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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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8/16/2019 1. Journal of Business Ethics Volume 18 Issue 4 1999 Gillian Rice -- Islamic Ethics and the Implications for Business …
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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
theNetherlands.
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346
illian
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
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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
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348 illian
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
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IslamicEthics 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 iswith 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
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8/16/2019 1. Journal of Business Ethics Volume 18 Issue 4 1999 Gillian Rice -- Islamic Ethics and the Implications for Business …
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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.
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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).
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352 illian
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,
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IslamicEthics
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
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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
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8/16/2019 1. Journal of Business Ethics Volume 18 Issue 4 1999 Gillian Rice -- Islamic Ethics and the Implications for Business …
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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.
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8/16/2019 1. Journal of Business Ethics Volume 18 Issue 4 1999 Gillian Rice -- Islamic Ethics and the Implications for Business …
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356
illian
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 toMuslim
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" inMuslim 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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