An Islamic perspective on the lack of

social responsibility in business

organisations

By Zahid Parvez & Pervaiz Ahmed

Working Paper Series 2004

Number WP005/04

ISSN Number 1363-6839

Zahid Parvez
Senior Lecturer
University of Wolverhampton, UK
Tel: +44 (0) 1902 323756
Email: Z.Parvez@wlv.ac.uk
 An Islamic perspective on the lack of social responsibility in business organisations

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© University of Wolverhampton 2004

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 An Islamic perspective on the lack of social responsibility in business organisations

Abstract
This paper explores from an Islamic perspective the underlying reasons why a weak sense of
corporate social responsibility exists. It argues that one possible explanation, amongst numerous
others, may lie in the narrowness of the problem solving approaches that are employed by business
organizations in addressing ethical and social issues. In general, the dominant economic problem-
solving approaches that are employed by business organizations tend to overlook the non-material
(i.e. spiritual) dimensions of the problem’s context. Problems are narrowed down, their material or
observable dimensions are analyzed and addressed in isolation to other issues that may be important
factors in their cause. Such approaches view compliance to ethical codes and fulfilling of corporate
social responsibility as an extra cost, extra work and a distraction from the core business functions.
Also, these approaches produce economic and technological response/solutions to ethical and social
issues. In other words, they place an increasing reliance on extrinsic mechanisms (e.g. monitoring,
surveillance, performance measures, etc.) to ensure compliance to ethical codes and fulfillment of
corporate social responsibility, and by so doing further cultivate individualism, narrows the spheres of
personal and corporate social responsibility, which more often than not gives rise to win-lose
solutions rather than collaboration based win-win solutions. The paper argues that problem-solving
approaches need to be broadened to incorporate spiritual dimensions and need to increase the
involvement of all stakeholders in a free discussion on identifying the problem situation and in
formulating the solutions. Solutions should aim to strengthen the natural social infrastructure and not
lead people to become dependent solely on the extrinsic rewards or monitoring mechanisms.

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 An Islamic perspective on the lack of social responsibility in business organisations

The author
Dr Zahid Parvez
Zahid Parvez is a Senior Lecturer within the department of Strategy at the University of
Wolverhampton Business School. His research interests include building a critical understanding of
the organisational implications of informatization. In particular, to understand the drivers and
assumptions behind informatization, meanings attached to informatized processes and systems as well
as how power is exercised through these systems

Professor Pervaiz K Ahmed

Pervaiz Ahmed is Professor of Management at the University of Wolverhampton Business School.
His key research interests include processes for strategy implementation, innovation, knowledge and
learning, and social responsibility and business ethics.

4
 An Islamic perspective on the lack of social responsibility in business organisations

An Islamic perspective on the lack of social responsibility in

business organisations

Introduction
Scholars have noted in numerous academic and non-academic literatures the increasing trend towards
individualism and the weakening sense of social responsibility in both business organisations and
societies in general (Qutb, 1985; Izetbegovic, 1993; Dennis et al. 1993; Hans Kung et al. 1993;
Cherrington & Cherrington, 1993; Nadwi, 1997). However, the causes of these business and social
attitudes, and their relationship to the policy-making approaches adopted by business and society have
not received due attention. This paper aims to examine the academic debate on social responsibility
of business organisations through the lens of Islam. It argues that a possible explanation for why a
sense of corporate social responsibility is weakening may lie in the narrowness and the restricted
nature of the problem solving and decision-making approaches and frameworks that have emerged
from the pervasive secular-economic frames of thought. As a consequence, of the approaches adopted
by business institutions, a number of failings arise regarding compliance to ethical codes and the
fulfilment of corporate social responsibility.

The paper first outlines the basic differences that exist in the problem solving approaches between
Islam and those that have arisen from the secular-economic paradigm. These problem-solving
approaches are then extended to the issue of corporate social responsibility. From insights based on
Islamic precepts issues pertinent to decision-making are drawn out. In this paper, we draw on one
religious perspective for insights. However, it is important to note that we believe that similar
conclusions and insights could be derived to some extent from other religious perspectives, such as
Christianity, Judaism etc. However, given our knowledge base, Islam is the most appropriate choice
to develop our argument.

