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Islamic Ethics and the Implications for BusinessAuthor(s): Gillian RiceSource: Journal of Business Ethics, Vol. 18, No. 4 (Feb., 1999), pp. 345-358Published by: SpringerStable URL: http://www.jstor.org/stable/25074059 .

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Islamic Ethics and the

Implications for Business Gillian Rice

ABSTRACT. As global business operations expand, managers need more knowledge of foreign cultures,

in particular, information on the ethics of doing business across borders. The purpose of this paper is twofold: (1) to share the Islamic perspective on business ethics, little known in the west, which

may stimulate further thinking and debate on the

relationships between ethics and business, and (2) to provide some knowledge of Islamic philosophy in order to help managers do business in Muslim

cultures. The case of Egypt illustrates some divergence between Islamic philosophy and practice in economic

life. The paper concludes with managerial implica tions and suggestions for further research.

KEYWORDS: business ethics, Egypt, Islamic business

ethics, Muslim culture

Introduction

Over the centuries, as state and church separated,

particularly in western societies, religion became

a private matter. The so-called "value-free

society" developed and economists focused

exclusively on the mechanics of economics.

There is a growing realization that value-free

economics is a misnomer. Post-modern thinkers

Gillian Rice is Associate Professor of Marketing at

Thunderbird, The American Graduate School of Inter

national Management. Her research includes study of economic development, environmental concerns and

marketing practices in developing countries. She is a

founding member of the International Management

Development Association. Her publications include

articles in International Marketing Review, International Journal of Forecasting, Information

and Management, The International Executive and

Journal of the Academy of Marketing Science.

have advocated changes over the past few decades

and there has been a reintroduction of a moral

dimension in business.

An important task for many managers is how

to integrate this moral dimension into business

conducted across borders. Managers need an

appreciation of the ethical norms of different

groups and cultures in order to gain complete

understanding of the cultural environment in

which the firm must operate (Al-Khatib et al.,

1995). Relatively few empirical studies have

addressed culturally-related ethical issues (see for

example, Becker and Fritzsche, 1987; Akaah,

1990; Vitell et al., 1993; Nyaw and Ng, 1994). Based upon the results of a study that found some

surprising significant differences between the

values of American and Thai marketers,

Singhapakdi et al. (1995) suggest that multina

tional corporations should train their marketing

professionals differently in different parts of the

world. Amine (1996) goes further and urges that

the role of global managers should be one of

"moral champions," committed to pursuing the

best in ethical and moral decision-making and

behavior. The definition of "best" is not an easy

task, however, when one takes into account the

many different moral philosophies that exist.

In recent years there have been a number of

articles published in the Journal of Business Ethics

which have discussed the positions of various

faiths regarding the relevance of religious ethical

principles to business decision-making (see for

example, Williams, 1993; Green, 1993; Rossauw,

1994; Gould, 1995). The Pope's Centesimus

Annus argues that what is lacking in our time is

a moral culture capable of transforming economic life so that it has a context in a

humane community (Williams, 1993).

Journal of Business Ethics 18: 345-358, 1999.

? 1999 Kluwer Academic Publishers. Printed in the Netherlands.



346 Gillian Rice

My focus in this paper is on the ethical

principles which relate to business and which are

contained in the religion of Islam. Islam is gen

erally misunderstood and it is often surprising to some that it contains an entire socio-economic

system. In Islam, it is ethics that dominates eco

nomics and not the other way around (Naqvi,

1981). My purpose is twofold: (1) to share a per

spective on business ethics, little known in the

west, which may stimulate further thinking and

debate on the relationships between ethics and

business, and (2) to provide some knowledge of

Islamic philosophy in order to help managers

doing business in Muslim cultures deal with

cultural differences. The paper is organized as

follows. First is a description of the Islamic

ethical system. Next is a discussion of the dif

ferences between philosophy and practice in

Islamic business ethics. This discussion forms the

basis for guidelines on doing business with people in Muslim cultures. Egypt is used as an illustra

tive case.

The Islamic ethical system

Muslims derive their ethical system from the

teachings of the Qur'an (which Muslims believe

is a book revealed by God to Muhammad

in seventh century Arabia), and from the

sunnah (the recorded sayings and behavior of

Muhammad). The goals of Islam are not pri

marily materialist. They are based on Islamic

concepts of human well being and good life

which stress brotherhood/sisterhood and socio

economic justice and require a balanced satisfac

tion of both the material and spiritual needs of

all humans (Chapra, 1992).

