which the following examples illustrate: Allah says,
“Say: Allah speaketh the truth. So follow the religion on Ibrahim, the upright. He was not the idolators.”
(Ali ‘Imran 3:95)
“That Allah may reward the true men for their truth, and punish the hypocrites if He will, or relent towards them (if He will). Lo! Allah is forgiving, merciful.”
(Al-Ahzab 33:73)
“O ye who believe! Fear Allah, and be with those who are truthful.”
(Al Taubah 9:19)
The Prophet s.a.w has also exhorted the believers to strictly adhere to truthfulness in business transactions. He says:
“The seller and the buyer have the right to keep or return the goods as long as they have not parted or till they part; and if both the parties spoke the truth and described the defects and qualities [of the goods], then they would be blessed in their transaction, and if they told lies or hid something, then the blessings of their transaction would be lost.”
(Al-Bukhari)
In a hadith narrated by Abu Hurayrah, the Prophet s.a.w is reported to have said:
“If you guarantee me six things on your part, I shall guarantee you Paradise. Speak the truth when you talk, keep a promise when you make it, when you are trusted with something fulfill your trust, avoid sexual immorality, lower your eyes, and restrain your hands from injustice.”
(Ahmad and Bayhaqi)
Truthfulness is very important in business. Without it, the business will become meaningless. A Muslim businessman should always believe strongly that truth always pays rich dividends in the long run. To him, it is the long term objective which matters as truth brings a much more enduring product or brand success. Truth of course, also brings him peace of mind which valued above anything else, especially monetary profits and wealth. The Prophet s.a.w said:
“Truly truth is calmness, and untruth is anxiety”
(Al-Tirmizi)
Truthfulness has a self-reinforcing effect (Beekun, 1997). In a hadith reported in Sahih al-Bukhari, The Prophet s.a.w said:
“Truthfulness leads to righteousness, and righteousness leads to Paradise. A man continued to tell the truth until he becomes a truthful person. Falsehood leads to al-fujur (i.e. wickedness, evil-doing), and al-fujur (wickedness) leads to the (Hell) Fire, and a man may continue to tell lies till he written before Allah, a liar.”
In a hadith Prophet s.a.w said:
“The merchant will be raised on the Day of Resurrection as evil-doers, except those who fear Allah, are honest and speak the truth.”
(Al-Tirmizi, Ibn Majah and Al-Darimi)
Therefore, every Islamic country must ensure that all of their business dealings and conducts must be done with truthful to obtain Allah’s blessing. The Prophet s.a.w repeatedly warned against those who cheat:
“Those who cheat is not one of us”
(Muslim)
“Merchants, beware of lying”
(Al-Tabrani)
Muslim businessmen from Islamic countries must keep their word and always speak the truth during their business activities. In conducting global business among Islamic countries, they must prevent themselves from involving in cheating and fraud. Their word is their bond. They must keep their promise in providing truthful information about their products, the delivery process, the quality of their products, and after sale services.
c) Trustworthiness (Amanah) in Business Transactions
Trustworthiness is one of the most important principles of ethical discipline in commercial transactions. Trust is a key to positive interpersonal relationships in various settings because it is central to how we interact with others (McKnight & Chervany, 1996). Trust is a moral virtue and duty incumbent on a Muslim in the performance of his affairs. It demands sincerity in work and purity of intention from every believer. Says the Holy Qur’an:
“O you believers! Do not betray Allah and the Messenger, nor knowingly, betray your trusts.” (Al Anfal 8:27)
The essence of the trust is the sense of accountability which implies the sense of having to appear before Allah and to account for ones actions. Indeed, trust is greatly emphasized in the Qur’an and Hadith. Some examples are as follows:
“Allah doth command you to render back your Trusts to those to whom they are due; and when ye judge between man and man, that ye judge with justice: verily how excellent is the teaching which He giveth you! for Allah is He Who heareth and seeth all things.”
(Al Nisa’ 4: 58)
The Prophet (s.a.w) mentioned the importance of trust as follows:
“God will bless the transaction in which the buyer and seller are unambiguous and frank and have goodwill for each other.”
A true Muslim trader will not therefore, barter his Akhirah (hereafter) for worldly gains. He will avoid fraud, deception, and other dubious means in selling his merchandise. The sense of mutual trust demands that the pros and cons of commodity be revealed to the buyer so that he purchases the commodity in full satisfaction.