A weakening sense of corporate social responsibility

There is a prevalent and strong belief that private enterprise operates in an amoral vacuum (McKenna,
1996). Many of the major business ethics texts even resign themselves to the fact that there is a
widespread community acceptance that the term ‘business ethics’ is an oxymoron; that business and
ethics do not go together (e.g. Donaldson & Werhane, 1988; Velasquez, 1992). Partly this mirrors
society standards and expectations, but it is also a reflection of the nature of both economic and
mainstream management theories, which have evolved to leave little space, if any, for moral and
social principles. Within these theories managers owe allegiance solely to the owners, and drive
businesses through the yardstick of maximum profit. The argument is simple: profitability is, after all,
a necessary condition of staying in business. It is argued that this viewpoint adopts a very specific
value system and world-view.

The business world is overflowing with companies that win accolades and awards (such as Business
Excellence, Quality, Investors in People) yet even in these companies’ words such as trust, integrity,
dignity, care and virtue still fail to hold significant practical meaning. With increasing frequency,
companies once held up as paragons of virtuous excellence stand mired in scandal and deceit. Like it
or not, we have managed to create a world, in which expediency and short-termism are the standard
norm. We are becoming dependent on societies that have to provide more and more rules and
legislations because trust between business organisations themselves and between consumers and
businesses is declining. Many no longer trust others to tell the truth, honour obligations or act with
moral fortitude (Sonnenberg & Goldberg, 1992). There are huge costs of this trend to business
because it has led to the growth of cynical employees, who behave on the belief that the impression
they make is more important than the work they produce. Milton-Smith (1995) retrospectively
commenting on 1980’s and 90’s business environment suggests it to be a period of unparalleled greed:
one has only to think of Imelda Marcos, Robert Maxwell, BCCI Directors, and Nick Leeson in the

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 An Islamic perspective on the lack of social responsibility in business organisations

Barings Bank collapse conjure up enduring images of extravagant display and excessive greed. And
more recently, in the wake of corporate collapses involving well-known companies, such as Enron
and WorldCom, many questions have been raised about the integrity of business and government
leaders. There have been disturbing revelations of unethical and, in some cases, illegal business
practices.

The link between a world view and problem solving approaches

There could be numerous reasons for such behaviour on the part of business organisations. One
possible reason that is argued for in this paper is the use of problem-solving approaches and
frameworks that emerge from secular-economic paradigms. These approaches, rooted on a
materialistic worldview, tend to exclude spiritual and moral dimensions in the process of framing
business and social problems. This in turn, influences business decisions and practices related to all
aspects of the business including attitudes towards social responsibility and ethical codes in general.
In other words, this paper argues that there is a strong link between a worldview and problem-solving
paradigms, and subsequently, between problem-solving paradigms and the degree of compliance to
ethical codes and social responsibility exercised by a business organisation. It is argued that the
economic problem-solving approaches, due to their inherent reductionist methodologies and short-
term vision, tend to view compliance to ethical codes and fulfilling of corporate social responsibility
as an extra cost, extra work and a distraction from the core business functions. In view of this, such
approaches tend to either ignore or not include corporate social responsibility amongst the priorities of
a business organisation.

A particular worldview, or the way people perceive social and material reality, impacts on how they
interpret and respond to the world around them. A worldview embodies beliefs and assumptions
about reality and it guides personal, corporate and social life in a particular direction. Peoples’ goals,
aspiration, priorities, strategies, commitments, and likes and dislikes, are all, on the whole, influenced
and forged by the worldview they hold. The way people perceive the world shapes their social and
political beliefs, and, thus, a worldview underpins social and economic policies and the culture of a
community and business organisations. Islam contends, that a worldview that does not embody
reality in its fullness, or is based on partial accounts of our true nature, will inevitably cause
imbalances and inconsistencies in our personal, business and social life, leading to numerous social
problems, strains and injustices in business and society. Such a worldview would lead to flawed
perspectives and incoherent and disassociated social values, and, thus, affect attitudes and social
conduct in a negative way. “Thus, any efforts for improving social life must begin by analysing the
dominant worldviews in society, and the arising social principles and problem solving frameworks
that guide and influence social policy” (Parvez, 2000 p.76).