A umoral filter^

There exists in most societies a relative scarcity of resources with unlimited claims upon them. A

free-market capitalist economy uses market

determined prices as a filtering mechanism to

distribute resources. The use of the price system

alone, however, can frustrate the realization of

socio-economic goals. Under a system of state

control, the allocation of resources is in the hands

of a bureaucracy, which is cumbersome and inef

ficient. According to Chapra (1992), the Islamic

worldview implies that the market system should

be maintained, but that the price mechanism be

complemented with a device that minimizes

unnecessary claims on resources. This device is

the "moral filter." This means that people would

pass their potential claims on resources through the "filter of Islamic values" so that many claims

would be eliminated before being expressed in

the marketplace. Resources would not be allowed

to be diverted to the production of luxuries until

the production of necessities was ensured in suf

ficient quantities (Siddiqi, 1981). The definition of luxurious or extravagant is related to the

average standards of consumption in a society, the

idea being that large departure from the standards

would not be permissible.

Keynes' (1972) observations on this subject

may be useful. He stated that even though "the

needs of human beings may seem to be insa

tiable," . . . "they fall into two classes ? those

needs which are absolute in the sense that we feel

them whatever the situation of our fellow human

beings may be, and those which are relative ones

in the sense that their satisfaction lifts us above

or makes us feel superior to others. Needs of the

second class, which satisfy the desire for superi

ority, may indeed be insatiable; for the higher the

general level, the higher still are they. But this is

not so true of the absolute needs." Islamic jurists'

categories of necessities (daruriyyat), conveniences

(hayiyyat) and refinements (tahsiniyyat) would fall into Keynes' first class of needs. These are any

goods and services which fulfill a need or reduce

a hardship and make a real difference in human

well-being. Thus "comforts" are included here

(Chapra, 1992). Luxuries (the second class of

needs), however, are goods and services derived

for their snob appeal and make no difference to

a person's well-being. Galbraith (1958) refers to

this second class of needs as "wants."

Consumer advocates in the U.S. have long been critical of business practices that increase

the desire for "wants" and subsequently have

adverse cultural and social effects (Williams,

1993). For example, in pursuit of profit maxi

mization, businesses often subject the consumer



Islamic Ethics 347

to advertising and sales promotion campaigns that

appeal to the consumer's vanity, sex appetite and

envy, either overtly or covertly. Consumers are

encouraged to believe that their actualization and

social esteem are dependent on the frequency and

value of their purchases. This leads in turn to a

tremendous amount of wasteful production, with adverse environmental as well as social

implications. According to the United Nations

Development Program (UNDP) Human Devel

opment Report (1994), the lifestyles of the rich

nations must change; the north has a fifth of the

world's population and four-fifths of its income

and it consumes seventy percent of the world's

energy, seventy-five percent of its metals and

eighty-five percent of its wood. Even in these

rich countries, some of the essential needs of the

poor remain unfulfilled, and high pollution and

rapid depletion of non-renewable resources

occur.

The question, of course, is how to implement the "moral filter" without coercion or despotism.

The filter mechanism of values must be socially

agreed upon and some way has to be devised to

motivate consumers and businesspeople to abide

by these values. From an Islamic point of view, social change must be gradual and cannot be

achieved through force. The Qur'anic injunction "There is no compulsion in religion" (Qur'an

2:256) is relevant here. Change can occur by

inviting people to alter their ways or by setting an example. Historically this is how Islam rapidly

spread through a large part of the world in the

seventh and eighth centuries (Eaton, 1994). For

example, when Muslim merchants traveled to

distant lands, the inhabitants of those lands were

impressed by the traders' social and business

conduct and so became curious about their

beliefs. Many of these inhabitants subsequently became Muslims. A parallel exists today with

respect to the "green" movement which con

tinues to spread around the globe. The adoption of environmentally conscious behavior is occur

ring through example, encouragement and edu

cation, as well as by legislation. Indeed, in the

environmental context, legislation is insufficient.

Only when the political will and support of the

populace are strong enough, are environmental

laws adequately enforced.

The Islamic ethical system contains specific

guidelines for achieving the moral filter and for

conducting business. These guidelines derive

from the interrelated concepts of unity, justice and trusteeship which I explain below.

Unity (tawhid)

The key to the business philosophy of Islam lies

in a person's relationship with God, His universe

and His people. In common with other revealed

religions is the moral appeal to humans to sur

render themselves to the will of God. Islam goes

beyond this exhortation and teaches that all life

is essentially a unity because it also provides the

practical way to pattern all facets of human life

in accordance with God's will. There should be

unity of ideas and actions in a person's existence

and consciousness (Asad, 1993). Muslims believe

that because people are accountable to God, and

their success in the hereafter depends on their

performance in this life on earth, this adds a new

dimension to the valuation of things and deeds

in this life (Siddiqi, 1981). Islam is simply a

program of life in accord with the "laws of

nature" decreed by God. A definite relationship between fellow humans is thus prescribed. This

is the relationship of brotherhood or sisterhood

and equality (Abu-Sulayman, 1976). In this sense,

unity is a coin with two faces: one implies that God is the sole creator of the universe and

the other implies that people are equal partners or that each person is a brother or sister to the

other. As far as business is concerned, this

means cooperation and equality of effort and

opportunity.

