Abstract
Business performance is traditionally viewed from the one-dimensional financial angle. This paper develops a new approach that links performance to the ethical vision of Islam based on maqasid al-shari’ah (i.e., the objectives of Islamic law). The approach involves a Pentagon-shaped performance scheme structure via five pillars, namely wealth, posterity, intellect, faith, and human self. Such a scheme ensures that any firm or organization can ethically contribute to the promotion of human welfare, prevent corruption, and enhance social and economic stability and not merely maximize its own performance in terms of its financial return. A quantitative measure of ethical performance is developed. It surprisingly shows that a firm or organization following only the financial aspect at the expense of the others performs poorly. This paper discusses further the practical instances of the quantitative measurement of the ethical aspects of the system taken at an aggregate level.
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Notes
Shari’ah means literally the way. In the Islamic terminology, it means jurisprudence that simultaneously encompasses the fundamental beliefs and the practical laws of Islam. According to Haron and Wan Azmi (2009 p.224), “the concept of Shari’ah encompasses not only the conduct of man in his life towards realizing the Divine Will, but also covers all behaviour—spiritual, mental and physical. This means that the concept of Shari’ah is greater than law, covering all aspects of living including faith and practices, personal behaviour, legal and social matters.”
The link between religion and economics was first established by Weber (1905). According to the author, religion has a positive impact on economic growth. He specifically shows that Protestantism has a greater impact than Catholicism on economic growth because of the Protestant work is more ethical.
The altruistic economic view conjectures that the wellbeing of people is closely related to that of the other individuals. Although it assumes that they maximize their own welfare, it considers that it also depends on the “sympathy” towards the other individuals so that their self-interest is mixed with the consideration toward the welfare of the others.
Smith’s (1776[1952]) view supporting capitalism is justified by the fact that it gives the individuals the tools to achieve their own goals and reach their satisfaction, through win–win games.
The use of natural resources and global warming are important in this context. Indeed, the question is whether the profit-oriented use of resources would be at the expense of the cleanliness of the environment and the perpetuity of the nature’s resources.
Prophet Muhammad, peace be upon him, said: “I have been sent to perfect ethical values”, cited in Al-Bayhaqi (1056[1994]).
Fiqh is the Islamic jurisprudence. The fiqh scholars expand the shari’ah by studying the two sources of rulings, namely the Qur’an (the Muslims’ Holy Book) and the Sunnah (the Prophet Muhammad’s practice).
This dimension identifies the measures in order to answer to the following question: How do customers see the firm?
This dimension identifies the measures in order to answer to the following question: What shall the firm do to be excellent at those processes?
This dimension identifies the measures in order to answer the following question: What shall he firm do to create value?
As an example of performance ratio, the variable “fair dealings” is proxied by the profit to total income ratio.
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Bedoui, H., Mansour, W. Performance and Maqasid al-Shari’ah’s Pentagon-Shaped Ethical Measurement. Sci Eng Ethics 21, 555–576 (2015). https://doi.org/10.1007/s11948-014-9561-9
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DOI: https://doi.org/10.1007/s11948-014-9561-9