Developing these arguments further, it is inferred that a worldview provides a particular vision of life
and the universe around us. This vision, in turn, develops a specific frame of mind (a mindset), and it
is this that gradually nurtures certain attitudes and creates distinctive approaches to life and human
problems. Those who hold materialistic-secular views will tend to approach social and business
problems and issues from different premises and perspectives as compared to those holding the
Islamic worldview, or other worldviews for that matter. In light of this, it is argued that both the scale
(i.e. dimensions considered) and scope (i.e. degree of broadness of strategies employed) regarding
business ethics in general and corporate social responsibility in particular, would differ between
different worldviews. In other words, different worldviews, and the emerging problem-solving
frames of mind, would not view business ethics and social responsibility in the same way. There will
be different opinions regarding what the aims of social responsibility should be or the appropriate
responses for it. Thus, different worldviews would lead to problems being framed in different ways
and would also influence and guide the process of formulating responses and solutions in different
ways.

In light of this, there have been efforts to introduce changes in the worldview held by business
organisations and society in general, in order to influence change in business models and to broaden

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 An Islamic perspective on the lack of social responsibility in business organisations

problem-solving approaches. For example, there has been a pregnant yet significant shift in
worldview over the last few decades. In the West, it began in the late 1970s, with the birth of
environmentalism (Weiner, 1992). In the East, the notion of harmony with nature has long historical
antecedents in religion as well as custom and practice. Many of the World’s religions, such as Islam,
Christianity and Buddism, explicitly embody principles of stewardship. This change holds significant
meaning and could possibly transform many of the business models. The effects of these influences
are gradually beginning to reverberate into a re-interpretation of the business gestalt. The mantle of
the economic mantra of profit and dominion over nature is being challenged by the notion that
humankind has stewardship obligations and social responsibilities beyond the self. Material dominion
as mode of thought placed humankind at the top of a hierarchy and entitled it to exploit all of nature
and even other humans for its own ends. Stewardship, in contrast, suggests that the task of humanity
is to take care of its environment and preserve nature in all its forms and relationships. If humankind
is to achieve the goal to return in as good or better shape the world that they inherited to each
succeeding generation then nurturance and care need to become the primary drivers rather than profit
alone.

Indifferent to ethical codes: a consequence of materialistic problem-

solving approaches
To understand the different responses and solutions derived from different worldviews, a closer
examination of the problem-solving approaches and frameworks is required. As an illustration, the
Islamic worldview recognises both the spiritual and material dimensions of reality and hence
incorporates these into its philosophy of life and problem-solving approaches.

Behold! your Lord said to the angels: 'I am about to create humans, from sounding clay; from
mud moulded into shape. When I have fashioned him (in due proportion) and breathed into
him of my spirit, fall ye down in obeisance unto him (Quran, 15:28-29).

In contrast, materialism as a worldview argues that only the material or the physical universe
constitutes reality. Matter and energy are the ultimate reality and, hence, the spiritual realm of our
being and that of the universe is rejected. Materialism has been defined as:

a primary concern for the acquisition of material goods and the enjoyment of physical
satisfactions, and as a consequent rejection of or indifference to the spiritual, aesthetic, or
ethical…(Stuart, 1989 p.19).

A frame of mind emerging from such a worldview naturally acknowledges only those dimensions of
the social reality that are observable and have material form, whilst other dimensions that do not have
any external and observable features are mostly overlooked or even ignored entirely from analysis
(e.g. moral and spiritual dimensions). Hence, this partial view of social reality gradually places
mental constraints on how problems are defined and subsequently on the solutions that are
formulated. It prevents business decision-makers from developing more creative and broader mental
and intellectual tools required for analysing and understanding stakeholder problems in a
comprehensive and balanced ways. In other words, such a mindset places limitations on the problem-
solving methodologies that are meant to guide policy-makers in framing stakeholder problems and
developing solutions. This is why the boundaries that are drawn around a problem situation are often
judgmental, narrow and exclude numerous non-material dimensions of the social phenomenon being
addressed (Vickers, 1965). For example, the causes of business problems generally identified through
secular-economic approaches tend to be restricted to material factors such as resources, profits,
growth and efficiency. Such conclusions, however, reduce the variety of solutions that are possible
for a given problem. Thus, due to the restricted nature of secular approaches, other, possibly more
effective solutions which draw on the inner resources (i.e. moral and spiritual dimensions) to solve
social and business problems, and which can inspire positive attitudes in people, generally remain
outside business decision making.