Justice (adalah)

Islam is absolutely unambiguous in its objective of eradicating from society all traces of inequity,

injustice, exploitation and oppression. The

Qur'an also condemns vicarious guilt or merit

and teaches the greatest possible individualism

"... no bearer of burdens can bear the burdens

of another; . . . man can have nothing but what

he strives for . . ." (Qur'an 53:38-9). This indi



348 Gillian Rice

vidualistic outlook on the spiritual destiny of

humanity is counterbalanced by a rigorous con

ception of society and social collaboration. In

their acquisition of wealth, however, people should not lie or cheat; they must uphold

promises and fulfill contracts. Usurious dealings are prohibited. Islam teaches that all wealth

should be productive and people may not stop the circulation of wealth after they have acquired it, nor reduce the momentum of circulation

(Chapra, 1992). The intense commitment of Islam to justice

and brotherhood demands that Muslim society take care of the basic needs of the poor. Individuals are obliged to earn a living and only

when this is impossible does the state intervene.

The Islamic institution of zakah, that is, a wealth

tax comprising compulsory charitable-giving for

specially designated groups in society, facilitates

the care of all members of society. The rich are

not the real owners of their wealth; they are only trustees. They must spend it in accordance with

the terms of the trust, one of the most impor tant of which is fulfilling the needs of the poor.

The word "zakah" means purification and as

such, income redistribution is not only an

economic necessity but also a means to spiritual salvation (". . . of their wealth take alms so that

you might purify and sanctify." Qur'an 9:103).

Thus, economics is effectively integrated with

ethics (Naqvi, 1981).

Trusteeship (khilafah)

People are viewed as trustees of the earth on

behalf of God. This does not mean a negation of private property but does have some impor tant implications. No inhibitions attach to

economic enterprise and people are encouraged to avail themselves of all opportunities available.

There is no conflict between the moral and

socio-economic requirements of life. There is a

very wide margin in a person's personal and

social existence. People may be ascetics or, after

paying the wealth tax, may enjoy fully their

remaining wealth. Yet, resources are for the

benefit of all and not just a few and everyone must acquire resources rightfully. Although

material prosperity is desirable, it is not a goal in itself. What is crucial is the motivation, the

"ends" of economic activity. Given the right

motivation, all economic activity assumes the

character of worship (Siddiqi, 1982). Indulgence in luxurious living and the desire to show-off is

condemned. Islam does not tolerate conspicuous

consumption (Chapra, 1992). Resources must also be disposed of in such a

way as to protect everyone's well-being (Al

Faruqi, 1976). No one is authorized to destroy or waste God-given resources. This is very relevant to ethics concerning business and the

environment: when Abu Bakr, the first ruler of

the Islamic state after Muhammad, sent someone

on a war assignment, he exhorted him not to

kill indiscriminately or to destroy vegetation or

animal life, even in war and on enemy territory. Thus there was no question of this being allowed

in peacetime or on home territory. Trusteeship is akin to the concept of sustainable development.

Models of sustainable development do not regard natural resources as a free good, to be plundered at the free will of any nation, any generation or

any individual (UNDP, 1994). The notion of

trusteeship is also common to the Jewish and

Christian faiths; Green (1993) refers to Psalms

24:1, "The earth is the Lord's and the fullness

thereof."

The need for balance

Muhammad advised Muslims to be moderate in

all their affairs; he described Islam as the "middle

way." A balance in human endeavors is neces

sary to ensure social well-being and continued

development of human potential. Chapra (1992) notes that Islam recognizes what Marxism sought to deny: the contribution of individual self

interest through profit and private property to

individual initiative, drive, efficiency and enter

prise. At the same time, Islam condemns the evils

of greed, unscrupulousness and disregard for the

rights and needs of others, which the secularist,

short-term, this-worldly perspective of capitalism sometimes encourages. The individual profit

motive is not the chief propelling force in Islam

(Siddiqi, 1981). Social good should guide entre



Islamic Ethics 349

preneurs in their decisions, besides profit. A

relevant saying of Muhammad is "work for your

worldly life as if you were going to live forever, but work for the life to come as if you were

going to die tomorrow."