In this ethical principle, it involves the relationship between sellers and buyers. Buyers expected to receive goods that are in good working conditions and priced fairly. They should be notified of any deficiencies. Seller must uses correct weights and measures in their selling transactions. In Qur’an, Allah says:
“Give just measure, and cause no loss (to others by fraud). And weigh with scales true and upright. And withhold not things justly due to men..” (Al Syu’ara’ 26: 181-183)
“Give full measure when you measure and weigh with a balance that is straight: that is the most fitting and the most advantageous in the final determination.”
(Al Isra’ 17: 35)
As can be seen from above ayat, the Muslim businessman must be trust in their measurements in business transactions and should not demand trustworthy from others while him himself being dishonest. Every Muslim businessman and Islamic Country should apply this trustworthiness in their day to day business transactions because Islam forbids any dishonesty in business.
d) Benevolence (Ihsan)
Benevolence can be defined as an act which benefits persons other than those from whom the act proceeds without any obligations (Beekun, 1997). It is a kindness to others and is encouraged in Islam. It also means fineness, proficiency or magnanimity in dealing with others (Zulkifli, 2008). Along with the concept of justice, the concept of benevolence is also frequently repeated in the Qur’an and the Hadith. Allah says,
“Spend your wealth for the cause of God, and be not cast by your own hands to ruin; and do well. Lo! God loves those who behave with ihsan.”
(Al Baqarah 2:195)
“Those who spend in ease and adversity, those who control their wrath and are forgiving toward mankind; God loves such doers of ihsan.”
(Ali ‘Imran 3:134)
“Lo! God enjoins ‘adl and ihsan, and giving to kinsfolk, and forbids lewdness and abomination…”
(Al Nahl 16:90)
The Prophet s.a.w is reported to have said:
“The inmates of Paradise are three types: one who wields authority and is just and fair; one who is truthful and has been endowed with power to do good deeds; and the person who is merciful and kind-hearted towards his relatives and to every pious Muslim, and who does not stretch out his hand in spite of having a large family to support.”
( Sahih Muslim)
According to al-Ghazzali, there are six kinds of benevolence in business ethics (Umaruddin, 1991);
i. If a person needs a thing, one should give it to him, making as little profit as possible. If the giver forgoes the profit, it will be better for him.
ii. If a man purchases anything from a poor person, it will be more graceful on his part to suffer a little loss by paying him more than what he considers to be the proper price. It is not praiseworthy to pay a rich man more than his due when he is notorious for charging high rates profit.
iii. In realizing one’s dues and loans one must act benevolently by giving the debtors more time to pay than is due, and if necessary, one should make reductions in loans to provide relief to the debtors.
iv. It is only proper that people who want to return the goods they have purchased should be permitted to do so as a matter of benevolence.
v. It is a graceful act on the part of a debtor if he pays his debts without being asked to do so. If possible long before they are due.
vi. When selling things on credit one should be generous enough, not to press for payment when people are not able to pay on the stipulated terms.
e) Justice (‘Adl)
Justice is the general principle that applies across all transactions in business. Justice or ‘Adl means to treat people equally is a pre-requisite of fairness and justice. Justice is the sum-total, in a sense, of all recognized rights and duties, as it often consists of nothing more than a balanced implementation of rights and duties. This principle is repeated in the Qur’an many times. The prophet also emphasized justice repeatedly. The practice of justice will also prevent a Muslim businessman from doing harm in business. Allah says,
“Deal not unjustly, and you shall not be dealt with unjustly”
(Al Baqarah 2:279)
“Allah commands justice, the doing of good and liberality to kith and kin. He forbids all shameful deeds and injustice and rebellion; he instructs you, that ye may receive administration.”
(Al Nahl 16:90)
Islam lays a great emphasis on social justice. Any social discrimination is repugnant in Islam. Social justice is strengthened through the concept of the universal brotherhood of Muslims from various Islamic countries. As brothers, Muslims should not harm but instead assist each other. A rich Islamic country must assist another Islamic country, especially the poor. The Prophet emphasized:
“A Muslim is the brother of another Muslim; he neither wrongs him, nor leaves him without help, nor humiliates him.”
(Muslim)
“Certainly Allah looks not at your wealth; instead He looks at your heart and your deeds.”