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 An Islamic perspective on the lack of social responsibility in business organisations

Some of the popular secular-economic problem-solving approaches are broadly framed within a
positivist approach such as the social survey tradition, and less often in the sociology of social
problems, symbolic interactionism, and the natural history approach to social problems, amongst
numerous others (Parsons, 1995). Most of these problem-solving approaches start by separating out
and isolating the particular issue of concern (e.g. drop in profits) from its wider human and social
context. They then employ various data collection methods for gaining insights into the problem
situation. However, these methods tend to primarily focus attention on the hard properties of the
problem context (i.e. objective and quantative data such as sales, outputs, bottom-line metrics,
observable behaviour, etc.) and underplay the spiritual and soft properties (such as feelings, attitudes,
tastes, perceptions, values, personal relationships or other subjective data). This is so because hard
properties are easy to identify and generalise as opposed to the soft properties. Thus, the data
collected often fails to illuminate the spiritual and moral dimensions of the problem situation, since
these properties fall outside the problem-search boundaries. In other words, most secular-economic
problem-solving approaches tend to employ a reductionist approach in identifying and addressing
complex organisational problems, and these often ignore or overlook the intermeshed moral and
spiritual issues. Problems are narrowed down and addressed in isolation to other wider moral and
social issues, which may be important factors in their cause.

Moreover, on the output side, that is, in the formulation of solutions, secular-economic approaches
tend to also rely largely on material/technological resources to bear upon the problem and for
implementing the solutions. Thus, solutions from such approaches generally require material and
economic resources, and external agencies and control mechanisms for their implementation, rather
than the inner human resources and control mechanisms (i.e. positive emotions such as compassion,
mercy, spirit of forgiveness, self and social discipline, motivation, self-adjustment and self-control).
As a result, such solutions place an increasing reliance on extrinsic mechanisms (e.g. monitoring,
surveillance, performance measures, etc.) to ensure compliance to ethical codes and for implementing
solutions in general. However, in the long term, such solutions, which emerge from secular problem-
solving methodologies, mostly create a cyclical problem situation - they make people more dependent
on external monitoring mechanisms or satisfier agencies (i.e. the money and external rewards), and by
so doing further cultivate individualism, which narrows the spheres of personal and corporate social
responsibility, which more often than not gives rise to win-lose solutions rather than collaboration
based win-win solutions.

Some examples at this stage will help to illustrate the basic differences that exist between the Islamic
and materialistic-secular problem-solving approaches. For instance, issues such as employee theft,
misuse of proprietary information, abuse of company expense accounts, misuse of company assets
and so on can affect the performance and subsequently the profits of a business organisation. These
can also damage the standing of a company in society if they become widespread. So how can such
offences or misdeeds be checked or eliminated completely? A secular approach would perhaps deal
with each category of offences in isolation to the bigger picture of such problems. The process
followed would include the collection of data on the offences or misdeeds in order to understand its
material causes (in isolation from the wider moral conditions and social context), developing a
number of alternative technical and formal/legal responses/solutions to address it, and then selecting
the most appropriate one within budgetary constraints. Take the misuse of proprietary information for
example. To address this issue, a materialistic-secular approach would aim to understand who has
been involved and the strategies that have employed in committing such an offence, and as a result
suggest the installation of more secure software systems for authentication and authorisation, secure
locks, alarm systems in offices where the information maybe held, or even the imposition of harsher
disciplinary policies for offenders, and so on. However, it is generally true that, with every problem
solving strategy an organisation can come up with, offenders have managed to find some other ways
for committing these sorts of offences. Thus, despite the fact that there are tougher disciplinary
policies, penalties and more surveillance, such offences and misdeeds are not reduced. According to
Islam, the solution does not lie solely in more secure software systems or other technological and
legal policies, rather the inner dimensions of our being also requires attention; the deep recesses of the

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 An Islamic perspective on the lack of social responsibility in business organisations

heart and soul have to be affected with moral-values, sense of accountability and respect for other
peoples’ property in order to change people’s behaviour and attitudes towards such offences and
social evils in general.