Islam, like some other religions, places a

greater emphasis on duties than on rights. The

wisdom behind this is that if duties (relating to

justice and trusteeship, for example) are fulfilled

by everyone, then self-interest is automatically held within bounds and the rights of all are

undoubtedly safeguarded. Society is the primary institution in Islam, not the state (Cantori and

Lowrie, 1992). Chapra (1992) argues that in

order to create an equilibrium between scarce

resources and the claims on them in a way that

realizes both efficiency and equity, it is neces

sary to focus on human beings themselves, rather

than on the market or the state. As emphasized

by Cantori and Lowrie (1992), the Islamic jurists and the Islamic law or "shari'ah" (literally,

"road") limit governmental power. The sharVah

is so all encompassing that there is less need for

legislation regarding issues of ethics, social

responsibility and human interaction. In partic

ular, Muslims believe that the Qur'an contains a

final and unambiguous statement of the truth, added to what had gone before (for example, the

messages delivered to Moses and Jesus). The duty of the Muslim community is to preserve this

message. Thus, Muslims have a profound horror

of anything regarded as innovation in matters of

religion, including what modern Christians

interpret as necessary adaptations of religion to

changing times (Eaton, 1994). The emphasis is therefore on the human being

rather than on state power. The real wealth of

societies is with their people. An excessive obses

sion with the creation of material wealth can

obscure the ultimate objective of enriching human lives. Humans are thus the ends as well

as the means. Unless humans are motivated to

pursue their self-interest within the constraints of

economic well-being (the application of the

"moral filter"), neither the "invisible hand" of

the market nor the "visible hand" of central

planning can succeed in achieving socio

economic goals (Chapra, 1992).

Summary

It should be emphasized that in Islam, business

activity is considered to be a socially useful

function; Muhammad was involved in trading for

much of his life. Great importance is attached to

views relating to consumption, ownership, goals of a business enterprise and the code of conduct

of various business agents. A summary of the

key ethical principles in Islam which relate to

business practices is presented in Table I. Because

Judaism, Christianity and Islam are closely

related, many ethical principles such as honesty, trustworthiness and taking care of the less

fortunate, are universal among the three religions, and indeed, among most moral codes. For

example, as pointed out by Rossauw (1994), someone with a Christian understanding of the

unconditional value of life cannot be careless in

the workplace about product and quality stan

dards that pose a threat to the lives of consumers

or employees. However, Rossauw suggests that it

is not the role of the church to approve or

condemn economic systems. As economic

systems are morally ambiguous, he encourages Christians to "keep a critical distance from the

economic system in which they are working." In contrast, because Islam supplies a practical

life-program, it is important to note that the

Islamic socio-economic system includes detailed

coverage of specific economic variables such as

interest, taxation, circulation of wealth, fair

trading, and consumption. Islamic law (shari'ah) derived from the Qur'an and sunnah also

covers business relationships between buyers and sellers, employers and employees and lenders

and borrowers (for full details, see for example, Keller, 1994). Note that there is no difference

between Muslims and non-Muslims in legal

rulings concerning commercial dealings. For

example, it is unlawful to undercut another's

price (whether that person be Muslim or non

Muslim) during a stipulated option to cancel

period. A seller is not permitted to tell the

buyer "cancel the deal and I'll sell you one

cheaper." Also, whoever knows of a defect in an

article he/she is selling is obliged to disclose it, to any buyer, Muslim or non-Muslim. Both

Islamic and non-Islamic employees must be



350 Gillian Rice

TABLE I

Examples of ethical principles in Islam relating to business practices

Ethical principle Relevant business practice(s)

Unity

"No Arab has superiority over any non-Arab and no non

Arab has any superiority over an Arab; no dark person has

superiority over a white person and no white person has any

superiority over a dark person. The criterion of honor in the

sight of God is righteousness and honest living." Saying of

Muhammad (Sallam and Hanafy, 1988).

Equal opportunity and non-discriminatory behavior in hiring, buying and selling.

"O mankind! We created from you from a single (pair) of a

male and a female, and made you into nations and tribes,

that you may know each other . . ." (Qur'an 49:13).

Teamwork. International business.

"... man can have nothing but what he strives for . . ."

(Qur'an 53:39).

Rewards should be received only after

expending efforts.

"God likes that when someone does anything, it must be

done perfectly well." Saying of Muhammad (Sallam and

Hanafy, 1988).

Excellence and quality of work.

"... say, 'O my Lord! increase me in knowledge.' "

(Qur'an 20:114).

"The acquisition of knowledge is a duty incumbent on every Muslim, male and female." Saying of Muhammad (Sallam and

Hanafy, 1988).

Importance of knowledge-seeking, research

and development, scientific activity,

training programs, executive training,

technology transfer.

Trusteeship

"God does command you to render back your trusts to those to whom they

are due . . ." (Qur'an 4:58)

Fulfilling obligations and trust in business

relationships and the workplace.