(Muslim)
Social and economic justice requires that Muslims sincerely and fairly fulfill the trusts placed upon them. Businessmen are therefore required to serve their customer and buyer fairly and justly. In Global business among Islamic Countries, there are rich country like Saudi Arabia and poor country like Somalia. Social and economic justice is closely related to the principle that the poor country has a right to part of the properties of the wealthy country. The Prophet s.a.w strongly emphasized:
“He is not a true Muslim who eats his fill when his next neighbour is hungry.”
(Al-Bukhari)
For Muslim Businessmen from Islamic countries, justice means honest and sincere business conduct and the use of their wealth to further promote economic prosperity that could be share among Islamic countries. It also promotes better distribution of wealth and the fruits of development which subsequently increases the standard of income and living of the entire Islamic community.
Beside all these principles of Islamic business ethics, there are other principles that need to be implementing in global business intra-Islamic countries. Those principles are sincerity, accountability, responsibility, deal with Muslims rather than non-Muslims, and mutual consultation. The most important principle is that we love Allah more than our business and everything. That means, we must love Allah even if we have to sacrifice everything else.
Unethical Practices in Business for Muslim Businessman
So far we have focused on one aspect of the business ethics guidelines prescribed by Islam for conducting business transactions. Another aspect of business ethics is the various forms of unethical business practices a Muslim businessman must avoid in his business dealings. Some of these prohibited and undesirable business practices are as follows:
a) Bribe
In business dealing, businessman may sometimes try to offer bribes in order to persuade another party to give them special favors. The practice of bribery is forbidden in Islam and must be avoided by Muslim businessman. The Prophet said:
“The Messenger of Allah cursed the one who bribes and takes bribes.”
(Abu Dawud)
According to the 2007 Corruption Perception Index by Transparency International, Islamic country such as Qatar ranked at the number of 32, UAE 34, Malaysia 43, Bahrain 46, Jordan and Oman 53 and Kuwait 60. Other Islamic countries were ranked lower than these countries. Meanwhile, in 2008, Qatar ranked at the 28, UAE 35, Oman 41, Bahrain 43, Jordan and Malaysia at 47 and Kuwait at 65 (http://www.transparency.org). It shows that bribery practices are still happened in Islamic countries. We hope that every government from Islamic country will try to reduce the corruption cases in their country to protect the Islamic image in global.
c) Dealing in Prohibited (Haram) Items
Dealing and trading in Haram items such as pigs, alcoholic liquors (khamr), drug, gambling, prostitution is strongly prohibited in Islam. The Prophet (s.a.w) is also reported to have said;
“Allah and His Messenger made illegal the trade of alcoholic liquors, dead animals, pigs and idols.”
(Bukhari)
d) Prohibition of interest or riba
Although Islam Islam encourages businessman to augment their capital trough trade, it explicitly prohibits them from capital expansion through lending in interest. The size of the rate of interest charged is inconsequential and riba is absolutely prohibited. There is no opportunity cost of lending money in Islam. Further, riba simply increases the gap between the wealthy lender and the poor borrower. Allah states in Qur’an:
“Those who devour usury will not stand except as stands one whom The Evil One by his touch has driven to madness. That is because they say: “Trade is like usury,” but Allah has permitted trade and forbidden usury.” (Al Baqarah 2:275)
f) Cheating and Fraud in Business Transactions
The traders and businessmen generally have a tendency to motivate the customers by adopting fraudulent business practices. Islam strongly condemns all such cheating practices in business transactions (Al-Ghashsh). The Messenger of Allah has commanded the believers not to indulge in cheating and fraudulent practices in business transactions. Sale of dead animal, dubious and vague transactions, manipulating the prices, and concealment of defects are all examples of cheating and fraud i.e. Al-Gashsh. The Prophet (s.a.w) has strongly condemned all such practices in a number of traditions and the believer to abstain from them. The Prophet (s.a.w) is reported to have said:
“The seller and the buyer have the right to keep the goods or return them as long as they have not parted. He also said that if both the parties have spoken the truth and described the defects as well as the merits thereof (the goods), they would be blessed in their deal. If they have told lies or concealed something, then blessings of their transaction would be lost.” (Bukhari)
As Muslim businessmen, we should try to avoid from all these unethical practices in our daily business or especially in global business among Islamic countries to obtain Allah’s blessing.