Similarly, to address a drop in profits, a secular approach would aim to understand how profits fell in
terms of sales, output, manpower efficiency, and so on. However, it is found that, with many
symptoms based responses/solutions (such as piece rate wage systems, gain-sharing, promotions,
marketing manoeuvres and ploys etc) short term solutions emerge to the detriment of the long term.
Thus, despite the temporary improvement long term amelioration is not forthcoming. According to
Islam, the solution lies not only in the extrinsic and surface but often the solution demands attention to
the spiritual and moral dimensions of our being. This underpins personal citizenship, as well as
organisational citizenship behaviours. Additionally materialistic-secular responses to problems try to
contain or reduce their effects rather than addressing their roots. Such solutions to problems tend to
operate by setting up of monitor and control structures, which are then operated indirectly through
processes of control mechanisms such as ISO standards. Several millions of pounds are spent
annually to form and maintain such control standards, but often with little results. As anticipated,
such approaches mostly fail to lead business towards long-term stakeholder harmony, and at best only
succeed in creating some awareness and understanding of such problems.

In contrast, Islam draws our attention to the fact that human motivation stems from one’s worldview
(Quran: 49:13). Improvement cannot, therefore, be made through control and legislation alone.
Certainly legislation and control mechanisms play an important role in establishing appropriate
behaviour and minimum levels of performance but they constitute a small part of bigger issue of
human behaviour and performance. From an Islamic perspective, control and laws that are to be
employed for guiding personal and business conduct should be enacted to protect minimums of
standards or as deterrents to wrong-doing. More than this there is a need to cultivate a higher-
consciousness, morals, and a sense of accountability as a prerequisite since they develop an inner
respect for societal values and laws. Taken together, these can ensure a change from within and
without. “Abhorrence of wrong-doing comes from within and, thus, the seed of change must be sown
from within. Therefore, relying only on laws to change people may not lead to an effective overall
and lasting change in business and society” (Parvez, 2000 pp.135-136).

Thus, from an Islamic perspective, such secular-economic problem-solving approaches do not deal
with business and social issues and problems in a balanced and comprehensive way. Solutions that
emerge are based either on partial understanding of the problem’s spiritual, moral, psychological,
sociological, political and economic dimensions, the wider problem context and their inter-
relationships, or are perhaps politically and economically motivated (Parsons, 1995 pp. 215-216), and
thus, lack far-sightedness. On the whole, such approaches in business organisations overlook the
more fundamental issues and concerns of employees and customers. The need for recognition,
dignity, mutual support, justice, and for satisfying other emotional and spiritual requirements, which
are essential for a healthy and balanced personal and work life, are not given the attention they
deserve. Perhaps, this is why stress, depression, anxiety, boredom, deterioration in working
relationships and spiritual emptiness are becoming a symptomatic condition of the modern business
environment. From an Islamic perspective, at the very best secular problem-solving approaches
address the symptoms of business problems, especially those involving business ethics and corporate
social responsibility, rather than their root causes. Due to their narrow focus, and faulty premises,
they fail to fully reconnect employees to the collective organisational life in which they exist.

The weakening sense of social responsibility

With the above foundations, this section moves onto explore the reasons why a sense of corporate
social responsibility is weakening, as perceived from an Islamic perspective. From a materialistic-
secular view, exercising social responsibility is likely to be seen as a cost, and cost implies a reduction
in profits, and this in turn can be considered to be against the interest of the business. From this
perspective, it can be understood why business organisations limit their time and other resources for

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 An Islamic perspective on the lack of social responsibility in business organisations

meeting their social responsibilities, or even try to absolve themselves from this extra work if they
can. It follows, that in order to make organisations comply in fulfilling their social responsibilities
some kind of policy or legislation would be required. However, this reduces social responsibility to a
legal obligation and, which over time, weakens the importance of it being viewed as a moral or social
obligation. Also, the drawback of this is that the law, although it may act as a deterrent, it cannot
reach all spheres of business responsibility, and hence can be undermined or even broken. Thus, to
ensure that business organisations fulfil their social responsibilities, external mechanisms of control
are relied upon.

In contrast, from an Islamic perspective, social responsibility exercised by a business organisation is