"... wear your beautiful apparel at every time and place of

prayer: eat and drink: but waste not by excess . . ."

(Qur'an 7:31).

It is acceptable to have wealth and to consume but not to waste resources.

Care for the environment.

". . .to God belongs all that is in the heavens and on

earth . . ." (Qur'an 3:129).

There is no unlimited right to private

property.

Justice

"... God loves not the arrogant, the vainglorious (nor) those

who are niggardly, enjoin niggardliness

on others . . ."

(Qur'an 4:36-7).

Prohibition of hoarding. Encouragement of

spending, investment in business enterprise and circulation of wealth.

"... and spend of your substance in the cause of God, and

make not your own hands contribute to your destruction;

but do good . . ." (Qur'an 2:195).

Condemnation of ostentatious consumption.



Islamic Ethics 351

Table I (continued)

Ethical principle Relevant business practice(s)

Justice continued. . . .

"... wealth and children are allurements of the life of this

world . . ." (Qur'an 18:46).

Acquisition of wealth is given reduced

consideration in the scale of human values.

"... He has raised you in ranks, some above others: that He

may try you in the gifts that He has given you" (Qur'an 6:165).

Income inequality is permitted.

"... it is We (God) who portion out between them their

livelihood in the life of this world: and We raise some of

them in ranks so that some may command work of others.

But the Mercy of your Lord is better than the (wealth) which they amass." (Qur'an 43:32).

Distinction between managers, workers,

professionals, etc. is acceptable.

"... of their wealth take alms, so that you might purify and

sanctify . . ." (Qur'an 9:103).

Income redistribution: wealth should be

shared with those less fortunate.

"God permits trade but forbids usurious gain*."

(Qur'an 2:275).

Unlawfulness of loans by which lender

obtains benefit.

"... give just measure and weight, nor withhold from the

people the things that are their due . . ." (Qur'an 11:85).

Give full measure and weight.

"He who cheats is not one of us." Saying of Muhammad

(Keller, 1994).

Whoever knows of a defect in something is

obliged to disclose it.

"... don't outbid one another in order to raise the price, . . . don't enter into a transaction when others have already

entered into that transaction and be as brothers one to

another." Saying of Muhammad (Hanafy and Sallam, 1988).

Fairness in contract negotiation.

"... make your utterance straightforward . . ." (Qur'an 33:70). Truthfulness and directness in negotiation.

"On the day of judgment, the honest Muslim merchant

will stand side by side with the martyrs." Saying of

Muhammad (Ali, 1992).

". . . stand out firmly for justice,

as witnesses to God, even

against yourselves, or your parents, or your kin, and whether

it be (against) rich and poor."

Non-discriminatory workplace practices.

Protection for "whistle-blowers." No

special privileges for those with wealth or

status.

"... nor shall We (God) deprive them (of the fruit) of aught Importance of individual responsibility, of their works: (yet) is each individual in pledge for his deeds."

(Qur'an 52:21).

* In the Qur'an, the Arabic word used is "riba" which lexically means "increment" (Keller, 1994).



352 Gillian Rice

treated with the same just, equitable and honest

approach. Note that Islam is not an ascetic religion. Islam

allows people to satisfy all their needs and to go

beyond. The objective should not be to create

a monotonous uniformity in Muslim society.

Simplicity in consumption can be attained in

lifestyles alongside creativity and diversity. Neither does Islam mean an absence of economic

liberalization. There is a different kind of liber

alization: one in which all private and public sector economic decisions are first passed

through the filter of moral values before they are

made subject to the discipline of the market.

Undoubtedly, to implement the "moral filter"

in practice requires the dedication of a large number of market participants. There is there

fore frequently a wide gap between the philos

ophy and practice of Islamic ethics in countries

with predominantly Muslim populations. The

next section examines this issue with reference

to Egypt.

Philosophy and practice: the example of

Egypt

The reality of present-day Muslim life is far from

the ideal possibilities given in the religious teach

ings of Islam (Asad, 1993). Because of a number

of historical factors, the dominant ideology in

Muslim countries is not Islam but rather secu

larism along with a mixture of feudalism, capi talism and socialism (Chapra, 1992). Islam is

conspicuous by its absence, particularly in the

political and economic fields. In the Muslim

countries, unjust and oppressive political and

socio-economic systems have been the cause of

the Islamic resurgence. The socio-economic

restructuring that Islam represents threatens the

governments' short-term (but not necessarily

long-term) interests.

Impact of economic liberalization

For one dimension of life such as business, it is

difficult to differentiate between the impact of

the religious context of the behavior and the total

cultural system (Moore and Delener, 1986).

Egyptians are a religious people closely attached

to their religious culture and identity. There is a

growing awareness among them that many Islamic cultural traits are being superseded by

western values, institutions and practices (Najjar,

1992; Asad, 1993). Joy and Ross (1989) observe

how, today, societal success in the third world is

measured and evaluated in terms of proximity to the institutions and values of the west.

Nevertheless, new techniques, ideas and values

will be accepted only if they meet the real needs

of people more effectively than existing ones.

Had such institutions such as liberal democracy,

capitalism or socialism succeeded in solving the

pressing problems of Egyptian society, they

probably would not have generated such hostility

(Najjar, 1992). Instead, they have been seen as

the cause of rapid deterioration of the quality of

Islamic life and the decline of the Muslim world.

The emphasis on conspicuous consumption and

changes in lifestyles which followed Sadat's

"infitah" (open-door) economic policy and move

to a free market economy in the seventies and

eighties aggravated inflation and unemployment in Egypt, sharpened social disparities and

enlarged the class of dispossessed and disaffected.

The economic liberalization policy concentrated

on trade, the importance of consumer items and

expansion of services such as tourism and hotel

management (Tuma, 1988), rather than on indus

trial projects. Privatization efforts continue,

although rather slowly because of the govern ment's philosophy of control. A "new class" has

arisen as a result of the open-door policy.

Although it is relatively small, it accumulated

much economic and political power during the

eighties (Jabber, 1986). This class consists mainly of entrepreneurs, professional and high salaried

employees of the private economy.

Cultural dualism

The artificial symbiosis of Islamic ethical beliefs

and "alien" socio-economic philosophies and

systems has led to the emergence of bifurcated

societies promoting schizophrenic behavior both

at the individual and collective level (Naqvi,



Islamic Ethics 353

1981). Ali (1992) discusses the Arab dual identity in detail, attributing it to two main factors: (1) colonialism which instilled feelings of inferiority in Arab thought and (2) the artificial division of lands into nation-states. The influx of multina

tional corporations into the region also con

tributed to cultural and social alienation. Because

of social and political instability in countries like

Egypt, people tend to believe everything in life

is temporary and they make their way on doubt.

Previous studies (for example, Rawwas et al.,

1994; Al-Khatib et al., 1994) suggest that social

and political instability or economic hardship

may cause tense, pessimistic and struggling indi

viduals to sacrifice ethicality for basic survival

needs. In particular, Tuma (1988) identifies

three main features of Egyptian culture which

Egyptians have internalized in their behavior to

enable them to deal with the difficulties of life in Egyptian society. These three features are inde

cision, procrastination and indifference. People will not firmly answer yes or no to a request, but will say "insha'Allah (God willing). They will not do today what they can do tomorrow, but

will say "bukra" (tomorrow), as if time had no

cost. They accept indecision and procrastination and their effects with apparent indifference, and

say "ma'alesh" (it doesn't matter), even though the costs may be substantial.

If God's name is invoked in every situation and

if every action depends on the will of a higher

authority, Tuma (1988) asks, what role does the

individual play? What responsibility must he or

she carry? It is important to note that Muslims

are exhorted in the Qur'an never to say that they will do something the next day without also

saying "insha'Allah." This does not absolve the

individual of responsibility; people should make

strong effort and work hard to achieve their

business plans. If these go awry, in hindsight, a

Muslim would consider this to be the will of

God. This may be viewed as "predestination in

reverse." Yet there is no concept of predestina tion in terms of the future as humans have free

will and must make their own conscious life (and

business) decisions. As Eaton (1994) explains, the

concept of the divine omniscience would be

empty if humans did not acknowledge that God

knows not only all that has ever happened but

also all that will ever happen, and that "the

'future' is therefore in a certain sense, already

'past.' "

In the words of the Bible, "That which

hath been is now; and that which is to be hath

already been" (Ecclesiastes, 3:15). Since humans

are subject to time and cannot see the future,

they have an experience of free choice. They make their choices and act accordingly; only when the act is past can they say "it was written"

or "it was decreed for us from the beginning of

time" (Eaton, 1994). The Qur'an states that a

person achieves only that for which he makes an

effort: "... And that man can have nothing but

what he does (good or bad) . . ." (Qur'an 53:39).

With respect to "insha'Allah," there appears to be a tension between the Qur'an's teaching and what sometimes occurs in practice. Tuma

(1988) suggests that, in practice, the deference to

a higher authority may be understood to mean

"if the boss wills it." If no-one will make deci

sions, then no-one will bear responsibility. Individual initiative is therefore reduced, as all

decisions are centralized, as a way of avoiding

responsibility and blame. Based on this author's

experiences in Egyptian society, the term

"insha'Allah" is also often used as a way of

meaning "no" without actually saying "no." It is

difficult to obtain firm commitment from

business partners and to plan accordingly. Al-Khatib et al. (1995) provide the following

explanation for this type of behavior: one ethical

standard is used to handle daily decisions while

the other, influenced by religious teachings, is

not implementable because of the economic

hardship faced by the people.