seen as a benefit rather than a cost. The logic of this can only be understood when the issue is
considered in broader scale and a longer time frame. Islam takes an integrated view of individuals
and society. It also broadens the frame of problem definition in terms of scale, scope and time
horizon. From an Islamic perspective, therefore, social responsibility is not just a matter of legal
obligations and material rights of stakeholders. It is a moral obligation and is a matter of survival of
both business organisations and society, as they are both dependent on each other. Any social
irresponsibility exercised towards each other would create problems for both, although these may
unfold over a longer time span. Thus, if a business organisation does not fulfil its social obligations,
and as a result passes on its costs (e.g. in the form of improper/illegal waste disposal, exploitation
through false advertisement, direct exploitation of employees or customers, or by not addressing poor
working conditions, high levels of stress, etc. onto society, it will come back to haunt or damage the
business through different ways and forms such as sabotage by employees, poor morale, or even
higher taxes, inflation, reduction in sales and profits, etc.). For example, a high level of stress
amongst employees will mean more time off work or more people needing healthcare and medication.
This will in turn increase pressure on healthcare institutions and subsequently they will demand more
resources from the government. To respond to these needs, the government may need to increase
individual and corporate taxes or raise money in other ways. Ultimately, whatever the response
strategy is adopted, it is likely that business organisations will have to meet these increased costs
either directly or indirectly in the longer term (e.g. a company can also be sued by employees for
negligence).

In contrast, by being more socially responsible and actively striving to balance the rights of all
stakeholders based on fairness, justice and dignity, and ensuring a just distribution of wealth, will
actually benefit a business organisation in the long-term as these would raise satisfaction, create a
healthy and conducive working atmosphere, reduce stress, improve morale, increase productivity, and
also increase the circulation of wealth in society.

For those who give in charity, men and women, and a loan to God a beautiful loan, it shall be
increased manifold (to their credit) and they shall have, (besides) a liberal reward (Al-Qur'an,
57:18).

God deprives usury of all blessing, but will give increase for deeds of charity (Quran 2: 276).

By spending in charity, the wealth does not decrease… (Muslim, vol. 4, no: 6264).

In other words, costs (in different forms) that are pushed onto society will come back as greater costs
for business organisations. In contrast, any benefits that are pushed onto society will come back as
greater benefits for business organisations over time. This is illustrated diagrammatically in Figure 1.

Costs/benefits
Costs/benefits
Business Society/stakeholders World
organisations

Greater costs/benefits over longer term

Greater costs/benefits over longer term

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 An Islamic perspective on the lack of social responsibility in business organisations

Figure 1. Cyclic return of costs and benefits on business organisations

Thus, in contrast to the narrow secular approaches, Islam adopts a broader boundary of reference in
terms of issues considered as well as the time frame. Religions, like Islam are guided by moral and
social frameworks that assist in focusing attention on addressing the root causes of social problems.
They take into consideration the wider factors impinging on a problem situation. The inner
dimensions of our being, our human nature, aspirations and inclinations, positive and negative
emotions, and the need for family, friendship, community, dignity and social contact, together with
the dominant cultural values, social attitudes and practices, economic conditions, and time-space
factors, etc., are all factors that need to be taken into consideration when addressing socially
embedded business problems. However, many of these hardly come into the frameworks of
materialistic-secular problem-solving methodologies. In Islam, the Holy Quran prescribes the process
of Shura (i.e. consultation) for problem solving. In fact, Islam enjoins consultation (Shura) at all
levels of individual, business and social life: in the affairs of the family, business, community, society
and the state.

Those who hearken to their Lord, and establish prayer; and who (conduct) their affairs by
mutual consultation; who spend out of what We bestow on them ... (al-Shura 42: 38).

Hasan (1984) has defined Shura as: ‘a collective endeavour for seeking an objective truth’. In it, the
participants are involved in a free exchange of ideas and views to arrive at a decision or a solution to a
problem, basing them on the guiding frameworks contained in the Quran. The discussion is not based
on blind support of a person, group or party, or constrained to narrow economic factors, but is rather
intended to bring benefit and justice to all stakeholders in a problem situation.

Shura as a concept is rooted on pluralism, active participation of all stakeholders in a problem

situation, and the employment of broader frameworks that are more inclusive of both material and
spiritual factors. It is a process of deliberation involving all stakeholders in identifying the problem
situation and in formulating the solutions. The process aims to arrive at responses or solutions to
social problems that draw on the powerful inner human resources such as spiritual values for
improving social attitudes and inspiring people to work for the common good.