Informality in business relationships

Social relations, the traditional extended family structure and nepotism have a strong influence

on business behavior. Egyptians prefer to do

business with people they know and like and

who they consider as friends. They are extremely

hospitable and generous and exchange gifts often.

As business relationships are often with friends or

family, these relationships are characterized by

informality which is subsequently reflected in the

treatment of time, weights and measures, and



354 Gillian Rice

quality control of goods and services (Tuma,

1988). Table I includes several Islamic ethical

principles which counter this informality. For

example, there should be no discrimination

between human beings, whether they are family members or not, full measure and full weight

should always be given to buyers, along with

explanation of any deficiencies in products to be

sold, and hard work and excellence or quality in

work is urged.

Implications for doing business with people in Muslim cultures: the case of Egypt

The bifurcated nature of the Egyptian culture

creates some interesting problems for foreign executives doing business in Egypt. On the one

hand, it might be useful for a foreign executive

to understand and show appreciation for the

Islamic concepts of unity (unity of faith and

action, equality of humans), trusteeship and

justice. On the other hand, managers must

consider the difficult realities of everyday living which lead people to forgo the ethical princi

ples of the Islamic tradition.

Can managers of multinationals play the role

of "moral champions" as Amine (1996) suggests? About sixty percent of multinationals have codes

of ethics in place (The Economist, 1995). Many

managers ignore ethical diversity, however, and

implement the same code of ethics around the

world. Vasquez-Parraga and Kara (1995) argue that codes of ethics have not worked. Some

contend that ethics cannot be taught to managers because their values are already formed. There

are, however, numerous documented cases that

show ethics can be influenced by organizational

pressures (Smith and Quelch, 1992). Rogers et

al. (1995) state that, especially in developing countries like Egypt, managers should develop and implement a balanced business philosophy

which integrates the profitability requirements of

multinationals with the social, economic and

ecological needs of developing countries and

those who live in them.

For example, the U.K.-based retail outlet

"Egyptian House" is a joint venture with Egypt's Foundation for the Productive Families, a gov

ernment-funded cooperative set up to make

needy Egyptian families self-sufficient (Thomas,

1996a). A non-profit U.S.-based cooperative, "Women's Organization Middle East Network"

(WOMEN), unites women from Egypt, Israel,

Jordan and Palestine. Its goals include training women in management, technology, finance and

marketing techniques, as well as promoting social

services. Products are to be marketed regionally and internationally, with the ultimate aim of

developing a franchise system (Thomas, 1995).

Niclas, a German clothing retailer is opening a

large number of outlets in the Middle East, with

plans to locate production as well as retail outlets

in Egypt. It can be argued that Niclas is pro

moting fashion and "luxurious" clothing items.

Nevertheless, the company's plans to promote brand loyalty also include starting a children's

club led by eco-friendly character "Niclas" who

will give talks about nature and ecology. Niclas

has a regional partner to assure regional adapta tion of business approaches (Thomas, 1996b).

There is undoubtedly a need for genuine

understanding of the ethics of foreigners with

whom an international manager seeks to do

business, whether these are other businesspeople, consumers or government representatives. In

each particular culture, this understanding should

extend to people's aspirational ethics as well as to

their everyday practices. Managers should not

look merely at the practices of the most corrupt level of society (Tuma, 1988; Al-Khatib et al.,

1995). The foregoing discussion of Islamic philosophy

and practice in Egypt suggests a number of impli cations for international executives. These are

detailed in Table II. The Egyptian culture, based

in the Islamic tradition, focuses on social issues

such as family, health and training for young

people. Marketing and public relations efforts

must therefore emphasize these issues (Wilkinson,

1996). For example, Egyptian House is planning to sponsor Egyptian students on annual place

ments to learn marketing techniques. In the tele

phone switching market, European firms have

strengthened their position in Egypt by visiting

agents more frequently and educating their agents

regarding new technology. Such efforts have led

to closer, more successful business relationships



Islamic Ethics 355

TABLE II Illustrations of the business implications of Islamic philosophy and practice in Egypt

Islamic philosophy Egyptian practice Implications for the foreign executive

Unity

Non-discrimination in the

workplace

Importance of knowledge-seeking

Trusteeship Care of the environment

Use of wealth for social causes, to aid less fortunate people.

Justice Precision in business dealings,

honesty, full information to the

buyer, etc. Individual

responsibility.

Prohibition of usurious

transactions e.g. payment and

receipt of interest.

Nepotism, importance of social

relationships in business

Egyptians place great emphasis on

education, wherever possible,

given the country's level of

economic development.

Egyptians have neglected this, in

part because of more pressing economic problems, but also

because of attitude. Changes are

occurring. Environmental laws

being implemented.

The "new" class which benefited

from liberalization tends to engage in conspicuous consumption.

Yet, there are also efforts on

the part of some Islamists to

develop social welfare programs.

Informality in treatment of time,

weights and measures, business

on a "handshake." Indecision,

procrastination. Lack of trust.

Efforts to gain benefits from the state^

Some Egyptian businesspeople observe this ruling; others do not.

Trust and friendship must be

developed, often slowly, before

business is possible. Hiring of

family members/friends by

Egyptian partner may result in

less than qualified individuals

for certain positions.

Provide training as part of contracts;

technology transfer; visits to foreign

company's home facilities much

appreciated.

Business opportunities in

environmental technology field.

Marketing appeals could be made

using the Islamic perspective on the

environment.

International managers have the

opportunity to be "moral

champions." E.g. success of Egyptian

House in UK, a joint venture with

Egypt's Foundation for the

Productive Families (Thomas,

1996a). Also, possibilities for

cause-related marketing in Egypt.

Foreign executives need to be

extremely patient and cautious.

Showing strong commitment,

however, will likely increase the

commitment of the Egyptian partner. Need for local agent/ partner.

Need to find out the views of the

Egyptian partner. Foreign executives

would be wise to avoid expressing

opinions, but should follow desires of

Egyptian partner. Opportunity for

innovative financing methods. Islamic

financing institutions and instruments

growing worldwide with many major western banks involved.



356 Gillian Rice

(Middle East Executive Reports, 1995). Innovative

financing methods based on Islamic practice are

growing worldwide and are accessible to western

business executives. For example, Citibank's

Islamic investment bank is headquartered in

Bahrain. The Islamic Development Bank has an

export credit agency, The Islamic Corporation for the Insurance of Investment and Export Credit (Middle East Economic Digest, 1995).

While there are some differences between phi

losophy and practice, it should be remembered

that the Islamic worldview has an enduring and

strong influence on Egyptian culture. In common

with most peoples of the world, Egyptians are

very favorably impressed and honored by a for

eigner's genuine desire to learn about the ideal

to which they aspire. An understanding of

Egyptians' inner conflicts in business ethics will

be appreciated. At all times, foreign executives

should demonstrate respect for Islam and they will find that, in turn, the Egyptians will truly

respect the foreigners' religious beliefs and ethical

ideals.

Conclusion

In response to the need for further research and

discussion about business ethics in different

cultures, I have described Islamic philosophy

regarding business practices. It is important not

merely to understand the philosophy or ideal, however. Knowledge of ethics in practice is vital

to the international manager. The illustration of

Egypt shows considerable diversities between

philosophy and practice; diversities which if

understood, can provide a foreign executive with

ideas on how to negotiate with Egyptians and

even what kinds of products or services might be appreciated. The specific Egyptian case, of

course, has limited generalizability, as all cultures

have unique traits. Nevertheless, the analytical framework I use is applicable in any culture.

Managers should examine first a culture's ideal

set of ethics, and second, the actual ethical

practice. They should also attempt to investigate reasons for differences between these two.

Future empirical research could focus on what

are the ethical issues of most concern to Muslim

managers and how these managers deal with

issues of social responsibility in their countries.

The results would be salient in the development and implementation of multinational companies' codes of ethics. In addition, organizations seeking to be "good corporate citizens" in Muslim coun

tries could benefit from this kind of research.

Because much international business is conducted

using agents and various types of joint ventures,

it is important to understand the ethical ideals

and practices of Muslim business partners. Also, how do they resolve conflicts with non-Muslim

partners? Research should include comparisons of different Muslim countries, such as those from

North Africa, the Gulf region, and Southeast

Asia. Furthermore, what is the impact of Islamic

thinking on different business functions such as

finance and marketing? For example, what kind

of advertising is not only acceptable in Islamic

cultures, but is preferred and more effective? The

most appropriate way to research these issues is

by conducting surveys to ascertain the attitudes

and practices of managers and consumers in

Muslim countries. In some contexts, such as

advertising research, laboratory and field exper iments may also be feasible.

The Islamic ideal is part of a universal Islamic

culture, common to all Muslims around the

world. Hence, a deeper appreciation of Islam

can be advantageous to executives conducting business with any Muslims, from Indonesia to

Morocco, and from the former Soviet Central

Asian republics to South Africa.

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