In light of Islamic guidance, the issue of compliance to an ethical code and a weakening sense of
corporate social responsibility need to be viewed in a broader context, and a more holistic approach
needs to be formulated. Islam suggests that corporate social responsibility should not be viewed in a
narrow sense - solely in meeting legal obligations. Rather, in addition, consideration should be given
to meeting spiritual and moral obligations by drawing on the inner resources and the deeper positive
emotions (e.g. mercy and compassion) that nurture a sense of duty towards others and a caring
attitude. The deep underlying human feelings and needs for such things as dignity, the need for
mutual support, respect, socialising and communicating, sharing with others, and so on, cannot and
should not be overlooked. Human beings, and by extension businesses, cannot live by bread alone
(that is, material things). Businesses are as much spiritual entities as they are material entities.
Organisational spirit is embodied by the collective business values, traditions and acts of individual
employees. Besides economic needs, social and spiritual needs also need to be taken into
consideration when addressing business social responsibility, or any other responsibility for that
matter. The Islamic solution advocates creating a culture that constantly nurtures and draws upon
these inner resources and positive forces to change attitudes and social practices (with the support of
material resources). These are drawn upon to bind employees into the business, much as we bind
individuals into a family and community, so that a natural infrastructure for providing support and
help to those in need is nurtured and established. For example, the Islamic solution places the bulk of

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 An Islamic perspective on the lack of social responsibility in business organisations

the responsibility of ‘social welfare’ on the family and community, and the State is expected to
intervene only when these natural social structures are unable to cope. In the broader context the
business organisation is an integral extension of the family and community. Additionally, under this
perspective the legislative or control approach is perceived as the bare minimum platform from which
higher organisational citizenship and civic behaviours emerge, if nurtured correctly.

Materialistic-secular approaches generally provide technological and economic solutions to ethical

and social issues, and tend not to draw upon the inner human resources to change and improve social
attitudes. Also such solutions rely on external means, such as on-going monitoring processes, control
agencies or the creation of control structures and processes for their implementation, and thus, require
huge resources. This adds to the overall costs of the business and hence could lead to a reduction in
profits. Drawing support from the resources that exist in the natural business environment (e.g. the
employees) from where the problems originate, is not usually actively sought. Such approaches
therefore create a demand for more and larger control agencies, and thus, gradually increase the role
of the control structure and hierarchy. Over time these problems become bigger and increasingly
more difficult to address. Numerous scholars highlight drawbacks of increased and more rigid
structures for governance, albeit for different reasons (Hayek, 1976; George & Wilding, 1985).

Control, in contrast to empowerment, creates a business dependency on the function of a hierarchy of

command and control, and this gradually undermines employee capacity and willingness to take
responsibility for themselves (Thomas & Velthouse, 1990; Spreitzer, 1995). In turn, this subtle shift
nurtures a weakening sense of wider social responsibility. Control environments characterised with
amoral conventions come to rely and look after only self-interest (Fukayama, 1995; Mayer et al.
1995). Thus, many employees no longer feel a personal responsibility for ensuring compliance to an
ethical code as this is taken over by extrinsic and impersonal mechanisms. Purely, economics based
decision-making, thus, contributes to attitudes of indifference to ethical codes and corporate social
responsibility. This attitude gradually fragments the organisational community/collective and breeds
individualism. In other words, it roots processes for social atomisation and an attitude of social
neglect, indifference and even social irresponsibility (Etzioni, 1988; 1993).

In short, decision policies that have emerged from economic problem-solving approaches have in
many cases created attitudes of indifference towards ethical codes and corporate social responsibility.
They have contributed in breeding individualism, weakening of social relationships, and a culture
where people lack a responsible, caring and sharing attitude (Tajfel, 1982; Deutsch, 1949; 1985). An
Islamic perspective, which views the material and spiritual dimensions of social reality inclusively,
argues for more comprehensive and balanced problem-solving approaches for resolution of
stakeholder issues. To achieve this, it is suggested that economic problem-solving approaches should
be broadened in scale (i.e. increase the range of dimensions analysed) and in scope (i.e. be part of a
wider strategy for reforming and improving social life). They need to give consideration not only to
the material and economic dimensions of the problem situation, but also to the following:
a. The spiritual dimensions of human nature; that is the positive and negative motives, desires,
emotions and feelings, likes and dislikes, social attitudes and inter-personal relationships. Many
problems arise from the inner spiritual state, moral condition of employees and the broader work
culture. Positive or negative actions are driven by powerful inner forces such as: compassion and
mercy, anger and hate, selfishness and indifference, jealousy and greed, sense of duty and respect,
level of stress, system of rewards, a desire to meet ones’ basic needs and aspirations, and the need
for justice, freedom, the sense of dignity, affection, belonging, community, etc. An understanding
of the spiritual and moral state of affairs is therefore important in social problem analysis and in
the formulation of effective responses/solutions. Part of the business solution should also include
strategies for inspiring and uplifting people spiritually, nurturing positive motives, desires and
feelings, developing stronger inter-personal and social relationships, and a more friendly and
conducive work culture (Edwards, 2000; Voydanoff, 1989; Zedeck, 1992). The five pillars of
Islam help to bring people at all levels of society together, in interaction and mutual support.
They actually provide a focus on obligations and duties as well as rights and relationships of each

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 An Islamic perspective on the lack of social responsibility in business organisations

other (by removing social hierarchies and barriers) and encourage the development of individuals
and the community: spiritually, morally and socially.
b. Business problem analyses needs to integrate economic consideration with deeper social analysis.
That is problems in one area of business may have their roots or triggers in other areas. For
example, pollution, poor performance or a weakening sense of social responsibility may be
triggered or caused by poor education, work pressures, family problems, peer group pressures,
negative social attitudes etc. Therefore, analyses of different problems need to be integrated and a
bigger picture developed of the state of social milieu of the organisation. This provides a more
comprehensive and integrated approach to develop effective strategies to adequately address
business social responsibility issues. According to Islam, this can be realised through the process
of Shura (i.e. the involvement of all stakeholders in a free discussion in identifying the problem
situation and in formulating the solutions)
c. Solutions should be guided by values and principles of social and economic justice, fair treatment,
individual and social responsibility and accountability, etc. These should help to establish a
balance between rights and duties.
d. Solutions should aim to strengthen the natural social infrastructure and not lead people to become
dependent solely on the extrinsic rewards or monitoring mechanisms. They should provide
support to, and not undermine the resources that exist within the natural social contexts from
which the problems arise. In other words, the responsibility for developing and implementing
solutions should be placed within the context from where the problems originated. Solutions
should not be imposed from the top or from outside the social context, rather the business needs to
work with the employees and customers and not upon them.

Conclusion
A weak compliance to ethical codes and a weakening of the sense of corporate social responsibility
may exist due to numerous social, economic and cultural pressures. It has been argued in this paper
that these pressures are linked and have emerged from the dominant and deeply rooted materialistic-
secular worldview in society. One of the factors presented above relates to the approaches that are
brought to bear on social and business problems. These problem-solving approaches have emerged
from a materialistic mindset, which perceives social reality in material forms only. The non-material
inner resources and spiritual dimensions that form part of the human and social reality are either
rejected or largely overlooked and ignored. In light of this, the economic problem-solving approaches
in general are unable to guide decision-makers in digging deep to identify the roots of ethical and
social problems and issues, and therefore, the solutions tend to be restricted, limited, and lack balance.
In some cases they create more social problems than they solve. It is argued that the weakening sense
of corporate social responsibility that is felt in society is a direct consequence of the narrow boundary
of economic problem-solving. Thus, the paper argues for a more comprehensive framework to
address social issues. This should take into consideration the spiritual and moral as well as the
economic dimensions of social reality in a balanced way. Although a radically new framework has
not been presented, a few additional dimensions that can be easily accommodated into the economic
problem-solving approaches have been suggested for initiating further debate on business social
responsibility towards all stakeholders including the wider society and environment.

By linking the individual to the organisational community, companies can go a long way in avoiding
the common shortcoming of business practice in business, as most arise from heavy reliance on
technical rules based conformance to create technical proficiency (Mautz & Sharaf, 1996). Also, such
approaches often obscure the role of individual to the extent that important moral and ethical issues
are overlooked (Shaub et al., 1993). This type of blinkered focus is typified by the recent wave of
companies adopting corporate codes of ethics and standards, in which managers hide behind a code of
ethics believing they are ethical if they do not violate the rules. Such approaches often do away the
role of ideals, virtue and individual integrity in the process.

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 An Islamic perspective on the lack of social responsibility in business organisations

Sonnenberg and Goldberg (1992, p.54) note that many organizations believe there is no correlation
between integrity and bottom-line performance but they are wrong: “integrity and performance are not
at the opposite ends of a continuum... When people work for an organization that they believe is fair,
where everyone is willing to give of themselves to get the job done, where traditions of loyalty and
caring are hallmarks, people work to a higher level.”

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